VeriSign, Inc.
May 7, 2009
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VeriSign Reports 13% Year-Over-Year Revenue Growth in First Quarter 2009

Company Exceeds Expectations With Non-GAAP Core Earnings per Share of $0.32

MOUNTAIN VIEW, CA, May 07, 2009 (MARKETWIRE via COMTEX News Network) -- VeriSign, Inc. (NASDAQ: VRSN), the trusted provider of Internet infrastructure services, today reported financial results for the first quarter ended March 31, 2009.

On a GAAP basis, VeriSign reported revenue of $255 million from continuing operations for the first quarter of 2009. On a GAAP basis, VeriSign reported net income attributable to VeriSign, Inc. and subsidiaries of $65 million and earnings per share attributable to VeriSign, Inc. and subsidiaries of $0.34 on a fully-diluted basis.

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 $252 million, up 2% from Q4 2008 and up 13% year-over-year. This includes $3 million from iDefense that was previously classified as a discontinued operation. GAAP operating margin for the first quarter was 29.3%.

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 $61 million for the first quarter of 2009 and fully-diluted earnings per share of $0.32. Non-GAAP operating margins for the first quarter were 36.9%. A table reconciling the GAAP to the non-GAAP results reported above is appended to this release.

"In the face of a tough economy, solid execution has delivered solid results," said Jim Bidzos, VeriSign's executive chairman and chief executive officer on an interim basis. "Our core businesses did well, and our divestiture efforts have shown great progress."

"During the past several quarters when the global economy has contracted, worldwide Internet usage has continued to rise," said Mark McLaughlin, president and chief operating officer of VeriSign. "VeriSign's services are important to the Internet economy. We remain confident in our ability to make continued progress in the business in the short term and grow in a disciplined manner over the long term."

"We are very pleased with the progress that we made in Q1, having delivered top and bottom line results that were in-line with or exceeded expectations while continuing to execute on our strategy to divest of non-core businesses," said Brian Robins, acting chief financial officer of VeriSign. "Furthermore, our balance sheet remains strong with nearly $950 million in cash and cash equivalents, and our deferred revenue for continuing operations grew 3% quarter-over-quarter."

Business and Corporate Highlights

--  VeriSign's Naming business ended the quarter with approximately 92.4
    million active domain names in the adjusted zone for .com and .net,
    representing a 9% increase year-over-year.
--  VeriSign SSL Services ended the quarter with 1.15 million SSL
    Certificates in the installed base, an increase of 13% over the same
    quarter last year.
--  VeriSign's average daily query load increased to 38 billion in Q1, a
    9% increase from the prior quarter.
--  Under Project Titan, VeriSign continues to expand and optimize its
    infrastructure.  VeriSign reduced average daily peak loads by more than 10
    percent through use of its enhanced security and monitoring, even in the
    face of growing daily average DNS requests.
--  In March, VeriSign announced a new agreement with eNom to promote and
    distribute VeriSign branded SSL Certificates through its retail and
    reseller channels.
--  VeriSign recently announced the VeriSign Identity Protection (VIP)
    Access for Mobile credential, which is now available for download onto more
    than 100 popular mobile phone models.   The application transforms leading
    mobile phones into strong authentication credentials capable of generating
    a unique one-time password (OTP) every time a consumer signs on to a Web
    site protected by the VIP Authentication Service.
--  Subsequent to the end of the quarter, VeriSign completed the sales of
    the Communication Services, International Clearing, and Real-Time Publisher
    (RTP) Services businesses.  The proceeds from the sales of the non-core
    businesses from November 2007 to date, including the sale of the remaining
    interest in the Jamba joint venture, are approximately $540 million.
--  From November 2007 to date, VeriSign has sold 10 non-core businesses
    and is in the process of winding down one business in non-core continuing
    operations.  There are currently three additional non-core businesses in
    discontinued operations remaining for sale, including Messaging and Managed
    Security Services.
--  The Enterprise and Security Services (ESS) bundle has been broken down
    into iDefense, MSS and security consulting.  For strategic reasons,
    iDefense, which provides information security threat intelligence, was
    retained and reclassified as core continuing operations as of March 31,
    2009.  VeriSign has entered into an exclusive letter of intent to sell MSS,
    which represents 65% of Q1 2009 revenue of the ESS bundle.  Entry into a
    binding agreement remains subject to agreement on final terms and
    conditions.
--  VeriSign 2009 Analyst Day will be held on November 19 in New York
    City.  Additional details will be forthcoming at a later date.


