Investor Relations

Verisign is a global provider of domain name registry services and internet infrastructure.

CONNECT WITH US

U.S.: 1-800-922-4917

Int'l: 1-703-948-3447

email investors relations

Verisign Reports Fourth Quarter and Full Year 2019 Results

February 6, 2020

RESTON, Va.--(BUSINESS WIRE)--Feb. 6, 2020-- VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the fourth quarter and full year 2019.

Fourth Quarter GAAP Financial Results
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $311 million for the fourth quarter of 2019, up 1.0 percent from the same quarter in 2018. Verisign reported net income of $148 million and diluted earnings per share (diluted “EPS”) of $1.26 for the fourth quarter of 2019, compared to net income of $182 million and diluted EPS of $1.50 for the same quarter in 2018. The operating margin was 63.9 percent for the fourth quarter of 2019 compared to 63.1 percent for the same quarter in 2018.

Fourth Quarter Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $154 million and diluted EPS of $1.31 for the fourth quarter of 2019, compared to net income of $191 million and diluted EPS of $1.58 for the same quarter in 2018. The non-GAAP operating margin was 67.9 percent for the fourth quarter of 2019 compared to 66.7 percent for the same quarter in 2018. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

2019 GAAP Financial Results
Verisign reported revenue of $1.23 billion for 2019, up 1.4 percent from $1.21 billion in 2018. Verisign reported net income of $612 million and diluted EPS of $5.15 for 2019, compared to net income of $582 million and diluted EPS of $4.75 in 2018. The operating margin for 2019 was 65.5 percent compared to 63.2 percent in 2018.

2019 Non-GAAP Financial Results
Verisign reported, on a non-GAAP basis, net income of $631 million and diluted EPS of $5.31 for 2019, compared to net income of $620 million and diluted EPS of $5.05 in 2018. The non-GAAP operating margin for 2019 was 69.6 percent compared to 67.5 percent in 2018.

Fourth quarter and full year 2018 GAAP net income and non-GAAP net income included $52.0 million and $42.8 million, respectively, related to the gain on the sale of the customer contracts of the security services business. The gain increased GAAP diluted EPS and non-GAAP diluted EPS by $0.43 and $0.36 in the fourth quarter of 2018 and by $0.43 and $0.35 for full year 2018.

“Focused execution yielded another solid quarter that caps off not only a solid year but a strong decade in which we’ve focused on our core business, expanded the domain name base and returned value to our shareholders. In 2019 we marked more than 22 years of uninterrupted availability of the Verisign DNS for .com and .net,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

  • Verisign ended 2019 with cash, cash equivalents, and marketable securities of $1.22 billion, a decrease of $52 million from year-end 2018.
  • Cash flow from operations was $194 million for the fourth quarter of 2019 and $754 million for the full year 2019 compared with $219 million for the same quarter in 2018 and $698 million for the full year 2018.
  • Deferred revenues on Dec. 31, 2019, totaled $1.03 billion, an increase of $16 million from year-end 2018.
  • During the fourth quarter, Verisign repurchased 1.0 million shares of its common stock for $195 million. During the full year 2019, Verisign repurchased 3.9 million shares of its common stock for $738 million.
  • Effective Feb. 6, 2020 the Board of Directors approved an additional authorization for share repurchases of approximately $743 million of common stock, which brings the total amount to $1.0 billion authorized and available under Verisign’s share repurchase program, which has no expiration.

Business Highlights

  • Verisign ended the fourth quarter with 158.8 million .com and .net domain name registrations in the domain name base, a 3.9 percent increase from the end of the fourth quarter of 2018, and a net increase of 1.46 million registrations during the fourth quarter of 2019.
  • In the fourth quarter, Verisign processed 10.3 million new domain name registrations for .com and .net, as compared to 9.5 million for the same quarter in 2018.
  • The final .com and .net renewal rate for the third quarter of 2019 was 73.7 percent compared with 74.8 percent for the same quarter in 2018. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Non-GAAP Financial Measures and Adjusted EBITDA

Verisign provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). Along with this information, management typically discloses and discusses certain non-GAAP financial measures in quarterly earnings news releases, on investor conference calls and during investor conferences and related events. These non-GAAP financial measures do not include stock-based compensation, non-cash interest expense through June 30, 2018, and loss on debt extinguishment, which are included in the comparable GAAP financial measures. Non-GAAP net income is also adjusted for an income tax rate of 22 percent which differs from the GAAP income tax rate.

