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VeriSign (VRSN) Reveals Q3 Domain Name Registration Numbers

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According to VeriSign Inc.’s (VRSN - Free Report) latest “The Domain Name Industry Brief”, domain name registrations decreased 0.4% sequentially to approximately 330.7 million across top-level domains (TLDs) at the end of the third quarter. Domain name registrations increased 3.7 million or 1.1% year over year.

Country Code Top-Level Domains (“ccTLDs”) increased 3.2% year over year and 0.3% sequentially to 144.7 million in the September quarter. On a combined basis, .com and .net domain names increased 1.2% year over year to approximately 145.8 million in the third quarter.

The company is benefiting from strong gTLD prospects. New gTLDs (“ngTLD”) represent 6.4% of total domain name registrations.

Reportedly, new .com and .net registrations were 8.9 million compared with 8.3 million in the year-ago quarter, driven by strong demand in the United States. 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 45.6% year to date, significantly outperforming the 41.5% 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.

On the last conference call, VeriSign provided a raised guidance for its domain name base growth rate for 2017. The company now anticipates the same to grow in the range of 2.8% to 3.1%, up from its earlier forecast of 2% to 2.75%. Going ahead, for the fourth quarter, VeriSign projects domain name base registration to increase in the range of 0.4 million to 0.9 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. Rise in bitcoin and cryptocurrency trading is also contributing to an increase in domain name registrations, which is a tailwind for the company.

However, a significant headwind for VeriSign is the soft growth in active domain name business for .com and .net TLDs.

Also, the negative impact of search engine adjustments on domain monetization and increasing operating expenses related to sales and marketing remain headwinds.

Zacks Rank & Stocks to Consider

VeriSign has a Zacks Rank #4 (Sell).

Some of the better-ranked stocks in the broader technology sector include IPG Photonics Corporation (IPGP - Free Report) ,  NetApp Inc. (NTAP - Free Report) and NVIDIA Corporation (NVDA - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Long-term earnings growth rate for IPG Photonics, NetApp and NVIDIA is projected to be 12%, 11.3% and 10.3%, respectively.

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