Business Wire | Jul 22, 2021 04:05PM EDT

Verisign Reports Second Quarter 2021 Results

Jul. 22, 2021

RESTON, Va.--(BUSINESS WIRE)--Jul. 22, 2021--VeriSign, Inc. (NASDAQ: VRSN), a global provider of domain name registry services and internet infrastructure, today reported financial results for the second quarter of 2021.

VeriSign, Inc. and its subsidiaries ("Verisign") reported revenue of $329 million for the second quarter of 2021, up 4.8 percent from the same quarter in 2020. Verisign reported net income of $148 million and diluted earnings per share (diluted "EPS") of $1.31 for the second quarter of 2021, compared to net income of $152 million and diluted EPS of $1.32 for the same quarter in 2020. The operating margin was 64.7 percent for the second quarter of 2021 compared to 65.8 percent for the same quarter in 2020.

"We're pleased with the operational and financial results of the quarter as well as the continued efforts of our dedicated team. Last week we reached a new milestone for our critical internet infrastructure by marking 24 years of 100% availability in the .com/.net domain name resolution system," said Jim Bidzos, Executive Chairman and Chief Executive Officer.

Financial Highlights

* On June 8, 2021, VeriSign, Inc. issued $750 million aggregate principal amount of 2.700% Senior Notes due 2031. On June 23, 2021, VeriSign, Inc. used the net proceeds from the offering, together with cash on hand, to fund the redemption of all of its outstanding $750 million, 4.625% Senior Notes due 2023; as part of this redemption, Verisign recognized a loss on debt extinguishment of $2.1 million related to the unamortized debt issuance costs on the notes. * Verisign ended the second quarter of 2021 with cash, cash equivalents and marketable securities of $1.12 billion, a decrease of $44 million from the end of 2020. * Cash flow from operating activities was $143 million for the second quarter of 2021, compared to $215 million for the same quarter in 2020. * Deferred revenues as of June 30, 2021 totaled $1.11 billion, an increase of $50 million from the end of 2020. * During the second quarter of 2021, Verisign repurchased 0.8 million shares of its common stock for an aggregate cost of $172 million. As of June 30, 2021, there was $737 million remaining for future share repurchases under the share repurchase program which has no expiration date.

Business Highlights

* Verisign ended the second quarter of 2021 with 170.6 million .com and .net domain name registrations in the domain name base, a 5.2 percent increase from the end of the second quarter of 2020, and a net increase of 2.59 million during the second quarter of 2021. * During the second quarter of 2021, Verisign processed 11.7 million new domain name registrations for .com and .net, compared to 11.1 million for the same quarter in 2020. * The final .com and .net renewal rate for the first quarter of 2021 was 76.0 percent compared to 75.4 percent for the same quarter in 2020. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Today's Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EDT) to review the second quarter 2021 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, attempted security breaches, cyber-attacks, and DDoS attacks against our systems and services; the introduction of undetected or unknown defects in our systems; vulnerabilities in the global routing system; system interruptions or system failures; damage to our data centers; risks arising from our operation of root servers and our performance of the Root Zone Maintainer functions; any loss or modification of our right to operate the .com and .net gTLDs; changes or challenges to the pricing provisions of the .com Registry Agreement; new or existing governmental laws and regulations in the U.S. or other applicable foreign jurisdictions; economic, legal and political risks associated with our international operations; the impact of unfavorable tax rules and regulations; risks from the adoption of ICANN's consensus and temporary policies, technical standards and other processes; the uncertainty of the impact of changes to the multi-stakeholder model of internet governance; the outcome of claims, lawsuits, audits or investigations; the effects of the COVID-19 pandemic; our ability to compete in the highly competitive business environment in which we operate; changes in internet practices and behavior and the adoption of substitute technologies, or the negative impact of wholesale price increases; our ability to expand our services into developing and emerging economies; our ability to maintain strong relationships with registrars and their resellers; our ability to attract, retain and motivate our highly skilled employees; and our ability to protect and enforce our intellectual property rights. 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, 2020, 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)2021 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, 2021 2020

ASSETS

Current assets:

Cash and cash equivalents $ 216,497 $ 401,194

Marketable securities 906,492 765,713

Other current assets 66,078 51,033

Total current assets 1,189,067 1,217,940

Property and equipment, net 247,694 245,571

Goodwill 52,527 52,527

Deferred tax assets 66,441 67,914

Deposits to acquire intangible assets 145,000 145,000

Other long-term assets 40,651 37,958

Total long-term assets 552,313 548,970

Total assets $ 1,741,380 $ 1,766,910

LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities:

Accounts payable and accrued liabilities $ 175,350 $ 208,642

Deferred revenues 822,984 780,051

Total current liabilities 998,334 988,693

Long-term deferred revenues 289,881 282,838

Senior notes 1,784,654 1,790,083

Long-term tax and other liabilities 86,296 95,494

Total long-term liabilities 2,160,831 2,168,415

Total liabilities 3,159,165 3,157,108

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-incapital-par value $.001 per share;Authorized shares: 1,000,000; Issuedshares: 354,071 at June 30, 2021 and 13,949,525 14,275,160 353,789 at December 31, 2020; Outstandingshares: 112,001 at June 30, 2021 and113,470 at December 31, 2020

