The latest Domain Name Industry Brief published by VeriSign, Inc. (VRSN) saw the addition of more than 7 million domain names to the Internet in the second quarter of 2012.
As a result, the total number of registered domain names expanded to more than 240 million worldwide across all domains, as of June 30, 2012.
The addition of 7.3 million domain names in the second quarter of 2012 translates to a 3.1% sequential growth and marks the sixth straight quarter of more than 2% growth in domain names. Worldwide registrations have increased 11.9% or 25.5 million since the second quarter of 2011.
Meanwhile, the .com and .net Top-Level Domains (TLDs) totaled 118.5 million domain names in the adjusted zone for .com and .net in the second quarter of 2012, thereby registering a 1.6% increase in the base over the first quarter of 2012 and a 7.8% increase over the second quarter of 2011. New .com and .net registrations totaled 8.4 million, up 4.2% on a year-over-year basis.
As of June 30, 2012, the base of registered names in .com totaled 103.7 million names, while .net totaled 14.8 million names. The .com/.net renewal rate for the second quarter of 2012 was 72.9%, down from 73.9% in the first quarter of 2012.
Verisign provides essential Internet infrastructure services to companies, service providers and website owners.
Internet Corporation for Assigned Names and Numbers (:ICANN) recently renewed Verisign's contract to serve as the authoritative registry operator for the .net registry for another six years.
The term period for the agreement will start from December 1, 2012 through November 30, 2018.
The terms of the agreement remains pretty much the same as the existing agreement except for new provisions regarding indemnification and audit rights, which is consistent with the other five largest generic top level domain (gTLD) registry agreements (including the .net agreement).
Meanwhile, under an agreement called the Cooperative Agreement, the U.S. Department of Commerce is currently reviewing the renewal of the .com registry agreement. VeriSign expects to get an approval by November 30.
Verisign has also applied for 14 new gTLDs including 12 transliterations of .com and .net through ICANN's new gTLD application process. Additionally, applicants for approximately 220 new gTLDs selected Verisign to provide back-end registry services. This bodes well for VeriSign in the long run as revenue from new gTLDs is not expected to be material before 2013.
We continue to maintain a Neutral recommendation on VeriSign. Our Neutral recommendation is supported by a Zacks #3 Rank, which translates into a Hold rating.
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