VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name
registry services and internet infrastructure, today reported
financial results for the fourth quarter and full year 2019.
Fourth Quarter GAAP Financial Results VeriSign, Inc. and
subsidiaries (“Verisign”) reported revenue of $311 million for the
fourth quarter of 2019, up 1.0 percent from the same quarter in
2018. Verisign reported net income of $148 million and diluted
earnings per share (diluted “EPS”) of $1.26 for the fourth quarter
of 2019, compared to net income of $182 million and diluted EPS of
$1.50 for the same quarter in 2018. The operating margin was 63.9
percent for the fourth quarter of 2019 compared to 63.1 percent for
the same quarter in 2018.
Fourth Quarter Non-GAAP Financial Results Verisign reported, on
a non-GAAP basis, net income of $154 million and diluted EPS of
$1.31 for the fourth quarter of 2019, compared to net income of
$191 million and diluted EPS of $1.58 for the same quarter in 2018.
The non-GAAP operating margin was 67.9 percent for the fourth
quarter of 2019 compared to 66.7 percent for the same quarter in
2018. A table reconciling the GAAP to the non-GAAP results (which
excludes items described below) is appended to this release.
2019 GAAP Financial Results Verisign reported revenue of $1.23
billion for 2019, up 1.4 percent from $1.21 billion in 2018.
Verisign reported net income of $612 million and diluted EPS of
$5.15 for 2019, compared to net income of $582 million and diluted
EPS of $4.75 in 2018. The operating margin for 2019 was 65.5
percent compared to 63.2 percent in 2018.
2019 Non-GAAP Financial Results Verisign reported, on a non-GAAP
basis, net income of $631 million and diluted EPS of $5.31 for
2019, compared to net income of $620 million and diluted EPS of
$5.05 in 2018. The non-GAAP operating margin for 2019 was 69.6
percent compared to 67.5 percent in 2018.
Fourth quarter and full year 2018 GAAP net income and non-GAAP
net income included $52.0 million and $42.8 million, respectively,
related to the gain on the sale of the customer contracts of the
security services business. The gain increased GAAP diluted EPS and
non-GAAP diluted EPS by $0.43 and $0.36 in the fourth quarter of
2018 and by $0.43 and $0.35 for full year 2018.
“Focused execution yielded another solid quarter that caps off
not only a solid year but a strong decade in which we’ve focused on
our core business, expanded the domain name base and returned value
to our shareholders. In 2019 we marked more than 22 years of
uninterrupted availability of the Verisign DNS for .com and .net,”
said Jim Bidzos, Executive Chairman, President and Chief Executive
Officer.
Financial Highlights
- Verisign ended 2019 with cash, cash equivalents, and marketable
securities of $1.22 billion, a decrease of $52 million from
year-end 2018.
- Cash flow from operations was $194 million for the fourth
quarter of 2019 and $754 million for the full year 2019 compared
with $219 million for the same quarter in 2018 and $698 million for
the full year 2018.
- Deferred revenues on Dec. 31, 2019, totaled $1.03 billion, an
increase of $16 million from year-end 2018.
- During the fourth quarter, Verisign repurchased 1.0 million
shares of its common stock for $195 million. During the full year
2019, Verisign repurchased 3.9 million shares of its common stock
for $738 million.
- Effective Feb. 6, 2020 the Board of Directors approved an
additional authorization for share repurchases of approximately
$743 million of common stock, which brings the total amount to $1.0
billion authorized and available under Verisign’s share repurchase
program, which has no expiration.
Business Highlights
- Verisign ended the fourth quarter with 158.8 million .com and
.net domain name registrations in the domain name base, a 3.9
percent increase from the end of the fourth quarter of 2018, and a
net increase of 1.46 million registrations during the fourth
quarter of 2019.
- In the fourth quarter, Verisign processed 10.3 million new
domain name registrations for .com and .net, as compared to 9.5
million for the same quarter in 2018.
- The final .com and .net renewal rate for the third quarter of
2019 was 73.7 percent compared with 74.8 percent for the same
quarter in 2018. Renewal rates are not fully measurable until 45
days after the end of the quarter.
Non-GAAP Financial Measures and
Adjusted EBITDA
Verisign provides quarterly and annual financial statements that
are prepared in accordance with generally accepted accounting
principles (GAAP). Along with this information, management
typically discloses and discusses certain non-GAAP financial
measures in quarterly earnings news releases, on investor
conference calls and during investor conferences and related
events. These non-GAAP financial measures do not include
stock-based compensation, non-cash interest expense through June
30, 2018, and loss on debt extinguishment, which are included in
the comparable GAAP financial measures. Non-GAAP net income is also
adjusted for an income tax rate of 22 percent which differs from
the GAAP income tax rate.
On a quarterly basis, Verisign also provides Adjusted EBITDA.
