Key Takeaways From Verisign’s Q2 Earnings

by Trefis Team
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After a positive start to the year, VeriSign (NASDAQ:VRSN) performed decently in the second quarter with revenue of $288 million, implying slight growth over the same period last year. The company’s net income saw a 9% increase to around $123 million. Below we highlight some of the key takeaways from the earnings release.

Key Highlights:

  • Verisign renewed its .net Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN), and will will remain the sole registry operator for the .net registry for the next 6 years.
  • In the quarter, domain name registrations for .com and .net together grew 1% year over year to 144.3 million. VeriSign processed 9.2 million new domain name registrations for .com and .net, a increase from 0.6 million processed in the prior year quarter.
  • The renewal rate for Q1 2017 stood at about 72.5%, down by about 2 percentage points. That 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 rates, economic activity globally and e-commerce activity.
  • For the reported quarter, the exact renewal rate figures will be available in the coming weeks. The company estimates that it will be around 73.9% compared to 73.8% in the year-ago quarter.
  • The company announced an increase in the annual fee for .net domain name registrations from $8.20 to $9.02, effective Feb. 1, 2018 per its agreement with ICANN.

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

The company holds a prime position in the highly regulated .com and .net domain industry. We expect the contract renewal and price hikes for .com and .net domain names will continue to boost the top line going forward. Additionally, VeriSign has the potential to greatly benefit from the growth opportunities in the Distributed Denial of Service (DDoS) security market.

For 2017, the company expects to record revenues in the $1.155 billion to $1.165 billion range, while non-GAAP operating margin is expected to be between 64.5% and 65.25%.

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