VeriSign Reports Fourth Quarter and Fiscal 2007 Results
MOUNTAIN VIEW, CA, Jan 31, 2008 (MARKET WIRE via COMTEX News Network) -- VeriSign, Inc. (NASDAQ: VRSN), the leading provider of Internet infrastructure for the networked world, today reported financial results for the fourth quarter and fiscal year ended December 31, 2007.
Q4 2007 Financial Results
VeriSign reported total revenue of $386 million for the fourth quarter of 2007. On a GAAP basis, VeriSign reported a net loss of $196 million for the fourth quarter of 2007 and a net loss per share of $0.88. These results include our best estimate of a non-cash impairment charge of $210 million associated with the digital content and messaging business.
On a non-GAAP basis (which excludes the items described below), VeriSign reported net income of $70 million for the fourth quarter of 2007 and earnings per share of $0.30 per fully-diluted share. A table reconciling the GAAP to non-GAAP results reported above is appended to this release.
"VeriSign's core businesses and our strong operational execution continue to yield solid growth," said Bill Roper, president and chief executive officer of VeriSign. "Our fourth quarter results support our decision to focus on our core strengths in Internet infrastructure. We are on track to deliver on the business strategy we outlined at our analyst day late last year."
2007 Financial Results
For the year ended December 31, 2007, VeriSign reported total revenue of $1.5 billion, excluding $12 million from discontinued operations.
On a GAAP basis, VeriSign reported a net loss of $120 million for 2007 and loss per share of $0.50.
On a non-GAAP basis (which excludes the items described below), VeriSign reported net income of $251 million for 2007 and earnings per share of $1.03 per fully-diluted share.
"We met our financial goals for the fourth quarter, closing out a solid year as non-GAAP operating margin excluding Jamba improved over 650 basis points from year ago results," said Bert Clement, chief financial officer of VeriSign. "The combination of a strong business model and operational rigor resulted in healthy operating cash flow of over $450 million and notable improvements in our balance sheet as we ended the year with strong cash and record deferred revenue."
Non-GAAP results exclude the following items which are included under GAAP: amortization of intangible assets, impairment of goodwill, acquired in-process R&D, stock-based compensation, former CEO severance, non-recurring costs and settlements, restructuring, impairments and other charges (reversals), net gain or loss on the sale or impairment of investments, gain or loss on the sale of a subsidiary, unrealized gain on Jamba JV call option, realized and unrealized gains and losses on embedded derivative, and stock option investigation costs. A table reconciling the GAAP to non-GAAP net income is appended to this release.
Internet Services Group
-- The Internet Services Group (ISG) -- which includes Naming, SSL and
Security Services -- delivered $245 million of revenue in the fourth
quarter of 2007, up 20% year over year.
-- VeriSign Naming Services ended the quarter with approximately 80.4
million active domain names in the adjusted zone for .com and .net,
representing a 4% increase over Q3 2007 and 24% increase year over year.
-- VeriSign Naming Services also registered 18.0 million new and renewed
domain names in .com and .net during the fourth quarter.
-- VeriSign SSL Services issued approximately 233,000 new and renewal
certificates in Q4, bringing the total installed base to 938,000, up 3%
from Q3 2007 and an increase of 16% year over year.
Communications Services Group
-- VeriSign Communications Services Group (CSG) -- which provides
intelligent communications, commerce and content services to
telecommunications carriers, media and entertainment companies, and next-
generation service providers -- delivered revenues of $142 million in the
fourth quarter of 2007, up 4% year over year excluding Jamba and Jamba
Services.
Additional Financial and Business Highlights
-- During the quarter, the company repurchased 6.6 million shares of
common stock at an average price of $30.70.
-- VeriSign ended the fourth quarter with Cash, Cash Equivalents,
Restricted Cash and Short-term Investments of $1.4 billion, an increase of
approximately $255 million from the prior quarter, and an increase of $675
million over last year.
-- Capital expenditures were approximately $58 million for the fourth
quarter and approximately $152 million for the year.
-- Deferred revenue on the balance sheet was $739 million as of December
31, 2007, an increase of $28 million from the prior quarter and up $131
million year-over-year.
-- Net days sales outstanding (Net DSO), which takes into account the
change in deferred revenue balances, was 44 days at the end of Q4.
