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Verisign Reports Fourth Quarter and Full Year 2020 Results

RESTON, Va.–(BUSINESS WIRE)–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.

©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.

CONSOLIDATED BALANCE SHEETS

(In thousands, except par value)

(Unaudited)

 

 

December 31,
2020

 

December 31,
2019

ASSETS

 

 

 

Current assets:

 

 

 

Cash and cash equivalents

$

401,194

 

 

 

$

508,196

 

 

Marketable securities

765,713

 

 

 

709,863

 

 

Other current assets

51,033

 

 

 

60,530

 

 

Total current assets

1,217,940

 

 

 

1,278,589

 

 

Property and equipment, net

245,571

 

 

 

250,283

 

 

Goodwill

52,527

 

 

 

52,527

 

 

Deferred tax assets

67,914

 

 

 

87,798

 

 

Deposits to acquire intangible assets

145,000

 

 

 

145,000

 

 

Other long-term assets

37,958

 

 

 

39,812

 

 

Total long-term assets

548,970

 

 

 

575,420

 

 

Total assets

$

1,766,910

 

 

 

$

1,854,009

 

 

LIABILITIES AND STOCKHOLDERS’ DEFICIT

 

 

 

Current liabilities:

 

 

 

Accounts payable and accrued liabilities

$

208,642

 

 

 

$

209,988

 

 

Deferred revenues

780,051

 

 

 

755,178

 

 

Total current liabilities

988,693

 

 

 

965,166

 

 

Long-term deferred revenues

282,838

 

 

 

278,702

 

 

Senior notes

1,790,083

 

 

 

1,787,565

 

 

Long-term tax and other liabilities

95,494

 

 

 

312,676

 

 

Total long-term liabilities

2,168,415

 

 

 

2,378,943

 

 

Total liabilities

3,157,108

 

 

 

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—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

$

132,683

 

 

 

$

89,974

 

 

 

Contacts

Investor Relations: David Atchley, datchley@verisign.com, 703-948-4643

Media Relations: James Barbour, jbarbour@verisign.com, 703-948-3800

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