VeriSign, Inc. reported revenue of $190 million for the second quarter of 2011, up 5% from the prior quarter and up 13% from the same quarter in 2010.
Of course in January 2011 Verisign is raising the fees on .net and .com registrations by 7% which should add to their bottom line for 2011, but 2010 is off to a great start for them.
Verisign reported net loss of $(11) million and diluted net loss per share of $(0.06) for the second quarter of 2011, however that’s from a $100 million payment of contingent interest to holders of the 3.25% Junior Subordinated Convertible Debentures due 2037 (“Convertible Debentures”) in connection with a special dividend in May 2011, and a corresponding offsetting discrete income tax benefit of $40 million, which on a net basis reduced diluted earnings per share by $0.35.
This is compared to net income attributable to Verisign stockholders of $35 million and earnings per share attributable to Verisign stockholders of $0.19 on a diluted basis in the same quarter in 2010.
The operating margin was 43.2% for the second quarter of 2011 compared to 30.3% for the same quarter in 2010.
Operating margin and diluted earnings per share for the second quarter of 2011 include a $6 million accrued expense reversal offset by a $4 million stock compensation charge, both of which are non-recurring in nature, which on a net basis, increased operating margin by 1% and increased diluted earnings per share by $0.02.
Verisign reported net income of $65 million and diluted earnings per share of $0.38 for the second quarter of 2011, compared to net income of $42 million and diluted earnings per share of $0.23 in the same quarter in 2010.
The operating margin was 51.7% for the second quarter of 2011 compared to 40.5% for the same quarter in 2010.
“We are pleased with our performance in the second quarter,” said Mark McLaughlin, president and chief executive officer of Verisign. “We are proud of our track record of maintaining 100 percent operational uptime for .com and .net and that we have been entrusted with the operation of .net for an additional 6 years.”
“We remain committed to delivering value to our shareholders through continued strategic focus, execution, and operating discipline,” said Brian Robins, chief financial officer of Verisign. “In addition to paying out the special dividend during the second quarter, we utilized $100 million to repurchase shares of our common stock.”
In addition, Verisign announced that Mark McLaughlin submitted his resignation to become the CEO of a private company.
His last day with the company will be August 25, 2011.
“We can’t thank Mark enough for his contributions as CEO over the last two years, as well as during his tenure with Verisign going back to 2000,” said Jim Bidzos, founder and chairman of Verisign. “We all wish him the very best in his new opportunity. I am especially appreciative that Mark will stay until August 25th to assist with the transition.”
- On April 28, Verisign announced a special cash dividend of $2.75 per share of its common stock or $463 million that was paid on May 18, 2011 to shareholders of record at the close of business on May 9, 2011. In addition, contingent interest totaling $100 million was paid on May 18, 2011 to holders of record of Convertible Debentures at the close of business on May 9, 2011.
- During the second quarter of 2011, Verisign repurchased approximately 2.8 million shares of our common stock for a cost of $100 million.
- Verisign ended the second quarter of 2011 with Cash, Cash Equivalents, Marketable Securities and Restricted Cash of $1.399 billion, a decrease of $552 million from the prior quarter and an increase of $60 million from the same quarter in 2010.
- Cash flow from operations was $13 million for the second quarter of 2011, reflecting a $100 million payment of contingent interest to holders of Convertible Debentures. A decrease in excess tax benefits of $(3) million for the second quarter of 2011 that are associated with stock-based compensation were classified as financing cash flows.
- Deferred revenues ended the second quarter of 2011 totaling $714 million, an increase of $15 million from the prior quarter and $73 million from the same quarter in 2010.
- Capital expenditures were $14 million in the second quarter of 2011.
Business and Corporate Highlights
- Verisign Registry Services ended the quarter with 110 million active domain names in the adjusted zone for .com and .net, representing an 8% increase year-over-year.
- In the second quarter of 2011, Verisign processed 8.1 million new domain name registrations, representing a 2% increase year-over-year.
- On May 11, 2011, Verisign announced that it had entered into a Settlement Agreement and Mutual Release with the Coalition for ICANN Transparency, Inc. (CFIT), CFIT’s members and specified related parties that resolved the over five year long CFIT litigation.
- On June 28, 2011, Verisign announced that the Internet Corporation for Assigned Names and Numbers (ICANN) and Verisign have renewed Verisign’s contract to serve as the authoritative registry operator for the .net registry for another six years.
- On July 14, 2011, Verisign announced that as of January 15, 2012, the registry fee for .com domain names will increase from $7.34 to $7.85 and that the registry fee for .net domain names will increase from $4.65 to $5.11.
- Verisign ended the second quarter of 2011 with approximately 1,040 employees, unchanged from the end of the prior quarter.
Shares of Verisign are up fractionally in after hours trading