Verisign Healthy Financials Show .COM/.NET Demand Slowing
Registrations of new .com and .net domain names increased by 420,000 net during the second quarter, meaning there were 128.9 million active domain names across both TLDs, an increase of 3.7 percent, Verisign Registry Services reported in their results for the second quarter of 2014 [pdf]. This compares to a 4.9 percent increase for the same period 12 months ago.
In the second quarter, Verisign processed 8.5 million new domain name registrations for .com and .net as compared to 8.7 million for the same period in 2013 and 8.4 million for the same period in 2012. It’s possible the decline could be attributed to the slowly declining number of available .com and .net domains, increased competition from the slew of new gTLDs available and/or the global economy.
There was also a decline in the final .com and .net renewal rates. For the first quarter of 2014 the renewal rate was 72.6 percent compared with 73.2 percent for the same quarter in 2013. Renewal rates are not fully measurable until 45 days after the end of the quarter.
There is also an increase in the annual fee for a .net domain coming, with the fee paid by registrars to Verisign increasing from $6.18 to $6.79, effective 1 February, 2015, as per Verisign’s agreement with ICANN.
“Our results are in keeping with our goal of creating long-term shareholder value by providing secure and stable critical internet infrastructure services and efficiently managing the business. Additionally, in keeping with our commitment to return value to our shareholders, we repurchased $300 million of Verisign shares during the quarter,” commented Jim Bidzos, executive chairman, president and chief executive officer.
Financially things appear to be in good health, although there was a decline in cash, cash equivalents and marketable securities as well as cash flow.
In second quarter GAAP financial results, revenue of $250 million was reported for the second quarter of 2014, up 4.6 percent from the same quarter in 2013. Verisign reported net income of $100 million and diluted earnings per share (EPS) of $0.71 for the second quarter of 2014, compared to net income of $87 million and diluted EPS of $0.55 in the same quarter in 2013. The operating margin was 57.2 percent for the second quarter of 2014 compared to 55.2 percent for the same quarter in 2013.
In Non-GAAP Financial Results Verisign reported, on a non-GAAP basis, net income of $96 million and diluted EPS of $0.68 for the second quarter of 2014, compared to net income of $92 million and diluted EPS of $0.58 for the same quarter in 2013.
Verisign ended the second quarter with cash, cash equivalents and marketable securities of $1.5 billion, a decrease of $178 million as compared with year-end 2013.
Cash flow from operations was $121 million for the second quarter compared with $147 million for the same quarter in 2013.