Financial Highlights

--  Pursuant to the terms of the arrangement agreement between VeriSign
    and Certicom, VeriSign received a termination fee of approximately $3
    million in the quarter that contributed approximately $0.01 to earnings per
    share.
--  Revenue from discontinued operations was $103 million while non-core
    businesses reported $3 million of revenue as part of continuing operations
    during the first quarter of 2009.
--  VeriSign ended the first quarter of 2009 with Cash and Equivalents of
    $944 million, inclusive of $2 million of restricted cash, an increase of
    $153 million from the prior quarter.
--  Cash flow from operations for the quarter was approximately $38
    million.
--  Capital expenditures, on a consolidated basis, were approximately $21
    million for the first quarter of 2009.
--  Deferred revenue on March 31, 2009 totaled $872 million for continuing
    operations, an increase of $27 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, restructuring costs, and impairments of goodwill and other intangible assets. 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.

Today's Conference Call

VeriSign will host a live teleconference call today at 2:00 p.m. (PDT) to review the first quarter results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (913) 312-1457 (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: 8466229) beginning at 5:00 p.m. (PDT) on May 7 and will run through May 13. 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, the risk that planned divestitures of certain businesses may be delayed or pending dispositions may not be completed, may generate less proceeds than expected or may incur unanticipated costs or otherwise negatively affect VeriSign's financial condition, results of operations or cash flows, and the uncertainty of whether Project Titan will achieve its stated objectives. 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)
                                                   March 31,  December 31,
                                                      2009        2008
                                                  ===========  ===========
                     ASSETS
Current assets:
   Cash and cash equivalents                      $   942,386  $   789,068
   Accounts receivable, net of allowance for
    doubtful accounts of $1,246 at March 31,
    2009 and $1,208 at December 31, 2008               80,783       83,749
   Prepaid expenses and other current assets          172,807      268,178
   Assets held for sale                               505,860      483,840
                                                  -----------  -----------
      Total current assets                          1,701,836    1,624,835
                                                  -----------  -----------
Property and equipment, net                           372,723      385,498
Goodwill                                              289,448      283,109
Other intangible assets, net                           34,302       35,312
Other assets                                           34,334       38,118
      Total long-term assets                          730,807      742,037
                                                  -----------  -----------
      Total assets                                $ 2,432,643  $ 2,366,872
                                                  ===========  ===========
       LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
   Accounts payable and accrued liabilities       $   195,358  $   263,535
   Accrued restructuring costs                         11,190       28,920
   Deferred revenues                                  651,647      629,800
   Deferred tax liabilities                             5,355        5,463
   Liabilities related to assets held for sale         60,541       49,160
                                                  -----------  -----------
      Total current liabilities                       924,091      976,878
                                                  -----------  -----------
Long-term deferred revenues                           219,944      215,281
Long-term accrued restructuring costs                   3,766        3,037
Convertible debentures, including contingent
 interest derivative                                  569,044      568,712
Long-term deferred tax liabilities                     73,259       68,833
Other long-term tax liabilities                        15,995       15,710
                                                  -----------  -----------
      Total long-term liabilities                     882,008      871,573
                                                  -----------  -----------
      Total liabilities                             1,806,099    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:
          192,754,908 excluding 112,788,543 held in
          treasury, at March 31, 2009; and
          191,547,795 excluding 112,717,587 held in
          treasury, at December 31, 2008                  306          304
      Additional paid-in capital                   21,945,092   21,891,891
      Accumulated deficit                         (21,374,968) (21,439,988)
      Accumulated other comprehensive income           11,819       17,006
                                                  -----------  -----------
      Total VeriSign, Inc. and subsidiaries
       stockholders' equity                           582,249      469,213
   Noncontrolling interest in subsidiary               44,295       49,208
                                                  -----------  -----------
      Total stockholders' equity                      626,544      518,421
                                                  -----------  -----------
      Total liabilities and stockholders' equity  $ 2,432,643  $ 2,366,872
                                                  ===========  ===========
                 VERISIGN, INC. AND SUBSIDIARIES
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
            (In thousands, except per share data)
                         (Unaudited)
                                                       Three Months Ended
                                                            March 31,
