Verisign Reports First Quarter 2020 Results
Net income for the first quarter of 2020 included the recognition of
“During the COVID-19 crisis, we are taking a number of steps to support small businesses and our local communities. Within
Financial Highlights
-
Verisign ended the first quarter of 2020 with cash, cash equivalents and marketable securities of$1.14 billion , a decrease of$79 million from the end of 2019. -
Cash flow from operating activities was
$180 million for the first quarter of 2020, compared to$187 million for the same quarter in 2019. -
Deferred revenues as of
March 31, 2020 totaled$1.06 billion , an increase of$23 million from the end of 2019. -
During the first quarter of 2020,
Verisign repurchased 1.3 million shares of its common stock for an aggregate cost of$245 million . As ofMarch 31, 2020 , there was$826 million remaining for future share repurchases under the share repurchase program which has no expiration date.
Business Highlights
-
On
March 27, 2020 ,Verisign announced that it and ICANN entered into the Third Amendment to the .com Registry Agreement which, among other changes, permitsVerisign to increase the price of .com domain name registrations by up to 7% over the previous year, in each of the final four years of each six-year period. The first such six-year period began onOctober 26, 2018 . However, in view of the current COVID-19 crisis,Verisign announced onMarch 25, 2020 , that it will freeze registry prices for all of its Top-Level Domains (TLDs), including .com and .net, through the end of 2020. -
During the first quarter,
Todd Strubbe was promoted from Executive Vice President and Chief Operating Officer to President and Chief Operating Officer, further strengthening Verisign’s senior management team. -
Verisign ended the first quarter of 2020 with 160.7 million .com and .net domain name registrations in the domain name base, a 3.8 percent increase from the end of the first quarter of 2019, and a net increase of 1.83 million during the first quarter of 2020. -
During the first quarter of 2020,
Verisign processed 10.0 million new domain name registrations for .com and .net, compared to 9.8 million for the same quarter in 2019. - The final .com and .net renewal rate for the fourth quarter of 2020 was 73.8 percent compared with 74.3 percent for the same quarter in 2018. Renewal rates are not fully measurable until 45 days after the end of the quarter.
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 our actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, risks arising from the effects of the COVID-19 pandemic; risks arising from the agreements governing our business; new or existing governmental laws and regulations in the
©2020
CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except par value) (Unaudited) |
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ASSETS |
|
|
|
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Current assets: |
|
|
|
|||||
Cash and cash equivalents |
$ |
498,693 |
|
|
$ |
508,196 |
|
|
Marketable securities |
639,939 |
|
|
709,863 |
|
|||
Other current assets |
46,863 |
|
|
60,530 |
|
|||
Total current assets |
1,185,495 |
|
|
1,278,589 |
|
|||
Property and equipment, net |
247,764 |
|
|
250,283 |
|
|||
|
52,527 |
|
|
52,527 |
|
|||
Deferred tax assets |
84,388 |
|
|
87,798 |
|
|||
Deposits to acquire intangible assets |
145,000 |
|
|
145,000 |
|
|||
Other long-term assets |
38,687 |
|
|
39,812 |
|
|||
Total long-term assets |
568,366 |
|
|
575,420 |
|
|||
Total assets |
$ |
1,753,861 |
|
|
$ |
1,854,009 |
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT |
|
|
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Current liabilities: |
|
|
|
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Accounts payable and accrued liabilities |
$ |
180,015 |
|
|
$ |
209,988 |
|
|
Deferred revenues |
775,657 |
|
|
755,178 |
|
|||
Total current liabilities |
955,672 |
|
|
965,166 |
|
|||
Long-term deferred revenues |
281,030 |
|
|
278,702 |
|
|||
Senior notes |
1,788,194 |
|
|
1,787,565 |
|
|||
Long-term tax and other liabilities |
138,079 |
|
|
312,676 |
|
|||
Total long-term liabilities |
2,207,303 |
|
|
2,378,943 |
|
|||
Total liabilities |
3,162,975 |
|
|
3,344,109 |
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Commitments and contingencies |
|
|
|
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Stockholders’ deficit: |
|
|
|
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Preferred stock—par value |
— |
|
|
— |
|
|||
Common stock and additional paid-in capital—par value |
14,734,618 |
|
|
14,990,011 |
|
|||
Accumulated deficit |
(16,143,374 |
) |
|
(16,477,490 |
) |
|||
Accumulated other comprehensive loss |
(358 |
