VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name
registry services and internet infrastructure, today reported
financial results for the first quarter of 2020.
VeriSign, Inc. and its subsidiaries (“Verisign”) reported
revenue of $313 million for the first quarter of 2020, up 2.0
percent from the same quarter in 2019. Verisign reported net income
of $334 million and diluted earnings per share (diluted “EPS”) of
$2.86 for the first quarter of 2020, compared to net income of $163
million and diluted EPS of $1.35 for the same quarter in 2019. The
operating margin was 66.0 percent for the first quarter of 2020
compared to 65.4 percent for the same quarter in 2019.
Net income for the first quarter of 2020 included the
recognition of $168 million of previously unrecognized income tax
benefits. This resulted from remeasurement of Verisign’s accrual
for uncertain tax positions based on IRS written confirmation
indicating no examination adjustment would be proposed related to
its audit of the worthless stock deduction taken in 2013.
Notwithstanding this written confirmation, Verisign’s U.S. federal
income tax returns remain under examination by the IRS for 2010
through 2014. This income tax benefit also increased diluted EPS by
$1.44.
“During the COVID-19 crisis, we are taking a number of steps to
support small businesses and our local communities. Within
Verisign, we remain focused on the health and welfare of our
employees and our primary mission, which is the secure and reliable
operation of critical internet infrastructure,” said Jim Bidzos,
Executive Chairman and Chief Executive Officer.
Financial Highlights
- Verisign ended the first quarter of 2020 with cash, cash
equivalents and marketable securities of $1.14 billion, a decrease
of $79 million from the end of 2019.
- Cash flow from operating activities was $180 million for the
first quarter of 2020, compared to $187 million for the same
quarter in 2019.
- Deferred revenues as of March 31, 2020 totaled $1.06 billion,
an increase of $23 million from the end of 2019.
- During the first quarter of 2020, Verisign repurchased 1.3
million shares of its common stock for an aggregate cost of $245
million. As of March 31, 2020, there was $826 million remaining for
future share repurchases under the share repurchase program which
has no expiration date.
Business Highlights
- On March 27, 2020, Verisign announced that it and ICANN entered
into the Third Amendment to the .com Registry Agreement which,
among other changes, permits Verisign to increase the price of .com
domain name registrations by up to 7% over the previous year, in
each of the final four years of each six-year period. The first
such six-year period began on October 26, 2018. However, in view of
the current COVID-19 crisis, Verisign announced on March 25, 2020,
that it will freeze registry prices for all of its Top-Level
Domains (TLDs), including .com and .net, through the end of
2020.
- During the first quarter, Todd Strubbe was promoted from
Executive Vice President and Chief Operating Officer to President
and Chief Operating Officer, further strengthening Verisign’s
senior management team.
- Verisign ended the first quarter of 2020 with 160.7 million
.com and .net domain name registrations in the domain name base, a
3.8 percent increase from the end of the first quarter of 2019, and
a net increase of 1.83 million during the first quarter of
2020.
- During the first quarter of 2020, Verisign processed 10.0
million new domain name registrations for .com and .net, compared
to 9.8 million for the same quarter in 2019.
- The final .com and .net renewal rate for the fourth quarter of
2020 was 73.8 percent compared with 74.3 percent for the same
quarter in 2018. 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 first quarter 2020 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 effects
of the COVID-19 pandemic; 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, 2019, 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.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In thousands, except par
value)
(Unaudited)
March 31, 2020
December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents
$
498,693
$
508,196
Marketable securities
639,939
709,863
Other current assets
46,863
60,530
Total current assets
1,185,495
1,278,589
Property and equipment, net
247,764
250,283
Goodwill
52,527
52,527
Deferred tax assets
84,388
87,798
Deposits to acquire intangible assets
145,000
145,000
Other long-term assets
38,687
39,812
Total long-term assets
568,366
575,420
Total assets
$
1,753,861
$
1,854,009
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued
liabilities
$
180,015
$
209,988
Deferred revenues
775,657
755,178
Total current liabilities
955,672
965,166
Long-term deferred revenues
281,030
278,702
Senior notes
1,788,194
1,787,565
Long-term tax and other liabilities
138,079
312,676
Total long-term liabilities
2,207,303
2,378,943
Total liabilities
3,162,975
3,344,109
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: 353,577 at March 31, 2020 and 353,157 at December
31, 2019; Outstanding shares: 115,701 at March 31, 2020 and 116,715
at December 31, 2019
14,734,618
14,990,011
Accumulated deficit
(16,143,374
)
(16,477,490
)
Accumulated other comprehensive loss
(358
)
(2,621
)
Total stockholders’ deficit
(1,409,114
)
(1,490,100
)
Total liabilities and stockholders’
deficit
$
1,753,861
$
1,854,009
VERISIGN, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per
share data)
(Unaudited)
Three Months Ended March
31,
2020
2019
Revenues
$
312,524
$
306,408
Costs and expenses:
Cost of revenues
45,573
45,504
Sales and marketing
6,604
10,519
Research and development
17,358
16,132
General and administrative
36,725
34,001
Total costs and expenses
106,260
106,156
Operating income
206,264
200,252
Interest expense
(22,535
)
(22,631
)
Non-operating income, net
7,084
12,203
Income before income taxes
190,813
189,824
Income tax benefit (expense)
143,303
(27,297
)
Net income
334,116
162,527
Other comprehensive income
2,263
49
Comprehensive income
$
336,379
$
162,576
Earnings per share:
Basic
$
2.87
$
1.36
Diluted
$
2.86
$
1.35
Shares used to compute earnings per
share
Basic
116,375
119,757
Diluted
116,730
120,317
VERISIGN, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended March
31,
2020
2019
Cash flows from operating activities:
Net income
$
334,116
$
162,527
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation of property and equipment
11,232
11,593
Stock-based compensation
11,441
12,462
Amortization of discount on investments in
debt securities
(3,003
)
(3,854
)
Other, net
1,692
(147
)
Changes in operating assets and
liabilities:
Other assets
28
(226
)
Accounts payable and accrued
liabilities
(27,409
)
(31,609
)
Deferred revenues
22,807
29,219
Net deferred income taxes and other
long-term tax liabilities
(170,844
)
7,365
Net cash provided by operating
activities
180,060
187,330
Cash flows from investing activities:
Proceeds from maturities and sales of
marketable securities
805,748
939,561
Purchases of marketable securities
(730,507
)
(496,779
)
Proceeds (payments) from sale of
business
14,856
(2,958
)
Purchases of property and equipment
(11,013
)
(9,133
)
Net cash provided by investing
activities
79,084
430,691
Cash flows from financing activities:
Repurchases of common stock
(275,623
)
(204,302
)
Proceeds from employee stock purchase
plan
8,296
8,253
Net cash used in financing activities
(267,327
)
(196,049
)
Effect of exchange rate changes on cash,
cash equivalents, and restricted cash
(1,316
)
255
Net (decrease) increase in cash, cash
equivalents, and restricted cash
(9,499
)
422,227
Cash, cash equivalents, and restricted
cash at beginning of period
517,601
366,753
Cash, cash equivalents, and restricted
cash at end of period
$
508,102
$
788,980
Supplemental cash flow disclosures:
Cash paid for interest
$
13,151
$
13,063
Cash paid for income taxes, net of refunds
received
$
15,914
$
14,185
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200423005695/en/
Investor Relations: David Atchley, datchley@verisign.com,
703-948-4643 Media Relations: Deana Alvy, dalvy@verisign.com,
703-948-3800
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