Verisign Reports 13% Year-Over-Year Revenue Growth in First Quarter 2012
First Quarter GAAP Financial Results
First Quarter Non-GAAP Financial Results
"The first quarter was another record in terms of new domain name registrations, reflecting the global growth in internet adoption and e-commerce," commented
"Our first quarter results demonstrate our continued financial and operational discipline," said
In addition, the company has appointed
Kilguss most recently served as chief financial officer of Internap Network Services and has significant financial management, operations, and development experience in publicly traded technology companies, as well as in the investment banking sector. In addition to Internap, Kilguss has served as chief financial officer of Towerstream Corporation and
"We are very pleased to announce
Financial Highlights
Verisign ended the first quarter with Cash, Cash Equivalents,Marketable Securities and Restricted Cash of$1.39 billion , an increase of$40 million from year end 2011.- Cash flow from operations was
$110 million for the first quarter compared with$90 million for the same quarter in 2011. - Deferred revenues on
March 31, 2012 , totaled$783 million , an increase of$55 million from year end 2011. - Capital expenditures were
$13 million in the first quarter of 2012. - During the first quarter,
Verisign repurchased approximately 1.8 million shares of the company's common stock for a cost of$68 million . AtMarch 31, 2012 , approximately$763 million remained available and authorized under the current share repurchase program. - For purposes of calculating diluted EPS, the first quarter diluted share count included 2.5 million shares related to the convertible debentures, compared with 0.5 million shares in the same quarter in 2011. These represent diluted shares and not shares that have been issued.
Business Highlights
- Verisign Registry Services added 2.86 million net new names and ended the first quarter with approximately 116.7 million active domain names in the adjusted zone for .com and .net, representing an 8.1% increase year-over-year.
- In the first quarter,
Verisign processed a record 8.9 million new domain name registrations, representing an increase of 7.7% year-over-year. - On
March 27, 2012 , theInternet Corporation of Assigned Names and Numbers ("ICANN") posted renewal terms negotiated betweenVerisign and ICANN for the .com Registry Agreement which are substantially the same as the terms contained in the existing .com Registry Agreement except for new provisions regarding indemnification and audit rights, consistent with the other five largest generic top level domain (gTLD) registry agreements (including the .net agreement). - Through ICANN's new gTLD application process, which we expect to close in
May 2012 ,Verisign applied for 14 new gTLDs including 12 transliterations of .com and .net. In addition, applicants for approximately 220 new gTLDs selectedVerisign to provide back-end registry services.
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 payments to holders of our Convertible Debentures, unrealized gain/loss on contingent interest derivative on 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
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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
©2012 VeriSign, Inc. All rights reserved.
VERISIGN, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except par value)
(Unaudited)
March 31, December 31,
2012 2011
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,353,040 $ 1,313,349
Marketable securities 32,803 32,860
Accounts receivable, net 13,553 14,974
Deferred tax assets and other current assets 74,287 86,598
------------ ------------
Total current assets 1,473,683 1,447,781
------------ ------------
Property and equipment, net 328,474 327,136
Goodwill and other intangible assets, net 53,525 53,848
Other assets 27,078 27,414
------------ ------------
Total long-term assets 409,077 408,398
------------ ------------
Total assets $ 1,882,760 $ 1,856,179
============ ============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable and accrued liabilities $ 99,640 $ 156,385
Deferred revenues 542,976 502,538
------------ ------------
Total current liabilities 642,616 658,923
------------ ------------
Long-term deferred revenues 240,314 226,033
Convertible debentures, including contingent
interest derivative 592,821 590,086
Long-term debt 100,000 100,000
Long-term deferred tax liabilities 333,181 325,527
Other long-term liabilities 45,161 43,717
------------ ------------
Total long-term liabilities 1,311,477 1,285,363
------------ ------------
Total liabilities 1,954,093 1,944,286
------------ ------------
Commitments and contingencies
Stockholders' deficit:
Preferred stock-par value $.001 per share;
Authorized shares: 5,000; Issued and
outstanding shares: none - -
Common stock-par value $.001 per share;
Authorized shares: 1,000,000; Issued shares:
317,722 at March 31, 2012 and 316,781 at
December 31, 2011 ; Outstanding shares: 158,352
at March 31, 2012 and 159,422 at December 31,
2011 318 317
Additional paid-in capital 20,084,011 20,135,237
Accumulated deficit (20,152,568) (20,220,577)
Accumulated other comprehensive loss (3,094) (3,084)
------------ ------------
Total stockholders' deficit (71,333) (88,107)
------------ ------------
Total liabilities and stockholders' deficit $ 1,882,760 $ 1,856,179
