VeriSign, Inc. (NASDAQ: VRSN), today reported financial results for the third quarter of 2015.
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $266 million for the third quarter of 2015, up 4.2% from the same quarter in 2014.
Verisign reported net income of $92 million and diluted earnings per share of $0.70 for the third quarter of 2015, compared to net income of $95 million and diluted EPS of $0.69 for the same quarter in 2014.
The operating margin was 58.1% for the third quarter of 2015 compared to 54.7% for the same quarter in 2014.
Verisign Registry Services added 1.68 million net new names during the third quarter, ending with 135.2 million .com and .net domain names in the domain name base, which represents a 3.4% increase over the base at the end of the third quarter in 2014, as calculated including domain names on hold for both periods.
In the third quarter, Verisign processed 9.2 million new domain name registrations for .com and .net, as compared to 8.7 million for the same quarter in 2014.
The final .com and .net renewal rate for the second quarter of 2015 was 72.7% compared with 71.8% for the same quarter in 2014. Renewal rates are not fully measurable until 45 days after the end of the quarter.
Verisign ended the third quarter with cash, cash equivalents and marketable securities of $1.9 billion, an increase of $466 million as compared with year-end 2014.
Cash flow from operations was $155 million for the third quarter of 2015, compared with $168 million for the same quarter in 2014.
Capital expenditures were $7 million in the third quarter of 2015.
During the third quarter, Verisign repurchased 2.3 million shares of its common stock for $156 million. At Sept. 30, 2015, $605 million remained available and authorized under the current share repurchase program which has no expiration.
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 information in quarterly earnings releases, on investor conference calls and during investor conferences and related events. This non-GAAP financial information does not include the following types of financial measures that are included in GAAP: stock-based compensation, unrealized gain/loss on the contingent interest derivative on the subordinated convertible debentures, and non-cash interest expense. Non-GAAP net income is decreased by amounts accrued, if any, during the period for contingent interest payable resulting from upside or downside triggers related to the subordinated convertible debentures and is adjusted for an income tax rate of 26 percent for 2015 and 28 percent for 2014, both of which differ 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 4.625% senior notes due 2023 and 5.25% senior notes due 2025. Adjusted EBITDA refers to net income before interest, taxes, depreciation and amortization, stock-based compensation, unrealized loss (gain) on the contingent interest derivative on the subordinated convertible debentures and unrealized loss (gain) on hedging agreements.
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. The presentation of this additional information is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP. Management believes that the non-GAAP information enhances investors’ overall understanding of Verisign’s financial performance and the comparability of Verisign’s operating results from period to period.
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.