VeriSign Reports Second Quarter Results in Line With Prior Guidance
MOUNTAIN VIEW, CA, Jul 26, 2007 (MARKET WIRE via COMTEX News Network) --
VeriSign, Inc. (NASDAQ: VRSN), the leading provider of digital infrastructure for the networked world, today reported financial results for the second quarter ended June 30, 2007.
VeriSign reported total revenue of $368 million for the second quarter of 2007. These results include $4 million of revenue related to the Jamba Services business that is held for sale and which is reported under discontinued operations on the statements of operation. On a GAAP basis, VeriSign reported a net loss of $5 million for the second quarter of 2007 and a net loss per share of $0.02 per fully-diluted share.
On a non-GAAP basis, VeriSign reported net income of $62 million for the second quarter of 2007 and earnings per share of $0.25 per diluted share. A table reconciling the GAAP to non-GAAP net income reported above is appended to this release.
"We are generally pleased with our second quarter performance," said Bill Roper, president and chief executive officer of VeriSign. "These results indicate that the benefits of the company-wide reorganization initiated at the first of the year are beginning to impact our operational and financial performance. We are focusing on more discipline in our business processes and the growth opportunities that we see for the remainder of this year and into the next."
"Our second quarter results demonstrate solid financial execution," said Bert Clement, chief financial officer of VeriSign. "Strong growth in the core registry and SSL businesses continues to strengthen our balance sheet, with Deferred Revenue of $691 million, up 4% from last quarter, and Cash and Investments of $819 million."
Business Highlights
-- In May, VeriSign announced that its Board of Directors had elected
William A. Roper, Jr. as President and Chief Executive Officer. The Board
also elected Edward A. Mueller as Chairman of the Board.
-- Earlier this month, the Company announced that its Board of Directors
had appointed Albert E. Clement as Chief Financial Officer.
-- VeriSign's Chief Technology Officer, Ari Balogh, was recognized by
InfoWorld Magazine as a Top 25 CTO for his continued leadership of Project
Titan, a three-year initiative to fortify and expand the capacity of the
global Internet infrastructure.
-- On July 16, 2007, VeriSign announced that it had become current in its
filings with the SEC, including its Annual Report on Form 10-K for the year
ended December 31, 2006 as well as Quarterly Reports for the second and
third quarters of 2006 and the first quarter of 2007.
-- Subsequent to completing its filings, the Company received
notification from Nasdaq that the Company had demonstrated compliance with
Nasdaq's filing requirements under the Marketplace Rules, that the matter
relating to the company's listing status had been closed, and that
VeriSign's securities will continue to be listed on the Nasdaq Global
Select Market.
-- John D. Roach has been appointed to the Company's Board of Directors,
effective July 19, 2007. Mr. Roach will serve on the Audit Committee of
the Board of Directors.
-- At eBay Live! in June, PayPal announced the general availability of
the PayPal Security Key, a two-factor authentication token that generates a
unique security code to protect consumers against phishing and online
fraud, in the United States, Germany and Australia. The PayPal Security Key
is part of the VeriSign Identity Protection (VIP) Network, helping to
prevent unauthorized access to consumer accounts on eBay, PayPal and a
variety of e-commerce websites.
-- VeriSign and Live Earth integrated mobile messaging and online
interactivity into events around the globe on 7.7.07 to enable millions of
participants to use their mobile phones to personally participate in the
broadcasts and live concerts demonstrating their commitment to making a
change for the environment.
-- VeriSign partnered with AirMagnet in June to launch the VeriSign
Wireless Intrusion Prevention Service (IPS), the first comprehensive
service designed to effectively shield rapidly growing corporate wireless
networks from data theft and other prominent security threats.
Internet Services Group
-- The Internet Services Group (ISG) -- which includes VeriSign Security
Services (VSS) and VeriSign Information Services (VIS) -- delivered $225
million of revenue in the second quarter of 2007.
-- The VeriSign Information Services business ended the quarter with
approximately 73 million active domain names in .com and .net, representing
a 5% increase over Q1 2007 and 27% increase year over year.
-- The VeriSign website certificate business issued approximately 211,000
new and renewal certificates in Q2, bringing the total base to 883,000, up
4% from Q1 2007. The installed base excluding the GeoTrust certificates
grew 13% year over year.
Communications Services Group
-- VeriSign Communications Services (VCS) Group -- which provides
intelligent communications, commerce and content services to
telecommunications carriers and next generation service providers --
delivered revenues of $143 million in the second quarter of 2007.
-- The Communications and Commerce group generated revenues of $90
million.
-- The Content group, which includes Messaging Services, generated
revenues of $39 million during the quarter.
Additional Financial Information
-- Year-to-date capital expenditures were approximately $48 million.
-- VeriSign ended the second quarter with Cash, Cash Equivalents,
Restricted Cash and Short-term Investments of $819 million, an increase of
$80 million from the prior quarter.
