Will Domain Name Registrations Continue To Boost VeriSign’s 3Q’18 Results?

by Trefis Team
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VeriSign
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VeriSign (NASDAQ:VRSN), the market leader in domain names and internet security, is expected to report its September quarter financial performance on 25th October 2018. The market expects the company to report a strong growth in its top-line driven by the growth in domain name registrations for .com and .net, coupled with improved renewal rates compared to the previous year. 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.

We have a price estimate of $140 per share for the company, which is lower than its current market price. View our interactive dashboard – VeriSign’s Outlook For 2018 – and modify the key drivers such as revenue and margins to gauge the impact on the company’s valuation.

 

Key Trends To Watch For In 3Q’18 Results

  • 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 domain name base to grow between 1.3 and 1.8 million net registrations during the third quarter. We expect this growth in registrations to boost its revenue growth for the quarter.
  • For the full year 2018, the company expects its domain name base to grow in the range of 3.50%-4.25%, up from its previous guidance of 2.5%-3.25%.
  • 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.
  • For the full year 2018, VeriSign anticipates its full year revenue to be in the range of $1.205-$1.215 billion, narrowed from its previous guidance of $1.200-$1.215 billion.
  • Further, VeriSign updated its operating margin (Non-GAAP) expectation to 66%-67%, up from the earlier guidance of 65.5%-66.5%. The company’s capital expenditure is still expected to be between $45 and $55 million.

Disagree with our forecasts? Create your own price estimate for VeriSign by changing the base inputs (blue dots) on our interactive dashboard.

 

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