VeriSign (VRSN - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.70 per share, which beat the Zacks Consensus Estimate by 11.1%. The company had reported earnings of $2.97 per share in the prior year quarter.
Revenues jumped 8.5% year over year to $369 million and beat the Zacks Consensus Estimate by 0.3%.
VeriSign expects 2023 revenues between $1.485 billion and $1.505 billion. The company’s domain name base’s growth is expected to remain flat to up 2.5%.
Quarter Details
VRSN ended the reported quarter with 173.8 million .com and .net domain name registrations, up 0.2% year over year.
The company processed 9.7 million new domain name registrations for .com and .net compared with 10.6 million in the year-ago quarter. VeriSign saw a decrease in new units in the fourth quarter due to many factors, which included lower first-time renewal rates, unfavorable year-over-year comparisons, uncertainty related to global macroeconomic conditions and relative weakness in 2022 registrations from China.
The final .com and .net renewal rate for third-quarter 2022 was 73.7% compared with 75% in the year-ago quarter. Renewal rates are not fully measurable until 45 days after the end of the quarter.
The company expects the renewal rate for fourth-quarter 2022 to be around 73.2% compared with 74.8% in the year-ago quarter.
The company also announced that it will increase the annual registry-level wholesale fee for each new and renewal .com domain name registration from $8.97 to $9.59, with effect from Sep 1.
VeriSign’s research and development expenses increased 3.4% from the year-ago quarter’s level to $21.5 million.
Selling, general and administrative (SG&A) expenses increased 7.5% year over year to $51.7 million. As a percentage of revenues, SG&A expenses contracted 10 basis points (bps) on a year-over-year basis to 14%.
Operating income was $245.5 million, up 10.5% year over year. The operating margin expanded 120 bps to 66.5%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, the company’s cash and cash equivalents (including marketable securities) were $980 million, unchanged as of Sep 30, 2022.
Cash flow from operating activities was $217 million in the fourth quarter compared with $206 million in the previous-year quarter. Free cash flow was $209 million in the reported quarter.
In the fourth quarter, Verisign repurchased 1.1 million shares for $212 million. For full year, the company repurchased 5.5 million shares worth $1.03 billion. As of Dec 31, 2022, the company had shares worth $859 million remaining under buyback authorization.
2023 Guidance
GAAP operating income is now expected to between $0.985 billion and $1.005 billion. Capital expenditures are anticipated in the range of $35-$45 million.
Zacks Rank & Stocks to Consider
VeriSign currently has a Zacks Rank #3 (Hold).
Investors interested in the broader technology space may also consider stocks like Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Super Micro Computer (SMCI - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista Networks and Super Micro Computer carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.23 per share, up 1.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 7.4% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 32% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 125.6% in the past year.
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VeriSign (VRSN - Free Report) reported fourth-quarter 2022 adjusted earnings of $1.70 per share, which beat the Zacks Consensus Estimate by 11.1%. The company had reported earnings of $2.97 per share in the prior year quarter.
Revenues jumped 8.5% year over year to $369 million and beat the Zacks Consensus Estimate by 0.3%.
VeriSign expects 2023 revenues between $1.485 billion and $1.505 billion. The company’s domain name base’s growth is expected to remain flat to up 2.5%.
Quarter Details
VRSN ended the reported quarter with 173.8 million .com and .net domain name registrations, up 0.2% year over year.
The company processed 9.7 million new domain name registrations for .com and .net compared with 10.6 million in the year-ago quarter. VeriSign saw a decrease in new units in the fourth quarter due to many factors, which included lower first-time renewal rates, unfavorable year-over-year comparisons, uncertainty related to global macroeconomic conditions and relative weakness in 2022 registrations from China.
The final .com and .net renewal rate for third-quarter 2022 was 73.7% compared with 75% in the year-ago quarter. Renewal rates are not fully measurable until 45 days after the end of the quarter.
The company expects the renewal rate for fourth-quarter 2022 to be around 73.2% compared with 74.8% in the year-ago quarter.
The company also announced that it will increase the annual registry-level wholesale fee for each new and renewal .com domain name registration from $8.97 to $9.59, with effect from Sep 1.
VeriSign’s research and development expenses increased 3.4% from the year-ago quarter’s level to $21.5 million.
Selling, general and administrative (SG&A) expenses increased 7.5% year over year to $51.7 million. As a percentage of revenues, SG&A expenses contracted 10 basis points (bps) on a year-over-year basis to 14%.
Operating income was $245.5 million, up 10.5% year over year. The operating margin expanded 120 bps to 66.5%.
Balance Sheet & Cash Flow
As of Dec 31, 2022, the company’s cash and cash equivalents (including marketable securities) were $980 million, unchanged as of Sep 30, 2022.
Cash flow from operating activities was $217 million in the fourth quarter compared with $206 million in the previous-year quarter. Free cash flow was $209 million in the reported quarter.
In the fourth quarter, Verisign repurchased 1.1 million shares for $212 million. For full year, the company repurchased 5.5 million shares worth $1.03 billion. As of Dec 31, 2022, the company had shares worth $859 million remaining under buyback authorization.
2023 Guidance
GAAP operating income is now expected to between $0.985 billion and $1.005 billion. Capital expenditures are anticipated in the range of $35-$45 million.
Zacks Rank & Stocks to Consider
VeriSign currently has a Zacks Rank #3 (Hold).
Investors interested in the broader technology space may also consider stocks like Arista Networks (ANET - Free Report) , Jabil (JBL - Free Report) and Super Micro Computer (SMCI - Free Report) . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista Networks and Super Micro Computer carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2023 earnings is pegged at $5.23 per share, up 1.4% in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 7.4% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 32% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 125.6% in the past year.
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