What Are Verisign’s Key Drivers of Revenue?
VeriSign (NASDAQ:VRSN) has seen its revenue grow at a CAGR of 5% and stock price jumped 2.8x between 2013 and 2017. This growth is primarily attributable to overall growth in domain name registrations. The company holds a prime position in the highly regulated .com and .net domain industry. Further, in a move to boost volumes and consolidate its dominant position in the industry, VeriSign ramped up its marketing efforts since 2014. As more and more companies began to rely on digitally growing their business, the number of registrations increased from 127.2 million to 146.4 million.
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Our interactive dashboard for Verisign shows the company’s historical trends and our expectations for its 2018 revenues; you can modify the key value drivers to see how they impact the company’s results.
VeriSign controls the rights to the exclusive registry of .com and .net Internet domain names. It collects a fixed fee each time individuals or businesses register a new .com or .net domain name, or renew the registration of an existing domain name. According to an agreement with ICANN and the U.S. DoC, Verisign charged its customers $7.85 for .com registrations since 2012 and the contract is up for renewal later in 2018. In 2017, Verisign renewed its .net Registry Agreement with the ICANN, and will remain the sole registry operator for the .net registry for the next 6 years with a contractual right to increase pricing by 10% annually.
Our price estimate for Verisign is slightly below the current market price.