Verisign Reports Second Quarter 2024 Results

Rhea-AI Summary

VeriSign, Inc. (NASDAQ: VRSN) reported its Q2 2024 financial results, showing solid growth. Revenue increased 4.1% year-over-year to $387 million. Operating income rose to $266 million, up from $249 million in Q2 2023. Net income reached $199 million, with diluted EPS of $2.01, compared to $186 million and $1.79 in the same quarter last year.

The company ended Q2 2024 with $690 million in cash and marketable securities. Cash flow from operations was $160 million. Verisign repurchased 2.2 million shares for $388 million and received board approval for an additional $1.11 billion in share repurchases.

The domain name base decreased by 2.2% year-over-year to 170.6 million .com and .net registrations. New domain name registrations were 9.2 million, down from 10.2 million in Q2 2023. The Q1 2024 renewal rate was 74.1%, slightly lower than the previous year's 75.5%.

Positive

• Revenue increased 4.1% year-over-year to $387 million
• Operating income rose to $266 million from $249 million in Q2 2023
• Net income reached $199 million, with diluted EPS of $2.01, up from $186 million and $1.79 in Q2 2023
• Cash flow from operations improved to $160 million from $145 million in Q2 2023
• Board approved an additional $1.11 billion for share repurchases

Negative

• Domain name base decreased by 2.2% year-over-year to 170.6 million .com and .net registrations
• New domain name registrations decreased to 9.2 million from 10.2 million in Q2 2023
• Q1 2024 renewal rate dropped to 74.1% from 75.5% in the same quarter of 2023
• Cash and marketable securities decreased by $236 million from year-end 2023

Insights

Financial Analyst

VeriSign's Q2 2024 results demonstrate steady growth and financial stability. Revenue increased by 4.1% year-over-year to $387 million, while net income rose to $199 million, up from $186 million in Q2 2023. The company's diluted EPS of $2.01 shows a notable improvement from $1.79 in the same quarter last year.

However, there are some concerning trends in the core business. The domain name base decreased by 2.2% year-over-year, with a net decrease of 1.8 million domain names in Q2 2024. New domain name registrations also declined from 10.2 million in Q2 2023 to 9.2 million in Q2 2024. The renewal rate for Q1 2024 dropped to 74.1% from 75.5% in the previous year.

Despite these challenges, VeriSign's financial management appears strong. The company repurchased 2.2 million shares for $388 million and received board approval for an additional $1.11 billion in share repurchases. This brings the total available for repurchases to $1.5 billion, potentially supporting the stock price in the near term.

Investors should monitor the declining domain registration trends closely, as they could impact long-term growth prospects if the trend continues. However, the company's strong cash flow and share repurchase program may provide some stability in the short to medium term.

Tech Expert

VeriSign's Q2 2024 results highlight both strengths and potential concerns in the domain name industry. The company's continued 100% availability of the .com/.net domain name resolution system for 27 years is a testament to its technological prowess and reliability. This track record is important for maintaining trust in the global internet infrastructure.

However, the decline in domain name registrations and renewals warrants attention. The 2.2% decrease in the domain name base and the drop in new registrations from 10.2 million to 9.2 million year-over-year could indicate shifting trends in how businesses and individuals approach online presence. This might be due to factors such as:

• Increased use of social media platforms for online presence
• Consolidation of multiple domains under single, stronger brands
• Economic factors affecting small businesses and startups

The lower renewal rate (74.1% vs 75.5%) might suggest that some domain holders are reassessing the value of their digital assets. VeriSign will need to innovate and adapt its services to maintain growth in a changing digital landscape.

Despite these challenges, VeriSign's strong financial performance and continued investment in share repurchases indicate confidence in its business model and future prospects. The company's role in maintaining critical internet infrastructure positions it well for long-term stability, even as it navigates short-term fluctuations in the domain name market.

RESTON, Va.--(BUSINESS WIRE)-- VeriSign, Inc. (NASDAQ: VRSN), a global provider of critical internet infrastructure and domain name registry services, today reported financial results for the second quarter of 2024.

VeriSign, Inc. and its subsidiaries (“Verisign”) reported revenue of $387 million for the second quarter of 2024, up 4.1 percent from the same quarter in 2023. Operating income was $266 million for the second quarter of 2024, compared to $249 million for the same quarter of 2023. Verisign reported net income of $199 million and diluted earnings per share (diluted “EPS”) of $2.01 for the second quarter of 2024, compared to net income of $186 million and diluted EPS of $1.79 for the same quarter of 2023.

