01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
VeriSign, Inc. (Nasdaq: VRSN) reported 2021 revenues of $1,327.6 milliona, up 5% from $1,265.1 million in 2020, with operating income of $866.8 million, also up 5%.
Net income was $784.8 millionb, and diluted EPS was $7.00 versus $7.07 in 2020. Revenue growth was driven primarily by the .com TLD, where the domain name base grew 5% and a .com price increase took effect September 1, 2021. The company ended 2021 with 173.4 million .com and .net registrations in the domain name base, and processed 44.6 million new .com and .net registrations during the year.
Cash flow from operations was $807.2 millionc, and the company repurchased $700.0 million of common stock during 2021. The balance sheet shows total stockholders' deficit of $1,260.5 million, with $1,785.7 million of senior notes outstanding. During 2021 the company issued $750.0 million of 2.700% notes due 2031 and used the proceeds, plus cash on hand, to redeem its $750.0 million 4.625% notes due 2023.
Cash and cash equivalents plus marketable securities totaled $1,205.8 milliond at year-end. The company also recognized a $165.5 million deferred tax benefit in the fourth quarter from an intercompany transfer of non-U.S. intellectual property. The filing highlights concentration and contractual risk: substantially all revenue comes from the .com and .net registry agreements, the .com Registry Agreement expires November 30, 2024, and the .net agreement expires July 1, 2023.
The company also announced an increase in the .com registry-level wholesale fee from $8.39 to $8.97, effective September 1, 2022. A pending matter involving the .web gTLD (Afilias IRP) remains open, with a $145.0 million deposit recorded for the .web contractual rights.
02—Key points
Key Highlights
- Revenues of $1,327.6 million in 2021, up 5% from 2020; operating income of $866.8 million, up 5%
- Net income of $784.8 million in 2021 versus $814.9 million in 2020; diluted EPS of $7.00 versus $7.07
- 173.4 million .com and .net registrations in the domain name base at December 31, 2021, up 5%
- Cash flow from operating activities of $807.2 million in 2021, up 11% from 2020
- Repurchased 3.3 million shares for $700.0 million in 2021; $1.0 billion repurchase authorization renewed February 10, 2022
- Announced .com wholesale fee increase from $8.39 to $8.97, effective September 1, 2022
- Substantially all revenue depends on the .com and .net registry agreements, with .net expiring July 1, 2023 and .com expiring November 30, 2024
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Verisign kept $0.59.
- Revenue$1.33B100.0%
- Cost of revenue−$191.9M14.5%
- Gross profit$1.14B85.5%
- Operating costs−$268.9M20.3%
- Operating income$866.8M65.3%
- Interest, other & tax−$82.0M6.2%
- Net income$784.8M59.1%
Where FY2021 revenue went
$1.33B- Net income: $784.8M, 59% of revenue
- Cost of revenue: $191.9M, 14% of revenue
- SG&A: $188.4M, 14% of revenue
- R&D: $80.5M, 6.1% of revenue
- Interest, other & tax: $82.0M, 6.2% of revenue
Kept 59% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $1.33B$1.27B | +4.9% |
| Cost of Revenue | $191.90M$180.20M | +6.5% |
| Gross Profit | $1.14B$1.08B | +4.7% |
| R&D Expenses | $80.50M$74.70M | +7.8% |
| SG&A Expenses | $188.40M$186.00M | +1.3% |
| Operating Expenses | $460.80M$440.90M | +4.5% |
| Operating Income | $866.80M$824.20M | +5.2% |
| Interest Expense | $83.30M$90.20M | −7.6% |
| Net Income | $784.80M$814.90M | −3.7% |
| EPS (Basic) | $7.01$7.08 | −1.0% |
| EPS (Diluted) | $7.00$7.07 | −1.0% |
| Shares Outstanding (Basic) | 112.00M115.10M | −2.7% |
| Shares Outstanding (Diluted) | 112.20M115.30M | −2.7% |
05—Questions
Frequently Asked Questions
What drove revenue growth in 2021?
The filing attributes the $62.5 million revenue increase primarily to higher .com registry revenue, driven by a 5% increase in the .com domain name base and the .com price increase effective September 1, 2021. U.S. revenue rose 6%, EMEA rose 8%, and China declined 12%.
How much debt does the company carry and what changed in 2021?
Total principal of senior notes was $1,800.0 million at December 31, 2021. In June 2021 the company issued $750.0 million of 2.700% notes due 2031 and redeemed all $750.0 million of its 4.625% notes due 2023. A $200.0 million revolving credit facility was undrawn at year-end.
What are the main risks tied to the company's contracts?
The company's .com and .net registry agreements contain presumptive renewal rights, but ICANN could refuse renewal or terminate them if the company fails to cure a fundamental breach or comply with a final arbitral or court decision. The .net agreement must be renewed by July 1, 2023 and the .com agreement by November 30, 2024. The filing also notes that the DOC must approve certain changes to the .com agreement.
What is the status of the .web gTLD dispute?
Afilias filed an Independent Review Process against ICANN in November 2018. The IRP panel issued a final decision on May 20, 2021, dismissing Afilias' claims to invalidate the auction or award .web to Afilias, but finding that ICANN violated aspects of its bylaws on transparency and fairness. On January 16, 2022, ICANN's Board directed its Board Accountability Mechanisms Committee to review the decision. The company has a $145.0 million deposit recorded for the .web contractual rights.
How did the company return capital to shareholders?
In 2021 the company repurchased 3.3 million shares at an average price of $215.16, for an aggregate cost of $700.0 million. As of December 31, 2021, $382.6 million remained under the program. On February 10, 2022, the Board authorized an additional $705.4 million, bringing the total authorization to up to $1.0 billion. The filing notes that stock buybacks have more than offset dilution from RSU grants.
06—Continue