Verisign Reports Fourth Quarter and Full Year 2020 Results
RESTON, VA - Feb. 11, 2021 - 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 2020.
Fourth Quarter Financial Results
VeriSign, Inc. and subsidiaries (“Verisign”) reported revenue of $320 million for the fourth quarter of 2020, up 3.1 percent from the same quarter in 2019. Verisign reported net income of $157 million and diluted earnings per share (diluted “EPS”) of $1.38 for the fourth quarter of 2020, compared to net income of $148 million and diluted EPS of $1.26 for the same quarter in 2019. The operating margin was 63.9 percent for the fourth quarters of 2020 and 2019.
Net income for the fourth quarter of 2020 included recognition of $12.4 million of previously unrecognized income tax benefits as a result of the lapse of certain statutes of limitations. This income tax benefit increased diluted EPS by $0.11.
2020 Financial Results
Verisign reported revenue of $1.27 billion for 2020, up 2.7 percent from $1.23 billion in 2019. Verisign reported net income of $815 million and diluted EPS of $7.07 for 2020, compared to net income of $612 million and diluted EPS of $5.15 in 2019. The operating margin for 2020 was 65.2 percent compared to 65.5 percent in 2019.
Net income for the full year of 2020 included the recognition of $204.2 million of previously unrecognized income tax benefits. These benefits resulted from remeasurements of Verisign’s accrual for uncertain tax positions as previously noted in the first and third quarter 2020 earnings releases and also due to the lapse of certain statutes of limitations noted above. Cumulatively, these income tax benefits increased diluted EPS by $1.77 for 2020.
“Reliance on internet services increased significantly due to the global events of 2020. Our resilient network design and preparedness over decades for challenging scenarios, and our agility and preparation for working remotely, enabled us to reliably and securely meet increased global dependence on the internet,” said Jim Bidzos, Executive Chairman and Chief Executive Officer.
Financial Highlights
•Verisign ended 2020 with cash, cash equivalents, and marketable securities of $1.17 billion, a decrease of $51 million from year-end 2019.
•Cash flow from operations was $195 million for the fourth quarter of 2020 and $730 million for the full year of 2020 compared with $194 million for the same quarter in 2019 and $754 million for the full year 2019.
•Deferred revenues as of Dec. 31, 2020, totaled $1.06 billion, an increase of $29 million from year-end 2019.
•During the fourth quarter of 2020, Verisign repurchased 0.8 million shares of its common stock for $170 million. During the full year of 2020, Verisign repurchased 3.7 million shares of its common stock for $735 million.
•Effective Feb. 11, 2021 the Board of Directors approved an additional authorization for share repurchases of approximately $747 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 of 2020 with 165.2 million .com and .net domain name registrations in the domain name base, a 4.0 percent increase from the end of the fourth quarter of 2019, and a net increase of 1.46 million registrations during the fourth quarter of 2020.
•In the fourth quarter of 2020, Verisign processed 10.5 million new domain name registrations for .com and .net, as compared to 10.3 million for the same quarter in 2019.
•The final .com and .net renewal rate was 73.7 percent for the third quarters of 2020 and 2019. Renewal rates are not fully measurable until 45 days after the end of the quarter.
•Verisign announces that it will increase the annual registry-level wholesale fee for each new and renewal .com domain name registration from $7.85 to $8.39, effective Sept. 1, 2021.
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 2020 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, the effects of the COVID-19 pandemic, 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, 2019, 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.
Contacts
Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643
Media Relations: James Barbour, jbarbour@verisign.com, 703-948-3800
Preferred stock—par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none
—
—
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 353,789 at December 31, 2020 and 353,157 at December 31, 2019; Outstanding shares: 113,470 at December 31, 2020 and 116,715 at December 31, 2019
14,275,160
14,990,011
Accumulated deficit
(15,662,602)
(16,477,490)
Accumulated other comprehensive loss
(2,756)
(2,621)
Total stockholders’ deficit
(1,390,198)
(1,490,100)
Total liabilities and stockholders’ deficit
$
1,766,910
$
1,854,009
VERISIGN, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands, except per share data)
(Unaudited)
Three Months Ended December 31,
Year Ended December 31,
2020
2019
2020
2019
Revenues
$
320,284
$
310,543
$
1,265,052
$
1,231,661
Costs and expenses:
Cost of revenues
45,972
46,454
180,177
180,467
Sales and marketing
12,907
13,862
36,790
46,637
Research and development
19,403
15,101
74,671
60,805
General and administrative
37,494
36,560
149,213
137,625
Total costs and expenses
115,776
111,977
440,851
425,534
Operating income
204,508
198,566
824,201
806,127
Interest expense
(22,537)
(22,712)
(90,144)
(90,611)
Non-operating income, net
925
9,123
16,187
43,260
Income before income taxes
182,896
184,977
750,244
758,776
Income tax (expense) benefit
(25,582)
(36,652)
64,644
(146,477)
Net income
157,314
148,325
814,888
612,299
Other comprehensive (loss) income
(15)
(202)
(135)
190
Comprehensive income
$
157,299
$
148,123
$
814,753
$
612,489
Earnings per share:
Basic
$
1.38
$
1.27
$
7.08
$
5.17
Diluted
$
1.38
$
1.26
$
7.07
$
5.15
Shares used to compute earnings per share
Basic
113,872
117,169
115,058
118,513
Diluted
114,107
117,658
115,298
118,968
VERISIGN, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
Year Ended December 31,
2020
2019
Cash flows from operating activities:
Net income
$
814,888
$
612,299
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment
46,352
46,330
Stock-based compensation
48,243
50,626
Amortization of discount on investments in debt securities
(6,131)
(14,777)
Gain on sale of business
(6,402)
(817)
Other, net
3,425
3,668
Changes in operating assets and liabilities:
Other assets
(9,214)
(3,279)
Accounts payable and accrued liabilities
2,227
(24)
Deferred revenues
29,009
16,191
Net deferred income taxes and other long-term tax liabilities
(192,214)
43,675
Net cash provided by operating activities
730,183
753,892
Cash flows from investing activities:
Proceeds from maturities and sales of marketable securities
2,305,732
2,247,904
Purchases of marketable securities
(2,355,405)
(2,030,521)
Purchases of property and equipment
(43,395)
(40,316)
Proceeds (Payments) from sale of business
20,810
(9,872)
Net cash (used in) provided by investing activities
(72,258)
167,195
Cash flows from financing activities:
Repurchases of common stock
(777,454)
(782,583)
Proceeds from employee stock purchase plan
12,577
13,152
Other financing activities
—
(872)
Net cash used in financing activities
(764,877)
(770,303)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(48)
64
Net (decrease) increase in cash, cash equivalents and restricted cash
(107,000)
150,848
Cash, cash equivalents, and restricted cash at beginning of period
517,601
366,753
Cash, cash equivalents, and restricted cash at end of period
$
410,601
$
517,601
Supplemental cash flow disclosures:
Cash paid for interest
$
87,354
$
87,683
Cash paid for income taxes, net of refunds received