) |
|
(2,621 |
) |
|||
Total stockholders’ deficit |
(1,409,114 |
) |
|
(1,490,100 |
) |
|||
Total liabilities and stockholders’ deficit |
$ |
1,753,861 |
|
|
$ |
1,854,009 |
|
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In thousands, except per share data) (Unaudited) |
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|
Three Months Ended
|
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|
2020 |
|
2019 |
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Revenues |
$ |
312,524 |
|
|
$ |
306,408 |
|
|
Costs and expenses: |
|
|
|
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Cost of revenues |
45,573 |
|
|
45,504 |
|
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Sales and marketing |
6,604 |
|
|
10,519 |
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Research and development |
17,358 |
|
|
16,132 |
|
|||
General and administrative |
36,725 |
|
|
34,001 |
|
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Total costs and expenses |
106,260 |
|
|
106,156 |
|
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Operating income |
206,264 |
|
|
200,252 |
|
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Interest expense |
(22,535 |
) |
|
(22,631 |
) |
|||
Non-operating income, net |
7,084 |
|
|
12,203 |
|
|||
Income before income taxes |
190,813 |
|
|
189,824 |
|
|||
Income tax benefit (expense) |
143,303 |
|
|
(27,297 |
) |
|||
Net income |
334,116 |
|
|
162,527 |
|
|||
Other comprehensive income |
2,263 |
|
|
49 |
|
|||
Comprehensive income |
$ |
336,379 |
|
|
$ |
162,576 |
|
|
|
|
|
|
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Earnings per share: |
|
|
|
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Basic |
$ |
2.87 |
|
|
$ |
1.36 |
|
|
Diluted |
$ |
2.86 |
|
|
$ |
1.35 |
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|
Shares used to compute earnings per share |
|
|
|
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Basic |
116,375 |
|
|
119,757 |
|
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Diluted |
116,730 |
|
|
120,317 |
|
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) |
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|
Three Months Ended
|
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|
2020 |
|
2019 |
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Cash flows from operating activities: |
|
|
|
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Net income |
$ |
334,116 |
|
|
$ |
162,527 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|||||
Depreciation of property and equipment |
11,232 |
|
|
11,593 |
|
|||
Stock-based compensation |
11,441 |
|
|
12,462 |
|
|||
Amortization of discount on investments in debt securities |
(3,003 |
) |
|
(3,854 |
) |
|||
Other, net |
1,692 |
|
|
(147 |
) |
|||
Changes in operating assets and liabilities: |
|
|
|
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Other assets |
28 |
|
|
(226 |
) |
|||
Accounts payable and accrued liabilities |
(27,409 |
) |
|
(31,609 |
) |
|||
Deferred revenues |
22,807 |
|
|
29,219 |
|
|||
Net deferred income taxes and other long-term tax liabilities |
(170,844 |
) |
|
7,365 |
|
|||
Net cash provided by operating activities |
180,060 |
|
|
187,330 |
|
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Cash flows from investing activities: |
|
|
|
|||||
Proceeds from maturities and sales of marketable securities |
805,748 |
|
|
939,561 |
|
|||
Purchases of marketable securities |
(730,507 |
) |
|
(496,779 |
) |
|||
Proceeds (payments) from sale of business |
14,856 |
|
|
(2,958 |
) |
|||
Purchases of property and equipment |
(11,013 |
) |
|
(9,133 |
) |
|||
Net cash provided by investing activities |
79,084 |
|
|
430,691 |
|
|||
Cash flows from financing activities: |
|
|
|
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Repurchases of common stock |
(275,623 |
) |
|
(204,302 |
) |
|||
Proceeds from employee stock purchase plan |
8,296 |
|
|
8,253 |
|
|||
Net cash used in financing activities |
(267,327 |
) |
|
(196,049 |
) |
|||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash |
(1,316 |
) |
|
255 |
|
|||
Net (decrease) increase in cash, cash equivalents, and restricted cash |
(9,499 |
) |
|
422,227 |
|
|||
Cash, cash equivalents, and restricted cash at beginning of period |
517,601 |
|
|
366,753 |
|
|||
Cash, cash equivalents, and restricted cash at end of period |
$ |
508,102 |
|
|
$ |
788,980 |
|
|
Supplemental cash flow disclosures: |
|
|
|
|||||
Cash paid for interest |
$ |
13,151 |
|
|
$ |
13,063 |
|
|
Cash paid for income taxes, net of refunds received |
$ |
15,914 |
|
|
$ |
14,185 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20200423005695/en/
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