Verisign Reports: Revenue up 5%; There are 128.5 Million .Com & .Nets As of March 31

Verisign logo

;

VeriSign, Inc. (NASDAQ: VRSN), today reported financial results for the first quarter of 2014, reporting revenue of $249 million for the first quarter of 2014, up 5% from the same quarter in 2013.

Verisign reported net income of $94 million and diluted earnings per share (EPS) of $0.64 for the first quarter of 2014, compared to net income of $85 million and diluted EPS of $0.52 in the same quarter in 2013.

The operating margin was 56.1 percent for the first quarter of 2014 compared to 56.4 percent for the same quarter in 2013.

Verisign reported, on a non-GAAP basis, net income of $95 million and diluted EPS of $0.64 for the first quarter of 2014, compared to net income of $94 million and diluted EPS of $0.58 for the same quarter in 2013.

Shares are up $.80 after hours to back over $50 a share.

Verisign expects to complete in Q2 the intended repatriation of approximately $700M-$800M of cash held by foreign subsidiaries

Financial Highlights

Verisign ended the first quarter with cash, cash equivalents and marketable securities of $1.7 billion, flat as compared with year-end 2013.

Cash flow from operations was $142 million for the first quarter compared with $151 million for the same quarter in 2013.

Deferred revenues on March 31, 2014, totaled $886 million, an increase of $30 million from year-end 2013.

Capital expenditures were $11 million in the first quarter of 2014.

During the first quarter, Verisign repurchased 2.4 million shares of its common stock for $132 million. At March 31, 2014, $868 million remained available and authorized under the current share repurchase program.

Business Highlights

Verisign Registry Services added 1.28 million net new names during the first quarter, ending with 128.5 million active domain names in the zone for .com and .net, which represents a 4% increase over the zone at the end of the first quarter in 2013.

In the first quarter, Verisign processed 8.6 million new domain name registrations for .com and .net as compared to 8.8 million for the same period in 2013.

The final .com and .net renewal rate for the fourth quarter of 2013 was 72.2% compared with 72.9 % for the same quarter in 2012.

Renewal rates are not fully measurable until 45 days after the end of the quarter.

Verisign ended the quarter with $1.7 Billion in cash and equivalents

 

.Com Passes 113 Million Registrations

Screen Shot 2014-03-22 at 12.36.55 PM

According to Verisign.com, the operator of the .Com registry the number of .Com domain names just broke the 113 Million mark for the first time.

The official number at the last Verisign update was 113,002,815.

According to ntldstats.com/tld the number of new gTLD registrations are over 332,000

Stock Analysis firm Trefis On Verisign: Risk Is ccTLD’s; Doesn’t Mention new gTLD’s

Stock Analysis firm Trefis had some interesting comments on Verisign in a note entitled “Drop In Verisign Shares Highlights Risks Associated With Domain Business

The note went on to say that the biggest risk to the Verisign business is growth in ccTLD domain names.

Trefis didn’t mention the new gTLD’s at all.

It would be one thing to mention new gTLD’s and then conclude that the wouldn’t impact Verisign market share of the global domain market, but for the company not to even mention new gTLD’s makes it look like Trefis doesn’t even know they exist.

Regarding the contract to run the .net and .com registry, all Trefis had to say was that “Losing the contract for either of these domain names come 2018 would mean a severe cut in the company’s top line”

You Think?

The post did not mention ICANN or the impact that the US possibility giving up oversight might effect the contract the next time it comes up for renewal.

Here is the post:

How Will Losing The .com/.net Contract Impact VeriSign?

VeriSign is the sole registrar for the .com/.net domain names, and had a market share of approximately 46.7% in global top level domain name registrations in 2013. At the end of Q3FY13, VeriSign had a total of 126 million .com and .net domain names registered in the adjusted zone out of a total 265 million domain names registered globally.

Losing the contract for either of these domain names come 2018 would mean a severe cut in the company’s top line. You can take a look at the impact a loss in contract to another registry service provider such as Neustar on VeriSign’s stock by changing its share of all domain registrations worldwide.

