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VeriSign (VRSN) Q2 Earnings Lag Estimates, Revenues Rise Y/Y

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VeriSign VRSN reported second-quarter 2021 adjusted earnings of $1.31 per share, which missed the Zacks Consensus Estimate by 0.8% and declined 0.8% year over year.

Revenues increased 4.8% year over year to $329.4 million and beat the Zacks Consensus Estimate by 0.76%.

Quarter Details

VeriSign ended the reported quarter with 170.6 million .com and .net domain name registrations, up 5.2% year over year. The uptick was driven by increase in demand for domain names across most regions as businesses continued to expand their online presence.

The company processed 11.7 million new domain name registrations for .com and .net compared with 11.1 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 first quarter of 2021 was 76% compared with 75.4% in the year-ago quarter.

VeriSign, Inc. Price, Consensus and EPS Surprise

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 expects the renewal rate for second-quarter 2021 to be around 75.3% compared with 72.8% in the year-ago quarter.

VeriSign’s research and development (R&D) expenses rose 8.8% from the year-ago quarter to $19.8 million. As a percentage of revenues, R&D expenses increased 20 basis points (bps) to 6%.

General and administrative (G&A) expenses increased 4.7% year over year to $38.6 million. As a percentage of revenues, G&A expenses remained stable at 11.7%.

Sales and marketing expenses (S&M) increased 15% year over year to $10.2 million. As a percentage of revenues, S&M expenses expanded 30 bps to 3.1%.

Operating income was $213 million, up 3% from the year-ago quarter. Operating margin contracted 110 bps to 64.7%.

Balance Sheet & Cash Flow

As of Jun 30, 2021, the company’s cash and cash equivalents (including marketable securities) were approximately $1.12 billion compared with $1.18 billion ended Mar 31, 2021.

Cash flow from operating activities was $142.5 million in the second quarter compared with $198.3 million in the previous quarter. Free cash flow was $125 million in the reported quarter compared with $191.6 million in the previous quarter.

In the second quarter, VeriSign repurchased 0.8 million shares for $172 million. As of Jun 30, 2021, $737 million remained for future share repurchases under the share buyback program that has no expiration date.

2021 Guidance

Domain name base is expected to increase between 4.7% and 6%.

VeriSign expects full-year revenues between $1.322 billion and $1.331 billion.

GAAP operating margin is expected in the 64.25-65% range.

Capital expenditure is anticipated in the range of $55-$65 million.

Zacks Rank & Other Stocks to Consider

VeriSign currently has a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader technology sector are Apple AAPL, Advanced Micro Devices AMD and Monolithic Power Systems MPWR. All the three stocks carry a Zacks Rank #2. 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 Jul 27.


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