Verisign reported Q4 earnings today after the close. Revenue was up 3.2% year over year. Net income was $103 million vs $106 million the previous Q4.
- Verisign ended 2017 with cash, cash equivalents and marketable securities of $2.4 billion, an increase of $617 million from year-end 2016.
- Cash flow from operations was $199 million for the fourth quarter of 2017 and $703 million for the full year 2017 compared with $205 million for the same quarter in 2016 and $693 million for the full year 2016.
- Deferred revenues on Dec. 31, 2017, totaled $999 million, an increase of $24 million from year-end 2016.
- During the fourth quarter, Verisign repurchased 1.3 million shares of its common stock for $145 million. During the full year 2017, Verisign repurchased 6.3 million shares of its common stock for $593 million.
- Effective Feb. 8, 2018, the Board of directors approved an additional authorization for share repurchases of approximately $586 million of common stock, which brings the total amount to $1.0 billion authorized and available under Verisign’s share repurchase program, which has no expiration.
- For purposes of calculating diluted EPS, the fourth quarter diluted share count included 25.2 million shares related to subordinated convertible debentures, compared with 20.6 million shares for the same quarter in 2016. These represent diluted shares and not shares that have been issued.
- Verisign ended the fourth quarter with 146.4 million .com and .net domain name registrations in the domain name base, a 2.9 percent increase from the end of the fourth quarter of 2016, and a net increase of 0.57 million during the fourth quarter of 2017.
- In the fourth quarter, Verisign processed 9.0 million new domain name registrations for .com and .net, as compared to 8.8 million for the same quarter in 2016.
- The final .com and .net renewal rate for the third quarter of 2017 was 74.4 percent compared with 73.0 percent for the same quarter in 2016. Renewal rates are not fully measurable until 45 days after the end of the quarter.
Fourth Quarter GAAP Financial Results
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $296 million for the fourth quarter of 2017, up 3.2 percent from the same quarter in 2016. Verisign reported net income of $103 million and diluted earnings per share (diluted “EPS”) of $0.83 for the fourth quarter of 2017, compared to net income of $106 million and diluted EPS of $0.84 for the same quarter in 2016. The operating margin was 59.7 percent for the fourth quarter of 2017 compared to 59.0 percent for the same quarter in 2016.
Fourth Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $119 million and diluted EPS of $0.96 for the fourth quarter of 2017, compared to net income of $115 million and diluted EPS of $0.92 for the same quarter in 2016. The non-GAAP operating margin was 64.1 percent for the fourth quarter of 2017 compared to 63.9 percent for the same quarter in 2016. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.
2017 GAAP Financial Results
For the year ended Dec. 31, 2017, Verisign reported revenue of $1.17 billion, up 2.0 percent from $1.14 billion in 2016. Verisign reported net income of $457 million and diluted EPS of $3.68 in 2017, compared to net income of $441 million and diluted EPS of $3.42 in 2016. The operating margin for 2017 was 60.7 percent compared to 60.1 percent in 2016.
2017 Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $492 million and diluted EPS of $3.96 for 2017, compared to net income of $465 million and diluted EPS of $3.61 for 2016. The non-GAAP operating margin for 2017 was 65.3 percent compared to 64.5 percent for 2016.
Impact of Tax Legislation
The Tax Cuts and Jobs Act (“Tax Act”) was enacted on Dec. 22, 2017. Fourth quarter and full year 2017 GAAP financial results include a net $9 million tax expense increase resulting from the Tax Act. This increase is comprised of a provisional income tax expense of $196 million consisting of one-time U.S. taxes on accumulated foreign earnings triggered by the Tax Act and related foreign withholding taxes, both net of resulting previously unrecognized foreign tax credits, offset by an income tax benefit of $187 million resulting from the revaluation of net deferred tax liabilities from 35 percent to the 21 percent U.S. federal income tax rate in the Tax Act. The provisional income tax expense on accumulated foreign earnings reflects our current best estimate, which may be adjusted over the course of 2018. By early second quarter of 2018, Verisign intends to repatriate approximately $1.1 billion of cash held by foreign subsidiaries, net of withholding taxes, based on current exchange rates.
“2017 was another solid year for Verisign. There was further expansion of the domain name base and revenues; we generated and efficiently returned value to shareholders; and we renewed the .net registry agreement for another six years, until 2023. We protected, grew and managed the business in 2017,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.