-- VeriSign announced at its Analyst Day on November 14, 2007 its
intention to focus on Internet infrastructure services and, as a result,
divest itself of a number of businesses over the course of 2008.
-- Timothy Tomlinson was appointed to the company's Board of Directors on
November 5, 2007. He serves on the Audit Committee and the Compensation
Committee. Mr. Tomlinson was previously a member of VeriSign's Board of
Directors from 1995 until 2002.
-- Ken Silva has been named the company's Chief Technology Officer. Mr.
Silva has more than 20 years of experience in security and
telecommunications and previously held the position of Chief Security
Officer at VeriSign.
Today's Conference Call
VeriSign will host a live teleconference call today at 2:00 pm (PST) to review the quarter's results. The call will be accessible by direct dial at (888) 676-VRSN (US) or (913) 312-1505 (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: 1256242) beginning at 5:00 pm (PDT) on January 31 and will run through February 6. 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) operates intelligent infrastructure services that enable and protect billions of interactions every day across the world's voice, video and data networks. 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 and Section 21E of the Securities Exchange Act of 1934. 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 and market acceptance of our existing services, the inability of VeriSign to successfully develop and market new services, and the uncertainty of whether new services as provided by VeriSign will achieve market acceptance or result in any revenues and the risk acquired businesses will not be integrated successfully and unanticipated costs of such integration. 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, 2006 and 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)
December 31, December 31,
2007 2006
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 1,376,722 $ 478,749
Short-term investments 1,011 198,656
Accounts receivable, net 208,799 241,570
Prepaid expenses and other current assets 116,758 294,955
Deferred tax assets 43,288 81,773
Current assets of discontinued operations - 36,661
------------- -------------
Total current assets 1,746,578 1,332,364
------------- -------------
Property and equipment, net 626,174 605,292
Goodwill 1,059,473 1,442,493
Other intangible assets, net 184,383 333,430
Restricted cash 46,936 49,437
Long-term deferred tax assets 282,337 179,023
Other assets, net 59,952 25,214
Investment in unconsolidated entities 112,351 -
Long-term assets of discontinued operations - 7,000
------------- -------------
Total long-term assets 2,371,606 2,641,889
------------- -------------
Total assets $ 4,118,184 $ 3,974,253
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 372,813 $ 681,996
Accrued restructuring costs 2,878 3,818
Deferred revenue 552,070 448,414
Short-term debt - 199,000
Deferred tax liabilities 6,619 1,448
Current liabilities of discontinued
operations - 24,601
------------- -------------
Total current liabilities 934,380 1,359,277
------------- -------------
Long-term deferred revenue 186,719 159,439
Long-term accrued restructuring costs 1,473 937
Long-term debt 1,265,296 -
Long-term tax liability 37,801 -
Other long-term liabilities 540 5,175
Long-term deferred tax liabilities 88,955 24,849
------------- -------------
Total long-term liabilities 1,580,784 190,400
------------- -------------
Total liabilities 2,515,164 1,549,677
Commitments and contingencies
Minority interest in subsidiaries 54,486 47,716
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: 222,849,348
and 243,844,122 (excluding 73,720,953 and
35,471,662 shares held in treasury at
December 31, 2007 and December 31, 2006,
respectively) 297 279
Additional paid-in capital 22,557,446 23,314,476
Accumulated deficit (21,011,184) (20,929,497)
Accumulated other comprehensive loss 1,975 (8,398)
------------- -------------
Total stockholders' equity 1,548,534 2,376,860
------------- -------------
Total liabilities and stockholders'
equity $ 4,118,184 $ 3,974,253