On a quarterly basis, Verisign also provides Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure and is calculated in accordance with the terms of the indentures governing Verisign’s senior notes. Adjusted EBITDA refers to net income before interest, taxes, depreciation and amortization, stock-based compensation, unrealized gain / loss on hedging agreements, and gain on the sale of a business.

Management believes that this non-GAAP financial data supplements the GAAP financial data by providing investors with additional information that allows them to have a clearer picture of Verisign’s operations and financial performance and the comparability of Verisign’s operating results from period to period. The presentation of these non-GAAP financial measures is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP.

The tables appended to this release include a reconciliation of the non-GAAP financial information to the comparable financial information reported in accordance with GAAP for the given periods.

Today’s Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EST) to review the fourth quarter and full year 2019 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4776 (international), conference ID: Verisign. A listen-only live web cast of the conference call and accompanying slide presentation will also be available at https://investor.verisign.com. An audio archive of the call will be available at https://investor.verisign.com/events.cfm. This news release and the financial information discussed on today’s conference call are available at https://investor.verisign.com.

About Verisign

Verisign, a global provider of domain name registry services and internet infrastructure, enables internet navigation for many of the world’s most recognized domain names. Verisign enables the security, stability, and resiliency of key internet infrastructure and services, including providing root zone maintainer services, operating two of the 13 global internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce. To learn more about what it means to be Powered by Verisign, please visit 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 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 agreements governing our business; new or existing governmental laws and regulations in the U.S. or other applicable foreign jurisdictions; system interruptions, security breaches, attacks on the internet by hackers, viruses, or intentional acts of vandalism; the uncertainty of the impact of changes to the multi-stakeholder model of internet governance; risks arising from our operation of two root zone servers and our performance of the Root Zone Maintainer functions; changes in internet practices and behavior and the adoption of substitute technologies; the success or failure of the evolution of our markets; the highly competitive business environment in which we operate; whether we can maintain strong relationships with registrars and their resellers to maintain their marketing focus on our products and services; the possibility of system interruptions or failures; challenging global economic conditions; economic, legal and political risk associated with our international operations; our ability to protect and enforce our rights to our intellectual property and ensure that we do not infringe on others’ intellectual property; the outcome of legal or other challenges resulting from our activities or the activities of registrars or registrants, or litigation generally; the impact of our new strategic initiatives, including our IDN gTLDs; whether we can retain and motivate our senior management and key employees; and the impact of unfavorable tax rules and regulations. More information about potential factors that could affect our business and financial results is included in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended Dec. 31, 2018, 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 announcement.

©2020 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.

 

VERISIGN, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

 

 

December 31,
2019

 

December 31,
2018

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

508,196

 

 

$

357,415

 

Marketable securities

709,863

 

 

912,254

 

Other current assets

60,530

 

 

47,365

 

Total current assets

1,278,589

 

 

1,317,034

 

Property and equipment, net

250,283

 

 

253,905

 

Goodwill

52,527

 

 

52,527

 

Deferred tax assets

87,798

 

 

104,992

 

Deposits to acquire intangible assets

145,000

 

 

145,000

 

Other long-term assets

39,812

 

 

41,046

 

Total long-term assets

575,420

 

 

597,470

 

Total assets

$

1,854,009

 

 

$

1,914,504

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

209,988

 

 

$

215,208

 

Deferred revenues

755,178

 

 

732,382

 

Total current liabilities

965,166

 

 

947,590

 

Long-term deferred revenues

278,702

 

 

285,720

 

Senior notes

1,787,565

 

 

1,785,047

 

Long-term tax and other liabilities

312,676

 

 

281,621

 

Total long-term liabilities

2,378,943

 

 

2,352,388

 

Total liabilities

3,344,109

 

 

3,299,978

 

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: 353,157 at December 31, 2019 and 352,325 at December 31, 2018; Outstanding shares: 116,715 at December 31, 2019 and 120,037 at December 31, 2018

353

 

 

352

 

