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VeriSign (VRSN) Q3 Earnings Beat Estimates, Revenues Rise Y/Y

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VeriSign (VRSN - Free Report) reported third-quarter 2021 adjusted earnings of $1.40 per share, which beat the Zacks Consensus Estimate by 3.7% but declined 6% year over year.

Revenues increased 5.1% year over year to $334.2 million and beat the Zacks Consensus Estimate by 0.67%.

Quarter Details

VeriSign ended the reported quarter with 172.1 million .com and .net domain name registrations, up 5.1% year over year.
 

VeriSign, Inc. Price, Consensus and EPS Surprise

VeriSign, Inc. Price, Consensus and EPS Surprise

VeriSign, Inc. price-consensus-eps-surprise-chart | VeriSign, Inc. Quote

 

The company processed 10.7 million new domain name registrations for .com and .net compared with 10.9 million in the year-ago quarter.

Renewal rates are not fully measurable until 45 days after the end of the quarter. The final .com and .net renewal rate for the second quarter of 2021 was 75.4% compared with 72.8% in the year-ago quarter.

The company expects the renewal rate for third-quarter 2021 to be around 75% compared with 73.7% in the year-ago quarter.

VeriSign’s research and development (R&D) expenses declined 0.7% from the year-ago quarter to $19.6 million. As a percentage of revenues, R&D expenses decreased 30 basis points (bps) to 5.9%.

General and administrative (G&A) expenses decreased 5.1% year over year to $36.2 million. As a percentage of revenues, G&A expenses declined 120 bps on a year-over-year basis to 10.8%.

Sales and marketing expenses (S&M) increased 12.2% year over year to $9.4 million. As a percentage of revenues, S&M expenses were up 20 bps year over year to 2.8%.

Operating income was $221.3 million, up 7.1% year over year. The operating margin expanded 120 bps to 66.2%.

Balance Sheet & Cash Flow

As of Sep 30, 2021, the company’s cash and cash equivalents (including marketable securities) were approximately $1.19 billion compared with $1.12 billion in Jun 30, 2021.

Cash flow from operating activities was $260 million in the third quarter compared with $142.5 million in the previous quarter. Free cash flow was $245 million in the reported quarter compared with $125 million in the previous quarter.

In the third quarter, VeriSign repurchased 0.8 million shares for $172 million. As of Sep 30, 2021, $565 million remained for future share repurchases under the share-buyback program that has no expiration date.

2021 Guidance

VeriSign’s domain name base is expected to increase between 4.5% and 5.5%.

VeriSign expects full-year revenues between $1.325 billion and $1.330 billion. The Zacks Consensus Estimate for the same is currently pegged at $1.32 billion, indicating 4.6% growth from the previous year figure.

GAAP operating margin is expected in the 64.8-65.3% range.

Capital expenditure is anticipated in the range of $55-$60 million.

Zacks Rank & Stocks to Consider

VeriSign currently has a Zacks Rank #4 (Sell).

Better-ranked stocks in the broader technology sector are DXC Technology (DXC - Free Report) , Etsy (ETSY - Free Report) and Fastly (FSLY - Free Report) . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All three companies are set to report their quarterly earnings on Nov 3.


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