01—Abstract
Summary
Summary of the 10-Q filed July 25, 2024. Cited figures are marked; the original filing is the authoritative source.
VeriSign, Inc. reported revenues of $387.1 milliona for the three months ended June 30, 2024, up from $372.0 million a year earlier, and $771.4 million for the six months, compared with $736.4 million.
Operating income was $266.2 millionb for the quarter and $525.1 million for the six months. Net income was $198.8 million for the quarter and $392.9 million for the six months, and diluted earnings per share were $2.01 and $3.93, respectively. The filing attributes revenue growth mainly to .com price increases effective September 1, 2023 and .net price increases effective February 1, 2024, partially offset by a decline in the domain name base, which fell to 170.6 million .com and .net registrations, a 2.2% decrease from June 30, 2023.
New .com and .net registrations were 9.2 million in the quarter, compared with 10.2 million a year earlier, and the final first-quarter 2024 renewal rate was 74.1%, compared with 75.5% for the first quarter of 2023. Cash flow and capital returns remained central to the story. Net cash provided by operating activities was $417.7 millionc for the six months, versus $404.3 million a year earlier.
During the quarter the company repurchased 2.2 million shares for $388.0 milliond, and total stockholders' deficit was $1.82 billion at June 30, 2024. Cash and cash equivalents plus marketable securities totaled $689.9 million, and the company had $750.0 million of 2.70% notes due 2031, $550.0 million of 4.75% notes due 2027, and $500.0 million of 5.25% notes due 2025. Effective July 25, 2024, the board authorized an additional $1.11 billion of repurchases, bringing total available authorization to up to $1.50 billion.
The filing shows a company with stable, high-margin revenue from its registry operations, with the operating margin at 68.8% for the quarter. Investors will likely focus on whether pricing gains can continue to offset the ongoing decline in domain registrations, particularly in China, and on the pace of share repurchases given the company's negative equity position.
02—Key points
Key Highlights
- Revenues were $387.1 million for Q2 2024, up 4% from $372.0 million, and $771.4 million for the six months, up 5% from $736.4 million.
- Operating income was $266.2 million for Q2 2024, up 7% from $248.7 million, and net income was $198.8 million versus $185.7 million a year earlier.
- The .com and .net domain name base fell to 170.6 million registrations at June 30, 2024, a 2.2% decrease from June 30, 2023, with a net decrease of 1.8 million from March 31, 2024.
- New .com and .net registrations were 9.2 million in Q2 2024, down from 10.2 million in Q2 2023; the first-quarter 2024 final renewal rate was 74.1% versus 75.5%.
- Net cash provided by operating activities was $417.7 million for the six months ended June 30, 2024, up from $404.3 million.
- The company repurchased 2.2 million shares for $388.0 million in Q2 2024, and on July 25, 2024 the board authorized an additional $1.11 billion, for total authorization of up to $1.50 billion.
- Total stockholders' deficit was $1.82 billion at June 30, 2024, compared with $1.58 billion at December 31, 2023, and cash plus marketable securities totaled $689.9 million.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Verisign kept $0.51.
- Revenue$387.1M100.0%
- Cost of revenue−$47.1M12.2%
- Gross profit$340.0M87.8%
- Operating costs−$73.8M19.1%
- Operating income$266.2M68.8%
- Interest, other & tax−$67.4M17.4%
- Net income$198.8M51.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed July 25, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $387.10M$372.00M | +4.1% |
| Cost of Revenue | $47.10M$50.30M | −6.4% |
| Gross Profit | $340.00M$321.70M | +5.7% |
| R&D Expenses | $23.80M$22.20M | +7.2% |
| SG&A Expenses | $50.00M$50.80M | −1.6% |
| Operating Expenses | $120.90M$123.30M | −1.9% |
| Operating Income | $266.20M$248.70M | +7.0% |
| Interest Expense | $18.80M$18.90M | −0.5% |
| Net Income | $198.80M$185.70M | +7.1% |
| EPS (Basic) | $2.01$1.79 | +12.3% |
| EPS (Diluted) | $2.01$1.79 | +12.3% |
| Shares Outstanding (Basic) | 98.90M103.90M | −4.8% |
| Shares Outstanding (Diluted) | 99.00M104.00M | −4.8% |
05—Questions
Frequently Asked Questions
What drove revenue growth in the quarter?
The filing states that revenue increased primarily due to .com price increases effective September 1, 2023 and 2022 and .net price increases effective February 1, 2024 and 2023. These gains were partially offset by a decline in the .com and .net domain name base and the elimination of revenue from operating the .gov gTLD, which was transitioned to another provider in Q4 2023.
Is domain registration demand weakening?
The filing says competitive pressure from ccTLDs, other gTLDs, and alternatives such as social media has limited demand. It also says challenging economic and regulatory conditions have weakened demand in China, and some U.S. registrars have shifted toward higher retail pricing and less marketing for new customers. Together these factors negatively affected renewal rates and new registration volumes, resulting in a declining domain name base.
How is the company returning capital to shareholders?
During Q2 2024 the company repurchased 2.2 million shares for $388.0 million, and $471.6 million remained available under the program at June 30, 2024. On July 25, 2024 the board authorized an additional $1.11 billion, bringing total available authorization to up to $1.50 billion, with no expiration date.
How is the company's debt position?
At June 30, 2024 the company had $750.0 million of 2.70% senior unsecured notes due 2031, $550.0 million of 4.75% notes due 2027, and $500.0 million of 5.25% notes due 2025. Its $200.0 million credit facility, expiring in 2028, had no borrowings outstanding. Management stated that existing cash, marketable securities, and operating cash flow should be sufficient to meet needs and service debt for the next 12 months and beyond.
What is the outlook for pricing?
The company announced on February 8, 2024 that the annual registry-level wholesale fee for each new and renewal .com domain name registration will rise from $9.59 to $10.26, effective September 1, 2024. The .net agreement permits price increases of up to 10% each year through June 30, 2029, and the fee rose from $9.92 to $10.91 effective February 1, 2024.
06—Continue