VeriSign (VRSN) Q4 Earnings Beat Estimates, Revenues Up Y/Y
VeriSign VRSN reported fourth-quarter 2023 adjusted earnings per share (EPS) of $1.92, which beat the Zacks Consensus Estimate by 4.9%. The company had reported EPS of $1.70 in the prior-year quarter.
Revenues jumped 3% year over year to $380 million but missed the Zacks Consensus Estimate by 0.2%.
VeriSign, Inc. Price, Consensus and EPS Surprise
VeriSign, Inc. price-consensus-eps-surprise-chart | VeriSign, Inc. Quote
Quarter in Details
VRSN ended the reported quarter with 172.7 million .com and .net domain name registrations, down 0.6% year over year.
The company processed 9 million new domain name registrations for .com and .net compared with 9.7 million in the year-ago quarter.
The final .com and .net renewal rates for third-quarter 2023 were 73.5% compared with 73.7% in the year-ago quarter. Renewal rates are not fully measurable until 45 days after the end of the quarter.
Management expects the renewal rate for fourth-quarter 2023 to be around 73.1% compared with 73.3% in the year-ago quarter.
The company announced that it will raise the annual registry-level wholesale fee for each new and renewal .com domain name registration from $9.59 to $10.26 from Sep 1, 2024.
VeriSign’s research and development expenses increased 6.5% from the year-ago quarter to $22.9 million.
Selling, general and administrative (SG&A) expenses increased 1.9% year over year to $52.7 million. As a percentage of revenues, SG&A expenses contracted 15 basis points (bps) on a year-over-year basis to 13.9%.
Operating income was $256.3 million, up 4.4% year over year. Operating margin expanded 88 bps to 67.4%.
Balance Sheet & Cash Flow
As of Dec 31, 2023, VRSN’s cash and cash equivalents (including marketable securities) were $926.4 million compared with $943 million as of Sep 30, 2023.
Cash flow from operating activities was $204.2 million in the fourth quarter compared with $216.9 million in the year-ago quarter. Free cash flow was $199.1 million in the reported quarter.
In the fourth quarter, Verisign repurchased 1.1 million shares for $223 million. The available amount under Verisign's share repurchase program is $1.12 billion.
2024 Guidance
Management expects 2024 revenues between $1.560 billion and $1.580 billion. VRSN’s domain name base’s growth is now expected to fall 1% to rise 1%.
GAAP operating income is now expected to be between $1.045 billion and $1.065 billion. Capital expenditures are anticipated to be in the range of $35-$45 million.
Zacks Rank & Stocks to Consider
VeriSign currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks worth considering in the broader technology space are Itron ITRI, Woodward WWD and Watts Water Technologies WTS. Woodward and Itron sport a Zacks Rank #1 (Strong Buy), while Watts Water Technologies 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 Itron’s 2023 EPS has remained unchanged in the past 60 days to $2.88. ITRI’s long-term earnings growth rate is 23%.
Itron’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 289.3%. Shares of ITRI have gained 33.1% in the past year.
The Zacks Consensus Estimate for Woodward’s 2024 EPS has inched up 5.7% in the past 60 days to $5.20. WWD’s long-term earnings growth rate is 15.5%.
Woodward’s earnings beat the Zacks Consensus in each of the last four quarters, the average surprise being 27.2%. Shares of WWD have gained 31% in the past year.
The Zacks Consensus Estimate for Watts Water Technologies 2023 EPS has improved 0.1% in the past 60 days to $8.09. WTS’s long-term earnings growth rate is 7.8%.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have soared 23.2% in the past year.
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