-- Deferred revenue on the balance sheet was $691 million as of June 30,
2007, an increase of $29 million from the prior quarter.
-- Net days sales outstanding (Net DSO), which takes into account the
change in deferred revenue balances, was 44 days at the end of Q2, an
improvement of one day from Q1.
Non-GAAP results exclude the following items which are included under GAAP: amortization of intangible assets, stock-based compensation, former CEO severance, non-recurring legal costs and settlements, restructuring and other charges, net loss on sale of investments, unrealized gain on Jamba JV call option, and stock option investigation costs. A table reconciling the GAAP to non-GAAP net income is appended to this release.
Today's Conference Call
VeriSign will host a live teleconference call today at 2:00 pm (PDT) to review the quarter's results. The call will be accessible by direct dial at (888) 676-VRSN (US) or (913) 981-4903 (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: 7180604) beginning at 5:00 pm (PDT) on July 26 and will run through August 1. 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)
June 30, December 31,
2007 2006
------------- -------------
Assets
Current assets:
Cash and cash equivalents $ 656,517 $ 478,749
Short-term investments 94,308 198,656
Accounts receivable, net 225,296 319,305
Prepaid expenses and other current assets 100,178 217,196
Deferred tax assets 80,063 84,318
Current assets of discontinued operations 34,909 34,356
------------- -------------
Total current assets 1,191,271 1,332,580
------------- -------------
Property and equipment, net 581,140 605,292
Goodwill 1,261,944 1,449,493
Other intangible assets, net 242,003 333,430
Restricted cash 48,361 49,437
Long-term deferred tax assets 218,050 177,805
Other assets, net 34,545 25,214
Investment in unconsolidated entities 105,500 -
Long-term assets of discontinued
operations 7,055 1,217
------------- -------------
Total long-term assets 2,498,598 2,641,888
------------- -------------
Total assets $ 3,689,869 $ 3,974,468
============= =============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $ 319,985 $ 675,105
Accrued restructuring costs 12,666 3,818
Deferred revenue 505,119 448,413
Short-term debt - 199,000
Deferred tax liabilities 1,025 1,414
Current liabilities of discontinued
operations 33,798 31,743
------------- -------------
Total current liabilities 872,593 1,359,493
------------- -------------
Long-term deferred revenue 179,666 159,439
Long-term accrued restructuring costs 624 937
Long-term tax liability 44,705 -
Other long-term liabilities 10,497 5,175
Long-term deferred tax liabilities 12,953 24,815
Long-term liabilities of discontinued
operations - 34
------------- -------------
Total long-term liabilities 248,445 190,400
------------- -------------
Total liabilities 1,121,038 1,549,893
Commitments and contingencies
Minority interest in subsidiaries 47,684 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:
243,838,287 and 243,844,122
(excluding 35,493,973 and 35,471,662
shares held in treasury at June 30, 2007
and December 31, 2006, respectively ) 244 244
Additional paid-in capital 23,362,353 23,314,511
Accumulated deficit (20,834,462) (20,929,498)
Accumulated other comprehensive loss (6,988) (8,398)
------------- -------------
Total stockholders' equity 2,521,147 2,376,859
------------- -------------
Total liabilities and
stockholders' equity $ 3,689,869 $ 3,974,468
============= =============
VERISIGN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenues $ 363,217 $ 387,832 $ 736,266 $ 757,941
Cost and expenses
Cost of revenues 147,836 145,715 298,476 282,682
Sales & marketing 63,890 92,808 142,840 183,358
Research & development 36,254 31,021 81,416 59,280
General & administrative 77,142 59,297 128,731 119,812
Restructuring, impairments &
other charges 15,179 (7,604) 42,191 (4,195)
Amortization of intangible
assets 29,669 31,833 61,456 59,833
Acquired in-process R&D - 4,600 - 15,500
--------- --------- --------- ---------
Total costs & expenses 369,970 357,670 755,110 716,270
--------- --------- --------- ---------
Operating (loss) income (6,753) 30,162 (18,844) 41,671
Other income, net 10,849 4,946 92,236 33,667
--------- --------- --------- ---------
Income from continuing
operations before income
taxes, earnings from
unconsolidated entities and
minority interest 4,096 35,108 73,392 75,338
Income tax expense (benefit) 11,609 (341,532) 20,371 (317,317)
Earnings from unconsolidated
entities, net of tax 1,748 - 2,196 -
Minority interest, net of tax 82 (758) (487) (1,405)
--------- --------- --------- ---------
Net (loss) income from
continuing operations (5,683) 375,882 54,730 391,250
Net income from from
discontinued operations, net
