Better Pricing And Demand For Digitalization To Drive VeriSign’s 2Q’18 Results
Building on the growth momentum of the previous few quarters, VeriSign (NASDAQ:VRSN) is expected to report a strong financial performance for the second quarter on Thursday, July 26. The company’s top-line is likely to be driven by higher domain name registrations for .com and .net, coupled with improved pricing due to the contractual right to increase the fees by up to 10% each year until 2023. We expect the company’s leading position in the highly regulated domain industry, and expected price hikes, to drive its value in the coming quarters. Additionally, VeriSign has the potential to greatly benefit from the significant growth opportunities in the Distributed Denial of Service (DDoS) security market.
We have created an interactive dashboard where you can change the company’s expected revenue and margins to gauge how they would impact expected earnings for the year.
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Key Highlights of 2Q’18
- VeriSign is expected to witness a rise in its domain name registrations driven by a strong internet adoption rate, global economic growth, e-commerce activity, and registrar go-to-market strategies. The company expects its net registrations to increase between 0.7 to 1.2 million during the second quarter. For the full year, the company anticipates domain name base growth of 2.5%-3.25% on a year-on-year basis.
- Being the sole registry operator for the .net registry for the next 6 years, VeriSign has the contractual right to increase the fees by up to 10% each year until June 30, 2023. Consequently, the company is likely to enjoy better pricing in the coming quarters, which will drive its value going forward.
- Similar to the last quarter, VeriSign is expected to repurchase its shares and return value to its shareholders. The company had returned $125 million to its shareholders through the repurchase of 1.1 million shares in the first quarter.
- For the full year 2018, VeriSign expects its revenue to be in the range of $1.200 – $1.215 billion and its operating margin (Non-GAAP) to be between 65.5% and 66.5%.
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