============ ============
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
----------------------
2012 2011
---------- ----------
Revenues $ 205,726 $ 181,523
---------- ----------
Costs and expenses:
Cost of revenues 41,256 40,869
Sales and marketing 27,815 22,391
Research and development 14,765 13,594
General and administrative 23,508 33,629
Restructuring charges (548) 5,530
---------- ----------
Total costs and expenses 106,796 116,013
---------- ----------
Operating income 98,930 65,510
Interest expense (12,340) (11,820)
Non-operating income, net 807 5,478
---------- ----------
Income from continuing operations before income
taxes 87,397 59,168
Income tax expense (21,292) (16,875)
---------- ----------
Income from continuing operations, net of tax 66,105 42,293
Income (loss) from discontinued operations, net of
tax 1,904 (1,522)
---------- ----------
Net income 68,009 40,771
---------- ----------
Foreign currency translation adjustments - 28
Change in unrealized gain on investments, net of
tax (5) (458)
Realized gain on investments, net of tax, included
in net income (5) (27)
---------- ----------
Other comprehensive loss (10) (457)
---------- ----------
Comprehensive income $ 67,999 $ 40,314
========== ==========
Basic income per share from:
Continuing operations $ 0.41 $ 0.25
Discontinued operations 0.02 (0.01)
---------- ----------
Net income $ 0.43 $ 0.24
========== ==========
Diluted income per share from:
Continuing operations $ 0.41 $ 0.25
Discontinued operations 0.01 (0.01)
---------- ----------
Net income $ 0.42 $ 0.24
========== ==========
Shares used to compute net income per share:
Basic 159,344 170,193
========== ==========
Diluted 162,881 171,979
========== ==========
VERISIGN, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Three Months Ended
March 31,
----------------------
2012 2011
---------- ----------
Cash flows from operating activities:
Net income $ 68,009 $ 40,771
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation of property and equipment and
amortization of other intangible assets 12,741 13,968
Stock-based compensation 8,130 14,950
Excess tax benefit associated with stock-based
compensation (3,567) (3,615)
Other, net 1,006 2,129
Changes in operating assets and liabilities:
Accounts receivable 1,392 (985)
Deferred tax assets and other assets 12,720 3,975
Accounts payable and accrued liabilities (44,872) (16,814)
Deferred revenues 54,719 35,908
---------- ----------
Net cash provided by operating activities 110,278 90,287
---------- ----------
Cash flows from investing activities:
Proceeds from maturities and sales of marketable
securities and investments 5,060 11,238
Purchases of marketable securities and investments (5,082) (18,008)
Purchases of property and equipment (12,917) (15,565)
Other investing activities - (1,181)
---------- ----------
Net cash used in investing activities (12,939) (23,516)
---------- ----------
Cash flows from financing activities:
Proceeds from issuance of common stock from option
exercises and employee stock purchase plans 11,390 16,550
Repurchases of common stock (75,149) (207,428)
Excess tax benefit associated with stock-based
compensation 3,567 3,615
Other financing activities 189 -
---------- ----------
Net cash used in financing activities (60,003) (187,263)
---------- ----------
Effect of exchange rate changes on cash and cash
equivalents 2,355 1,690
---------- ----------
Net increase (decrease) in cash and cash equivalents 39,691 (118,802)
Cash and cash equivalents at beginning of period 1,313,349 1,559,628
---------- ----------
Cash and cash equivalents at end of period $1,353,040 $1,440,826
========== ==========
Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized
interest $ 20,036 $ 20,062
========== ==========
Cash paid for income taxes, net of refunds
received $ 13,186 $ 2,539
========== ==========
VERISIGN, INC.
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 2012 March 31, 2011
-------------------- --------------------
Operating Net Operating Net
Income Income Income Income
--------- --------- --------- ---------
GAAP as reported $ 98,930 $ 68,009 $ 65,510 $ 40,771
Discontinued operations (1,904) 1,522
Adjustments:
Stock-based compensation 8,130 8,130 11,961 11,961
Amortization of other
intangible assets 323 323 323 323
Restructuring charges (548) (548) 5,530 5,530
Unrealized loss on
contingent interest
derivative on Convertible
Debentures 813 450
Non-cash interest expense 1,620 1,664
Tax adjustment (8,028) (6,854)
--------- --------- ---------
Non-GAAP as adjusted $ 106,835 $ 68,415 $ 83,324 $ 55,367
========= ========= ========= =========
Revenues $ 205,726 $ 181,523
Non-GAAP operating margin 51.9% 45.9%
========= =========
Diluted shares 162,881 171,979
Per diluted share, non-GAAP as
adjusted $ 0.42 $ 0.32
========= =========
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
The following table presents the classification of stock-based compensation:
Three Months Ended
---------------------
March 31, March 31,
2012 2011
---------- ----------
Cost of revenues $ 1,537 $ 1,990
Sales and marketing 1,516 1,854
Research and development 1,242 1,518
General and administrative 3,835 6,599
Restructuring charges - 2,989
---------- ----------
Total stock-based compensation expense $ 8,130 $ 14,950
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Source:
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