============= =============
VERISIGN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenues $ 386,436 $ 408,639 $ 1,496,289 $ 1,562,998
Cost and expenses
Cost of revenues 148,057 148,723 596,517 574,762
Sales & marketing 68,381 98,299 276,632 376,508
Research &
development 38,872 36,812 160,185 129,256
General &
administrative 73,269 67,731 261,130 256,592
Restructuring,
impairments & other
charges (935) (192) 43,262 (4,471)
Impairment of
goodwill (1) 210,000 - 210,000 -
Amortization of
intangible assets 25,371 31,957 116,064 122,767
Acquired in-process
R&D - - - 16,700
----------- ----------- ----------- -----------
Total costs &
expenses 563,015 383,330 1,663,790 1,472,114
----------- ----------- ----------- -----------
Operating (loss) income (176,579) 25,309 (167,501) 90,884
Other income, net 9,972 4,377 96,004 42,643
----------- ----------- ----------- -----------
Income (loss) from
continuing operations
before income taxes,
earnings from
unconsolidated
entities and minority
interest (166,607) 29,686 (71,497) 133,527
Income tax (expense)
benefit (23,389) (59,904) (47,260) 243,648
Earnings from
unconsolidated
entities, net of tax (4,430) - (2,018) -
Minority interest, net
of tax (1,299) (751) (3,840) (2,875)
----------- ----------- ----------- -----------
Net (loss) income from
continuing operations (195,725) (30,969) (124,615) 374,300
Net income from from
discontinued
operations, net of tax - 1,437 3,573 4,715
Gain on sale of
discontinued
operations, net of tax - - 1,357 -
----------- ----------- ----------- -----------
Net (loss) income $ (195,725) $ (29,532) $ (119,685) $ 379,015
=========== =========== =========== ===========
Basic net income (loss)
per share from:
Continuing operations $ (0.88) $ (0.13) $ (0.52) $ 1.53
Discontinued
operations - 0.01 0.02 0.02
----------- ----------- ----------- -----------
Net (loss) income $ (0.88) $ (0.12) $ (0.50) $ 1.55
=========== =========== =========== ===========
Diluted net income
(loss) income per
share from:
Continuing operations $ (0.88) $ (0.13) $ (0.52) $ 1.51
Discontinued
operations - 0.01 0.02 0.02
----------- ----------- ----------- -----------
Net (loss) income $ (0.88) $ (0.12) $ (0.50) $ 1.53
=========== =========== =========== ===========
Shares used in per
share computation:
Basic 223,274 243,832 237,707 244,421
=========== =========== =========== ===========
Diluted 223,274 243,832 237,707 247,073
=========== =========== =========== ===========
Stock-based compensation
Cost of revenue $ 6,283 $ 4,522 $ 20,928 $ 14,696
Sales & marketing 6,716 4,013 22,933 15,237
Research & development 4,322 3,069 14,920 10,437
General &
administrative 6,898 5,281 35,822 24,346
----------- ----------- ----------- -----------
Total stock-based
compensation $ 24,219 $ 16,885 $ 94,603 $ 64,716
=========== =========== =========== ===========
(1) Best estimate of a non-cash impairment loss associated with the
digital content and messaging business. The Company is currently
finalizing its valuation analysis.
VERISIGN, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
------------------------ ------------------------
2007 2006 2007 2006
----------- ----------- ----------- -----------
Revenue reconciliation
Revenue from continuing
operations $ 386,436 $ 408,639 $ 1,496,289 $ 1,562,998
Revenue from
discontinued
operations (1) - 3,589 11,869 12,162
----------- ----------- ----------- -----------
Revenue including
discontinued
operations $ 386,436 $ 412,228 $ 1,508,158 $ 1,575,160
=========== =========== =========== ===========
(1) For the twelve months ended December 31, 2007, revenue from
discontinued operations represents activity related primarily to the
Jamba Services business. VeriSign previously provided investors and
analysts forecasts for the period that included revenue up until an
estimated disposition date of the business. For the three and twelve
months ended December 31, 2006, revenue from discontinued operations
represents activity related to both Jamba Services and the Payments
Gateway business. For GAAP purposes, revenue from these and all
periods are reclassified to net income from discontinued operations.