Additional paid-in capital

14,989,658

 

 

15,706,774

 

Accumulated deficit

(16,477,490

)

 

(17,089,789

)

Accumulated other comprehensive loss

(2,621

)

 

(2,811

)

Total stockholders’ deficit

(1,490,100

)

 

(1,385,474

)

Total liabilities and stockholders’ deficit

$

1,854,009

 

 

$

1,914,504

 

 

VERISIGN, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

2019

 

2018

 

2019

 

2018

Revenues

$

310,543

 

 

$

307,452

 

 

$

1,231,661

 

 

$

1,214,969

 

Costs and expenses:

 

 

 

 

 

 

 

Cost of revenues

46,454

 

 

48,368

 

 

180,467

 

 

192,134

 

Sales and marketing

13,862

 

 

17,179

 

 

46,637

 

 

64,891

 

Research and development

15,101

 

 

15,042

 

 

60,805

 

 

57,884

 

General and administrative

36,560

 

 

32,897

 

 

137,625

 

 

132,668

 

Total costs and expenses

111,977

 

 

113,486

 

 

425,534

 

 

447,577

 

Operating income

198,566

 

 

193,966

 

 

806,127

 

 

767,392

 

Interest expense

(22,712

)

 

(22,634

)

 

(90,611

)

 

(114,845

)

Non-operating income, net

9,123

 

 

62,570

 

 

43,260

 

 

76,969

 

Income before income taxes

184,977

 

 

233,902

 

 

758,776

 

 

729,516

 

Income tax expense

(36,652

)

 

(51,707

)

 

(146,477

)

 

(147,027

)

Net income

148,325

 

 

182,195

 

 

612,299

 

 

582,489

 

Other comprehensive (loss) income

(202

)

 

192

 

 

190

 

 

130

 

Comprehensive income

$

148,123

 

 

$

182,387

 

 

$

612,489

 

 

$

582,619

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

1.27

 

 

$

1.51

 

 

$

5.17

 

 

$

5.13

 

Diluted

$

1.26

 

 

$

1.50

 

 

$

5.15

 

 

$

4.75

 

Shares used to compute earnings per share

 

 

 

 

 

 

 

Basic

117,169

 

 

120,591

 

 

118,513

 

 

113,452

 

Diluted

117,658

 

 

121,329

 

 

118,968

 

 

122,661

 

 

VERISIGN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

Year Ended December 31,

 

2019

 

2018

Cash flows from operating activities:

 

 

 

Net income

$

612,299

 

 

$

582,489

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation of property and equipment

46,330

 

 

48,367

 

Stock-based compensation

50,626

 

 

52,504

 

Amortization of discount on investments in debt securities

(14,777

)

 

(18,259

)

Gain on sale of business

(817

)

 

(54,840

)

Other, net

3,668

 

 

14,646

 

Changes in operating assets and liabilities:

 

 

 

Other assets

(3,279

)

 

1,041

 

Accounts payable and accrued liabilities

(24

)

 

(2,130

)

Deferred revenues

16,191

 

 

19,825

 

Net deferred income taxes and other long-term tax liabilities

43,675

 

 

54,124

 

Net cash provided by operating activities

753,892

 

 

697,767

 

Cash flows from investing activities:

 

 

 

Proceeds from maturities and sales of marketable securities

2,247,904

 

 

4,031,809

 

Purchases of marketable securities

(2,030,521

)

 

(2,976,752

)

Purchases of property and equipment

(40,316

)

 

(37,007

)

(Payments) Proceeds from sale of business

(9,872

)

 

52,240

 

Other investing activities

 

 

(160

)

Net cash provided by investing activities

167,195

 

 

1,070,130

 

Cash flows from financing activities:

 

 

 

Repurchases of common stock

(782,583

)

 

(638,152

)

Proceeds from employee stock purchase plan

13,152

 

 

12,836

 

Repayment of principal on subordinated convertible debentures

 

 

(1,250,009

)

Other financing activities

(872

)

 

 

Net cash used in financing activities

(770,303

)

 

(1,875,325

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

64

 

 

(958

)

Net increase (decrease) in cash, cash equivalents and restricted cash

150,848

 

 

(108,386

)

Cash, cash equivalents, and restricted cash at beginning of period

366,753

 

 

475,139

 

Cash, cash equivalents, and restricted cash at end of period

$

517,601

 

 

$

366,753

 

Supplemental cash flow disclosures:

 

 

 

Cash paid for interest

$

87,683

 

 

$

117,956

 

Cash paid for income taxes, net of refunds received

$

89,974

 

 

$

84,906

 

 

VERISIGN, INC.