of tax 965 905 2,305 2,023
--------- --------- --------- ---------
Net (loss) income $ (4,718) $ 376,787 $ 57,035 $ 393,273
========= ========= ========= =========
Basic net income (loss) per
share from:
Continuing operations $ (0.02) $ 1.54 $ 0.22 $ 1.59
Discontinued operations 0.00 0.00 0.01 0.01
--------- --------- --------- ---------
Net (loss) income $ (0.02) $ 1.54 $ 0.23 $ 1.60
========= ========= ========= =========
Diluted net (loss) income per
share from:
Continuing operations $ (0.02) $ 1.52 $ 0.22 $ 1.58
Discontinued operations 0.00 0.00 0.01 0.01
--------- --------- --------- ---------
Net (loss) income $ (0.02) $ 1.52 $ 0.23 $ 1.59
========= ========= ========= =========
Shares used in per share
computation:
Basic 243,846 244,744 243,849 245,171
========= ========= ========= =========
Diluted 243,846 247,252 246,102 247,745
========= ========= ========= =========
Stock-based compensation
Cost of revenue $ 3,659 $ 3,381 $ 7,339 $ 7,286
Sales & marketing 4,198 3,709 9,913 7,252
Research & development 2,298 2,596 5,322 4,873
General & administrative 15,118 5,647 21,071 12,588
--------- --------- --------- ---------
Total stock-based
compensation $ 25,273 $ 15,333 $ 43,645 $ 31,999
========= ========= ========= =========
VERISIGN, INC. AND SUBSIDIARIES
STATEMENTS OF OPERATIONS RECONCILIATION
(In thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
--------- --------- --------- ---------
Revenue reconciliation
Revenue from continuing
operations $ 363,217 $ 387,832 $ 736,266 $ 757,941
Revenue from discontinued
operations (1) 4,407 2,938 8,804 5,598
--------- --------- --------- ---------
Revenue including discontinued
operations $ 367,624 $ 390,770 $ 745,070 $ 763,539
========= ========= ========= =========
(1) For the three and six months ended June 30, 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 six months ended
June 30, 2006, revenue from discontinued operations represents activity
related to 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 (loss) income on a GAAP
basis $ (4,718) $ 376,787 $ 57,035 $ 393,273
Amortization of intangible
assets 29,669 31,833 61,456 59,833
Acquired in-process
research and development - 4,600 - 15,500
Stock-based compensation 25,273 15,333 43,645 31,999
Former CEO severance 10,430 - 10,430 -
Non-recurring legal costs
and settlements 487 1,300 762 3,300
Restructuring, impairments
and other charges
(reversals) 15,179 (7,604) 42,191 (4,195)
Net (gain) loss on sale of
investments (55) 28 (885) (20,220)
Net gain on sale of
subsidiary - - (74,999) -
Unrealized gain on Jamba
JV call option (3,755) - (3,755) -
Stock option investigation
costs 3,787 - 6,719 -
Income tax expense
(benefit) (2) 12,307 (340,972) 21,839 (316,550)
--------- --------- --------- ---------
Non-GAAP income before
income taxes 88,604 81,305 164,438 162,940
Non-GAAP tax rate in lieu of
the GAAP rate (26,581) (24,392) (49,331) (48,882)
--------- --------- --------- ---------
Net income on a non-GAAP basis $ 62,023 $ 56,913 $ 115,107 $ 114,058
========= ========= ========= =========
Statements of operations reconciliation per share
Diluted net (loss) income per
share on a GAAP basis $ (0.02) $ 1.52 $ 0.23 $ 1.59
Amortization of intangible
assets 0.12 0.13 0.25 0.24
Acquired in-process
research and development - 0.02 - 0.06
Stock-based compensation 0.10 0.06 0.17 0.13
Former CEO severance 0.04 - 0.04 -
Non-recurring legal costs
and settlements - 0.01 - 0.01
Restructuring, impairments
and other charges
(reversals) 0.06 (0.03) 0.17 (0.02)
Net (gain) loss on sale of
investments - - - (0.08)
Net gain on sale of
subsidiary - - (0.30) -
Unrealized gain on Jamba
JV call option (0.02) - (0.02) -
Stock option investigation
costs 0.02 - 0.03 -
Non-GAAP tax rate of 30%
in lieu of the GAAP rate (0.05) (1.48) (0.11) (1.47)
--------- --------- --------- ---------
Diluted net income per share on
a non-GAAP basis $ 0.25 $ 0.23 $ 0.46 $ 0.46
========= ========= ========= =========
Shares used in calculation of
net (loss) income per share 249,404 247,252 248,880 247,745
(2) Includes tax from discontinued operations of $698 and $1,468 for the
three and six months ended June 30, 2007, respectively, and $560 and
$767 for the three and six months ended June 30, 2006 respectively.
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, acquired in-process research and
development, stock-based compensation, former CEO severance, non-recurring
legal costs and settlements, restructuring, impairments and other charges
(reversals), net (gain) loss on sale of investments, net gain on sale of
subsidiary, unrealized gain on Jamba JV call option 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.
Copyright 2007 Market Wire, All rights reserved.
News Provided by COMTEX