Verisign Reports 12% Year-Over-Year Revenue Growth in First Quarter 2011
First Quarter GAAP Financial Results
First Quarter Non-GAAP Financial Results
"We are pleased to report another record quarter for
In addition,
"Given the strength of our capital position following the restructuring of
the business over the past several years, particularly as a result of the
sale of the Authentication Services business last August, the Board voted
at a regularly scheduled meeting to return approximately
"We are committed to delivering value to our shareholders through
disciplined operations and investment in growth opportunities for the
company," said
Financial Highlights
-- During the first quarter,Verisign repurchased approximately 6 million shares for a cost of approximately$200 million . --Verisign ended the first quarter with Cash, Cash Equivalents,Marketable Securities and Restricted Cash of$1.951 billion , a decrease of$113 million from the prior quarter and an increase of$399 million from the same quarter in 2010. -- Cash flow from operations was$90 million for the first quarter. Excess tax benefits of$4 million for the first quarter that are associated with stock-based compensation were classified as financing cash flows. -- Deferred revenues onMarch 31, 2011 totaled$699 million , an increase of$36 million from the prior quarter and$81 million from the same quarter in 2010. -- Capital expenditures were$16 million in the first quarter of 2011.
Business and Corporate Highlights
-- Verisign Registry Services ended the quarter with approximately 108
million active domain names in the adjusted zone for .com and .net,
representing a 9% increase year-over-year.
-- In the first quarter, Verisign processed a record 8.3 million new
domain name registrations, representing an approximately 3% increase
year-over-year.
-- Verisign experienced an average daily query load of 57 billion
during the first quarter, compared to 54 billion in the same quarter
in 2010.
-- On April 11, 2011 , Verisign announced that the Internet Corporation
for Assigned Names and Numbers ("ICANN") posted renewal terms for
the .Net Registry Agreement which were negotiated between Verisign
and ICANN and are substantially the same terms contained in the
existing .Net Agreement.
-- On March 31, 2011 , Verisign deployed Domain Name System Security
Extensions ("DNSSEC") in the .com domain to provide origin
authentication of Domain Name System ("DNS") data, authenticated
denial of existence, and data integrity.
-- Verisign announced during the quarter that its Managed DNS Service
now provides full support for DNSSEC compliance features and Geo
Location capabilities, product enhancements which strengthen the
security and performance of DNS transactions.
-- Verisign ended the first quarter of 2011 with approximately 1,040
employees, compared to 1,050 employees at the end of the prior
quarter.
Non-GAAP Items
Non-GAAP financial results exclude the following items that are included
under GAAP: discontinued operations, stock-based compensation, amortization
of other intangible assets, impairments of goodwill and other intangible
assets, restructuring charges, contingent interest payment to holders of
our Convertible Debentures, and non-cash interest expense. Non-GAAP
financial information is also adjusted for a 30% tax rate which differs
from the GAAP tax rate. A table reconciling the GAAP to non-GAAP operating
income and net income attributable to
Today's Conference Call
About
VRSNF
Statements in this announcement other than historical data and information
constitute forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933 as amended and Section 21E of the Securities
Exchange Act of 1934 as amended. These statements involve risks and
uncertainties that could cause
VERISIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
March 31, December 31,
2011 2010
----------- -----------
ASSETS
Current assets:
Cash and cash equivalents $ 1,440,826 $ 1,559,628
Marketable securities 506,014 501,238
Accounts receivable, net 15,852 14,874
Prepaid expenses and other current assets 97,406 102,217
----------- -----------
Total current assets 2,060,098 2,177,957
----------- -----------
Property and equipment, net 193,145 190,319
Goodwill and other intangible assets, net 54,823 55,146
Other assets 22,537 20,584
----------- -----------
Total long-term assets 270,505 266,049
----------- -----------
Total assets $ 2,330,603 $ 2,444,006
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 159,627 $ 195,235
Deferred revenues 485,462 457,478
----------- -----------
Total current liabilities 645,089 652,713
----------- -----------
Long-term deferred revenues 213,484 205,560
Convertible debentures, including contingent
interest derivative 583,852 581,626
Long-term deferred tax liabilities 317,944 309,696
Other long-term liabilities 24,906 17,981
----------- -----------
Total long-term liabilities 1,140,186 1,114,863
----------- -----------
Total liabilities 1,785,275 1,767,576
----------- -----------
Commitments and contingencies
Stockholders' equity:
Preferred stock--par value $.001 per share;
Authorized shares: 5,000,000; Issued and
outstanding shares: none - -
Common stock--par value $.001 per share;
Authorized shares: 1,000,000,000; Issued
and outstanding shares: 168,413,107,
excluding 146,420,438 held in treasury, at
March 31, 2011 ; and 172,736,281, excluding
140,576,600 held in treasury, at December 31,
2010 315 313
Additional paid-in capital 20,869,501 21,040,919
Accumulated deficit (20,322,697) (20,363,468)
Accumulated other comprehensive loss (1,791) (1,334)
----------- -----------
Total stockholders' equity 545,328 676,430
----------- -----------
Total liabilities and stockholders' equity $ 2,330,603 $ 2,444,006
=========== ===========
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
--------------------
2011 2010
--------- ---------
Revenues $ 181,523 $ 161,582
--------- ---------
Costs and expenses
Cost of revenues 40,869 38,814
Sales and marketing 22,391 21,310
Research and development 13,594 12,277
General and administrative 33,629 34,844
Restructuring charges 5,530 234
--------- ---------
