01—Abstract
Summary
Summary of the 10-K filed February 26, 2010. Cited figures are marked; the original filing is the authoritative source.
VeriSign, Inc. reported 2009 revenues from continuing operations of $1.03 billiona, up 7% from $964.7 million in 2008, driven mainly by Naming Services ($615.9 million, up 12%) and Authentication Services ($410.1 million, up 3%).
Income from continuing operations was $197.5 millionb, or $1.03 per diluted share, versus $85.4 million in 2008. Consolidated net income attributable to VeriSign common stockholders was $245.6 million, or $1.28 per diluted share, compared with a net loss of $374.3 million in 2008, which reflected large losses on divestitures. During 2009 the company substantially completed its strategy of divesting or winding down non-core businesses, selling several units for aggregate net cash consideration of $477.4 million and recording an aggregate gain of $35.2 million.
The company is winding down its Content Portal Services business by the end of 2010. Cash and cash equivalents were $1.48 billionc at December 31, 2009, against $1.25 billion of 3.25% convertible debentures due 2037 with a carrying amount of $574.4 million, and the company repurchased 11.3 million shares for $252.8 million under its 2008 Share Buyback Program, leaving $697.2 million available.
The filing highlights risks tied to ICANN and Department of Commerce agreements, including the .com registry agreement running through November 30, 2012, and the .net agreement through June 30, 2011. Management also announced fee increases for .com (to $7.34d from $6.86) and .net (to $4.65 from $4.23) effective July 1, 2010, and expects continued revenue growth in 2010.
02—Key points
Key Highlights
- Revenues from continuing operations were $1,030.6 million in 2009, up 7% from $964.7 million in 2008.
- Naming Services revenues rose 12% to $615.9 million, while Authentication Services grew 3% to $410.1 million.
- Income from continuing operations was $197.5 million ($1.03 per diluted share), compared with $85.4 million in 2008.
- Net income attributable to VeriSign common stockholders was $245.6 million ($1.28 per diluted share), versus a net loss of $374.3 million in 2008.
- Non-core divestitures generated aggregate net cash consideration of $477.4 million and an aggregate gain of $35.2 million in 2009.
- Cash and cash equivalents were $1.48 billion at year-end 2009; the company repurchased 11.3 million shares for $252.8 million, leaving $697.2 million under its buyback program.
- Announced .com registry fees rising 7% to $7.34 and .net fees rising 10% to $4.65, effective July 1, 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2009, Verisign kept $0.40.
- Revenue$615.9M100.0%
- Cost of revenue−$166.7M27.1%
- Gross profit$449.2M72.9%
- Operating costs−$289.3M47.0%
- Operating income$160.0M26.0%
- Interest, other & tax$85.6M13.9%
- Net income$245.6M39.9%
Where FY2009 revenue went
$615.9M- Other operating costs: $236.9M, 38% of revenue
- Cost of revenue: $166.7M, 27% of revenue
- Operating income: $160.0M, 26% of revenue
- R&D: $52.4M, 8.5% of revenue
Kept 26% as operating income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2009filed February 26, 2010Financial Statements
FY2009 against FY2008
| Line item | FY2009FY2008 | Change |
|---|---|---|
| Revenue | $615.95M$558.90M | +10.2% |
| Cost of Revenue | $166.71M$160.84M | +3.6% |
| Gross Profit | $449.24M$398.05M | +12.9% |
| R&D Expenses | $52.36M$61.75M | −15.2% |
| Operating Expenses | $455.99M$584.91M | −22.0% |
| Operating Income | $159.96M-$26.01M | +714.9% |
| Interest Expense | $47.35M$44.39M | +6.7% |
| Net Income | $245.55M-$374.25M | +165.6% |
| EPS (Basic) | $1.28$-1.90 | +167.4% |
| EPS (Diluted) | $1.28$-1.87 | +168.4% |
| Shares Outstanding (Basic) | 191.82M197.20M | −2.7% |
| Shares Outstanding (Diluted) | 192.57M200.60M | −4.0% |
05—Questions
Frequently Asked Questions
Why did net income swing from a loss in 2008 to a profit in 2009?
The 2008 loss of $374.3 million was driven largely by discontinued operations, which recorded $424.8 million in losses upon divestiture of businesses and $459.6 million of total losses from discontinued operations. In 2009, discontinued operations contributed income of $48.1 million, including a $35.2 million gain on divestitures. Continuing operations also improved, with operating income rising to $313.7 million from $63.6 million, reflecting higher revenues and lower restructuring and impairment charges.
How much debt does VeriSign carry and when does it come due?
The company's principal long-term debt is $1.25 billion principal amount of 3.25% junior subordinated convertible debentures due August 15, 2037, with a carrying amount of $574.4 million at December 31, 2009. The company also has a $500.0 million revolving credit facility with no outstanding borrowings at year-end 2009, and $1.7 million was used for letters of credit.
What regulatory agreements could affect the Naming Services business?
VeriSign is the exclusive registry for .com, .net and .name under agreements with ICANN and the Department of Commerce. The .com Registry Agreement runs through November 30, 2012, and the .net Registry Agreement through June 30, 2011. The filing states that the .com agreement is expected to be renewed if the public interest standard is met, but notes that the Department of Commerce must approve renewal, and that ICANN and government review panels could take positions unfavorable to the company.
What is the company's plan for its remaining non-core businesses?
The company substantially completed divesting or winding down its non-core businesses during 2009. The one remaining non-core business, Content Portal Services (CPS), is being wound down, with completion expected no later than the end of 2010, and its results are reported in the Other Services segment. Management stated that proceeds from divestitures will be used for investment in growth opportunities in or adjacent to Naming and Authentication Services.
What did management say about outlook for 2010?
Management expects continued improvement in Naming Services revenue growth in 2010, citing Internet growth and the July 2010 .com and .net fee increases. It expects continued but slowing growth in Business Authentication Services, consistent revenues in that business, and growth in User Authentication Services driven by PKI Services. It also expects sales and marketing expenses to rise as a percentage of revenues, and general and administrative expenses to fall as a percentage of revenues.
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