VeriSign Beats Estimates

Verisign Inc.: Q1 EPS Beat Drives Shares

Verisign Inc. (VRSN - Analyst Report, Hold) shares are tracking higher in trading today following the company’s better-than-expected Q1 results.

Revenues of $252 million exceeded our estimate of $249 million and consensus expectation of $248 million. Proforma EPS also came in higher at $0.32, compared to our estimate of $0.28. Q1 revenue was augmented by $3 million in the iDefense segment, which was previously categorized as non-core revenues.

Overall margin upside during the quarter was impressive. The company added another 2 million in domain names, driving its DNS segment revenues to $148 million. VeriSign SSL Services ended the quarter with 1.15 million SSL Certificates in the installed base, an increase of 13% year-over-year.

VeriSign recently announced the VeriSign Identity Protection (VIP) Access for Mobile credentials, which is now available for download onto more than 100 popular mobile phone models. The application transforms leading mobile phones into strong authentication credentials capable of generating a unique one-time password (OTP) every time a consumer signs on to a Web site.

From November 2007 to date, VeriSign has sold 10 non-core businesses (out of a total of 13) for a total exceeding $530 million and is in the process of winding down one business in non-core operations.  There are currently three additional non-core businesses in discontinued operations remaining for sale, including Messaging and Managed Security Services.

Operating cash flow for the reported quarter was roughly $38 million with capex of $21 million. VRSN exited the quarter with $942 million in cash & equivalents and $569 million in long-term debt.