RECONCILIATION OF NON-GAAP FINANCIAL MEASURES

(In thousands, except per share data)

(Unaudited)

 

 

Three Months Ended December 31,

 

2019

 

2018

 

Operating
Income

 

Net Income

 

Operating
Income

 

Net Income

GAAP as reported

$

198,566

 

 

$

148,325

 

 

$

193,966

 

 

$

182,195

 

Adjustments:

 

 

 

 

 

 

 

Stock-based compensation

12,389

 

 

12,389

 

 

11,098

 

 

11,098

 

Tax adjustment

 

 

(6,768

)

 

 

 

(2,193

)

Non-GAAP

$

210,955

 

 

$

153,946

 

 

$

205,064

 

 

$

191,100

 

 

 

 

 

 

 

 

 

Revenues

$

310,543

 

 

 

 

$

307,452

 

 

 

Non-GAAP operating margin

67.9

%

 

 

 

66.7

%

 

 

Diluted shares

 

 

117,658

 

 

 

 

121,329

 

Diluted EPS, non-GAAP

 

 

$

1.31

 

 

 

 

$

1.58

 

 

 

Year Ended December 31,

 

2019

 

2018

 

Operating
Income

 

Net Income

 

Operating
Income

 

Net Income

GAAP as reported

$

806,127

 

 

$

612,299

 

 

$

767,392

 

 

$

582,489

 

Adjustments:

 

 

 

 

 

 

 

Stock-based compensation

50,626

 

 

50,626

 

 

52,504

 

 

52,504

 

Non-cash interest expense

 

 

 

 

 

 

5,719

 

Loss on debt extinguishment

 

 

 

 

 

 

6,554

 

Tax adjustment

 

 

(31,591

)

 

 

 

(27,717

)

Non-GAAP

$

856,753

 

 

$

631,334

 

 

$

819,896

 

 

$

619,549

 

 

 

 

 

 

 

 

 

Revenues

$

1,231,661

 

 

 

 

$

1,214,969

 

 

 

Non-GAAP operating margin

69.6

%

 

 

 

67.5

%

 

 

Diluted shares

 

 

118,968

 

 

 

 

122,661

 

Diluted EPS, non-GAAP

 

 

$

5.31

 

 

 

 

$

5.05

 

VERISIGN, INC.

RECONCILIATION OF NON-GAAP ADJUSTED EBITDA

(In thousands)

(Unaudited)

 

The following table reconciles GAAP net income to non-GAAP Adjusted EBITDA for the period shown below:

 
 

 

Year Ended
December 31, 2019

Net Income

$

612,299

 

Interest expense

90,611

 

Income tax expense

146,477

 

Depreciation and amortization

46,330

 

Stock-based compensation

50,626

 

Unrealized gain on hedging agreements

(235

)

Gain on sale of business

(817

)

Non-GAAP Adjusted EBITDA

$

945,291

 

 

VERISIGN, INC.

STOCK-BASED COMPENSATION CLASSIFICATION

(In thousands)

(Unaudited)

 

The following table presents the classification of stock-based compensation:

 
 

 

Three Months Ended
December 31,

 

Year Ended
December 31,

 

2019

 

2018

 

2019

 

2018

Cost of revenues

$

1,675

 

 

$

1,652

 

 

$

6,739

 

 

$

6,835

 

Sales and marketing

889

 

 

579

 

 

3,755

 

 

4,972

 

Research and development

1,626

 

 

1,696

 

 

6,370

 

 

6,728

 

General and administrative

8,199

 

 

7,171

 

 

33,762

 

 

33,969

 

Total stock-based compensation expense

$

12,389

 

 

$

11,098

 

 

$

50,626

 

 

$

52,504

 

 

Source: VeriSign, Inc.

Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643
Media Relations: David McGuire, dmcguire@verisign.com, 703-948-3800