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VeriSign (VRSN) Q2 Earnings Top Estimates, Revenues Up Y/Y
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VeriSign (VRSN - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $1.79, which beat the Zacks Consensus Estimate by 5.3%. The company had reported EPS of $1.54 in the prior-year quarter.
Revenues jumped 5.7% year over year to $372 million but missed the Zacks Consensus Estimate by 0.01%.
VeriSign marginally narrowed the upper end of its revenue guidance. Management now expects 2023 revenues to be between $1.49 billion and $1.50 billion compared with the earlier guided range of $1.490-$1.505 billion. VRSN’s domain name base’s growth is now expected to stay flat or rise 1% due to continued uncertainty and weakness related to China. Earlier, the domain name base’s growth was projected to rise 0.5% to 2.25%.
VRSN ended the reported quarter with 174.4 million .com and .net domain name registrations, up 0.1% year over year. Our estimate for .com and .net domain name registrations was 176.8 million.
The company processed 10.2 million new domain name registrations for .com and .net compared with 10.1 million in the year-ago quarter. Our estimate for new domain name registrations for .com and .net was 9.4 million.
The final .com and .net renewal rate for first-quarter 2023 was 75.5% compared with 75.9% 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 second-quarter 2023 to be around 73.4% compared with 73.8% in the year-ago quarter.
VeriSign’s research and development expenses increased 9.4% from the year-ago quarter to $22.2 million.
Selling, general and administrative (SG&A) expenses increased 10.2% year over year to $50.8 million. As a percentage of revenues, SG&A expenses expanded 55 basis points (bps) on a year-over-year basis to 13.7%.
Operating income was $249 million, up 5.5% year over year. Operating margin contracted 21 bps to 66.9%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, VRSN’s cash and cash equivalents (including marketable securities) were $935.6 million compared with $1.02 billion as of Mar 31.
Cash flow from operating activities was $145.3 million in the second quarter compared with $144.9 million in the previous-year quarter. Free cash flow was $138.8 million in the reported quarter.
In the second quarter, Verisign repurchased 1 million shares for $220 million. The board of directors authorized the purchase of an additional $1.14 billion in common stock, bringing the total authorized and available under Verisign's share repurchase program to $1.5 billion.
2023 Guidance
GAAP operating income is now expected to be between $0.99 billion and $1.005 billion. Capital expenditures are anticipated in the range of $45-$55 million compared with the previous guidance of $35-$45 million.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
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VeriSign (VRSN) Q2 Earnings Top Estimates, Revenues Up Y/Y
VeriSign (VRSN - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of $1.79, which beat the Zacks Consensus Estimate by 5.3%. The company had reported EPS of $1.54 in the prior-year quarter.
Revenues jumped 5.7% year over year to $372 million but missed the Zacks Consensus Estimate by 0.01%.
VeriSign marginally narrowed the upper end of its revenue guidance. Management now expects 2023 revenues to be between $1.49 billion and $1.50 billion compared with the earlier guided range of $1.490-$1.505 billion. VRSN’s domain name base’s growth is now expected to stay flat or rise 1% due to continued uncertainty and weakness related to China. Earlier, the domain name base’s growth was projected to rise 0.5% to 2.25%.
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 174.4 million .com and .net domain name registrations, up 0.1% year over year. Our estimate for .com and .net domain name registrations was 176.8 million.
The company processed 10.2 million new domain name registrations for .com and .net compared with 10.1 million in the year-ago quarter. Our estimate for new domain name registrations for .com and .net was 9.4 million.
The final .com and .net renewal rate for first-quarter 2023 was 75.5% compared with 75.9% 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 second-quarter 2023 to be around 73.4% compared with 73.8% in the year-ago quarter.
VeriSign’s research and development expenses increased 9.4% from the year-ago quarter to $22.2 million.
Selling, general and administrative (SG&A) expenses increased 10.2% year over year to $50.8 million. As a percentage of revenues, SG&A expenses expanded 55 basis points (bps) on a year-over-year basis to 13.7%.
Operating income was $249 million, up 5.5% year over year. Operating margin contracted 21 bps to 66.9%.
Balance Sheet & Cash Flow
As of Jun 30, 2023, VRSN’s cash and cash equivalents (including marketable securities) were $935.6 million compared with $1.02 billion as of Mar 31.
Cash flow from operating activities was $145.3 million in the second quarter compared with $144.9 million in the previous-year quarter. Free cash flow was $138.8 million in the reported quarter.
In the second quarter, Verisign repurchased 1 million shares for $220 million. The board of directors authorized the purchase of an additional $1.14 billion in common stock, bringing the total authorized and available under Verisign's share repurchase program to $1.5 billion.
2023 Guidance
GAAP operating income is now expected to be between $0.99 billion and $1.005 billion. Capital expenditures are anticipated in the range of $45-$55 million compared with the previous guidance of $35-$45 million.
Zacks Rank & Stocks to Consider
VeriSign currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . Each of these companies presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.