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VeriSign (VRSN) Q3 Earnings Top Estimates, Revenues Up Y/Y
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VeriSign (VRSN - Free Report) reported third-quarter 2022 adjusted earnings of $1.58 per share, which beat the Zacks Consensus Estimate by 0.6% and increased 12.9% year over year. Our estimate for third-quarter earnings was pegged at $1.57 per share.
Revenues jumped 6.8% year over year to $356.9 million and came in line with the Zacks Consensus Estimate. We projected revenues to be $357 million for the third quarter.
However, VeriSign tweaked its full-year guidance due to uncertainty prevailing over global macroeconomic conditions and geopolitical instability. VeriSign expects full-year revenues between $1.418 billion and $1.426 billion compared with the earlier guided range of $1.415-$1.43 billion. VeriSign’s domain name base’s growth is now expected to be between 0.25% and 1% as against the earlier expected range of 0.5-1.5%
VeriSign ended the reported quarter with 174.2 million .com and .net domain name registrations, up 1.2% year over year.
The company processed 9.9 million new domain name registrations for .com and .net compared with 10.7 million in the year-ago quarter. VeriSign saw a decrease in new units in the third quarter due to many factors, which included 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 second-quarter 2022 stood at 73.8% against 75.4% 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 third-quarter 2022 to be around 73.8%, compared to 75% in the year-ago quarter.
VeriSign’s research and development expenses increased 7.1% from the year-ago quarter’s level to $21 million.
Selling, general and administrative (SG&A) expenses increased 7.7% year over year to $49.1 million. As a percentage of revenues, SG&A expenses expanded 20 basis points (bps) on a year-over-year basis to 13.8%.
Operating income was $236.8 million, up 7% year over year. The operating margin expanded 20 bps to 66.4%.
Balance Sheet & Cash Flow
As of Sep 30, the company’s cash and cash equivalents (including marketable securities) were $980 million compared with $997 billion as of Jun 30.
Cash flow from operating activities was $262 million in the third quarter compared with $145 million in the previous-year quarter. Free cash flow was $255 million in the reported quarter compared with $138.7 million in the previous-year quarter.
In the third quarter, Verisign repurchased 1.5 million shares for $275 million. The company increased the repurchase authorization by another $803 million taking the total count to $1 billion under repurchase authorization as of Oct 27, 2022.
2022 Guidance
GAAP operating margin is now expected in the 65.75-66.25% range compared with the earlier guidance of 65.25-66.25%. The company’s ongoing focus on cost containment is likely to act as a tailwind.
Capital expenditures are anticipated in the range of $30-$35 million compared with the previous expectation of $30-$40 million.
The Zacks Consensus Estimate for Pure Storage’s 2022 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have gained 11.1% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 8.5%. Shares of BLKB have lost 26.2% in the past year.
The Zacks Consensus Estimate for Aspen’s fiscal 2023 earnings is pegged at $6.77 per share. The long-term earnings growth rate is anticipated to be 18.2%.
AZPN’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 19.3%. Shares of AZPN have gained 50.5% in the past year.
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VeriSign (VRSN) Q3 Earnings Top Estimates, Revenues Up Y/Y
VeriSign (VRSN - Free Report) reported third-quarter 2022 adjusted earnings of $1.58 per share, which beat the Zacks Consensus Estimate by 0.6% and increased 12.9% year over year. Our estimate for third-quarter earnings was pegged at $1.57 per share.
Revenues jumped 6.8% year over year to $356.9 million and came in line with the Zacks Consensus Estimate. We projected revenues to be $357 million for the third quarter.
However, VeriSign tweaked its full-year guidance due to uncertainty prevailing over global macroeconomic conditions and geopolitical instability. VeriSign expects full-year revenues between $1.418 billion and $1.426 billion compared with the earlier guided range of $1.415-$1.43 billion. VeriSign’s domain name base’s growth is now expected to be between 0.25% and 1% as against the earlier expected range of 0.5-1.5%
VeriSign, Inc. Price, Consensus and EPS Surprise
VeriSign, Inc. price-consensus-eps-surprise-chart | VeriSign, Inc. Quote
Quarter Details
VeriSign ended the reported quarter with 174.2 million .com and .net domain name registrations, up 1.2% year over year.
The company processed 9.9 million new domain name registrations for .com and .net compared with 10.7 million in the year-ago quarter. VeriSign saw a decrease in new units in the third quarter due to many factors, which included 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 second-quarter 2022 stood at 73.8% against 75.4% 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 third-quarter 2022 to be around 73.8%, compared to 75% in the year-ago quarter.
VeriSign’s research and development expenses increased 7.1% from the year-ago quarter’s level to $21 million.
Selling, general and administrative (SG&A) expenses increased 7.7% year over year to $49.1 million. As a percentage of revenues, SG&A expenses expanded 20 basis points (bps) on a year-over-year basis to 13.8%.
Operating income was $236.8 million, up 7% year over year. The operating margin expanded 20 bps to 66.4%.
Balance Sheet & Cash Flow
As of Sep 30, the company’s cash and cash equivalents (including marketable securities) were $980 million compared with $997 billion as of Jun 30.
Cash flow from operating activities was $262 million in the third quarter compared with $145 million in the previous-year quarter. Free cash flow was $255 million in the reported quarter compared with $138.7 million in the previous-year quarter.
In the third quarter, Verisign repurchased 1.5 million shares for $275 million. The company increased the repurchase authorization by another $803 million taking the total count to $1 billion under repurchase authorization as of Oct 27, 2022.
2022 Guidance
GAAP operating margin is now expected in the 65.75-66.25% range compared with the earlier guidance of 65.25-66.25%. The company’s ongoing focus on cost containment is likely to act as a tailwind.
Capital expenditures are anticipated in the range of $30-$35 million compared with the previous expectation of $30-$40 million.
Zacks Rank & Stocks to Consider
VeriSign currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader technology space are Pure Storage (PSTG - Free Report) , Blackbaud (BLKB - Free Report) and Aspen Technology (AZPN - Free Report) . Pure Storage and Aspen currently sport a Zacks Rank #1 (Strong Buy) while Blackbaud carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Pure Storage’s 2022 earnings is pegged at $1.18 per share, up 24.2% in the past 60 days. The long-term earnings growth rate is anticipated to be 35.5%.
Pure Storage’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 171.8%. Shares of PSTG have gained 11.1% in the past year.
The Zacks Consensus Estimate for Blackbaud’s 2022 earnings is pegged at $2.55 per share, unchanged in the past 60 days. The long-term earnings growth rate is anticipated to be 3%.
Blackbaud’s earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 8.5%. Shares of BLKB have lost 26.2% in the past year.
The Zacks Consensus Estimate for Aspen’s fiscal 2023 earnings is pegged at $6.77 per share. The long-term earnings growth rate is anticipated to be 18.2%.
AZPN’s earnings beat the Zacks Consensus Estimate in three of the last four quarters, the average being 19.3%. Shares of AZPN have gained 50.5% in the past year.