Business Wire | Jul 23, 2020 04:05PM EDT

Verisign Reports Second Quarter 2020 Results

Jul. 23, 2020

RESTON, Va.--(BUSINESS WIRE)--Jul. 23, 2020--VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the second quarter of 2020.

VeriSign, Inc. and its subsidiaries ("Verisign") reported revenue of $314 million for the second quarter of 2020, up 2.6 percent from the same quarter in 2019. Verisign reported net income of $152 million and diluted earnings per share (diluted "EPS") of $1.32 for the second quarter of 2020, compared to net income of $148 million and diluted EPS of $1.24 for the same quarter in 2019. The operating margin was 65.8 percent for the second quarter of 2020 compared to 65.9 percent for the same quarter in 2019.

"For many people who are working from home and isolating at home, online services are critical. More businesses and individuals than ever depend on internet infrastructure for their livelihood. Commitment to our mission of maintaining our unparalleled record of uninterrupted .com and .net DNS is our priority," said Jim Bidzos, Executive Chairman and Chief Executive Officer.

Financial Highlights

* Verisign ended the second quarter of 2020 with cash, cash equivalents and marketable securities of $1.19 billion, a decrease of $23 million from the end of 2019. * Cash flow from operating activities was $215 million for the second quarter of 2020, compared to $165 million for the same quarter in 2019. * Deferred revenues as of June 30, 2020 totaled $1.06 billion, an increase of $30 million from the end of 2019. * During the second quarter of 2020, Verisign repurchased 0.7 million shares of its common stock for an aggregate cost of $150 million. As of June 30, 2020, there was $676 million remaining for future share repurchases under the share repurchase program which has no expiration date.

Business Highlights

* Verisign ended the second quarter of 2020 with 162.1 million .com and .net domain name registrations in the domain name base, a 3.8 percent increase from the end of the second quarter of 2019, and a net increase of 1.41 million during the second quarter of 2020. * During the second quarter of 2020, Verisign processed 11.1 million new domain name registrations for .com and .net, compared to 10.3 million for the same quarter in 2019. * The final .com and .net renewal rate for the first quarter of 2020 was 75.4 percent compared with 75.0 percent for the same quarter in 2019. Renewal rates are not fully measurable until 45 days after the end of the quarter. * Verisign announces that it will extend the freeze on registry prices for all of its Top-Level Domains, including .com and .net, through March 31, 2021. Additionally, Verisign announces the extension of the waiver of the wholesale restore fee for expired domains through the end of 2020.

Today's Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EDT) to review the second quarter 2020 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (786) 789-4772 (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, risks arising from 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.

(c)2020 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.

VERISIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

June 30, December 31, 2020 2019

ASSETS

Current assets:

Cash and cash equivalents $ 306,701 $ 508,196

Marketable securities 887,872 709,863

Other current assets 55,075 60,530

Total current assets 1,249,648 1,278,589

Property and equipment, net 250,290 250,283

Goodwill 52,527 52,527

Deferred tax assets 82,048 87,798

Deposits to acquire intangible assets 145,000 145,000

Other long-term assets 40,613 39,812

Total long-term assets 570,478 575,420

Total assets $ 1,820,126 $ 1,854,009

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable and accrued liabilities $ 235,671 $ 209,988

Deferred revenues 782,661 755,178

Total current liabilities 1,018,332 965,166

Long-term deferred revenues 281,649 278,702

Senior notes 1,788,824 1,787,565

Long-term tax and other liabilities 131,645 312,676

Total long-term liabilities 2,202,118 2,378,943

Total liabilities 3,220,450 3,344,109

Commitments and contingencies

Stockholders' deficit:

Preferred stock-par value $.001 per share;Authorized shares: 5,000; Issued and - - outstanding shares: none

Common stock and additional paid-in capital-parvalue $.001 per share; Authorized shares:1,000,000; Issued shares: 353,637 at June 30, 14,592,929 14,990,011 2020 and 353,157 at December 31, 2019;Outstanding shares: 115,011 at June 30, 2020and 116,715 at December 31, 2019

Accumulated deficit (15,990,895) (16,477,490)

Accumulated other comprehensive loss (2,358) (2,621)

Total stockholders' deficit (1,400,324) (1,490,100)

Total liabilities and stockholders' deficit $ 1,820,126 $ 1,854,009

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended Six Months Ended June 30, June 30,

2020 2019 2020 2019

Revenues $ 314,365 $ 306,289 $ 626,889 $ 612,697

Costs and expenses:

Cost of revenues 43,608 44,066 89,181 89,570

Sales and marketing 8,890 12,399 15,494 22,918

Research and development 18,202 14,953 35,560 31,085

General and 36,885 33,178 73,610 67,179 administrative

Total costs and expenses 107,585 104,596 213,845 210,752

Operating income 206,780 201,693 413,044 401,945

Interest expense (22,535) (22,635) (45,070) (45,266)

Non-operating income, net 7,403 11,436 14,487 23,639

Income before income 191,648 190,494 382,461 380,318 taxes

Income tax (expense) (39,169) (42,960) 104,134 (70,257) benefit

Net income 152,479 147,534 486,595 310,061

Other comprehensive (2,000) 35 263 84 (loss) income

Comprehensive income $ 150,479 $ 147,569 $ 486,858 $ 310,145



Earnings per share:

Basic $ 1.32 $ 1.24 $ 4.20 $ 2.60

Diluted $ 1.32 $ 1.24 $ 4.19 $ 2.59

Shares used to compute earnings per share

Basic 115,347 118,965 115,861 119,359

Diluted 115,544 119,361 116,137 119,837

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended June 30,

2020 2019

Cash flows from operating activities:

Net income $ 486,595 $ 310,061

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation of property and equipment 22,841 22,884

Stock-based compensation 23,428 25,617

Amortization of discount on investments in debt (5,095) (5,679) securities

Other, net (3,006) 894

Changes in operating assets and liabilities:

Other assets (10,146) (10,254)

Accounts payable and accrued liabilities 25,796 (39,351)

Deferred revenues 30,430 31,857

Net deferred income taxes and other long-term (175,471) 16,146 tax liabilities

Net cash provided by operating activities 395,372 352,175

Cash flows from investing activities:

Proceeds from maturities and sales of 995,194 1,466,303 marketable securities

Purchases of marketable securities (1,167,680) (1,021,741)

Purchases of property and equipment (21,891) (20,189)

Proceeds received (payments made) related to 20,009 (6,311) sale of business

Net cash (used in) provided by investing (174,368) 418,062 activities

Cash flows from financing activities:

Repurchases of common stock (429,826) (384,532)

Proceeds from employee stock purchase plan 8,296 8,253

Net cash used in financing activities (421,530) (376,279)

Effect of exchange rate changes on cash, cash (965) 243 equivalents, and restricted cash

Net (decrease) increase in cash, cash (201,491) 394,201 equivalents, and restricted cash

Cash, cash equivalents, and restricted cash at 517,601 366,753 beginning of period

Cash, cash equivalents, and restricted cash at $ 316,110 $ 760,954 end of period

Supplemental cash flow disclosures:

Cash paid for interest $ 43,708 $ 43,708

Cash paid for income taxes, net of refunds $ 26,472 $ 62,214 received

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CONTACT: Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643 Media Relations: James Barbour, jbarbour@verisign.com, 703-948-3800