VeriSign Inc. (VRSN - Free Report) recently announced that about 1.3 million domain names were registered in second-quarter 2017.
According to the latest “The Domain Name Industry Brief”, domain name registrations increased 0.4% sequentially to approximately 331.9 million across top-level domains (TLDs) at the end of the quarter. Domain name registrations increased 6.7 million or 2.1%, year over year.
Country Code Top-Level Domains (“ccTLDs”) increased 2.6% year over year and 0.8% sequentially to 144.2 million in the June 2017 quarter. The increase was noted across all Top-Level Domains (TLDs) as both .com and .net grew during the quarter. On a combined basis, .com and .net domain names improved 0.8% year over year to approximately 144.3 million in the second quarter.
The company is benefiting from strong gTLD prospects. New gTLDs (“ngTLD”) represent 7.3% of total domain name registrations.
Reportedly, new .com and .net registrations were 9.2 million compared with 8.6 million in the year-ago quarter. VeriSign reported that .com continued to maintain its position as the largest TLD, followed by .cn (China) and .tk (Tokelau).
Shares of VeriSign have gained 37.2% year to date, significantly outperforming the 27% rally of the industry it belongs to.
Domain Registration Prospects
VeriSign is the exclusive registrar of the .com, .net and .name domains per its agreements with The Internet Corporation for Assigned Names and Numbers (ICANN).
The company announced a new agreement with ICANN per which the annual fee for a .net domain name registration will be increased from $8.20 to $9.02 effective Feb. 1, 2018. However, the other terms of the agreement remain unchanged.
VeriSign also raised its domain name base growth rate guidance for 2017. The company now anticipates the same to grow between 2% and 2.75%, up from its earlier forecast of 1% to 2.5%.
Going ahead, for the third quarter, VeriSign projects domain name base registration to increase in the range of 0.8 million to 1.3 million.
Also, gTLD prospects, international expansion through IDNs and investments in intellectual properties will boost results in our view. The company continues to benefit from strong demand in the United States as well as in international markets. We believe that increasing domain name registration coupled with price hikes for domain names will drive the top line.
However, the negative impact of search engine adjustments on domain monetization and increasing operating expenses related to sales and marketing remain primary headwinds.
Zacks Rank & Stocks to Consider
Currently, VeriSign has a Zacks Rank #4 (Sell).
Better-ranked stocks in the broader technology sector include Activision Blizzard (ATVI - Free Report) , Lam Research (LRCX - Free Report) and Micron Technology (MU - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Long-term earnings growth rate for Activision Blizzard, Lam Research and Micron is currently projected to be 13.6%, 17.2% and 10%, respectively.
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