Adjusted EBITDA is a non-GAAP financial measure and is calculated
in accordance with the terms of the indentures governing Verisign’s
senior notes. Adjusted EBITDA refers to net income before interest,
taxes, depreciation and amortization, stock-based compensation,
unrealized gain / loss on hedging agreements, and gain on the sale
of a business.
Management believes that this non-GAAP financial data
supplements the GAAP financial data by providing investors with
additional information that allows them to have a clearer picture
of Verisign’s operations and financial performance and the
comparability of Verisign’s operating results from period to
period. The presentation of these non-GAAP financial measures is
not meant to be considered in isolation nor as a substitute for
results prepared in accordance with GAAP.
The tables appended to this release include a reconciliation of
the non-GAAP financial information to the comparable financial
information reported in accordance with GAAP for the given
periods.
Today’s Conference Call
Verisign will host a live conference call today at 4:30 p.m.
(EST) to review the fourth quarter and full year 2019 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, risks arising from the
agreements governing our business; new or existing governmental
laws and regulations in the U.S. or other applicable foreign
jurisdictions; system interruptions, security breaches, attacks on
the internet by hackers, viruses, or intentional acts of vandalism;
the uncertainty of the impact of changes to the multi-stakeholder
model of internet governance; risks arising from our operation of
two root zone servers and our performance of the Root Zone
Maintainer functions; changes in internet practices and behavior
and the adoption of substitute technologies; the success or failure
of the evolution of our markets; the highly competitive business
environment in which we operate; whether we can maintain strong
relationships with registrars and their resellers to maintain their
marketing focus on our products and services; the possibility of
system interruptions or failures; challenging global economic
conditions; economic, legal and political risk associated with our
international operations; our ability to protect and enforce our
rights to our intellectual property and ensure that we do not
infringe on others’ intellectual property; the outcome of legal or
other challenges resulting from our activities or the activities of
registrars or registrants, or litigation generally; the impact of
our new strategic initiatives, including our IDN gTLDs; whether we
can retain and motivate our senior management and key employees;
and the impact of unfavorable tax rules and regulations. 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, 2018, 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.
©2020 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.
CONSOLIDATED BALANCE
SHEETS
(In thousands, except par
value)
(Unaudited)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
508,196
$
357,415
Marketable securities
709,863
912,254
Other current assets
60,530
47,365
Total current assets
1,278,589
1,317,034
Property and equipment, net
250,283
253,905
Goodwill
52,527
52,527
Deferred tax assets
87,798
104,992
Deposits to acquire intangible assets
145,000
145,000
Other long-term assets
39,812
41,046
Total long-term assets
575,420
597,470
Total assets
$
1,854,009
$
1,914,504
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued
liabilities
$
209,988
$
215,208
Deferred revenues
755,178
732,382
Total current liabilities
965,166
947,590
Long-term deferred revenues
278,702
285,720
Senior notes
1,787,565
1,785,047
Long-term tax and other liabilities
312,676
281,621
Total long-term liabilities
2,378,943
2,352,388
Total liabilities
3,344,109
3,299,978
Commitments and contingencies
Stockholders’ deficit:
Preferred stock—par value $.001 per share;
Authorized shares: 5,000; Issued and outstanding shares: none
—
—
Common stock—par value $.001 per share;
Authorized shares: 1,000,000; Issued shares: 353,157 at December
31, 2019 and 352,325 at December 31, 2018; Outstanding shares:
116,715 at December 31, 2019 and 120,037 at December 31, 2018
353
352
Additional paid-in capital
14,989,658
15,706,774
Accumulated deficit
(16,477,490
)
(17,089,789
)
Accumulated other comprehensive loss
(2,621
)
(2,811
)
Total stockholders’ deficit
(1,490,100
)
(1,385,474
)
Total liabilities and stockholders’
deficit
$
1,854,009
$
1,914,504
VERISIGN, INC.
CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME
(In thousands, except per
share data)
(Unaudited)
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Revenues
$
310,543
$
307,452
$
1,231,661
$
1,214,969
Costs and expenses:
Cost of revenues
46,454
48,368
180,467
192,134
Sales and marketing
13,862
17,179
46,637
64,891
Research and development
15,101
15,042
60,805
57,884
General and administrative
36,560
32,897
137,625
132,668
Total costs and expenses
111,977
113,486
425,534
447,577
Operating income
198,566
193,966
806,127
767,392
Interest expense
(22,712
)
(22,634
)
(90,611
)
(114,845
)
Non-operating income, net
9,123
62,570
43,260
76,969
Income before income taxes
184,977
233,902
758,776
729,516
Income tax expense
(36,652
)
(51,707
)
(146,477
)
(147,027
)
Net income
148,325
182,195
612,299
582,489
Other comprehensive (loss) income
(202
)
192
190
130
Comprehensive income
$
148,123
$
182,387
$
612,489
$
582,619
Earnings per share:
Basic
$
1.27
$
1.51
$
5.17
$
5.13
Diluted
$
1.26
$
1.50
$
5.15
$
4.75
Shares used to compute earnings per
share
Basic
117,169
120,591
118,513
113,452
Diluted
117,658
121,329
118,968
122,661
VERISIGN, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December
31,
2019
2018
Cash flows from operating activities:
Net income
$
612,299
$
582,489
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property and equipment
46,330
48,367
Stock-based compensation
50,626
52,504
Amortization of discount on investments in
debt securities
(14,777
)
(18,259
)
Gain on sale of business
(817
)
(54,840
)
Other, net
3,668
14,646
Changes in operating assets and
liabilities:
Other assets
(3,279
)
1,041
Accounts payable and accrued
liabilities
(24
)
(2,130
)
Deferred revenues
16,191
19,825
Net deferred income taxes and other
long-term tax liabilities
43,675
54,124
Net cash provided by operating
activities
753,892
697,767
Cash flows from investing activities:
Proceeds from maturities and sales of
marketable securities
2,247,904
4,031,809
Purchases of marketable securities
(2,030,521
)
(2,976,752
)
Purchases of property and equipment
(40,316
)
(37,007
)
(Payments) Proceeds from sale of
business
(9,872
)
52,240
Other investing activities
—
(160
)
Net cash provided by investing
activities
167,195
1,070,130
Cash flows from financing activities:
Repurchases of common stock
(782,583
)
(638,152
)
Proceeds from employee stock purchase
plan
13,152
12,836
Repayment of principal on subordinated
convertible debentures
—
(1,250,009
)
Other financing activities
(872
)
—
Net cash used in financing activities
(770,303
)
(1,875,325
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
64
(958
)
Net increase (decrease) in cash, cash
equivalents and restricted cash
150,848
(108,386
)
Cash, cash equivalents, and restricted
cash at beginning of period
366,753
475,139
Cash, cash equivalents, and restricted
cash at end of period
$
517,601
$
366,753
Supplemental cash flow disclosures:
Cash paid for interest
$
87,683
$
117,956
Cash paid for income taxes, net of refunds
received
$
89,974
$
84,906
VERISIGN, INC.
RECONCILIATION OF NON-GAAP
FINANCIAL MEASURES
(In thousands, except per
share data)
(Unaudited)
Three Months Ended December
31,
2019
2018
Operating Income
Net Income
Operating Income
Net Income
GAAP as reported
$
198,566
$
148,325
$
193,966
$
182,195
Adjustments:
Stock-based compensation
12,389
12,389
11,098
11,098
Tax adjustment
(6,768
)
(2,193
)
Non-GAAP
$
210,955
$
153,946
$
205,064
$
191,100
Revenues
$
310,543
$
307,452
Non-GAAP operating margin
67.9
%
66.7
%
Diluted shares
117,658
121,329
Diluted EPS, non-GAAP
$
1.31
$
1.58
Year Ended December
31,
2019
2018
Operating Income
Net Income
Operating Income
Net Income
GAAP as reported
$
806,127
$
612,299
$
767,392
$
582,489
Adjustments:
Stock-based compensation
50,626
50,626
52,504
52,504
Non-cash interest expense
—
5,719
Loss on debt extinguishment
—
6,554
Tax adjustment
(31,591
)
(27,717
)
Non-GAAP
$
856,753
$
631,334
$
819,896
$
619,549
Revenues
$
1,231,661
$
1,214,969
Non-GAAP operating margin
69.6
%
67.5
%
Diluted shares
118,968
122,661
Diluted EPS, non-GAAP
$
5.31
$
5.05
VERISIGN, INC.
RECONCILIATION OF NON-GAAP
ADJUSTED EBITDA
(In thousands)
(Unaudited)
The following table reconciles GAAP net
income to non-GAAP Adjusted EBITDA for the period shown below:
Year Ended December 31,
2019
Net Income
$
612,299
Interest expense
90,611
Income tax expense
146,477
Depreciation and amortization
46,330
Stock-based compensation
50,626
Unrealized gain on hedging agreements
(235
)
Gain on sale of business
(817
)
Non-GAAP Adjusted EBITDA
$
945,291
VERISIGN, INC.
STOCK-BASED COMPENSATION
CLASSIFICATION
(In thousands)
(Unaudited)
The following table presents the
classification of stock-based compensation:
Three Months Ended December
31,
Year Ended December
31,
2019
2018
2019
2018
Cost of revenues
$
1,675
$
1,652
$
6,739
$
6,835
Sales and marketing
889
579
3,755
4,972
Research and development
1,626
1,696
6,370
6,728
General and administrative
8,199
7,171
33,762
33,969
Total stock-based compensation expense
$
12,389
$
11,098
$
50,626
$
52,504
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200206005770/en/
Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643 Media
Relations: David McGuire, dmcguire@verisign.com, 703-948-3800
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