Domain Name Growth Reaffirms Verisign’s $37 Fair Value
Around 5 million new domain names were registered by users across the world in the third quarter, taking the total number of Internet domains to 220 million. [1] The number of .com and .net domains increased to 112 million, accounting for slightly more than 50% of total internet domains. Verisign (NASDAQ:VRSN) is the exclusive domain registrar for .com and .net domains, and it competes with domain name registry providers like NeuStar, Employ Media, and Afilias to maintain existing and win new registry rights.
See our complete analysis of Verisign here
Verisign generates almost all its revenues from .com and .net domain registration business. We expect .com and .net domains to have around 50% share of total Internet domains.
The domain growth in Q3 2011 is in line with our forecasts, and we estimate the total number of domains will reach 227 million by the end of 2011. You can check the impact of any deviation in the total domain growth by tweaking the trend-line in the chart below.
[trefis_forecast ticker=”VRSN” driver=”0031″]
Verisign has been trying to increase the number of .com and .net domain registrations by offering free services like Domain Countdown and MobileView. It may also generate additional revenue in the coming years by offering domain registry services for custom top-level domains for brands like .google and .apple, but that will likely be much lower than its revenue from the core .com and .net registration business.
We currently have a $37 Trefis price estimate for Verisign, which stands just above its current market price. The .com and .net domains account for nearly 90% of Verisign’s Trefis price estimate.
[trefis_slideshow ticker=”VRSN” rhs=”3″]
Understand How a Company’s Products Impact its Stock Price at Trefis
Notes:- Internet Grows to Nearly 220 Million Domain Names in Third Quarter, Press Release [↩]