VeriSign Reports 6% Year-Over-Year Core Revenue Growth in Third Quarter 2009
MOUNTAIN VIEW, CA, Nov 05, 2009 (MARKETWIRE via COMTEX News Network) -- VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services, today reported financial results for the third quarter ended September 30, 2009.
On a GAAP basis, VeriSign reported revenue of $258 million from continuing operations for the third quarter of 2009. On a GAAP basis, VeriSign reported net income attributable to VeriSign, Inc. and subsidiaries of $54 million and earnings per share attributable to VeriSign, Inc. and subsidiaries of $0.28 on a diluted basis. GAAP operating margin for the third quarter was 29.1%.
On a GAAP basis, VeriSign reported segment revenue for Internet Infrastructure and Identity Services ("3IS"), or the "core" businesses of Naming Services and Authentication Services, of $257 million for the third quarter of 2009, up 1% from the prior quarter and up 6% year-over-year.
On a non-GAAP basis (which excludes items described below) for its core businesses, VeriSign reported net income attributable to VeriSign, Inc. and subsidiaries of $64 million for the third quarter of 2009 and diluted earnings per share of $0.33. Non-GAAP operating margin for the third quarter was 38.6%. A table reconciling the GAAP to the non-GAAP results reported above is appended to this release.
"We had a good quarter and we're pleased with the strength of our core businesses both in terms of growth and operating leverage," said Mark McLaughlin, president and chief executive officer of VeriSign. "As we enter the last quarter of 2009, and with our divestitures essentially behind us, we are focused on growing VeriSign's core businesses."
"Our execution over the past two years has been strong, even as we implemented a significant refocusing of the business," said Brian Robins, chief financial officer of VeriSign. "We have continued to deliver solid revenue and earnings growth. We believe VeriSign today has the operational focus and financial flexibility we need to deliver for our customers and move the business forward."
Business and Corporate Highlights
-- VeriSign Naming Services ended the quarter with approximately 94.9
million active domain names in the domain name base for .com and .net,
representing a 6% increase year-over-year.
-- VeriSign Business Authentication Services ended the quarter with 1.20
million SSL certificates in the installed base, representing a 9% increase
year-over-year.
-- VeriSign's average daily query load increased to 54 billion in Q3 from
49 billion in Q2.
-- In October, VeriSign and RSA announced a technical and sales
partnership that includes the integration by the end of December 2009 of
the RSA SecurID Authentication Engine into the VeriSign Identity Protection
(VIP) Authentication Service.
-- Subsequent to the end of the quarter, VeriSign completed the sales of
the Global Security Consulting business, and Messaging and Mobile Media
Services. The proceeds from the sales of 13 of our former non-core
businesses from November 2007 to date, including the sale of the remaining
interest in the Jamba joint venture, are approximately $750 million.
-- VeriSign 2009 Analyst Day will be held on November 19 in New York
City. A live webcast of the event will be available at
http://investor.verisign.com.
Financial Highlights
-- Revenue from discontinued operations was $41 million while the non-
core Pre-Pay Billing business reported $1 million of revenue as part of
continuing operations during the third quarter of 2009.
-- Transition services revenue for businesses previously divested is
included in Other Income/Loss and was $1.2 million in the third quarter of
2009 compared to $1.1 million in the second quarter.
-- VeriSign ended the third quarter of 2009 with Cash, Cash Equivalents
and Restricted Cash of $1.4 billion, an increase of $124 million from the
prior quarter.
-- Cash flow from operations, on a consolidated basis, was approximately
$105 million for the third quarter of 2009 and $222 million year-to-date,
after giving effect to a reclassification of $101 million of year-to-date
excess tax benefits associated with stock-based compensation from operating
cash flows to financing cash flows.
-- Capital expenditures, on a consolidated basis, were approximately $25
million for the third quarter of 2009 and $66 million year-to-date.
-- Deferred revenue on September 30, 2009 totaled $881 million for
continuing operations, an increase of $3 million from the prior quarter.
Non-GAAP Items
Non-GAAP results exclude the following items that are included under GAAP: discontinued operations, non-core businesses in continuing operations, stock-based compensation, amortization of other intangible assets, impairments of goodwill and other intangible assets, restructuring costs 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 net income is appended to this release. All non-GAAP figures for each period presented herein have been conformed to exclude the foregoing items under GAAP. Prior disclosures of non-GAAP figures may not exclude these same items and as such should not be used for comparison purposes.
