Verisign Reports Third Quarter 2021 Results

Rhea-AI Summary

VeriSign (NASDAQ: VRSN) reported its Q3 2021 financial results, achieving $334 million in revenue, marking a 5.1% increase year-over-year. The net income was $157 million, with diluted EPS at $1.40, down from $171 million and $1.49 EPS in Q3 2020. Operating margin improved to 66.2%. The company ended the quarter with $1.20 billion in cash and equivalents, and $1.16 billion in deferred revenues. Domain registrations rose to 172.1 million, a 5.1% increase, while renewal rates improved to 75.4%.

Positive

• Q3 2021 revenue reached $334 million, up 5.1% from the previous year.
• Net income of $157 million and diluted EPS of $1.40, reflecting solid operational performance.
• Operating margin improved to 66.2%, indicating efficient cost management.
• Cash and equivalents increased to $1.20 billion, enhancing financial stability.
• Deferred revenues rose to $1.16 billion, signaling strong future cash flow.
• Domain registrations increased to 172.1 million, a 5.1% growth year-over-year.
• Improved renewal rates at 75.4% compared to 72.8% in Q2 2020.

Negative

• Net income and diluted EPS decreased from the same quarter last year due to a one-time tax benefit in Q3 2020.
• New domain registrations slightly declined from 10.9 million to 10.7 million year-over-year.

RESTON, Va.--(BUSINESS WIRE)-- VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the third quarter of 2021.

VeriSign, Inc. and its subsidiaries (“Verisign”) reported revenue of $334 million for the third quarter of 2021, up 5.1 percent from the same quarter in 2020. Verisign reported net income of $157 million and diluted earnings per share (diluted “EPS”) of $1.40 for the third quarter of 2021, compared to net income of $171 million and diluted EPS of $1.49 for the same quarter in 2020. The operating margin was 66.2 percent for the third quarter of 2021 compared to 65.0 percent for the same quarter in 2020.

Net income for the third quarter last year included the recognition of $24 million of previously unrecognized income tax benefits. These benefits resulted from remeasurement of Verisign’s accrual for uncertain tax positions as previously noted in the third quarter 2020 earnings release. This income tax benefit increased diluted EPS by $0.21 for the third quarter of 2020.

“Thanks to the dedication of our worldwide team, Verisign delivered on our mission, and delivered another quarter of solid results,” said Jim Bidzos, Executive Chairman and Chief Executive Officer.

Financial Highlights

• Verisign ended the third quarter of 2021 with cash, cash equivalents and marketable securities of $1.20 billion, an increase of $32 million from the end of 2020.
• Cash flow from operating activities was $260 million for the third quarter of 2021, compared to $140 million for the same quarter in 2020.
• Deferred revenues as of Sept. 30, 2021 totaled $1.16 billion, an increase of $95 million from the end of 2020.
• During the third quarter of 2021, Verisign repurchased 0.8 million shares of its common stock for an aggregate cost of $172 million. As of Sept. 30, 2021, there was $565 million remaining for future share repurchases under the share repurchase program which has no expiration date.

Business Highlights

• Verisign ended the third quarter of 2021 with 172.1 million .com and .net domain name registrations in the domain name base, a 5.1 percent increase from the end of the third quarter of 2020, and a net increase of 1.48 million during the third quarter of 2021.
• During the third quarter of 2021, Verisign processed 10.7 million new domain name registrations for .com and .net, compared to 10.9 million for the same quarter in 2020.
• The final .com and .net renewal rate for the second quarter of 2021 was 75.4 percent compared to 72.8 percent for the same quarter in 2020. 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 third quarter 2021 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4776 (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, a global provider of domain name registry services and internet infrastructure, enables internet navigation for many of the world’s most recognized domain names. Verisign enables the security, stability, and resiliency of key internet infrastructure and services, including 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 about what it means to be Powered by Verisign, 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; vulnerabilities in the global routing system; system interruptions or system failures; damage to our data centers; risks arising from our operation of root servers and our performance of the Root Zone Maintainer functions; 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 foreign jurisdictions; economic, legal and political risks associated with our international operations; the impact of unfavorable tax rules and regulations; risks from the adoption of ICANN’s consensus and temporary policies, technical standards and other processes; the uncertainty of the impact of changes to the multi-stakeholder model of internet governance; the outcome of claims, lawsuits, audits or investigations; the effects of the COVID-19 pandemic; our ability to compete in the highly competitive business environment in which we operate; 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 our 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, 2020, 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.

©2021 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 thousands, except par value) (Unaudited)
	September 30, 2021				December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents.......................................................................................................	$	256,869			$	401,194
Marketable securities...............................................................................................................	941,552				765,713
Other current assets..................................................................................................................	65,989				51,033
Total current assets...........................................................................................................	1,264,410				1,217,940
Property and equipment, net............................................................................................................	249,093				245,571
Goodwill..........................................................................................................................................	52,527				52,527
Deferred tax assets..........................................................................................................................	65,163				67,914
Deposits to acquire intangible assets..............................................................................................	145,000				145,000
Other long-term assets....................................................................................................................	38,514				37,958
Total long-term assets.......................................................................................................	550,297				548,970
Total assets........................................................................................................................	$	1,814,707			$	1,766,910
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities................................................................................	$	204,511			$	208,642
Deferred revenues....................................................................................................................	843,664				780,051
Total current liabilities......................................................................................................	1,048,175				988,693
Long-term deferred revenues..........................................................................................................	314,089				282,838
Senior notes.....................................................................................................................................	1,785,152				1,790,083
Long-term tax and other liabilities.................................................................................................	84,869				95,494
Total long-term liabilities.................................................................................................	2,184,110				2,168,415
Total liabilities..................................................................................................................	3,232,285				3,157,108
Commitments and contingencies
Stockholders’ deficit:
Preferred stock—par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none..........................................................................................................	—				—
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 354,154 at September 30, 2021 and 353,789 at December 31, 2020; Outstanding shares: 111,283 at September 30, 2021 and 113,470 at December 31, 2020..........................................................................................................................................	13,793,049				14,275,160
Accumulated deficit.................................................................................................................	(15,207,854)				(15,662,602)
Accumulated other comprehensive loss...................................................................................	(2,773)				(2,756)
Total stockholders’ deficit.................................................................................................	(1,417,578)				(1,390,198)
Total liabilities and stockholders’ deficit..........................................................................	$	1,814,707			$	1,766,910

VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands, except per share data) (Unaudited)
	Three Months Ended September 30,								Nine Months Ended September 30,
	2021				2020				2021				2020
Revenues...........................................................................................	$	334,242			$	317,879			$	987,268			$	944,768
Costs and expenses:
Cost of revenues.........................................................................	47,801				45,024				142,565				134,205
Sales and marketing...................................................................	9,410				8,389				28,115				23,883
Research and development........................................................	19,566				19,708				59,685				55,268
General and administrative........................................................	36,160				38,109				112,212				111,719
Total costs and expenses.....................................................	112,937				111,230				342,577				325,075
Operating income..............................................................................	221,305				206,649				644,691				619,693
Interest expense.................................................................................	(18,829)				(22,537)				(64,427)				(67,607)
Non-operating income (loss), net......................................................	164				775				(1,433)				15,262
Income before income taxes.............................................................	202,640				184,887				578,831				567,348
Income tax (expense) benefit............................................................	(46,018)				(13,908)				(124,083)				90,226
Net income........................................................................................	156,622				170,979				454,748				657,574
Other comprehensive income (loss).................................................	61				(383)				(17)				(120)
Comprehensive income.....................................................................	$	156,683			$	170,596			$	454,731			$	657,454
Earnings per share:
Basic...........................................................................................	$	1.40			$	1.49			$	4.05			$	5.70
Diluted.......................................................................................	$	1.40			$	1.49			$	4.04			$	5.68
Shares used to compute earnings per share
Basic...........................................................................................	111,664				114,655				112,389				115,456
Diluted.......................................................................................	111,793				114,831				112,530				115,699

VERISIGN, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited)
	Nine Months Ended September 30,
	2021				2020
Cash flows from operating activities:
Net income.............................................................................................................................	$	454,748			$	657,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment........................................................................	35,609				34,463
Stock-based compensation..............................................................................................	41,019				36,106
Other, net.........................................................................................................................	5,410				(8,482)
Changes in operating assets and liabilities:
Other assets................................................................................................................	(19,735)				(11,107)
Accounts payable and accrued liabilities...................................................................	(5,529)				(5,912)
Deferred revenues.......................................................................................................	94,863				27,673
Net deferred income taxes and other long-term tax liabilities...................................	(5,476)				(195,353)
Net cash provided by operating activities...............................................................	600,909				534,962
Cash flows from investing activities:
Proceeds from maturities and sales of marketable securities................................................	2,246,148				1,804,541
Purchases of marketable securities........................................................................................	(2,421,705)				(2,093,437)
Purchases of property and equipment....................................................................................	(39,536)				(36,933)
Proceeds received related to sale of business.........................................................................	—				20,009
Net cash used in investing activities........................................................................	(215,093)				(305,820)
Cash flows from financing activities:
Repayment of borrowings......................................................................................................	(750,000)				—
Proceeds from senior note issuance, net of issuance costs....................................................	741,075				—
Repurchases of common stock...............................................................................................	(536,797)				(603,705)
Proceeds from employee stock purchase plan.......................................................................	12,404				12,577
Net cash used in financing activities.......................................................................	(533,318)				(591,128)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash...........................	(600)				(506)
Net decrease in cash, cash equivalents, and restricted cash..........................................................	(148,102)				(362,492)
Cash, cash equivalents, and restricted cash at beginning of period..............................................	410,601				517,601
Cash, cash equivalents, and restricted cash at end of period.........................................................	$	262,499			$	155,109
Supplemental cash flow disclosures:
Cash paid for interest.............................................................................................................	$	61,845			$	56,860
Cash paid for income taxes, net of refunds received.............................................................	$	132,202			$	105,258

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211028005929/en/

Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643

Media Relations: James Barbour, jbarbour@verisign.com, 703-948-3800

Source: VeriSign, Inc.

FAQ

What were the financial results of VeriSign for Q3 2021?

VeriSign reported $334 million in revenue and net income of $157 million for Q3 2021.

How did VeriSign's diluted earnings per share change in Q3 2021?

Diluted EPS dropped to $1.40 in Q3 2021 from $1.49 in Q3 2020.

What is the current cash position of VeriSign?

As of Q3 2021, VeriSign has $1.20 billion in cash, cash equivalents, and marketable securities.

How many domain registrations does VeriSign have as of Q3 2021?

VeriSign has 172.1 million .com and .net domain name registrations.

What are the renewal rates for VeriSign's domains in Q2 2021?

The renewal rate for .com and .net domains was 75.4% for Q2 2021.