VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name
registry services and internet infrastructure, today reported
financial results for the first quarter of 2019.
First Quarter GAAP Financial Results
VeriSign, Inc. and its subsidiaries (“Verisign”) reported
revenue of $306 million for the first quarter of 2019, up 2.4
percent from the same quarter in 2018. Verisign reported net income
of $163 million and diluted earnings per share (diluted “EPS”) of
$1.35 for the first quarter of 2019, compared to net income of $134
million and diluted EPS of $1.09 for the same quarter in 2018. The
operating margin was 65.4 percent for the first quarter of 2019
compared to 62.0 percent for the same quarter in 2018.
First Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $158
million and diluted EPS of $1.31 for the first quarter of 2019,
compared to net income of $132 million and diluted EPS of $1.07 for
the same quarter in 2018. The non-GAAP operating margin was 69.4
percent for the first quarter of 2019 compared to 66.3 percent for
the same quarter in 2018. A table reconciling the GAAP to the
non-GAAP results (which excludes the items described under
“Non-GAAP Financial Measures and Adjusted EBITDA” below) is
appended to this news release.
“We’re pleased to deliver another solid quarter,” said Jim
Bidzos, Executive Chairman, President and Chief Executive
Officer.
Financial Highlights
- Verisign ended the first quarter of
2019 with cash, cash equivalents and marketable securities of $1.25
billion, a decrease of $17 million from the end of 2018.
- During the first quarter of 2019,
Verisign repatriated $249 million of cash held by foreign
subsidiaries, net of foreign withholding taxes.
- Cash flow from operating activities was
$187 million for the first quarter of 2019, compared with $90
million for the same quarter in 2018.
- Deferred revenues as of March 31, 2019
totaled $1.05 billion, an increase of $29 million from the end of
2018.
- During the first quarter of 2019,
Verisign repurchased 1.0 million shares of its common stock for an
aggregate cost of $175 million. As of March 31, 2019, there
was $891 million remaining for future share repurchases under the
share repurchase program which has no expiration date.
Business Highlights
- Verisign ended the first quarter of
2019 with 154.8 million .com and .net domain name registrations in
the domain name base, a 4.4 percent increase from the end of the
first quarter of 2018, and a net increase of 1.82 million during
the first quarter of 2019.
- During the first quarter of 2019,
Verisign processed 9.8 million new domain name registrations for
.com and .net, compared to 9.6 million for the same quarter in
2018.
- The final .com and .net renewal rate
for the fourth quarter of 2018 was 74.3 percent compared with 72.2
percent for the same quarter in 2017. 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 the
following items that are included in the comparable GAAP financial
measures: stock-based compensation, non-cash interest expense
through June 30, 2018, and loss on debt extinguishment. Non-GAAP
net income is 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, gain on the sale of a
business, and loss on debt extinguishment.
Management believes that these non-GAAP financial measures
supplement the GAAP financial measures 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
financial measures prepared in accordance with GAAP.
The tables appended to this release include a reconciliation of
the non-GAAP financial measures to the comparable financial
measures 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.
(EDT) to review the first quarter 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 Registry Services 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.
©2019 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, 2019
December 31, 2018
ASSETS
Current assets: Cash and cash equivalents $ 779,625 $ 357,415
Marketable securities 473,365 912,254 Other current assets 62,277
47,365 Total current assets 1,315,267
1,317,034 Property and equipment, net 252,237 253,905
Goodwill 52,527 52,527 Deferred tax assets 120,192 104,992 Deposits
to acquire intangible assets 145,000 145,000 Other long-term assets
34,453 41,046 Total long-term assets 604,409
597,470 Total assets $ 1,919,676 $ 1,914,504
LIABILITIES AND
STOCKHOLDERS’ DEFICIT
Current liabilities: Accounts payable and accrued liabilities $
183,996 $ 215,208 Deferred revenues 757,284 732,382
Total current liabilities 941,280 947,590 Long-term
deferred revenues 289,730 285,720 Senior notes 1,785,676 1,785,047
Long-term tax and other liabilities 309,119 281,621
Total long-term liabilities 2,384,525 2,352,388 Total
