Internet Names Grow at VeriSign

According to the latest Domain Name Industry Brief published by VeriSign Inc. (VRSN - Analyst Report), approximately five million names were added to the internet in the third quarter of 2011 bringing the total number of registered domain names to nearly 220 million on a worldwide basis.

VeriSign Inc. provides essential Internet infrastructure services to companies, service providers and website owners. The company offers a broad platform of products and services that enables Internet users, website owners and operators of digital networks.

VeriSign’s registry, security and communications services are essential for the smooth functioning of the online world. The company exclusively registers domain names within the .com, .net and .name generic top-level domains (gTLDs) under agreements with the Internet Corporation for Assigned Names and Numbers (ICANN) and the U.S. Department of Commerce (DOC).

The addition of 4.9 million domain names represents a growth of 2.3% in the second quarter of 2011 and marks the third straight with a growth of more than 2%.  In the first quarter, internet additions were 4.5 million domain names, an increase of 2.2% and 5.2 million domain names in the second quarter, an increase of 2.5%.

Meanwhile, new .com and .net registrations totalled 7.9 million during the quarter, up 5.9% year over year. The .com and .net TLDs experienced reached a combined total of 112 million names.

ICANN recently renewed Verisign's contract to serve as the authoritative registry operator for the .net registry for another six years till 2017. Moreover, ICANN recently announced its plan to increase the number of generic top-level domains.

VeriSign views the introduction of new gTLDs as an adjacent growth opportunity. This should positively impact results in the coming years. 

As of January 15, 2012, the registry fee for .com domain names will increase from $7.34 to $7.85, and the registry fee for .net domain names will increase from $4.65 to $5.11. The fee increases will have no direct impact to 2011 revenue since the increases are not effective until January 15, 2012 but should positively impact revenues in 2012.

VeriSign has considerably streamlined its business to focus on providing, reliable and secure Internet infrastructure services. The disposal of non-core businesses has boosted margins while the recently announced buyback of shares will positively boost the bottom-line.  

We continue to maintain an Outperform recommendation on VeriSign. Our recommendation is supported by Zacks #1 Rank, which translates into a short-term rating of Strong Buy.

Read the full analyst report on VRSN