VeriSign, Inc.
May 8, 2008
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VeriSign Reports First Quarter 2008 Results

Exceeds Guidance Driven By Growth in Core Businesses and Disciplined Expense Management

MOUNTAIN VIEW, CA, May 08, 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 first quarter ended March 31, 2008.

VeriSign reported revenue of $354 million for the first quarter of 2008. On a GAAP basis, VeriSign reported a net loss of $19 million and a net loss per share of $0.09. These GAAP results reflect a $25.5 million impairment on certain assets held for sale as well as a restructuring charge of $26.5 million for both continuing and discontinued operations.

VeriSign also reported segment revenue for Internet Infrastructure and Identity Services (3IS), or the "core businesses": Naming, SSL, and IAS. The company reported revenue for the core businesses of $223 million, up 5% from Q4 and up 23% year over year.

On a non-GAAP basis (which excludes the items described below) for our core businesses, VeriSign reported net income of $44 million for the first quarter of 2008 and earnings per share of $0.21 per fully-diluted share. A table reconciling the GAAP to non-GAAP results reported above is appended to this release.

"Our first quarter non-GAAP results represent strong growth in our core businesses as well as better than expected performance from the businesses to be divested," said Bill Roper, president and chief executive officer of VeriSign. "We are pleased that our strategy is beginning to show momentum and we will continue to invest in our core businesses."

"This is a strong start to our fiscal year as we continue to focus on key operational priorities," said Brian Robins, acting chief financial officer of VeriSign. "In addition to strong revenue growth this quarter in our core businesses, non-GAAP operating margin for core services was 30.3% and we repurchased approximately 14% of shares outstanding as of December 31, 2007 while maintaining a healthy balance sheet."

Business and Corporate Highlights

--  VeriSign Naming Services ended the quarter with approximately 84.4
    million active domain names in the adjusted zone for .com and .net,
    representing a 5% increase over Q4 2007 and 22% increase year over year.
--  During the quarter, VeriSign announced that as of October 1, 2008, the
    registry fee for .com domain names will increase from $6.42 to $6.86 and
    that the registry fee for .net domain names will increase from $3.85 to
    $4.23 per year.
--  VeriSign continues the Project Titan initiative with the expansion of
    existing sites as well as the launch of five new regional Internet sites --
    two additional sites in the U.S., as well as sites in India, Hong Kong and
    Italy.
--  VeriSign SSL Services ended the quarter with 1,024,000 SSL
    certificates in the installed base, up 4% from 987,000 in Q4 2007 and an
    increase of 16% from 886,000 certificates last year.
--  During the first quarter of 2008, VeriSign announced that more than
    100 credit unions have gone live on EV SSL. Other EV SSL customer wins
    include HSBC, FileYourTaxes.com and online editing house Scribendi.
--  VeriSign's IAS team launched the VIP Quick Start and VIP Test Drive
    for Developers programs to further the adoption of consumer Identity and
    Authentication Services.
--  As of March 31, 2008, the company has sold over 1.8 million
    credentials for our VIP and one time password (OTP) programs.
--  Kathleen Cote, formerly CEO of Worldport Communications Company, was
    appointed to the company's Board of Directors on February 20, 2008.  Ms.
    Cote serves on the Audit Committee.
--  Brian G. Robins, senior vice president, was appointed acting chief
    financial officer on April 4, 2008.


Financial Highlights

--  Non-core businesses, including $41 million from discontinued
    operations, delivered $172 million of revenue in the first quarter of 2008.
--  During the quarter, the company repurchased over 31 million shares of
    common stock, retiring nearly 14% of the shares outstanding as of December
    31, 2007.
--  VeriSign ended the first quarter with Cash, Cash Equivalents,
    Restricted Cash and Short-term Investments of $532 million, a decrease of
    $893 million from the prior quarter as a result of Q1 share repurchases.
--  Cash flow from operations for the quarter was $74 million.
--  Capital expenditures were approximately $26 million for the first
    quarter.
--  Deferred revenue on March 31, 2008 totaled $761 million, an increase
    of $23 million from the prior quarter.