Today's Conference Call
VeriSign will host a live teleconference call today at 2:00 p.m. (PST) to review the third quarter results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (913) 981-5530 (international). A listen-only live web cast and accompanying slide presentation of the earnings conference call will also be available at http://investor.verisign.com. A replay of this call will be available at (888) 203-1112 or (719) 457-0820 (passcode: 1432650) beginning at 7:00 p.m. (PST) on November 5 and will run through November 11. This press release and the financial information discussed on today's conference call are available on the Investor Relations section of the VeriSign website at http://investor.verisign.com.
About VeriSign
VeriSign, Inc. (NASDAQ: VRSN) is the trusted provider of Internet infrastructure services for the networked world. Billions of times each day, VeriSign helps companies and consumers all over the world engage in communications and commerce with confidence. Additional news and information about the company is available at www.verisign.com.
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's actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as increasing competition and pricing pressure from competing services offered at prices below our prices, market acceptance of our existing services and the current global economic downturn, the inability of VeriSign to successfully develop and market new services, the uncertainty of whether new services as provided by VeriSign will achieve market acceptance or result in any revenues and the uncertainty of the expense and duration of transition services and requests for indemnification relating to completed divestitures. More information about potential factors that could affect the Company's business and financial results is included in VeriSign's filings with the Securities and Exchange Commission, including in the Company's Annual Report on Form 10-K for the year ended December 31, 2008, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. VeriSign undertakes no obligation to update any of the forward-looking statements after the date of this press release.
VERISIGN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
September 30, December 31,
2009 2008
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents $ 1,432,306 $ 789,068
Accounts receivable, net of allowance for
doubtful accounts of $668 at September 30,
2009 and $1,208 at December 31, 2008 73,247 83,749
Prepaid expenses and other current assets 151,003 268,178
Assets held for sale 240,202 483,840
------------ ------------
Total current assets 1,896,758 1,624,835
------------ ------------
Property and equipment, net 372,413 385,498
Goodwill 290,214 283,109
Other intangible assets, net 24,681 35,312
Other assets 37,397 38,118
------------ ------------
Total long-term assets 724,705 742,037
------------ ------------
Total assets $ 2,621,463 $ 2,366,872
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable and accrued liabilities $ 246,592 $ 263,535
Accrued restructuring costs 5,980 28,920
Deferred revenues 656,751 629,800
Liabilities related to assets held for sale 41,455 49,160
Other current liabilities 2,712 5,463
------------ ------------
Total current liabilities 953,490 976,878
------------ ------------
Long-term deferred revenues 224,541 215,281
Long-term accrued restructuring costs 3,114 3,037
Convertible debentures, including contingent
interest derivative 571,526 568,712
Other long-term liabilities 86,692 84,543
------------ ------------
Total long-term liabilities 885,873 871,573
------------ ------------
Total liabilities 1,839,363 1,848,451
------------ ------------
Commitments and contingencies
Stockholders' equity:
VeriSign, Inc. and subsidiaries
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: 192,271,949
excluding 115,079,736 held in treasury, at
September 30, 2009; and 191,547,795
excluding 112,717,587 held in treasury,
at December 31, 2008 307 304
Additional paid-in capital 22,009,195 21,891,786
Accumulated deficit (21,286,483) (21,439,988)
Accumulated other comprehensive income 9,039 17,111
------------ ------------
Total VeriSign, Inc. and subsidiaries
stockholders' equity 732,058 469,213
Noncontrolling interest in subsidiary 50,042 49,208
------------ ------------
Total stockholders' equity 782,100 518,421
------------ ------------
Total liabilities and stockholders' equity $ 2,621,463 $ 2,366,872
============ ============
VERISIGN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------- ----------------------
2009 2008 2009 2008
---------- ---------- ---------- ----------
Revenues $ 257,995 $ 245,934 $ 769,609 $ 723,232
---------- ---------- ---------- ----------
Costs and expenses:
Cost of revenues 56,736 57,265 174,520 172,498