Total costs and expenses 116,013 107,479
--------- ---------
Operating income 65,510 54,103
Interest expense (11,820) (11,998)
Non-operating income, net 5,478 4,828
--------- ---------
Income from continuing operations before income taxes 59,168 46,933
Income tax expense (16,875) (16,924)
--------- ---------
Income from continuing operations, net of tax 42,293 30,009
(Loss) income from discontinued operations, net of
tax (1,522) 22,431
--------- ---------
Net income 40,771 52,440
Less: Net income from discontinued operations, net of
tax, attributable to noncontrolling interest in
subsidiary - (1,084)
--------- ---------
Net income attributable to Verisign stockholders $ 40,771 $ 51,356
========= =========
Basic income per share attributable to Verisign
stockholders from:
Continuing operations $ 0.25 $ 0.16
Discontinued operations (0.01) 0.12
--------- ---------
Net income $ 0.24 $ 0.28
========= =========
Diluted income per share attributable to Verisign
stockholders from:
Continuing operations $ 0.25 $ 0.16
Discontinued operations (0.01) 0.12
--------- ---------
Net income $ 0.24 $ 0.28
========= =========
Shares used to compute net income per share
attributable to Verisign stockholders:
Basic 170,193 183,174
========= =========
Diluted 171,979 184,259
========= =========
Amounts attributable to Verisign stockholders:
Income from continuing operations, net of tax $ 42,293 $ 30,009
(Loss) income from discontinued operations, net
of tax (1,522) 21,347
--------- ---------
Net income attributable to Verisign stockholders $ 40,771 $ 51,356
========= =========
The following table presents the classification of
stock-based compensation:
Cost of revenues $ 1,990 $ 921
Sales and marketing 1,854 1,120
Research and development 1,518 1,070
General and administrative 6,599 5,229
Restructuring charges 2,989 112
--------- ---------
Stock-based compensation for continuing operations 14,950 8,452
Discontinued operations - 3,633
--------- ---------
Total stock-based compensation expense $ 14,950 $ 12,085
========= =========
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
------------------------
2011 2010
----------- -----------
Cash flows from operating activities:
Net income $ 40,771 $ 52,440
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property and equipment and
amortization of other intangible assets 13,968 21,905
Stock-based compensation 14,950 12,085
Excess tax benefit associated with
stock-based compensation (3,615) (8,097)
Other, net 2,129 6,270
Changes in operating assets and liabilities,
excluding the effects of acquisitions and
divestitures:
Accounts receivable (985) 4,579
Prepaid expenses and other assets 3,975 9,689
Accounts payable and accrued liabilities (16,814) (33,734)
Deferred revenues 35,908 35,983
----------- -----------
Net cash provided by operating activities 90,287 101,120
----------- -----------
Cash flows from investing activities:
Proceeds from maturities and sales of
marketable securities and investments 11,238 95,909
Proceeds received from divestiture of
businesses, net of cash contributed - 15,583
Purchases of marketable securities and
investments (18,008) (549,087)
Purchases of property and equipment (15,565) (19,898)
Other investing activities (1,181) -
----------- -----------
Net cash used in investing activities (23,516) (457,493)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock from
option exercises and employee stock purchase
plans 16,550 17,393
Repurchases of common stock (207,428) (53,753)
Excess tax benefit associated with stock-based
compensation 3,615 8,097
Other financing activities - (346)
----------- -----------
Net cash used in financing activities (187,263) (28,609)
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents 1,690 (2,154)
----------- -----------
Net decrease in cash and cash equivalents (118,802) (387,136)
Cash and cash equivalents at beginning of period 1,559,628 1,477,166
----------- -----------
Cash and cash equivalents at end of period $ 1,440,826 $ 1,090,030
=========== ===========
Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized
interest $ 20,062 $ 19,811
=========== ===========
VERISIGN, INC.
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2011 March 31, 2010
---------------------- ---------------------
Net Income Net Income
attributable attributable
Operating to Verisign Operating to Verisign
Income stockholders Income stockholders
--------- ----------- --------- -----------
GAAP as reported $ 65,510 $ 40,771 $ 54,103 $ 51,356
Discontinued operations 1,522 (21,347)
Adjustments:
Stock-based compensation 11,961 11,961 8,340 8,340
Amortization of other
intangible assets 323 323 324 324
Restructuring charges 5,530 5,530 234 234
Non-cash interest expense 1,664 1,841
Tax adjustment (6,719) (377)
--------- ----------- --------- -----------
Non-GAAP as adjusted $ 83,324 $ 55,052 $ 63,001 $ 40,371
========= =========== ========= ===========
Diluted shares 171,979 184,259
Per diluted share, non-GAAP
as adjusted $ 0.32 $ 0.22
=========== ===========
Management believes that this non-GAAP financial data supplements our GAAP financial data by providing investors with additional information that allows them to have a clearer picture of the Company's operations. The presentation of this additional information is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP. We believe that the non-GAAP information enhances the investors' overall understanding of our financial performance and the comparability of the company's operating results from period to period. Above, we have provided a reconciliation of the non-GAAP financial information that we provide each quarter with the comparable financial information reported in accordance with GAAP for the given period.
SUPPLEMENTAL FINANCIAL INFORMATION
Three months ended
-------------------------------------------------------
March 31, December 31, September 30, June 30, March 31,
2011 2010 2010 2010 2010
--------- ------------ ------------ --------- ---------
Revenues $ 181,523 $ 178,829 $ 172,286 $ 167,881 $ 161,582
========= ============ ============ ========= =========
Source:
News Provided by Acquire Media