Verisign News Releases

Verisign Reports Third Quarter 2019 Results

Dateline City:
RESTON, Va.

RESTON, Va.--(BUSINESS WIRE)--VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the third quarter of 2019.

Third Quarter GAAP Financial Results

VeriSign, Inc. and its subsidiaries (“Verisign”) reported revenue of $308 million for the third quarter of 2019, up 0.9 percent from the same quarter in 2018. Verisign reported net income of $154 million and diluted earnings per share (diluted “EPS”) of $1.30 for the third quarter of 2019, compared to net income of $138 million and diluted EPS of $1.13 for the same quarter in 2018. The operating margin was 66.7 percent for the third quarter of 2019 compared to 63.8 percent for the same quarter in 2018.

Third Quarter Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $161 million and diluted EPS of $1.36 for the third quarter of 2019, compared to net income of $151 million and diluted EPS of $1.23 for the same quarter in 2018. The non-GAAP operating margin was 70.8 percent for the third quarter of 2019 compared to 68.7 percent for the same quarter in 2018. A table reconciling the GAAP to the non-GAAP results (which excludes the items described under “Non-GAAP Financial Measures and Adjusted EBITDA” below) is appended to this news release.

“Our third quarter results are the product of focused execution and our commitment to delivering shareholder value,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

  • Verisign ended the third quarter of 2019 with cash, cash equivalents and marketable securities of $1.23 billion, a decrease of $40 million from the end of 2018.
  • Cash flow from operating activities was $208 million for the third quarter of 2019, compared to $187 million for the same quarter in 2018.
  • Deferred revenues as of Sept. 30, 2019 totaled $1.04 billion, an increase of $24 million from the end of 2018.
  • During the third quarter of 2019, Verisign repurchased 1.0 million shares of its common stock for an aggregate cost of $194 million. As of Sept. 30, 2019, there was $522 million remaining for future share repurchases under the share repurchase program which has no expiration date.

Business Highlights

  • Verisign ended the third quarter of 2019 with 157.4 million .com and .net domain name registrations in the domain name base, a 3.8 percent increase from the end of the third quarter of 2018, and a net increase of 1.27 million during the third quarter of 2019.
  • During the third quarter of 2019, Verisign processed 9.9 million new domain name registrations for .com and .net, compared to 9.5 million for the same quarter in 2018.
  • The final .com and .net renewal rate for the second quarter of 2019 was 74.2 percent compared with 75.0 percent for the same quarter in 2018. Renewal rates are not fully measurable until 45 days after the end of the quarter.

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 measures in quarterly earnings news releases, on investor conference calls and during investor conferences and related events. These non-GAAP financial measures do not include stock-based compensation which is included in the comparable GAAP financial measures. Non-GAAP net income is also adjusted for an income tax rate of 22 percent which differs 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 senior notes. Adjusted EBITDA refers to net income before interest, taxes, depreciation and amortization, stock-based compensation, unrealized gain / loss on hedging agreements, and gain on the sale of a business.

Management believes that these non-GAAP financial measures supplement the GAAP financial measures by providing investors with additional information that allows them to have a clearer picture of Verisign’s operations and financial performance and the comparability of Verisign’s operating results from period to period. The presentation of these non-GAAP financial measures is not meant to be considered in isolation nor as a substitute for financial measures prepared in accordance with GAAP.

The tables appended to this release include a reconciliation of the non-GAAP financial measures to the comparable financial measures reported in accordance with GAAP for the given periods.

Today’s Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EDT) to review the third quarter 2019 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4776 (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-and-presentations/events. 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 agreements governing our Registry Services 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, 2018, 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.