Sales and marketing 45,015 41,646 128,341 133,779
Research and development 24,940 21,764 72,976 70,528
General and
administrative 42,634 49,677 134,721 152,742
Restructuring,
impairments and other
charges 10,428 5,909 15,673 107,293
Amortization of other
intangible assets 3,112 2,500 9,394 7,675
---------- ---------- ---------- ----------
Total costs and
expenses 182,865 178,761 535,625 644,515
---------- ---------- ---------- ----------
Operating income 75,130 67,173 233,984 78,717
Other loss, net (8,669) (13,450) (23,228) (22,308)
---------- ---------- ---------- ----------
Income from continuing
operations before income
taxes and loss from
unconsolidated entities 66,461 53,723 210,756 56,409
---------- ---------- ---------- ----------
Income tax expense 18,111 8,876 71,213 7,466
Loss from unconsolidated
entities, net of tax - (2,509) - (3,099)
---------- ---------- ---------- ----------
Income from continuing
operations, net of tax 48,350 42,338 139,543 45,844
Income (loss) from
discontinued operations,
net of tax 6,249 (242,613) 16,343 (321,463)
---------- ---------- ---------- ----------
Net income (loss) 54,599 (200,275) 155,886 (275,619)
Less: Net income
attributable to
noncontrolling interest in
subsidiary (988) (815) (2,381) (2,710)
---------- ---------- ---------- ----------
Net income (loss)
attributable to VeriSign,
Inc. and subsidiaries
common stockholders $ 53,611 $ (201,090) $ 153,505 $ (278,329)
========== ========== ========== ==========
Basic income (loss) per
share attributable to
VeriSign, Inc. and
subsidiaries common
stockholders from:
Continuing operations $ 0.25 $ 0.21 $ 0.71 $ 0.22
Discontinued operations 0.03 (1.25) 0.09 (1.62)
---------- ---------- ---------- ----------
Net income (loss) $ 0.28 $ (1.04) $ 0.80 $ (1.40)
========== ========== ========== ==========
Diluted income (loss) per
share attributable to
VeriSign, Inc. and
subsidiaries common
stockholders from:
Continuing operations $ 0.24 $ 0.21 $ 0.71 $ 0.21
Discontinued operations 0.04 (1.24) 0.08 (1.58)
---------- ---------- ---------- ----------
Net income (loss) $ 0.28 $ (1.03) $ 0.79 $ (1.37)
========== ========== ========== ==========
Shares used to compute net
income (loss) per share
attributable to
VeriSign, Inc. and
subsidiaries common
stockholders:
Basic 192,619 193,853 192,527 198,622
========== ========== ========== ==========
Diluted 193,472 195,930 193,235 202,951
========== ========== ========== ==========
Amounts attributable to
VeriSign, Inc. and
subsidiaries common
stockholders:
Income from continuing
operations, net of tax $ 47,362 $ 41,523 $ 137,162 $ 43,134
Income (loss) from
discontinued
operations, net of tax 6,249 (242,613) 16,343 (321,463)
---------- ---------- ---------- ----------
Net income (loss)
attributable to
VeriSign, Inc. and
subsidiaries common
stockholders $ 53,611 $ (201,090) $ 153,505 $ (278,329)
========== ========== ========== ==========
VERISIGN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Nine Months Ended
September 30,
------------------------
2009 2008
----------- -----------
Cash flows from operating activities:
Net income (loss) $ 155,886 $ (275,619)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Loss (gain) on divestiture of businesses,
net of tax 46,000 (32,853)
Depreciation of property and equipment 52,321 85,593
Amortization of other intangible assets 9,394 22,758
Estimated (reversals) losses on assets held
for sale (33,293) 308,765
Stock-based compensation 39,405 75,368
Loss on sale and impairment of long-lived
assets 14,237 80,534
Impairment of goodwill - 45,793
Excess tax benefit associated with stock-based
compensation (100,583) (7,094)
Other, net (5,951) 5,846
Changes in operating assets and liabilities:
Accounts receivable, net 14,519 30,547
Prepaid expenses and other assets (7,271) 12,093
Accounts payable and accrued liabilities 28,209 (116,273)
Accrued restructuring costs (22,841) 29,752
Deferred revenues 32,010 97,830
----------- -----------
Net cash provided by operating activities 222,042 363,040
----------- -----------
Cash flows from investing activities:
Proceeds from maturities and sales of
investments 117,901 1,440
Proceeds from sale of property and equipment - 48,843
Purchases of property and equipment (66,067) (88,093)
Reclassification of cash equivalents to
short-term investments - (248,403)
Proceeds received from divestiture of
businesses, net of cash provided 282,178 60,613
Investment in unconsolidated entities - (15,679)
Cash received from trust, previously restricted - 45,000
Other investing activities (3,300) 5,697
----------- -----------
Net cash provided by (used in) investing
activities 330,712 (190,582)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock from
option exercises and employee stock purchase