Non-GAAP Items

Non-GAAP results exclude the following items which are included under GAAP: loss from discontinued operations, loss from non-core businesses, stock-based compensation, amortization of intangible assets, restructuring costs, non-recurring costs, and gains and losses on investments and derivatives. 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 pm (PST) to review the quarter's results. The call will be accessible by direct dial at (888) 676-VRSN (US) 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: 5868343) beginning at 5:00 pm (PDT) on May 8 and will run through May 14. 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 that the planned divestitures of certain businesses may be delayed, 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, 2007, 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,
                                                    2008          2007
                                                ------------  ------------
                        Assets
Current assets:
   Cash and cash equivalents                    $    483,025  $  1,376,722
   Short-term investments                              1,485         1,011
   Accounts receivable, net                          174,354       208,799
   Prepaid expenses and other current assets         157,599       163,041
   Assets held for sale                              112,956             -
                                                ------------  ------------
      Total current assets                           929,419     1,749,573
                                                ------------  ------------
   Property and equipment, net                       606,669       621,917
   Goodwill                                        1,020,874     1,082,420
   Other intangible assets, net                       68,296       121,792
   Restricted cash                                    47,204        46,936
   Other assets, net                                 281,261       290,647
   Investment in unconsolidated entities             112,718       109,828
                                                ------------  ------------
      Total long-term assets                       2,137,022     2,273,540
                                                ------------  ------------
      Total assets                              $  3,066,441  $  4,023,113
                                                ============  ============
          Liabilities and Stockholders' Equity
Current liabilities:
   Accounts payable and accrued liabilities     $    314,859  $    388,562
   Accrued restructuring costs                        22,307         2,878
   Short-term debt                                   140,000             -
   Deferred revenues                                 566,564       552,070
   Other liabilities                                   2,872         2,632
   Liabilities related to assets held for sale        18,842             -
                                                ------------  ------------
      Total current liabilities                    1,065,444       946,142
                                                ------------  ------------
   Long-term deferred revenues                       194,750       186,719
   Long-term accrued restructuring costs               1,340         1,473
   Convertible debentures                          1,263,451     1,265,296
   Other long-term liabilities                        38,941        41,133
                                                ------------  ------------
      Total long-term liabilities                  1,498,482     1,494,621
                                                ------------  ------------
      Total liabilities                            2,563,926     2,440,763
Commitments and contingencies
Minority interest in subsidiaries                     62,218        54,485
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: 194,428,020
    and 222,849,348 (excluding 104,851,276 and
    73,720,953 shares held in treasury at
    March 31, 2008 and December 31, 2007,
    respectively)                                        299           297
   Additional paid-in capital                     21,474,113    22,559,045
   Accumulated deficit                           (21,052,769)  (21,033,452)
   Accumulated other comprehensive income             18,654         1,975
                                                ------------  ------------
      Total stockholders' equity                     440,297     1,527,865
                                                ------------  ------------
      Total liabilities and stockholders'
       equity                                   $  3,066,441  $  4,023,113
                                                ============  ============
                      VERISIGN, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
                  (In thousands, except per share data)
                                (Unaudited)
                                                Three Months  Three Months
                                                    Ended         Ended
                                                  March 31,     March 31,
                                                ------------  ------------
                                                    2008          2007
                                                ------------  ------------
Revenues                                          $ 354,281     $ 328,483
Costs and expenses
   Cost of revenues                                  124,234       116,418
   Sales & marketing                                  59,238        77,215
   Research & development                             38,351        42,177
   General & administrative                           71,660        49,281
   Restructuring, impairments & other charges,
    (net)                                             21,538        25,594
   Amortization of other intangible assets             8,698        27,416
                                                ------------  ------------
        Total costs and expenses                     323,719       338,101
                                                ------------  ------------
Operating (loss) income                               30,562        (9,618)
Other (loss) income, net                              (1,858)       81,280
                                                ------------  ------------
Income from continuing operations before income
 taxes, (loss) earnings from unconsolidated
 entities and minority interest                       28,704        71,662
Income tax expense                                   (13,399)       (9,246)
(Loss) earnings from unconsolidated entities,
 net of tax                                           (2,141)          448
Minority interest, net of tax                           (906)         (569)
                                                ------------  ------------
Income from continuing operations                     12,258        62,295
Discontinued operations, net of tax                  (30,845)         (542)
                                                ------------  ------------
Net (loss) income                               $    (18,587) $     61,753
                                                ============  ============
Basic income (loss) per share from:
   Continuing operations                        $       0.06  $       0.25
   Discontinued operations                             (0.15)            -
                                                ------------  ------------
   Net (loss) income                            $      (0.09) $       0.25
                                                ============  ============
Diluted (loss) income per share from:
   Continuing operations                        $       0.06  $       0.25
   Discontinued operations                             (0.15)            -
                                                ------------  ------------
   Net (loss) income                            $      (0.09) $       0.25
                                                ============  ============
    Shares used in per share computation:
      Basic                                          206,550       243,852
                                                ============  ============
      Diluted                                        210,471       248,357
                                                ============  ============
                      VERISIGN, INC. AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                              (In thousands)
