01—Abstract
Summary
Summary of the 10-Q filed October 24, 2024. Cited figures are marked; the original filing is the authoritative source.
VeriSign, Inc. reported third-quarter 2024 revenues of $390.6 milliona, up 4% from $376.3 million in the prior-year quarter, and operating income of $269.3 million, up 6% from $254.3 million.
For the nine months ended September 30, 2024, revenues were $1,162.0 millionb (up 4%) and operating income was $794.4 million (up 7%). Net income was $201.3 million for the quarter ($2.07 per diluted share) and $594.2 million for the nine months ($6.00 per diluted share). The company attributed revenue growth primarily to .com and .net price increases, partially offset by a decline in the domain name base, which fell 2.5% year over year to 169.6 million registrations, and by the elimination of .gov gTLD operation revenue after its transition to another provider in the fourth quarter of 2023.
The filing notes that the net decrease of 1.1 million registrations from June 30, 2024 and the lower Q3 new registrations of 9.3 million versus 9.9 million reflect weaker demand, particularly in China, where revenues declined 10% in the quarter and 15% for the nine months. Capital allocation remained a major focus. The company repurchased 1.7 million shares for $300.9 millionc in the quarter and $949.3 million under its plans for the nine months.
In July 2024, the Board authorized an additional $1.11 billiond, bringing total availability to about $1.28 billion as of September 30, 2024. Cash, cash equivalents and marketable securities totaled $644.9 million, down from $926.4 million at year-end 2023, and stockholders' deficit widened to $(1,900.6) million. Senior notes total $1.79 billion including $299.7 million of 2025 notes classified as current, which management intends to refinance, with $200.0 million of credit facility capacity available as a backstop.
02—Key points
Key Highlights
- Revenues rose to $390.6 million in Q3 2024 (up 4%) and $1,162.0 million for the nine months (up 4%), driven by .com and .net price increases.
- Operating income increased to $269.3 million in Q3 2024 (up 6%) and $794.4 million for the nine months (up 7%).
- The .com and .net domain name base declined 2.5% year over year to 169.6 million registrations, with a net decrease of 1.1 million from June 30, 2024.
- China revenues fell 10% in Q3 2024 and 15% for the nine months, reflecting weaker domain demand in the region.
- Net income was $201.3 million in Q3 2024 ($2.07 per diluted share), compared with $188.5 million ($1.83 per diluted share) a year earlier.
- The company repurchased $963.3 million of common stock in the nine months ended September 30, 2024, with approximately $1.28 billion remaining under the program.
- $299.7 million of 2025 Senior Notes are classified as current; management intends to refinance them, with a $200.0 million credit facility as an alternative.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2024, Verisign kept $0.52.
- Revenue$390.6M100.0%
- Cost of revenue−$46.8M12.0%
- Gross profit$343.8M88.0%
- Operating costs−$74.5M19.1%
- Operating income$269.3M68.9%
- Interest, other & tax−$68.0M17.4%
- Net income$201.3M51.5%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2024filed October 24, 2024Financial Statements
Q3 FY2024 against Q3 FY2023
| Line item | Q3 FY2024Q3 FY2023 | Change |
|---|---|---|
| Revenue | $390.60M$376.30M | +3.8% |
| Cost of Revenue | $46.80M$48.60M | −3.7% |
| Gross Profit | $343.80M$327.70M | +4.9% |
| R&D Expenses | $23.20M$21.70M | +6.9% |
| SG&A Expenses | $51.30M$51.70M | −0.8% |
| Operating Expenses | $121.30M$122.00M | −0.6% |
| Operating Income | $269.30M$254.30M | +5.9% |
| Interest Expense | $18.90M$18.80M | +0.5% |
| Net Income | $201.30M$188.50M | +6.8% |
| EPS (Basic) | $2.07$1.83 | +13.1% |
| EPS (Diluted) | $2.07$1.83 | +13.1% |
| Shares Outstanding (Basic) | 97.30M102.90M | −5.4% |
| Shares Outstanding (Diluted) | 97.30M103.00M | −5.5% |
05—Questions
Frequently Asked Questions
What drove VeriSign's revenue growth in the third quarter of 2024?
Revenues increased 4% to $390.6 million, primarily due to .com and .net price increases. These gains were partially offset by a decline in the domain name base and the elimination of revenue from operating the .gov gTLD, which transitioned to another provider in the fourth quarter of 2023.
Why did the domain name base decline?
The filing attributes the decline to competitive pressure from ccTLDs, other gTLDs, and social media, changing consumer and business internet practices, and registrants managing their domain investments. It also cites weaker demand in China and some U.S. registrars shifting focus to higher retail pricing and reduced marketing for new customers, which negatively affected renewal rates and new registrations.
How is the company returning capital to shareholders?
VeriSign repurchased 1.7 million shares for $300.9 million in Q3 2024 and $949.3 million under its repurchase plans for the nine months. In July 2024, the Board authorized an additional $1.11 billion, bringing total availability to about $1.28 billion as of September 30, 2024. The program has no expiration date.
How does the company plan to handle its 2025 senior notes?
The company intends to refinance all $500.0 million of its 2025 Senior Notes, due April 1, 2025, through new long-term debt under existing market conditions. If refinancing is not available, it intends to use its $200.0 million of available credit facility capacity, which matures in 2028, to repay $200.0 million of the notes.
What is the company's liquidity position?
Cash, cash equivalents and marketable securities totaled $644.9 million as of September 30, 2024, down from $926.4 million at December 31, 2023. Operating cash flow was $671.1 million for the nine months. Management believes these resources, along with operating cash flow and access to additional financing, will be sufficient for working capital, capital expenditures and debt service for the next 12 months and beyond.
06—Continue