                                                      --------------------
                                                        2009       2008
                                                      ---------  ---------
Revenues                                              $ 254,995  $ 235,265
                                                      ---------  ---------
Costs and expenses:
      Cost of revenues                                   60,308     59,485
      Sales and marketing                                38,027     48,583
      Research and development                           24,802     25,224
      General and administrative                         49,148     54,491
      Restructuring charges                               4,775     16,261
      Amortization of other intangible assets             3,221      2,638
                                                      ---------  ---------
         Total costs and expenses                       180,281    206,682
                                                      ---------  ---------
Operating income                                         74,714     28,583
Other loss, net                                          (4,293)    (3,639)
                                                      ---------  ---------
   Income from continuing operations before income
    taxes and loss from unconsolidated entities          70,421     24,944
                                                      ---------  ---------
   Income tax expense                                   (23,532)    (6,649)
   Loss from unconsolidated entities, net of tax              -     (1,761)
                                                      ---------  ---------
Income from continuing operations, net of tax            46,889     16,534
Income (loss) from discontinued operations, net of
 tax                                                     18,626    (23,689)
                                                      ---------  ---------
Net income (loss)                                        65,515     (7,155)
   Less: Net income attributable to noncontrolling
    interest in subsidiary                                 (495)      (906)
                                                      ---------  ---------
Net income (loss) attributable to VeriSign, Inc. and
 subsidiaries                                         $  65,020  $  (8,061)
                                                      =========  =========
Basic income (loss) per share attributable to
 VeriSign, Inc. and subsidiaries from:
      Continuing operations                           $    0.24  $    0.08
      Discontinued operations                              0.10      (0.12)
                                                      ---------  ---------
      Net income (loss)                               $    0.34  $   (0.04)
                                                      =========  =========
Diluted income (loss) per share attributable to
 VeriSign, Inc. and subsidiaries from:
      Continuing operations                           $    0.24  $    0.07
      Discontinued operations                              0.10      (0.11)
                                                      ---------  ---------
      Net income (loss)                               $    0.34  $   (0.04)
                                                      =========  =========
Shares used to compute net income (loss) per share
 attributable to VeriSign, Inc. and subsidiaries:
      Basic                                             192,311    206,550
                                                      =========  =========
      Diluted                                           192,804    210,471
                                                      =========  =========
                 VERISIGN, INC. AND SUBSIDIARIES
          CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (In thousands)
                          (Unaudited)
                                                      Three Months Ended
                                                          March 31,
                                                    ----------------------
                                                       2009        2008
                                                    ----------  ----------
Cash flows from operating activities:
  Net income (loss)                                 $   65,515  $   (7,155)
  Adjustments to reconcile net income (loss) to net
   cash provided by operating activities:
    Gain on divestiture of businesses, net of tax            -      (1,221)
    Unrealized gain on contingent interest
     derivative on convertible debentures               (1,174)     (1,838)
    Depreciation of property and equipment              17,309      31,852
    Amortization of other intangible assets              3,221      11,957
    Estimated (gains) losses on assets held for
     sale                                               (4,477)     25,511
    Gain on receipt of acquisition termination fee      (3,279)          -
    Provision for doubtful accounts                        329         575
    Stock-based compensation                            13,928      26,795
    Loss on disposal of property and equipment and
     other                                               1,658         836
    Loss from unconsolidated entities, net of tax            -       1,761
  Changes in operating assets and liabilities:
    Accounts receivable                                  8,464      (1,025)
    Prepaid expenses and other assets                  (29,380)     14,535
    Accounts payable and accrued liabilities           (42,467)    (94,842)
    Accrued restructuring costs                        (17,001)     19,296
    Deferred revenues                                   25,792      42,473
                                                    ----------  ----------
      Net cash provided by operating activities         38,438      69,510
                                                    ----------  ----------
Cash flows from investing activities:
  Proceeds from maturities and sales of investments     94,016         100
  Purchases of investments                                (750)          -
  Proceeds from sale of property and equipment               -       1,286