“We delivered another solid quarter, both operationally and financially, by focusing on our mission. Last week we marked 27 years of providing 100% availability in the .com/.net domain name resolution system,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

• Verisign ended the second quarter of 2024 with cash, cash equivalents and marketable securities of $690 million, a decrease of $236 million from year-end 2023.
• Cash flow from operations was $160 million for the second quarter of 2024, compared to $145 million for the same quarter of 2023.
• Deferred revenues as of June 30, 2024 totaled $1.29 billion, an increase of $43 million from year-end 2023.
• During the second quarter of 2024, Verisign repurchased 2.2 million shares of its common stock for an aggregate cost of $388 million.
• Effective July 25, 2024 the Board of Directors approved an additional authorization for share repurchases of approximately $1.11 billion of common stock, which brings the total amount to $1.5 billion authorized and available under Verisign’s share repurchase program, which has no expiration.

Business Highlights

• Verisign ended the second quarter of 2024 with 170.6 million .com and .net domain name registrations in the domain name base, a 2.2 percent decrease from the end of the second quarter of 2023, and a net decrease of 1.8 million domain names during the second quarter of 2024.
• During the second quarter of 2024, Verisign processed 9.2 million new domain name registrations for .com and .net, compared with 10.2 million for the second quarter of 2023.
• The final .com and .net renewal rate for the first quarter of 2024 was 74.1 percent compared to 75.5 percent for the same quarter of 2023. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Today’s Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EDT) to review the second quarter 2024 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4783 (international), conference ID: Verisign. A listen-only live web cast of the conference call and accompanying slide presentation will also be available at https://investor.verisign.com. An audio archive of the call will be available at https://investor.verisign.com/events.cfm. This news release and the financial information discussed on today’s conference call are available at https://investor.verisign.com.

About Verisign

Verisign (NASDAQ: VRSN), a global provider of critical internet infrastructure and domain name registry services, enables internet navigation for many of the world’s most recognized domain names. Verisign helps enable the security, stability, and resiliency of the Domain Name System and the internet by providing root zone maintainer services, operating two of the 13 global internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce. To learn more please visit verisign.com.

VRSNF

Statements in this announcement other than historical data and information constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These statements involve risks and uncertainties that could cause our actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, attempted security breaches, cyber-attacks, and DDoS attacks against our systems and services; the introduction of undetected or unknown defects in our systems or services; vulnerabilities in the global routing system; system interruptions or system failures; damage or interruptions to our data centers, data center systems or resolution systems; risks arising from our operation of root servers and our performance of the Root Zone Maintainer functions; deterioration of economic conditions, particularly in China; our ability to compete in the highly competitive business environment in which we operate; any loss or modification of our right to operate the .com and .net gTLDs; changes or challenges to the pricing provisions of the .com Registry Agreement; new or existing governmental laws and regulations in the U.S. or other applicable non-U.S. jurisdictions; new laws, regulations, directives or ICANN policies that require us to obtain and maintain personal information of registrants; economic, legal, regulatory, and political risks associated with our international operations; unfavorable changes in, or interpretations of, tax rules and regulations; risks from the adoption of ICANN’s consensus and temporary policies, technical standards and other processes; the weakening of, or changes to, the multi-stakeholder model of internet governance; the outcome of claims, lawsuits, audits or investigations; changes in internet practices and behavior and the adoption of substitute technologies, or the negative impact of wholesale price increases; our ability to expand our services into developing and emerging economies; our ability to maintain strong relationships with registrars and their resellers; our ability to attract, retain and motivate highly skilled employees; and our ability to protect and enforce our intellectual property rights. More information about potential factors that could affect our business and financial results is included in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended Dec. 31, 2023, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Verisign undertakes no obligation to update any of the forward-looking statements after the date of this announcement.

©2024 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.

VERISIGN, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In millions, except par value) (Unaudited)
	June 30, 2024				December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents	$	252.2			$	240.1
Marketable securities		437.7				686.3
Other current assets		71.3				61.9
Total current assets		761.2				988.3
Property and equipment, net		227.8				233.2
Goodwill		52.5				52.5
Deferred tax assets		279.8				301.0
Deposits to acquire intangible assets		145.0				145.0
Other long-term assets		38.8				29.0
Total long-term assets		743.9				760.7
Total assets	$	1,505.1			$	1,749.0
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities	$	224.2			$	257.4
Deferred revenues		967.1				931.1
Total current liabilities		1,191.3				1,188.5
Long-term deferred revenues		321.6				315.0
Senior notes		1,791.3				1,790.2
Long-term tax and other liabilities		17.3				36.3
Total long-term liabilities		2,130.2				2,141.5
Total liabilities		3,321.5				3,330.0
Commitments and contingencies
Stockholders’ deficit:
Preferred stock—par value $.001 per share; Authorized shares: 5.0; Issued and outstanding shares: none		—				—
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000; Issued shares: 355.1 at June 30, 2024 and 354.9 at December 31, 2023; Outstanding shares: 98.0 at June 30, 2024 and 101.3 at December 31, 2023		11,179.9				11,808.0
Accumulated deficit		(12,993.5	)			(13,386.4	)
Accumulated other comprehensive loss		(2.8	)			(2.6	)
Total stockholders’ deficit		(1,816.4	)			(1,581.0	)
Total liabilities and stockholders’ deficit	$	1,505.1			$	1,749.0

VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions, except per share data) (Unaudited)
	Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Revenues	$	387.1			$	372.0			$	771.4			$	736.4
Costs and expenses:
Cost of revenues		47.1				50.3				96.2				100.2
Research and development		23.8				22.2				48.6				46.4
Selling, general and administrative		50.0				50.8				101.5				99.8
Total costs and expenses		120.9				123.3				246.3				246.4
Operating income		266.2				248.7				525.1				490.0
Interest expense		(18.8	)			(18.9	)			(37.6	)			(37.7	)
Non-operating income, net		11.5				12.7				25.4				24.0
Income before income taxes		258.9				242.5				512.9				476.3
Income tax expense		(60.1	)			(56.8	)			(120.0	)			(111.9	)
Net income		198.8				185.7				392.9				364.4
Other comprehensive loss		—				(0.7	)			(0.2	)			(0.7	)
Comprehensive income	$	198.8			$	185.0			$	392.7			$	363.7
Earnings per share:
Basic	$	2.01			$	1.79			$	3.93			$	3.49
Diluted	$	2.01			$	1.79			$	3.93			$	3.49
Shares used to compute earnings per share
Basic		98.9				103.9				99.9				104.4
Diluted		99.0				104.0				99.9				104.5

VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)
	Six Months Ended June 30,
		2024				2023
Cash flows from operating activities:
Net income	$	392.9			$	364.4
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment		19.1				22.9
Stock-based compensation expense		29.4				29.5
Amortization of discount on investments in debt securities		(11.1	)			(9.3	)
Other, net		1.6				2.0
Changes in operating assets and liabilities:
Other assets		(19.2	)			(1.0	)
Other liabilities		(58.8	)			(48.7	)
Deferred revenues		42.6				41.5
Net deferred income taxes		21.2				3.0
Net cash provided by operating activities		417.7				404.3
Cash flows from investing activities:
Proceeds from maturities and sales of marketable securities		727.6				721.3
Purchases of marketable securities		(468.1	)			(697.6	)
Purchases of property and equipment		(13.0	)			(12.2	)
Net cash provided by investing activities		246.5				11.5
Cash flows from financing activities:
Repurchases of common stock		(660.2	)			(453.4	)
Proceeds from employee stock purchase plan		8.3				8.0
Net cash used in financing activities		(651.9	)			(445.4	)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash		(0.3	)			(0.2	)
Net increase (decrease) in cash, cash equivalents, and restricted cash		12.0				(29.8	)
Cash, cash equivalents, and restricted cash at beginning of period		245.5				379.0
Cash, cash equivalents, and restricted cash at end of period	$	257.5			$	349.2
Supplemental cash flow disclosures:
Cash paid for interest	$	36.4			$	36.4
Cash paid for income taxes, net of refunds received	$	138.6			$	132.4

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240725059150/en/

Investor Relations: David Atchley, datchley@verisign.com, 703-948-3447

Media Relations: David McGuire, davmcguire@verisign.com, 703-948-3800

Source: VeriSign, Inc.

FAQ

What was Verisign's (VRSN) revenue in Q2 2024?

Verisign reported revenue of $387 million for the second quarter of 2024, up 4.1% from the same quarter in 2023.

How much did Verisign's (VRSN) EPS grow in Q2 2024?

Verisign's diluted earnings per share (EPS) grew to $2.01 in Q2 2024, compared to $1.79 for the same quarter of 2023.

How many .com and .net domain registrations did Verisign (VRSN) have at the end of Q2 2024?

Verisign ended Q2 2024 with 170.6 million .com and .net domain name registrations, a 2.2% decrease from the end of Q2 2023.

What was Verisign's (VRSN) share repurchase activity in Q2 2024?

Verisign repurchased 2.2 million shares of its common stock for an aggregate cost of $388 million in Q2 2024.

How much additional share repurchase authorization did Verisign (VRSN) receive in July 2024?

Verisign's Board of Directors approved an additional authorization for share repurchases of approximately $1.11 billion on July 25, 2024.