Chronicle Journal: Finance

Verisign Reports Second Quarter 2020 Results

VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the second quarter of 2020.

VeriSign, Inc. and its subsidiaries (“Verisign”) reported revenue of $314 million for the second quarter of 2020, up 2.6 percent from the same quarter in 2019. Verisign reported net income of $152 million and diluted earnings per share (diluted “EPS”) of $1.32 for the second quarter of 2020, compared to net income of $148 million and diluted EPS of $1.24 for the same quarter in 2019. The operating margin was 65.8 percent for the second quarter of 2020 compared to 65.9 percent for the same quarter in 2019.

“For many people who are working from home and isolating at home, online services are critical. More businesses and individuals than ever depend on internet infrastructure for their livelihood. Commitment to our mission of maintaining our unparalleled record of uninterrupted .com and .net DNS is our priority,” said Jim Bidzos, Executive Chairman and Chief Executive Officer.

Financial Highlights

  • Verisign ended the second quarter of 2020 with cash, cash equivalents and marketable securities of $1.19 billion, a decrease of $23 million from the end of 2019.
  • Cash flow from operating activities was $215 million for the second quarter of 2020, compared to $165 million for the same quarter in 2019.
  • Deferred revenues as of June 30, 2020 totaled $1.06 billion, an increase of $30 million from the end of 2019.
  • During the second quarter of 2020, Verisign repurchased 0.7 million shares of its common stock for an aggregate cost of $150 million. As of June 30, 2020, there was $676 million remaining for future share repurchases under the share repurchase program which has no expiration date.

Business Highlights

  • Verisign ended the second quarter of 2020 with 162.1 million .com and .net domain name registrations in the domain name base, a 3.8 percent increase from the end of the second quarter of 2019, and a net increase of 1.41 million during the second quarter of 2020.
  • During the second quarter of 2020, Verisign processed 11.1 million new domain name registrations for .com and .net, compared to 10.3 million for the same quarter in 2019.
  • The final .com and .net renewal rate for the first quarter of 2020 was 75.4 percent compared with 75.0 percent for the same quarter in 2019. Renewal rates are not fully measurable until 45 days after the end of the quarter.
  • Verisign announces that it will extend the freeze on registry prices for all of its Top-Level Domains, including .com and .net, through March 31, 2021. Additionally, Verisign announces the extension of the waiver of the wholesale restore fee for expired domains through the end of 2020.

Today’s Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EDT) to review the second quarter 2020 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4772 (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 effects of the COVID-19 pandemic; risks arising from the agreements governing our 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, 2019, 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.

©2020 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)

 

June 30,
2020

December 31,
2019

ASSETS

Current assets:

Cash and cash equivalents

$

306,701

$

508,196

Marketable securities

887,872

709,863

Other current assets

55,075

60,530

Total current assets

1,249,648

1,278,589

Property and equipment, net

250,290

250,283

Goodwill

52,527

52,527

Deferred tax assets

82,048

87,798

Deposits to acquire intangible assets

145,000

145,000

Other long-term assets

40,613

39,812

Total long-term assets

570,478

575,420

Total assets

$

1,820,126

$

1,854,009

LIABILITIES AND STOCKHOLDERS’ DEFICIT

Current liabilities:

Accounts payable and accrued liabilities

$

235,671

$

209,988

Deferred revenues

782,661

755,178

Total current liabilities

1,018,332

965,166

Long-term deferred revenues

281,649

278,702

Senior notes

1,788,824

1,787,565

Long-term tax and other liabilities

131,645

312,676

Total long-term liabilities

2,202,118

2,378,943

Total liabilities

3,220,450

3,344,109

Commitments and contingencies

Stockholders’ deficit:

Preferred stock—par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none

Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 353,637 at June 30, 2020 and 353,157 at December 31, 2019; Outstanding shares: 115,011 at June 30, 2020 and 116,715 at December 31, 2019

14,592,929

14,990,011

Accumulated deficit

(15,990,895)

(16,477,490)

Accumulated other comprehensive loss

(2,358)

(2,621)

Total stockholders’ deficit

(1,400,324)

(1,490,100)

Total liabilities and stockholders’ deficit

$

1,820,126

$

1,854,009

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

 

Three Months Ended
June 30,

Six Months Ended
June 30,

2020

2019

2020

2019

Revenues

$

314,365

$

306,289

$

626,889

$

612,697

Costs and expenses:

Cost of revenues

43,608

44,066

89,181

89,570

Sales and marketing

8,890

12,399

15,494

22,918

Research and development

18,202

14,953

35,560

31,085

General and administrative

36,885

33,178

73,610

67,179

Total costs and expenses

107,585

104,596

213,845

210,752

Operating income

206,780

201,693

413,044

401,945

Interest expense

(22,535)

(22,635)

(45,070)

(45,266)

Non-operating income, net

7,403

11,436

14,487

23,639

Income before income taxes

191,648

190,494

382,461

380,318

Income tax (expense) benefit

(39,169)

(42,960)

104,134

(70,257)

Net income

152,479

147,534

486,595

310,061

Other comprehensive (loss) income

(2,000)

35

263

84

Comprehensive income

$

150,479

$

147,569

$

486,858

$

310,145

Earnings per share:

Basic

$

1.32

$

1.24

$

4.20

$

2.60

Diluted

$

1.32

$

1.24

$

4.19

$

2.59

Shares used to compute earnings per share

Basic

115,347

118,965

115,861

119,359

Diluted

115,544

119,361

116,137

119,837

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended
June 30,

2020

2019

Cash flows from operating activities:

Net income

$

486,595

$

310,061

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment

22,841

22,884

Stock-based compensation

23,428

25,617

Amortization of discount on investments in debt securities

(5,095)

(5,679)

Other, net

(3,006)

894

Changes in operating assets and liabilities:

Other assets

(10,146)

(10,254)

Accounts payable and accrued liabilities

25,796

(39,351)

Deferred revenues

30,430

31,857

Net deferred income taxes and other long-term tax liabilities

(175,471)

16,146

Net cash provided by operating activities

395,372

352,175

Cash flows from investing activities:

Proceeds from maturities and sales of marketable securities

995,194

1,466,303

Purchases of marketable securities

(1,167,680)

(1,021,741)

Purchases of property and equipment

(21,891)

(20,189)

Proceeds received (payments made) related to sale of business

20,009

(6,311)

Net cash (used in) provided by investing activities

(174,368)

418,062

Cash flows from financing activities:

Repurchases of common stock

(429,826)

(384,532)

Proceeds from employee stock purchase plan

8,296

8,253

Net cash used in financing activities

(421,530)

(376,279)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(965)

243

Net (decrease) increase in cash, cash equivalents, and restricted cash

(201,491)

394,201

Cash, cash equivalents, and restricted cash at beginning of period

517,601

366,753

Cash, cash equivalents, and restricted cash at end of period

$

316,110

$

760,954

Supplemental cash flow disclosures:

Cash paid for interest

$

43,708

$

43,708

Cash paid for income taxes, net of refunds received

$

26,472

$

62,214

Contacts:

Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643
Media Relations: James Barbour, jbarbour@verisign.com, 703-948-3800

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