  Purchases of property and equipment                  (20,994)    (26,167)
  Proceeds received from acquisition termination
   fee                                                   3,279           -
  Proceeds received from divestiture of businesses,
   net of cash contributed                               2,372      14,160
  Other investing activities                               206        (268)
                                                    ----------  ----------
      Net cash provided by (used in) investing
       activities                                       78,129     (10,889)
                                                    ----------  ----------
Cash flows from financing activities:
  Proceeds from issuance of common stock from
   option exercises and employee stock purchase
   plan                                                 17,133      45,916
  Repurchases of common stock                           (1,361) (1,146,510)
  Proceeds from credit facility                              -     200,000
  Repayment of short-term debt related to credit
   facility                                                  -     (60,000)
  Excess tax benefit associated with stock options      27,293           -
      Net cash provided by (used in) financing
       activities                                       43,065    (960,594)
                                                    ----------  ----------
Effect of exchange rate changes on cash and cash
 equivalents                                            (6,314)      8,276
                                                    ----------  ----------
Net increase (decrease) in cash and cash
 equivalents                                           153,318    (893,697)
Cash and cash equivalents at beginning of period       789,068   1,376,722
                                                    ----------  ----------
Cash and cash equivalents at end of period          $  942,386  $  483,025
                                                    ==========  ==========
Supplemental cash flow disclosures:
  Cash paid for interest, net of capitalized
   interest                                         $   19,521  $   17,922
                                                    ==========  ==========
  Dividend payable to noncontrolling interest in
   subsidiary                                       $      807  $      730
                                                    ==========  ==========
                   VERISIGN, INC. AND SUBSIDIARIES
                STATEMENTS OF OPERATIONS RECONCILIATION
                (In thousands, except per share data)
                              (unaudited)
                                                  Three Months Ended
                                                    March 31, 2009
                                            ------------------------------
                                                              Net Income
                                                                (loss)
                                                             attributable
                                                             to VeriSign,
                                              Operating        Inc. and
                                                Income       Subsidiaries
                                            --------------  --------------
GAAP as reported                            $       74,714  $       65,020
   Discontinued operations                                         (18,626)
   Non-core businesses in continuing
    operations (1)                                    (173)         (1,111)
                                            --------------  --------------
   Core operations                                  74,541          45,283
   Adjustments to core operations (1):
      Stock-based compensation                      10,679          10,679
      Amortization of other intangible
       assets                                        3,220           3,220
      Restructuring costs                            4,610           4,610
   Tax adjustment (2)                                               (2,814)
                                            --------------  --------------
Non-GAAP as adjusted                        $       93,050  $       60,978
                                            ==============  ==============
Diluted shares                                     192,804         192,804
Per diluted share, core operations                          $         0.23
                                                            ==============
Per diluted share, non-GAAP as adjusted                     $         0.32
                                                            ==============
(1)  As of March 31, 2009, the Company's business consists of the
following reportable segments: Internet Infrastructure and Identity
Services which consists of Naming Services, and Authentication Services
comprising of SSL Certificate Services and Identity and Authentication
Services; and Other Services which consists of the continuing operations
of non-core businesses and legacy products and services from divested
businesses.
(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,
restructuring costs and impairments of goodwill and other intangible
assets.  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.
SUPPLEMENTAL FINANCIAL INFORMATION
                                    Three Months Ended
                 ----------------------------------------------------------
                  March 31,  December 31, September 30, June 30,  March 31,
                     2009        2008        2008        2008       2008
                  ----------- ----------- ----------- ----------- ---------
Revenues from
 core operations
 (1)              $   252,212 $   248,123 $   241,322 $   234,448 $ 223,846
                  =========== =========== =========== =========== =========

Contacts
Investor Relations:
Nancy Fazioli
ir@verisign.com
650-426-5146

Media Relations:
Christina Rohall
crohall@verisign.com
650-336-4663


SOURCE: VeriSign, Inc.

mailto:ir@verisign.com
mailto:crohall@verisign.com

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