                                (Unaudited)
                                                Three Months  Three Months
                                                    Ended         Ended
                                                  March 31,     March 31,
                                                ------------  ------------
                                                    2008          2007
                                                ------------  ------------
Cash flows from operating activities:
   Net (loss) income                            $    (18,587) $     61,753
   Adjustments to reconcile net income to net
    cash provided by operating activities:
      Gain on divestiture of businesses                 (816)      (74,999)
      Unrealized gain on contingent interest
       derivative on convertible debentures           (1,838)            -
      Depreciation of property and equipment          31,815        28,176
      Amortization of other intangible assets         11,957        31,787
      Impairment of assets held for sale              25,511             -
      Provision for doubtful accounts                    575        (1,156)
      Stock-based compensation and other              22,550        16,725
      Restructuring, impairments and other
       charges, net                                   26,465        27,012
      Impairment of equity investment                    327             -
      Gain on sale of property and equipment            (728)            -
      Net gain on sale of investments                   (382)         (829)
      Loss (earnings) from unconsolidated
       entities, net of tax                            2,141          (448)
      Minority interest, net of tax                      906           569
      Deferred income tax provision                   (4,045)        5,123
   Changes in operating assets and liabilities:
      Accounts receivable                             (1,025)      (45,859)
      Prepaid expenses and other current assets       20,594        75,746
      Accounts payable and accrued liabilities       (81,620)     (127,657)
      Deferred revenues                               40,503        48,034
                                                ------------  ------------
        Net cash provided by operating
         activities                                   74,303        43,977
                                                ------------  ------------
Cash flows from investing activities:
   Purchases of investments                                -      (135,882)
   Proceeds from sale of property and equipment        1,286             -
   Proceeds from maturities and sales of
    investments                                          100       191,912
   Purchases of property and equipment               (25,939)      (15,125)
   Proceeds received on divestiture of majority
    ownership interest in Jamba, net of cash
    contributed                                            -       152,643
   Proceeds from sale of discontinued
    operations                                        14,160             -
   Other assets                                       (5,289)        1,138
                                                ------------  ------------
        Net cash (used in) provided by
         investing activities                        (15,682)      194,686
                                                ------------  ------------
Cash flows from financing activities:
   Proceeds from issuance of common stock from
    option exercises and employee stock
    purchase plans                                    46,195             -
   Change in net assets of minority interest              62             7
   Repurchases of common stock                    (1,146,510)            -
   Proceeds from credit facility, net of
    issuance costs                                   200,000             -
   Repayment of short-term debt                      (60,000)     (199,000)
   Dividend paid to minority interest                   (341)            -
                                                ------------  ------------
        Net cash (used in) financing activities     (960,594)     (198,993)
                                                ------------  ------------
Effect of exchange rate changes on cash and
 cash equivalents                                      8,276           791
                                                ------------  ------------
Net (decrease) increase in cash and cash
 equivalents                                        (893,697)       40,461
Cash and cash equivalents at beginning of
 period                                            1,376,722       501,784
                                                ------------  ------------
Cash and cash equivalents at end of period           483,025       542,245
Cash and cash equivalents of Jamba Service at
 end of period                                             -       (19,221)
                                                ------------  ------------
Cash and cash equivalents of continuing
 operations at end of period                    $    483,025  $    523,024
                                                ============  ============
Supplemental cash flow disclosures:
   Cash paid for interest                       $     20,146  $      2,649
                                                ============  ============
                      VERISIGN, INC. AND SUBSIDIARIES
                  STATEMENTS OF OPERATIONS RECONCILIATION
                  (In thousands, except per share data)
                                                       Three Months Ended
                                                         March 31, 2008
                                                      Operating     Net
                                                        Income     Income
                                                      ---------  ---------
GAAP as reported                                      $  30,562  $ (18,587)
   Discontinued operations and non-core businesses (1)     (833)    32,104
   Adjustments to core  businesses: (1)
    Stock based compensation                             13,533     13,533
    Amortization of intangibles                           2,491      2,491
    Restructuring costs                                  14,124     14,124
    Non recurring and other costs (2)                     7,793      7,793
    Gains or losses on investments and derivatives                  (1,997)
   Tax adjustment (3)                                               (5,768)
                                                      ---------  ---------
Non-GAAP as adjusted                                  $  67,670  $  43,693
                                                      =========  =========
Dilutive shares                                         210,471    210,471
                                                      ---------  ---------
Per diluted share                                     $    0.32  $    0.21
                                                      =========  =========
(1)  As of March 31, 2008, the Company's business consists of the following
reportable segments: Internet Infrastructure and Identity Services ("3IS")
and Other Services which represents continuing operations of non-core
businesses and legacy products and services. The 3IS segment is also
referred to as "core businesses" which are Naming, SSL, and Authentication.
(2) Non recurring and other costs primarily consists of $8.1 million in
penalties related to late payment of payroll taxes on employee stock based
awards during fiscal 2004 through the first quarter of fiscal 2008.
(3) Non-GAAP tax is calculated as 30% of income from continuing operations,
excluding minority interest, 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: loss from
discontinued operations, loss from non-core businesses, stock-based
compensation, amortization of intangible assets, restructuring costs,
non-recurring costs, and gains and losses on investments and derivatives.
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
                              December 31, September 30, June 30, March 31,
                                  2007        2007        2007      2007
Revenue from core business    $  212,408   $  202,916   $ 193,261 $ 180,902
                              ==========   ==========   ========= =========

SOURCE: VeriSign, Inc.


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