Statements of
operations
reconciliation
Net income on a GAAP
basis $ (195,725) $ (29,532) $ (119,685) $ 379,015
Amortization of
intangible assets 25,371 31,957 116,064 122,767
Impairment of
goodwill (2) 210,000 - 210,000 -
Acquired
in-process research
and development - - - 16,700
Stock-based
compensation (3) 24,219 16,872 94,603 64,577
Former CEO severance - - 10,430 -
Non-recurring costs
and settlements 14,914 164 16,284 3,665
Restructuring,
impairments and other
charges (reversals) (935) (192) 43,262 (4,471)
Net (gain) loss on sale
of investments (2,280) 2 1,150 (20,282)
Net (gain) loss on sale
of subsidiary 1,260 - (75,096) -
Unrealized (gain) on
Jamba JV call option (3,178) - (10,925) -
Stock option investigation
costs - 4,103 7,896 9,119
Embedded derivative on
debt offering 2,712 - 15,296 -
Income from discontinued
operations - (1,437) (3,573) (4,715)
Income tax expense
(benefit) 23,389 59,904 47,260 (243,648)
----------- ----------- ----------- -----------
Non-GAAP continuing
operations income
before income taxes 99,747 81,841 352,966 322,727
Non-GAAP tax rate in
lieu of the GAAP
rate (4) (29,924) (24,552) (105,890) (96,818)
----------- ----------- ----------- -----------
Net income from
continuing operations
on a non-GAAP basis $ 69,823 $ 57,289 $ 247,076 $ 225,909
=========== =========== =========== ===========
Net income from
discontinued
operation, net of tax - 1,437 3,573 4,715
----------- ----------- ----------- -----------
Net income on a
non-GAAP basis $ 69,823 $ 58,726 $ 250,649 $ 230,624
=========== =========== =========== ===========
Statements of
operations
reconciliation per
share
Diluted net income
(loss) per share on a
GAAP basis $ (0.88) $ (0.12) $ (0.50) $ 1.53
Diluted net loss
(income) per share
on a GAAP basis 0.02 - 0.01 -
Amortization of
intangible assets 0.11 0.13 0.48 0.50
Impairment of goodwill 0.91 - 0.86 -
Acquired in-process
research and development - - - 0.07
Stock-based
compensation 0.11 0.07 0.39 0.26
Former CEO severance - - 0.04 -
Non-recurring costs and
settlements 0.06 - 0.07 0.01
Restructuring, impairments
and other charges
(reversals) - - 0.18 (0.02)
Net (gain) loss on
sale of investments (0.01) - - (0.08)
Net (gain) loss on sale
of subsidiary 0.01 - (0.31) -
Unrealized (gain) on
Jamba JV call option (0.01) - (0.04) -
Stock option
investigation costs - 0.02 0.03 0.04
Embedded derivative on
debt offering 0.01 - 0.06 -
Income from discontinued
operations - (0.01) (0.01) (0.02)
Income tax expense
(benefit) 0.10 0.24 0.19 (0.99)
----------- ----------- ----------- -----------
Non-GAAP continuing
operations income
before income taxes 0.43 0.33 1.45 1.30
Non-GAAP tax rate in
lieu of the GAAP rate (0.13) (0.10) (0.43) (0.39)
----------- ----------- ----------- -----------
Non-GAAP net income
from continuing
operations basis 0.30 0.23 1.02 0.91
=========== =========== =========== ===========
Net income from
discontinued
operation, net of tax - 0.01 0.01 0.02
----------- ----------- ----------- -----------
Diluted net income per
share on a non-GAAP
basis $ 0.30 $ 0.24 $ 1.03 $ 0.93
=========== =========== =========== ===========
Shares used in
calculation of net
(loss) income per
share 229,583 247,088 243,170 247,073
(2) Best estimate of a non-cash impairment loss associated with the
digital content and messaging business. The Company is currently
finalizing its valuation analysis.
(3) Three and twelve months ended December 31, 2006 excludes $13 and $139
of stock-based compensation included in discontinued operations.
(4) Non-GAAP tax is calculated as 30% of Net income from continuing
operations, excluding Minority interest and Earnings from
unconsolidated subsidiaries, which are 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 infromation 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: amortization of intangible assets, impairment of
goodwill, acquired in-process R&D, stock-based compensation, former
CEO severance, non-recurring costs and settlements, restructuring,
impairments and other charges (reversals), net gain or loss on the
sale or impairment of investments, gain or loss on the sale of a
subsidiary, unrealized gain on Jamba JV call option, realized and
unrealized gains and losses on embedded derivative, and stock option
investigation costs. Non-GAAP financial information is also adjusted
for a 30% tax rate which differs from the GAAP tax rate.
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.
SOURCE: VeriSign, Inc.
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