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VeriSign (VRSN) Q4 Earnings Top Estimates, Revenues Rise Y/Y
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VeriSign (VRSN - Free Report) reported fourth-quarter 2020 adjusted earnings of $1.38 per share, beating the Zacks Consensus Estimate by 7%. The reported figure also increased 9.5% year over year.
Revenues climbed 3.1% year over year to $320.3 million, in line with the Zacks Consensus Estimate.
Quarter Details
VeriSign ended the reported quarter with 165.2 million .com and .net domain name registrations, up 4% year on year. This uptick was driven by contributions from the North America and Europe, Middle East and Africa (EMEA)-based registrars. This was, nonetheless, moderately offset by reduced activity from the China-based registrars.
The company processed 10.5 million new domain name registrations for .com and .net compared with the year-earlier quarter’s 10.3 million.
Notably, renewal rates are not fully measurable until 45 days after the end of a quarter. The final .com and .net renewal rate for the third quarter of 2020 was 73.7%, flat year over year.
The company expects the renewal rate for fourth-quarter 2020 to be 73.5%. The renewal rate in the fourth quarter of 2019 was 73.8%.
VeriSign’s research and development (R&D) expenses flared up 28.5% from the prior-year quarter to $19.4 million. As a percentage of revenues, R&D expenses expanded 120 basis points (bps) year over year to 6.1%.
General and administrative (G&A) expenses shot up 2.6% to $37.5 million, year over year. As a percentage of revenues, G&A expenses contracted 10 bps year on year to 11.7%.
However, sales and marketing expenses (S&M) declined 6.9% year over year to $12.9 million. As a percentage of revenues, S&M expenses shrunk 40 bps to 4%, year on year.
Operating income totaled $204.5 million, up 3% from the year-ago period. Operating margin contracted 10 bps year over year to 63.9%.
Balance Sheet & Cash Flow
As of Dec 31, 2020, the company’s cash and cash equivalents (including marketable securities) were $1.17 billion compared with $1.15 billion as of Sep 30, 2020.
Cash flow from operating activities was $195.2 million in the October-December quarter compared with the previous quarter’s $139.6 million. Free cash flow was $188.8 million in the reported period compared with the July-September quarter’s $124.5 million.
During the fourth quarter, VeriSign repurchased 0.8 million shares for $170 million, which brings the total amount of shares repurchased in 2020 to 3.7 million shares for $735 million.
Also, as approved by the board of directors, the amount of shares authorized for share repurchase was increased by close to $747 million, effective Feb 11, 2021. This brings the total amount available for buybacks to $1 billion.
Key Announcements
VeriSign announced that from Sep 1, 2021, it will increase the annual registry-level wholesale price for new and renewal .com domain name registration by 54 cents from $7.85 to $8.39.
2021 Guidance
Domain name base is expected to lie between 2.5% and 4.5%.
Moreover, VeriSign projects full-year revenues between $1.3 billion and $1.32 billion.
GAAP operating margin is estimated in the 64-65% band.
Capital expenditure is anticipated in the range of $55-$65 million.
Zacks Rank & Stocks to Consider
VeriSign currently carries a Zacks Rank #3 (Hold).
While CEVA is set to release quarterly results on Feb 16, Shopify and Baidu will report on Feb 17.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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VeriSign (VRSN) Q4 Earnings Top Estimates, Revenues Rise Y/Y
VeriSign (VRSN - Free Report) reported fourth-quarter 2020 adjusted earnings of $1.38 per share, beating the Zacks Consensus Estimate by 7%. The reported figure also increased 9.5% year over year.
Revenues climbed 3.1% year over year to $320.3 million, in line with the Zacks Consensus Estimate.
Quarter Details
VeriSign ended the reported quarter with 165.2 million .com and .net domain name registrations, up 4% year on year. This uptick was driven by contributions from the North America and Europe, Middle East and Africa (EMEA)-based registrars. This was, nonetheless, moderately offset by reduced activity from the China-based registrars.
The company processed 10.5 million new domain name registrations for .com and .net compared with the year-earlier quarter’s 10.3 million.
VeriSign, Inc. Price, Consensus and EPS Surprise
VeriSign, Inc. price-consensus-eps-surprise-chart | VeriSign, Inc. Quote
Notably, renewal rates are not fully measurable until 45 days after the end of a quarter. The final .com and .net renewal rate for the third quarter of 2020 was 73.7%, flat year over year.
The company expects the renewal rate for fourth-quarter 2020 to be 73.5%. The renewal rate in the fourth quarter of 2019 was 73.8%.
VeriSign’s research and development (R&D) expenses flared up 28.5% from the prior-year quarter to $19.4 million. As a percentage of revenues, R&D expenses expanded 120 basis points (bps) year over year to 6.1%.
General and administrative (G&A) expenses shot up 2.6% to $37.5 million, year over year. As a percentage of revenues, G&A expenses contracted 10 bps year on year to 11.7%.
However, sales and marketing expenses (S&M) declined 6.9% year over year to $12.9 million. As a percentage of revenues, S&M expenses shrunk 40 bps to 4%, year on year.
Operating income totaled $204.5 million, up 3% from the year-ago period. Operating margin contracted 10 bps year over year to 63.9%.
Balance Sheet & Cash Flow
As of Dec 31, 2020, the company’s cash and cash equivalents (including marketable securities) were $1.17 billion compared with $1.15 billion as of Sep 30, 2020.
Cash flow from operating activities was $195.2 million in the October-December quarter compared with the previous quarter’s $139.6 million. Free cash flow was $188.8 million in the reported period compared with the July-September quarter’s $124.5 million.
During the fourth quarter, VeriSign repurchased 0.8 million shares for $170 million, which brings the total amount of shares repurchased in 2020 to 3.7 million shares for $735 million.
Also, as approved by the board of directors, the amount of shares authorized for share repurchase was increased by close to $747 million, effective Feb 11, 2021. This brings the total amount available for buybacks to $1 billion.
Key Announcements
VeriSign announced that from Sep 1, 2021, it will increase the annual registry-level wholesale price for new and renewal .com domain name registration by 54 cents from $7.85 to $8.39.
2021 Guidance
Domain name base is expected to lie between 2.5% and 4.5%.
Moreover, VeriSign projects full-year revenues between $1.3 billion and $1.32 billion.
GAAP operating margin is estimated in the 64-65% band.
Capital expenditure is anticipated in the range of $55-$65 million.
Zacks Rank & Stocks to Consider
VeriSign currently carries a Zacks Rank #3 (Hold).
Baidu (BIDU - Free Report) , Shopify (SHOP - Free Report) and CEVA are a few better-ranked stocks from the broader computer and technology sector. Baidu and Shopify sport a Zacks Rank #1 (Strong Buy), while CEVA carries a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
While CEVA is set to release quarterly results on Feb 16, Shopify and Baidu will report on Feb 17.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2021 today >>