plan 32,906 120,591
Repurchases of common stock (51,682) (1,276,683)
Proceeds from credit facility - 200,000
Repayment of short-term debt related to credit
facility - (200,000)
Excess tax benefit associated with stock-based
compensation 100,583 7,094
Dividend paid to noncontrolling interest in
subsidiary (113) (741)
----------- -----------
Net cash provided by (used in) financing
activities 81,694 (1,149,739)
----------- -----------
Effect of exchange rate changes on cash and cash
equivalents 8,790 4,084
----------- -----------
Net increase (decrease) in cash and cash
equivalents 643,238 (973,197)
Cash and cash equivalents at beginning of period 789,068 1,376,722
----------- -----------
Cash and cash equivalents at end of period $ 1,432,306 $ 403,525
=========== ===========
Supplemental cash flow disclosures:
Cash paid for interest, net of capitalized
interest $ 39,256 $ 35,677
=========== ===========
Dividend payable to noncontrolling interest in
subsidiary $ 694 $ -
=========== ===========
VERISIGN, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
(Unaudited)
Three Months Ended Nine Months Ended
September 30, 2009 September 30, 2009
-------------------------- -------------------------
Net Income Net Income
(loss) (loss)
attributable attributable
to VeriSign, to VeriSign,
Operating Inc. and Operating Inc. and
Income Subsidiaries Income Subsidiaries
----------- ------------- ---------- -------------
GAAP as reported $ 75,130 $ 53,611 $ 233,984 $ 153,505
Discontinued
operations (6,249) (16,343)
Non-core
businesses in
continuing
operations (1) 424 417 (686) (1,646)
Adjustments:
Stock-based
compensation 10,376 10,376 32,604 32,604
Amortization of
other intangible
assets 3,112 3,112 9,394 9,394
Impairment of
other intangible
asset 9,684 9,684 9,684 9,684
Restructuring
costs 471 471 5,399 5,399
Non-cash interest
expense 1,709 5,008
Tax adjustment (2) (9,558) (10,147)
----------- ------------- ---------- -------------
Non-GAAP as adjusted $ 99,197 $ 63,573 $ 290,379 $ 187,458
=========== ============= ========== =============
Diluted shares 193,472 193,235
============= =============
Per diluted share,
non-GAAP as adjusted $ 0.33 $ 0.97
============= =============
(1) As of September 30, 2009, the Company's business consists of the
following reportable segments: (a) 3IS and (b) Other Services. 3IS consists
of core operations of Naming Services and Authentication Services.
Authentication Services is comprised of Business Authentication Services,
formerly known as Secure Socket Layer Certificate Services; and User
Authentication Services, formerly known as Identity and Authentication
Services. Other Services consists of non-core businesses in continuing
operations.
(2) Non-GAAP tax is calculated as 30% of income from continuing operations,
excluding noncontrolling interest in subsidiary, which is presented net of
tax on the Statement of Operations.
VeriSign provides quarterly and annual financial statements that are
prepared in accordance with generally accepted accounting principles
(GAAP). Along with this information, we typically disclose and discuss
certain non-GAAP financial information in our quarterly earnings release,
on investor conference calls and during investor conferences and related
events. This non-GAAP financial information does not include the following
types of financial measures that are included in GAAP: discontinued
operations, non-core businesses in continuing operations, stock-based
compensation, amortization of other intangible assets, impairments of
goodwill and other intangible assets, restructuring costs and non-cash
interest expense. Non-GAAP financial information is also adjusted for a
30% tax rate which differs from the GAAP tax rate. All non-GAAP figures
for each period presented herein have been conformed to exclude the
foregoing items under GAAP. Prior disclosures of non-GAAP figures may not
exclude these same items, and as such should not be used for comparison
purposes.
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 core operations.
The presentation of this additional information is not meant to be
considered in isolation or 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
-------------------------------------------------
September December September
30, June 30, March 31, 31, 30,
2009 2009 2009 2008 2008
--------- --------- --------- --------- ---------
Revenues from core (3IS)
operations(1) $ 256,908 $ 255,248 $ 252,212 $ 248,123 $ 241,322
========= ========= ========= ========= =========
Contacts Investor Relations: Nancy Fazioli ir@verisign.com 650-426-5146 Media Relations: Brad Williams brwilliams@verisign.com 650-426-5298
SOURCE: VeriSign, Inc.
mailto:ir@verisign.com mailto:brwilliams@verisign.com
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