01—Abstract
Summary
Summary of the 10-Q filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
VeriSign, Inc. reported first-quarter 2024 revenues of $384.3 milliona, up 5% from $364.4 million in the same period of 2023, and operating income of $258.9 million, up 7% from $241.3 million.
Net income was $194.1 millionb, compared with $178.7 million a year earlier, and diluted earnings per share were $1.92, versus $1.70. Revenue growth was primarily attributed to price increases on .com registrations effective September 1, 2023 and 2022, while the domain name base fell to 172.5 million .com and .net registrations, a 1.3% decrease from March 31, 2023, with China revenue down 18%. Cash flow and capital return remained central.
Operating cash flow was $257.3 millionc, compared with $259.0 million in the prior-year quarter. The company repurchased 1.3 million shares for $260.4 million during the quarter, leaving approximately $859.6 million available under its repurchase program. Cash and cash equivalents rose to $731.8 million from $240.1 million at year-end 2023, while marketable securities declined to $192.9 million from $686.3 million.
Total stockholders' deficit widened to $1,635.7 milliond, and senior notes were carried at $1,790.7 million. The company stated it believes existing cash, marketable securities and operating cash flows will be sufficient to meet working capital, capital expenditure and debt service requirements for the next 12 months and beyond. Management also disclosed a pending ICANN Independent Review Process brought by Afilias Domains No. 3 Limited (now Altanovo Domains Limited), which the company and Nu Dotco, LLC have requested to join, and stated that other legal matters are not expected to have a material adverse effect.
02—Key points
Key Highlights
- Revenue rose to $384.3 million, up 5% year over year, driven primarily by .com price increases effective September 1, 2023 and 2022.
- Operating income increased 7% to $258.9 million, and net income rose to $194.1 million from $178.7 million.
- Diluted EPS was $1.92, compared with $1.70 in Q1 2023, helped by lower weighted-average shares outstanding (100.9 million diluted versus 105.0 million).
- The .com and .net domain name base declined 1.3% year over year to 172.5 million, with softness primarily in China; China revenue fell 18% to $20.7 million.
- The company repurchased $260.4 million of stock (1.3 million shares), with $859.6 million remaining under the authorization as of March 31, 2024.
- Operating cash flow was $257.3 million, compared with $259.0 million a year earlier; cash and cash equivalents increased to $731.8 million.
- Total stockholders' deficit was $1,635.7 million at March 31, 2024, and senior notes carried at $1,790.7 million remain the main debt obligation.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Verisign kept $0.51.
- Revenue$384.3M100.0%
- Cost of revenue−$49.1M12.8%
- Gross profit$335.2M87.2%
- Operating costs−$76.3M19.9%
- Operating income$258.9M67.4%
- Interest, other & tax−$64.8M16.9%
- Net income$194.1M50.5%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 25, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $384.30M$364.40M | +5.5% |
| Cost of Revenue | $49.10M$49.90M | −1.6% |
| Gross Profit | $335.20M$314.50M | +6.6% |
| R&D Expenses | $24.80M$24.20M | +2.5% |
| SG&A Expenses | $51.50M$49.00M | +5.1% |
| Operating Expenses | $125.40M$123.10M | +1.9% |
| Operating Income | $258.90M$241.30M | +7.3% |
| Interest Expense | $18.80M$18.80M | 0.0% |
| Net Income | $194.10M$178.70M | +8.6% |
| EPS (Basic) | $1.93$1.70 | +13.5% |
| EPS (Diluted) | $1.92$1.70 | +12.9% |
| Shares Outstanding (Basic) | 100.80M104.90M | −3.9% |
| Shares Outstanding (Diluted) | 100.90M105.00M | −3.9% |
05—Questions
Frequently Asked Questions
What drove VeriSign's revenue growth in the first quarter of 2024?
Revenues increased 5% to $384.3 million, primarily due to higher revenue from operating the .com registry, supported by the price increases that became effective September 1, 2023 and 2022. The company also noted that the .net price increase effective February 1, 2024 contributed to higher cash received from customers.
Is the domain name base growing?
No. As of March 31, 2024, there were 172.5 million .com and .net registrations, a 1.3% decrease from March 31, 2023 and a net decrease of 0.3 million from December 31, 2023. The company attributed the decline to softness in demand, primarily in China, and to competitive pressures from ccTLDs, other gTLDs and social media.
How is the company returning capital to shareholders?
During the quarter, VeriSign repurchased 1.3 million shares under its repurchase plans for $260.4 million, plus $9.5 million for tax withholdings, for total repurchases of $269.9 million. Approximately $859.6 million remained available under the program, which has no expiration date.
Does the company have liquidity to meet its obligations?
Management stated that existing cash, cash equivalents and marketable securities, together with funds from operations and its ability to arrange additional financing, should be sufficient to meet working capital, capital expenditure and debt service needs for the next 12 months and beyond. Cash and cash equivalents and marketable securities totaled $924.7 million at March 31, 2024. The $200.0 million credit facility had no borrowings outstanding.
What legal matters are pending?
Afilias Domains No. 3 Limited (now Altanovo Domains Limited), a competitor and losing bidder in the .web auction, filed another Independent Review Process under ICANN's bylaws on July 14, 2023. On April 11, 2024, Verisign and Nu Dotco, LLC submitted a written request to participate. Management stated that various other claims and lawsuits are not expected to have a material adverse effect on financial condition, results of operations or cash flows.
06—Continue