“Currently, we believe the only threat to VeriSign’s market share in the global domain name registrations market is from country code top level domain names (ccTLDs). ccTLD registrations reached 119.5 million at the end of Q3FY13 and have been increasing at almost three times the growth rate in .com/.net domain names. “

“This rapid increase in ccTLD registrations, combined with restrictions on domain name pricing, have strained top line growth for VeriSign, which fell to 10.5% in 2013 from 13% in 2012. ”

“We expect VeriSign’s market share to decline gradually until the end of our review period as ccTLD registrations continue to grab potential .com/.net registrants.””

Verisign Issues Statement On ICANN’s Move & Is Down Over 5% In Pre-market

Verisign logo

VeriSign, Inc. VRSN today provided a statement on the National Telecommunications and Information Administration’s (NTIA) announcement of its intent to transition key Internet domain name functions.

Verisign shares are down over 5% in pre-market activity trading at just over $52 a share.

Here is Verisign’s announcement:

“”The announcement by NTIA on Friday, March 14, 2014, does not affect Verisign’s operation of the .com and .net registries. The announcement does not impact Verisign’s .com or .net domain name business nor impact its .com or .net revenue or those agreements, which have presumptive rights of renewal.

The NTIA announcement involves Internet functions that are entirely different functions from those Verisign performs under its .com and .net agreements. The functions performed by Verisign involved in the NTIA announcement have been performed as a community service spanning three decades without compensation at the request of the Department of Commerce under the Cooperative Agreement”

Verisign Answers ICANN’s Name Collision Study With Its Own Blog Post

Earlier today we told you that ICANN Published A Study On Mitigating Risks Of Name Collisions from new gTLD domain names.

Tonight Verisign  published an answer to the study ICANN.

On its company blog Verisign, in a post entitled “Uncontrolled Interruption? Dozens of “Blocked” Domains in New gTLDs Actually Delegated”, Verisign in part says:

The report “centers on the technique of “controlled interruption,” initially described in a public preview shared by Jeff Schmidt last month.”

“With that technique, domain names that are currently on one of ICANN’s second-level domain (SLD) block lists can be registered and delegated for regular use, provided that they first go through a trial period where they’re mapped to a designated “test” address.  ”

“The staged introduction of new SLDs is intended to provide operators of installed systems the opportunity to assess the potential impact of an impending name collision on their own, before any external operators have an opportunity to exploit it.”

“If this technique (or any other) were adopted, it would stand to reason the staged introduction would need to be monitored carefully. ”

” Someone would need to check that SLDs on the block lists actually did go through the trial period, and were not put into regular use without the appropriate opportunity for assessment by operators of installed systems.”

(Note that Verisign isn’t endorsing the technique; we are reviewing the just-published Mitigating the Risk of DNS Namespace Collisions report, and we’ve already expressed reservations about the statistical invalidity of SLD block lists as an indicator of name collision risk.  That being said, the point still remains that if such a technique were adopted, it would need to be monitored to ensure correct implementation.)

“Given the anticipation of “controlled” interruption, it’s ironic that while ICANN specifically precludes the delegation of domain names on the SLD block lists, dozens of them were actually registered and delegated!”

“That fact was recently duly noted by one of Verisign’s researchers who has been analyzing the daily progress of new gTLDs.  As it turns out, nearly all delegated SLDs that should have been blocked were cancelled over the past weekend after independent reports citing the existence of inappropriate delegations began to circulate.:

:That the delegations of SLDs on the block lists could have caused name collisions with installed systems is not our primary concern.  (And, as noted above, we don’t consider the block lists – which are based solely on query frequency at specific points in time – to be the final word on which delegations might or might not cause name collisions. ”

Our concern, rather, is that domain names on the SLD block lists were delegated at all, given ICANN’s clear direction to the contrary.”

” As Pat “Kane and I have noted in a broader-ranging letter to NTIA on operational miscues in the new gTLD delegation process, a policy that’s unenforced is worse than no policy at all.”

“If this is the state of affairs when the answer is “no” – effectively, a state of “uncontrolled interruption” – what happens when the answer changes to “wait 120 days”?”

The study is now the subject of a comment period which ends on April 21st, 2014