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Verisign Annual Report, Year Ended Dec 31, 2022

Filing Date
Filed February 17, 2023
Period End
December 31, 2022
Security
VRSN
One revenue dollarkept$0.47
In the record · 2016–202610-K1110-Q338-K94

VRSN filed 11 annual reports (10-K), 33 quarterly reports (10-Q) and 94 current reports (8-K) between 2016 and 2026.

  1. Material agreement8-K · Jul ’17Jul ’17
  2. Leadership change8-K · Jul ’19Jul ’19
  3. Leadership change8-K · Jun ’21Jun ’21
  4. Material agreement8-K · Jun ’26Jun ’26

01—Abstract

Summary

Summary of the 10-K filed February 17, 2023. Cited figures are marked; the original filing is the authoritative source.

VeriSign, Inc. (filed as VeriSign, Inc.; trades on Nasdaq under VRSN) reports that it is a global provider of domain name registry services and internet infrastructure, operating the authoritative registry for the .com and .net top-level domains, two of the 13 global internet root servers, and the Root Zone Maintainer function.

For 2022, revenues were $1,424.9 milliona, up from $1,327.6 million in 2021, and operating income was $943.1 million, up from $866.8 million. Net income was $673.8 million, down from $784.8 million in 2021, with income tax expense of $206.4 million in 2022 versus a $2.6 million benefit in 2021 that was driven by a $165.5 million deferred tax asset recognized in 2021. Net cash provided by operating activities was $831.1 million.

The company stated that .com and .net registrations in the domain name base reached 173.8 million at December 31, 2022, and that new .com and .net registrations declined to 39.9 million from 44.6 million in 2021. The final .com and .net renewal rate for the third quarter of 2022 was 73.7%b, compared with 75.0% for the same quarter of 2021. The filing notes that demand from the pandemic-era surge appears to have subsided in 2022.

Revenue growth was driven mainly by .com price increases effective September 1, 2021 and 2022. Capital allocation included $1.03 billionc of share repurchases in 2022, with $858.8 million remaining under the program, and total principal of senior notes of $1,800.0 million at year-end. Cash and marketable securities totaled $980.4 million at December 31, 2022, against total stockholders' deficit of $1,562.2 million.

The filing also announced a .com wholesale fee increase from $8.97 to $9.59d effective September 1, 2023, and a .net fee increase from $9.02 to $9.92 effective February 1, 2023. Key forward-looking items include the .com Registry Agreement and .net Registry Agreement renewal dates of November 30, 2024 and June 30, 2023, respectively, and an ongoing ICANN process regarding the .web gTLD.

02—Key points

Key Highlights

  1. Revenues rose to $1,424.9 million in 2022 from $1,327.6 million in 2021, driven mainly by .com price increases effective September 1, 2021 and 2022.
  2. Operating income was $943.1 million in 2022, up from $866.8 million in 2021, and net income was $673.8 million, down from $784.8 million.
  3. New .com and .net registrations fell to 39.9 million in 2022 from 44.6 million in 2021, while the domain name base was 173.8 million at December 31, 2022.
  4. The final .com and .net renewal rate for Q3 2022 was 73.7%, compared with 75.0% in Q3 2021.
  5. The company repurchased 5.5 million shares for $1.03 billion in 2022, with $858.8 million remaining under the repurchase program.
  6. Key contract dates: the .net Registry Agreement must be renewed by July 1, 2023, and the .com Registry Agreement by November 30, 2024.
  7. The .com wholesale fee rises from $8.97 to $9.59 effective September 1, 2023, and the .net fee rises from $9.02 to $9.92 effective February 1, 2023.

03—One dollar

Follow one dollar

Of each $1.00 of revenue in FY2022, Verisign kept $0.47.

  1. Revenue$1.42B100.0%
  2. Cost of revenue−$200.7M14.1%
  3. Gross profit$1.22B85.9%
  4. Operating costs−$281.1M19.7%
  5. Operating income$943.1M66.2%
  6. Interest, other & tax−$269.3M18.9%
  7. Net income$673.8M47.3%
Computed from 10-KFY2022filed February 17, 2023Computed from this filing’s revenue, gross profit, operating income and net income · right columngrey figure: share of revenue

Where FY2022 revenue went

$1.42B
  • Net income: $673.8M, 47% of revenue
  • Interest, other & tax: $269.3M, 19% of revenue
  • Cost of revenue: $200.7M, 14% of revenue
  • SG&A: $195.4M, 14% of revenue
  • R&D: $85.7M, 6.0% of revenue

Kept 47% as net income

Full revenue history →

04—Financials

Financial Highlights

Figures from 10-KFY2022filed February 17, 2023
Revenue$1.42B85.9% Gross MarginNet Income$673.80M47.3% Net MarginEPS (Diluted)$6.24Total Assets$1.73BCash & Equivalents$379.00MFree Cash Flow$803.70M

Financial Statements

FY2022 against FY2021

Line itemFY2022FY2021Change
Revenue$1.42B$1.33B+7.3%
Cost of Revenue$200.70M$191.90M+4.6%
Gross Profit$1.22B$1.14B+7.8%
R&D Expenses$85.70M$80.50M+6.5%
SG&A Expenses$195.40M$188.40M+3.7%
Operating Expenses$481.80M$460.80M+4.6%
Operating Income$943.10M$866.80M+8.8%
Interest Expense$75.30M$83.30M−9.6%
Net Income$673.80M$784.80M−14.1%
EPS (Basic)$6.24$7.01−11.0%
EPS (Diluted)$6.24$7.00−10.9%
Shares Outstanding (Basic)107.90M112.00M−3.7%
Shares Outstanding (Diluted)108.00M112.20M−3.7%

05—Questions

Frequently Asked Questions

  1. What drives VeriSign's revenue?

    Revenue is primarily derived from fees charged to registrars for initial registrations and renewals of .com and .net domain names. Changes in revenue are driven largely by the number of new registrations, the renewal rate, and price increases permitted by ICANN and the DOC. The filing states that .com price increases effective September 1, 2021 and 2022 drove the 2022 revenue increase.

  2. Why did net income decline in 2022 even though operating income increased?

    Income tax expense was $206.4 million in 2022, compared with a $2.6 million tax benefit in 2021. The 2021 result included a $165.5 million deferred tax asset and corresponding income tax benefit from an intercompany intellectual property transfer. Operating income rose to $943.1 million from $866.8 million, while interest expense fell to $75.3 million from $83.3 million.

  3. What risks does the filing highlight for the company's core business?

    The filing identifies the renewal and continuation of the .com and .net Registry Agreements and the Cooperative Agreement with the DOC as central, noting that substantially all revenue comes from these gTLDs. It also cites cyber-attacks, DDoS attacks, government regulation, competition from ccTLDs and social media, and declining demand as domain name registrations and renewals have slowed.

  4. What is the status of the .web gTLD matter?

    As disclosed in Item 3, Afilias filed an Independent Review Process against ICANN over the .web auction. The IRP panel's May 20, 2021 decision dismissed Afilias' claims seeking to invalidate the auction, but recommended that ICANN's Board consider the objections. The Board's Accountability Mechanisms Committee is reviewing the matter, and the company has a $145.0 million deposit recorded pending transfer of the .web contractual rights.

06—Continue

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