Verisign (NASDAQ:VRSN) reported its earnings for Q4 and FY2011, with revenue growth of 13% year-over-year for the full year. [1] It ended 2011 with approximately 113.8 million active .com and .net domain names, a net addition of 1.9 million domains, right in line with our expectations. The domain renewal rate is also expected to be up marginally, to 73.4%.
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Jim Bidzos, Chairman and CEO of Verisign said:
In a year that saw strong growth in global Internet adoption, increased demand on our DNS infrastructure, and a growing need for network security services, Verisign delivered security and stability. We were able to both invest in strengthening our infrastructure, and manage our business for growth. Also in 2011, we completed four years of board-directed restructuring, including divesting non-core businesses, and relocating our corporate headquarters. We returned divestiture proceeds to our shareholders. This restructuring has resulted in a more efficient, focused Verisign that we believe is better prepared for the opportunities ahead. We delivered for both the global community of Internet users that increasingly rely on us, and for our shareholders.
We expect Verisign’s total number of registered domains to exceed 120 million in 2012, but its market share may decline as the overall domain name market grows even faster.
In the earnings call, Verisign also stated that it was looking to generate additional revenue from new gTLDs (custom domains like .google and .apple) by acting as the registry backend provider for applicants. The revenue from its custom gTLD registrar business isn’t expected to impact its earnings significantly though, not until 2013.
Following the earnings, we have updated our model to reflect the latest financials. We are revising our estimates and are making slight adjustments to our price estimate.
Verisign competes with other domain name registry providers like NeuStar, Employ Media, and Afilias to win new and maintain existing registry rights. Its .com and .net domain registration business accounts for nearly 90% of its $38 Trefis price estimate.
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