How Will ICANN’s Decision To Allow Domain Registration Fee Hikes Affect VeriSign’s Revenue?

by Trefis Team
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VeriSign (NASDAQ: VRSN) is a key player in the serves the internet domain registration business. The company employs over 1000 employees globally and competes with GoDaddy, Cylance, Comodo, and DigiCert, among others. The company enjoys a strong competitive advantage over its competitors, which has ensured that VeriSign’s revenues rise steadily over the years despite its previously limited ability to improve its fee structure. With ICANN – the organization responsible for coordinating procedures related to the Internet – approving VeriSign’s ability to increase its domain-registration fees anywhere from 4-7% over coming years, this should have a visible impact on the latter’s revenues going forward, as we highlight below.

Our interactive dashboard – How Does VeriSign Make Money? – provides key details and our future outlook for the company’s revenues.

 

Revenue set to improve, but domain-registration growth to remain moderate

Fees will be a key factor for revenue growth to increase over the next five years. Registrations will continue growing at the levels that the company has previously witnessed. With the company having no plans to enter markets that are growing quicker, we don’t expect a large pickup in domain registrations going into 2020.

Data around how VeriSign’s domain registrations and average revenue per registration have trended over the years is available in our interactive dashboard.

Can Competitors Affect Revenue?

  • VeriSign’s competitors such as GoDaddy, and Comodo offer similar hosting and security services, but are not likely to affect VeriSign’s revenue even if it increases its fees.
  • This is because no company provides exactly the same services as Verisign because of which it enjoys a very high level of competitive advantage – something that is unlikely to be affected soon.

Emerging markets remain key to VeriSign’s success in the long run

  • VeriSign has pushed into key emerging markets such as China, India and Vietnam, but continues to see slow uptake for its services in these markets.
  • Many have argued that its growth remains weak in these markets largely due to its lack of willingness to aggressively market itself.
  • Hence, while opportunities remain, Verisign’s management may have to find ways to improve growth if it wishes to retain confidence from the market.
  • Renewal of VeriSign’s services and growth from emerging markets remain central to the company’s fortunes.

 

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