VeriSign Q3 Earnings: Company Posts A Better Than Expected Quarter

by Trefis Team
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VeriSign (NASDAQ:VRSN) recently released Q3 results, posting higher revenues and earnings year over year. Revenues came in at $288 million, up 8.2% from the same quarter in 2015. Earnings came in higher by almost 15% this time around, coming in at around $118 million. The company ended the quarter with cash, cash equivalents and marketable securities of $1.8 billion, a decrease of about $158 million from year-end 2015.

Key Highlights:

  • Last week, VeriSign announced that the U.S. Department of Commerce has allowed the extension of the Registry Agreement with the Internet Corporation for Assigned Names and Numbers, making the company the sole registry operator for the .com registry through November 30, 2024.

  • The company processed close to 8.3 million new domain name registrations for .com and .net this quarter, as opposed to 9.2 million in Q3 2015.
  • The renewal rate for Q2 2016 stood at about 73.8% compared to 72.7% in Q2 2015. The news only comes now as renewal rates are not completely measurable until after 45 days from the end of the quarter. Domain growth is primarily driven by internet adoption rate, economic activity globally, e-commerce activity and registrar go-to-market strategies.

  • The third quarter ended with 144.1 million .com and .net domain name registrations in the domain name base. That is a 6.6% increase year over year.

  • In the last quarter, it was announced that VeriSign was given permission to provide registrations for .com and .net domain names in the People’s Republic of China. The .com and .net domain registries will be the first non-Chinese registry to be allowed in China. This marks a huge opportunity for Verisign. The company now has the potential to increase sales from the region at a dramatic pace given the popularity of the TLDs in question globally. To put things into perspective, revenues in the region grew at a rate of 71% this quarter.

Additionally, this quarter marks 20 straight quarters in which the company maintained a 100% .com and .net availability. As more and more companies begin to rely on digitally growing their business, maintaining availability is going to be of utmost priority. Given the track record so far, it could be many quarters before we see this number slip.

Furthermore, it is expected that Q4 2016 will be a unique quarter in terms of domain name registration renewal. The volume of domain name registrations up for renewal in the quarter will have a larger proportion of first time renewing registration as a result of strong demand during Q3 and Q4 2015.

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