liabilities 3,325,805 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: 352,872 at March 31, 2019 and
352,325 at December 31, 2018; Outstanding shares: 119,391 at March
31, 2019 and 120,037 at December 31, 2018 353 352 Additional
paid-in capital 15,523,542 15,706,774 Accumulated deficit
(16,927,262 ) (17,089,789 ) Accumulated other comprehensive loss
(2,762 ) (2,811 ) Total stockholders’ deficit (1,406,129 )
(1,385,474 ) Total liabilities and stockholders’ deficit $
1,919,676 $ 1,914,504
VERISIGN,
INC. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (In thousands, except per share data)
(Unaudited) Three Months Ended March 31,
2019 2018 Revenues $ 306,408 $ 299,288
Costs and expenses: Cost of revenues 45,504 48,152 Sales and
marketing 10,519 17,275 Research and development 16,132 15,375
General and administrative 34,001 33,067 Total costs
and expenses 106,156 113,869 Operating income 200,252
185,419 Interest expense (22,631 ) (40,788 ) Non-operating income,
net 12,203 7,804 Income before income taxes 189,824
152,435 Income tax expense (27,297 ) (18,172 ) Net income 162,527
134,263 Other comprehensive income 49 243
Comprehensive income $ 162,576 $ 134,506
Earnings per share: Basic $ 1.36 $ 1.38
Diluted $ 1.35 $ 1.09 Shares used to compute earnings
per share Basic 119,757 97,250 Diluted 120,317
123,506
VERISIGN, INC. CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands)
(Unaudited) Three Months Ended March 31,
2019 2018 Cash flows from operating
activities: Net income $ 162,527 $ 134,263 Adjustments to reconcile
net income to net cash provided by operating activities:
Depreciation of property and equipment 11,593 12,117 Stock-based
compensation 12,462 12,978 Amortization of discount on investments
in debt securities (3,854 ) (4,128 ) Other, net (147 ) 4,005
Changes in operating assets and liabilities: Other assets (226 )
(987 ) Accounts payable and accrued liabilities (31,609 ) (36,271 )
Deferred revenues 29,219 27,120 Net deferred income taxes and other
long-term tax liabilities 7,365 (59,108 ) Net cash provided
by operating activities 187,330 89,989 Cash flows
from investing activities: Proceeds from maturities and sales of
marketable securities 939,561 1,931,930 Purchases of marketable
securities (496,779 ) (631,456 ) Purchases of property and
equipment (9,133 ) (7,662 ) Other investing activities (2,958 )
(160 ) Net cash provided by investing activities 430,691
1,292,652 Cash flows from financing activities: Proceeds
from employee stock purchase plan 8,253 7,811 Repurchases of common
stock (204,302 ) (152,741 ) Net cash used in financing activities
(196,049 ) (144,930 ) Effect of exchange rate changes on cash, cash
equivalents, and restricted cash 255 167 Net increase
in cash, cash equivalents, and restricted cash 422,227 1,237,878
Cash, cash equivalents, and restricted cash at beginning of period
366,753 475,139 Cash, cash equivalents, and
restricted cash at end of period $ 788,980 $ 1,713,017
Supplemental cash flow disclosures: Cash paid for interest $
13,063 $ 43,326 Cash paid for income taxes, net of
refunds received $ 14,185 $ 72,959
VERISIGN, INC. RECONCILIATION OF NON-GAAP FINANCIAL
MEASURES AND ADJUSTED EBITDA (In thousands, except per share
data) (Unaudited) Three Months Ended March
31, 2019 2018
OperatingIncome
Net Income
OperatingIncome
Net Income GAAP as reported $ 200,252 $
162,527 $ 185,419 $ 134,263 Adjustments: Stock-based compensation
12,462 12,462 12,978 12,978 Non-cash interest expense — 3,918 Tax
adjustment (17,206 ) (19,081 )
Non-GAAP $
212,714 $ 157,783 $ 198,397 $ 132,078
Revenues $ 306,408 $ 299,288
Non-GAAP operating
margin 69.4 % 66.3 %
Diluted shares 120,317 123,506
Diluted EPS, non-GAAP $ 1.31 $ 1.07
The following table presents the classification of stock-based
compensation:
Three Months EndedMarch
31,
2019 2018 Cost of revenues $ 1,598 $ 1,609
Sales and marketing 983 1,448 Research and development 1,589 1,721
General and administrative 8,292 8,200 Total stock-based
compensation expense $ 12,462 $ 12,978
The following table reconciles GAAP net income to non-GAAP
Adjusted EBITDA:
Year EndedMarch 31, 2019
Net Income $ 610,753 Interest expense 96,689 Income tax
expense 156,152 Depreciation and amortization 47,844 Stock-based
compensation 51,988 Unrealized loss on hedging agreements 119 Gain
on sale of business (55,550 ) Loss on debt extinguishment 6,554
Non-GAAP Adjusted EBITDA $ 914,549
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190425005729/en/
Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643Media
Relations: Deana Alvy, dalvy@verisign.com, 703-948-3800
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