©2019 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)

 

 

 

September 30,
2019

 

December 31,
2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

109,288

 

 

$

357,415

 

Marketable securities

1,120,723

 

 

912,254

 

Other current assets

68,135

 

 

47,365

 

Total current assets

1,298,146

 

 

1,317,034

 

Property and equipment, net

250,159

 

 

253,905

 

Goodwill

52,527

 

 

52,527

 

Deferred tax assets

100,564

 

 

104,992

 

Deposits to acquire intangible assets

145,000

 

 

145,000

 

Other long-term assets

40,334

 

 

41,046

 

Total long-term assets

588,584

 

 

597,470

 

Total assets

$

1,886,730

 

 

$

1,914,504

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

200,361

 

 

$

215,208

 

Deferred revenues

760,517

 

 

732,382

 

Total current liabilities

960,878

 

 

947,590

 

Long-term deferred revenues

281,735

 

 

285,720

 

Senior notes

1,786,935

 

 

1,785,047

 

Long-term tax and other liabilities

309,101

 

 

281,621

 

Total long-term liabilities

2,377,771

 

 

2,352,388

 

Total liabilities

3,338,649

 

 

3,299,978

 

Commitments and contingencies

 

 

 

Stockholders’ deficit:

 

 

 

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

 

 

 

Common stock—par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 353,084 at September 30, 2019 and 352,325 at December 31, 2018; Outstanding shares: 117,705 at September 30, 2019 and 120,037 at December 31, 2018

353

 

 

352

 

Additional paid-in capital

15,175,962

 

 

15,706,774

 

Accumulated deficit

(16,625,815

)

 

(17,089,789

)

Accumulated other comprehensive loss

(2,419

)

 

(2,811

)

Total stockholders’ deficit

(1,451,919

)

 

(1,385,474

)

Total liabilities and stockholders’ deficit

$

1,886,730

 

 

$

1,914,504

 

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Revenues

$

308,421

 

 

$

305,777

 

 

$

921,118

 

 

$

907,517

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenues

44,443

 

 

48,249

 

 

134,013

 

 

143,766

 

Sales and marketing

9,857

 

 

13,868

 

 

32,775

 

 

47,712

 

Research and development

14,619

 

 

13,712

 

 

45,704

 

 

42,842

 

General and administrative

33,886

 

 

34,951

 

 

101,065

 

 

99,771

 

Total costs and expenses

102,805

 

 

110,780

 

 

313,557

 

 

334,091

 

Operating income

205,616

 

 

194,997

 

 

607,561

 

 

573,426

 

Interest expense

(22,633

)

 

(22,631

)

 

(67,899

)

 

(92,211

)

Non-operating income, net

10,498

 

 

5,935

 

 

34,137

 

 

14,399

 

Income before income taxes

193,481

 

 

178,301

 

 

573,799

 

 

495,614

 

Income tax expense

(39,568

)

 

(40,621

)

 

(109,825

)

 

(95,320

)

Net income

153,913

 

 

137,680

 

 

463,974

 

 

400,294

 

Other comprehensive income (loss)

308

 

 

(322

)

 

392

 

 

(62

)

Comprehensive income

$

154,221

 

 

$

137,358

 

 

$

464,366

 

 

$

400,232

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.30

 

 

$

1.13

 

 

$

3.90

 

 

$

3.60

 

Diluted

$

1.30

 

 

$

1.13

 

 

$

3.89

 

 

$

3.25

 

Shares used to compute earnings per share

 

 

 

 

 

 

 

Basic

118,194

 

 

121,682

 

 

118,966

 

 

111,046

 

Diluted

118,569

 

 

122,261

 

 

119,410

 

 

123,079

 

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Nine Months Ended
September 30,

 

2019

 

2018

Cash flows from operating activities:

 

 

 

Net income

$

463,974

 

 

$

400,294

 

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

 

 

 

Depreciation of property and equipment

34,327

 

 

36,450

 

Stock-based compensation

38,237

 

 

41,406

 

Amortization of discount on investments in debt securities

(10,271

)

 

(12,746

)

Other, net

2,126

 

 

14,752

 

Changes in operating assets and liabilities:

 

 

 

Other assets

(12,123

)

 

(6,917

)

Accounts payable and accrued liabilities

(7,110

)

 

(29,478

)

Deferred revenues

24,563

 

 

24,844

 

Net deferred income taxes and other long-term tax liabilities

26,571

 

 

10,662

 

Net cash provided by operating activities

560,294

 

 

479,267

 

Cash flows from investing activities:

 

 

 

Proceeds from maturities and sales of marketable securities

1,523,862

 

 

3,081,702

 

Purchases of marketable securities

(1,721,661

)

 

(2,067,498

)

Purchases of property and equipment

(31,498

)

 

(29,597

)

Other investing activities

(8,530

)

 

(160

)

Net cash (used in) provided by investing activities

(237,827

)

 

984,447

 

Cash flows from financing activities:

 

 

 

Repayment of principal on subordinated convertible debentures

 

 

(1,250,009

)

Proceeds from employee stock purchase plan

13,152

 

 

12,836

 

Repurchases of common stock

(583,485

)

 

(459,803

)

Net cash used in financing activities

(570,333

)

 

(1,696,976

)

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

(208

)

 

(985

)

Net decrease in cash, cash equivalents, and restricted cash

(248,074

)

 

(234,247

)

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

366,753

 

 

475,139

 

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

$

118,679

 

 

$

240,892

 

Supplemental cash flow disclosures:

 

 

 

Cash paid for interest

$

57,074

 

 

$

87,184

 

Cash paid for income taxes, net of refunds received

$

75,197

 

 

$

84,433

 

VERISIGN, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES AND ADJUSTED EBITDA

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended September 30,

 

2019

 

2018

 

Operating

Income

 

Net Income

 

Operating

Income

 

Net Income

GAAP as reported

$

205,616

 

 

$

153,913

 

 

$

194,997

 

 

$

137,680

 

Adjustments:

 

 

 

 

 

 

 

Stock-based compensation

12,620

 

 

12,620

 

 

15,130

 

 

15,130

 

Tax adjustment

 

 

(5,774

)

 

 

 

(1,933

)

Non-GAAP

$

218,236

 

 

$

160,759

 

 

$

210,127

 

 

$

150,877

 

 

 

 

 

 

 

 

 

Revenues

$

308,421

 

 

 

 

$

305,777

 

 

 

Non-GAAP operating margin

70.8

%

 

 

 

68.7

%

 

 

Diluted shares

 

 

118,569

 

 

 

 

122,261

 

Diluted EPS, non-GAAP

 

 

$

1.36

 

 

 

 

$

1.23

 

The following table presents the classification of stock-based compensation:

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2019

 

2018

 

2019

 

2018

Cost of revenues

$

1,725

 

 

$

1,755

 

 

$

5,064

 

 

$

5,183

 

Sales and marketing

864

 

 

1,451

 

 

2,866

 

 

4,393

 

Research and development

1,513

 

 

1,623

 

 

4,744

 

 

5,032

 

General and administrative

8,518

 

 

10,301

 

 

25,563

 

 

26,798

 

Total stock-based compensation expense

$

12,620

 

 

$

15,130

 

 

$

38,237

 

 

$

41,406

 

The following table reconciles GAAP net income to non-GAAP Adjusted EBITDA:

 

 

Four Quarters Ended
September 30, 2019

Net Income

$

646,169

 

Interest expense

90,534

 

Income tax expense

161,532

 

Depreciation and amortization

46,244

 

Stock-based compensation

49,335

 

Unrealized loss on hedging agreements

134

 

Gain on sale of business

(55,657

)

Non-GAAP Adjusted EBITDA

$

938,291

 

 

Language:
English
Contact:

Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643
Media Relations: David McGuire, dmcguire@verisign.com, 703-948-3800

Ticker Slug:
Ticker:
VRSN
Exchange:
NASDAQ
ISIN:
US92343E1029