Accumulated deficit (15,364,476 ) (15,662,602 )

Accumulated other comprehensive loss (2,834 ) (2,756 )

Total stockholders' deficit (1,417,785 ) (1,390,198 )

Total liabilities and stockholders' deficit $ 1,741,380 $ 1,766,910

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Revenues

$

329,405

$

314,365

$

653,026

$

626,889

Costs and expenses:

Cost of revenues

47,796

43,608

94,764

89,181

Sales and marketing

10,221

8,890

18,705

15,494

Research and development

19,808

18,202

40,119

35,560

General and administrative

38,601

36,885

76,052

73,610

Total costs and expenses

116,426

107,585

229,640

213,845

Operating income

212,979

206,780

423,386

413,044

Interest expense

(23,064

)

(22,535

)

(45,598

)

(45,070

)

Non-operating (loss) income, net

(2,041

)

7,403

(1,597

)

14,487

Income before income taxes

187,874

191,648

376,191

382,461

Income tax (expense) benefit

(40,102

)

(39,169

)

(78,065

)

104,134

Net income

147,772

152,479

298,126

486,595

Other comprehensive (loss) income

(87

)

(2,000

)

(78

)

263

Comprehensive income

$

147,685

$

150,479

$

298,048

$

486,858

Earnings per share:

Basic

$

1.31

$

1.32

$

2.64

$

4.20

Diluted

$

1.31

$

1.32

$

2.64

$

4.19

Shares used to compute earnings per share

Basic

112,387

115,347

112,757

115,861

Diluted

112,517

115,544

112,905

116,137

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands, except per share data)

(Unaudited)

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

2021 2020 2021 2020

Revenues $ 329,405 $ 314,365 $ 653,026 $ 626,889

Costs and expenses:

Cost of 47,796 43,608 94,764 89,181 revenues

Sales and 10,221 8,890 18,705 15,494 marketing

Research and 19,808 18,202 40,119 35,560 development

General and 38,601 36,885 76,052 73,610 administrative

Total costs and 116,426 107,585 229,640 213,845 expenses

Operating 212,979 206,780 423,386 413,044 income

Interest (23,064 ) (22,535 ) (45,598 ) (45,070 ) expense

Non-operating(loss) income, (2,041 ) 7,403 (1,597 ) 14,487 net

Income before 187,874 191,648 376,191 382,461 income taxes

Income tax(expense) (40,102 ) (39,169 ) (78,065 ) 104,134 benefit

Net income 147,772 152,479 298,126 486,595

Othercomprehensive (87 ) (2,000 ) (78 ) 263 (loss) income

Comprehensive $ 147,685 $ 150,479 $ 298,048 $ 486,858 income



Earnings per share:

Basic $ 1.31 $ 1.32 $ 2.64 $ 4.20

Diluted $ 1.31 $ 1.32 $ 2.64 $ 4.19

Shares used tocompute earnings per share

Basic 112,387 115,347 112,757 115,861

Diluted 112,517 115,544 112,905 116,137

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

Six Months Ended June 30,

2021

2020

Cash flows from operating activities:

Net income

$

298,126

$

486,595

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

Depreciation of property and equipment

23,577

22,841

Stock-based compensation

26,591

23,428

Other, net

4,398

(8,101

)

Changes in operating assets and liabilities:

Other assets

(18,602

)

(10,146

)

Accounts payable and accrued liabilities

(36,787

)

25,796

Deferred revenues

49,976

30,430

Net deferred income taxes and other long-term tax liabilities

(6,435

)

(175,471

)

Net cash provided by operating activities

340,844

395,372

Cash flows from investing activities:

Proceeds from maturities and sales of marketable securities

1,482,952

995,194

Purchases of marketable securities

(1,623,566

)

(1,167,680

)

Purchases of property and equipment

(24,270

)

(21,891

)

Proceeds received related to sale of business

-

20,009

Net cash used in investing activities

(164,884

)

(174,368

)

Cash flows from financing activities:

Repayment of borrowings

(750,000

)

-

Proceeds from senior note issuance, net of issuance costs

742,329

-

Repurchases of common stock

(361,199

)

(429,826

)

Proceeds from employee stock purchase plan

8,101

8,296

Net cash used in financing activities

(360,769

)

(421,530

)

Effect of exchange rate changes on cash, cash equivalents, and restricted cash

(364

)

(965

)

Net decrease in cash, cash equivalents, and restricted cash

(185,173

)

(201,491

)

Cash, cash equivalents, and restricted cash at beginning of period

410,601

517,601

Cash, cash equivalents, and restricted cash at end of period

$

225,428

$

316,110

Supplemental cash flow disclosures:

Cash paid for interest

$

48,718

$

43,708

Cash paid for income taxes, net of refunds received

$

98,993

$

26,472

View source version on businesswire.com: https://www.businesswire.com/news/home/20210722005761/en/

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