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VeriSign (VRSN) to Report Q3 Earnings: What's in Store?

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VeriSign (VRSN) to Report Q3 Earnings: What's in Store?

VeriSign's (VRSN) third-quarter 2018 results are expected to benefit from higher domain name registrations.

VeriSign, Inc. VRSN is set to report third-quarter 2018 results on Oct 25.

The company has delivered an average four-quarter positive earnings surprise of 1.37%

In the last reported quarter, the company's earnings of $1.18 per share topped the Zacks Consensus Estimate of $1.14. The figure increased 12.4% from the year-ago quarter.

Revenues increased 4.8% year over year to $302.5 million and came slightly ahead of the Zacks Consensus Estimate of $302 million. The year-over-year growth was primarily driven by higher renewal rates and increased domain name registrations mainly in the United States and China.

For the third quarter, Verisign expects revenues between $1.205 billion and $1.215 billion. VeriSign projects domain name base registration to increase in the range of 1.3-1.8 million.

The Zacks Consensus Estimate for the quarter to be reported is pegged at $1.19 per share, indicating a year-over-year increase of 19%. Further, the consensus mark for revenues is pegged at $305.3 million, up roughly 4.4% from the year-ago quarter.

Let’s see how things are shaping up for the upcoming announcement.

VeriSign, Inc. Price and Consensus

VeriSign, Inc. Price and Consensus | VeriSign, Inc. Quote

Factors Likely to Influence Q3 Results

VeriSign holds a significant position in the highly regulated .com and .net domain industry. The company 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 renewal of the .com contract and price hikes for the .com and .net domain names remain drivers of VeriSign’s top line. Domain name registrations increased 6 million or 1.8% sequentially to 339.8 million across top-level domains (TLDs) at the end of the second quarter.

We believe that the growing need for Internet consumption globally will primarily drive domain names registered with VeriSign and thus contribute to its growth.

However, increase in marketing expenses is expected to keep margins under pressure in the to-be-reported quarter.

What Our Model Says

According to the Zacks model, a company with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) has a good chance of beating estimates if it also has a positive Earnings ESP. The Sell-rated stocks (Zacks Rank #4 or 5) are best avoided.

VeriSign has a Zacks Rank #2 and an Earnings ESP of -1.12%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks With a Favorable Combination

Here are some companies, which, per our model, have the right combination of elements to post an earnings beat in the upcoming release:

Apple AAPL has an Earnings ESP of +1.59% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

HubSpot HUBS has an Earnings ESP of +57.58% and a Zacks Rank #2.

Globant S.A. GLOB has an Earnings ESP of +5.5% and a Zacks Rank #2.

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