VeriSign Inc.
07/24/2025 | Press release | Distributed by Public on 07/24/2025 14:43
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the 2024 Form 10-K and the interim unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item I of this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties, including, among other things, statements regarding the Company's dividend program and our expectations about the sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility. Forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled "Risk Factors" in Part II, Item 1A of the Quarterly Report on Form 10-Q for the period ended March 31, 2025. You should also carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in 2025. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.
For purposes of this Quarterly Report on Form 10-Q, the terms "Verisign," "the Company," "we," "us," and "our" refer to VeriSign, Inc. and its consolidated subsidiaries.
Overview
We are a global provider of critical internet infrastructure and domain name registry services, enabling internet navigation for many of the world's most recognized domain names. We help enable the security, stability, and resiliency of the Domain Name System and the internet by providing Root Zone Maintainer Services, operating two of the thirteen global internet root servers, and providing registration services and authoritative resolution for the .comand .netgeneric top-level domains ("gTLDs"), which support the majority of global e-commerce.
As of June 30, 2025, we had 170.5 million .comand .net registrations in the domain name base. The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users, which is partially driven by greater availability of internet access, as well as marketing activities carried out by us and our registrars. The number of domain name registrations under our management may be negatively impacted by certain factors, including overall economic conditions, competition from country code top-level domains ("ccTLDs"), other gTLDs, services that offer alternatives for an online presence, such as social media and artificial intelligence, and ongoing changes in the internet practices and behaviors of consumers and businesses. Factors such as the evolving practices and preferences of internet users, and how they navigate the internet, as well as the motivation of domain name registrants and how they will manage their investment in domain names, can negatively impact our business and the demand for new domain name registrations and renewals.
Business Highlights and Trends
•We recorded revenues of $409.9 million and $812.2 million during the three and six months ended June 30, 2025, which represents an increase of 6% and 5%, respectively, compared to the same periods in 2024.
•We recorded operating income of $280.7 million and $551.9 million during the three and six months ended June 30, 2025, which represents an increase of 5% compared to the same periods in 2024.
•As of June 30, 2025, we had 170.5 million .comand .net registrations in the domain name base, which represents a 0.1% decrease from June 30, 2024, and a net increase of 0.7 million domain name registrations from March 31, 2025.
•During the three months ended June 30, 2025, we processed 10.4 million new domain name registrations for .com and .netcompared to 9.2 million for the same period in 2024.
•The final .comand .net renewal rate for the first quarter of 2025 was 75.5% compared to 74.1% for the first quarter of 2024. Renewal rates are not fully measurable until 45 days after the end of the quarter.
•We generated cash flows from operating activities of $493.8 million during the six months ended June 30, 2025, compared to $417.7 million for the same period in 2024.
•During the three months ended June 30, 2025, we repurchased 0.6 million shares of common stock for an aggregate cost of $162.6 million. As of June 30, 2025, there was $630.1 million remaining for future share repurchases under
the share repurchase program. Effective July 24, 2025, the Board of Directors authorized the repurchase of common stock in the amount of $913.1 million, in addition to the $586.9 million that remained available for repurchases under the prior share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program.
•On April 23, 2025, the Board of Directors declared a cash dividend of $0.77 per share of outstanding common stock, totaling $72.1 million, which was paid on May 28, 2025. On July 22, 2025, the Board of Directors declared a cash dividend of $0.77 per share of outstanding common stock to stockholders of record as of the close of business on August 19, 2025, payable on August 27, 2025.
Pursuant to our agreements with ICANN, we make available files containing all active domain names registered in the .comand .netregistries. Further, we also make available a summary of the active zone count registered in the .comand.netregistries and the number of .comand .netdomain name registrations in the domain name base. The zone counts and information on how to obtain access to the zone files can be found at https://www.Verisign.com/zone. The domain name base is the active zone plus the number of domain names that are registered but not configured for use in the respective top-level domain zone file plus the number of domain names that are in a client or server hold status. The domain name base may also reflect compensated or uncompensated judicial or administrative actions to add or remove from the active zone an immaterial number of domain names. These files and the related summary data are updated daily. The update times may vary each day. The number of domain names provided in this Form 10-Q are as of midnight of the date reported.
Results of Operations
The following table presents information regarding our results of operations as a percentage of revenues:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||
| Costs and expenses: | |||||||||||||||||||||||
| Cost of revenues | 12.0 | 12.2 | 12.1 | 12.5 | |||||||||||||||||||
| Research and development | 6.3 | 6.1 | 6.4 | 6.3 | |||||||||||||||||||
| Selling, general and administrative | 13.2 | 12.9 | 13.6 | 13.1 | |||||||||||||||||||
| Total costs and expenses | 31.5 | 31.2 | 32.1 | 31.9 | |||||||||||||||||||
| Operating income | 68.5 | 68.8 | 67.9 | 68.1 | |||||||||||||||||||
| Interest expense | (4.6) | (4.9) | (4.8) | (4.9) | |||||||||||||||||||
| Non-operating income, net | 1.3 | 3.0 | 1.6 | 3.3 | |||||||||||||||||||
| Income before income taxes | 65.2 | 66.9 | 64.7 | 66.5 | |||||||||||||||||||
| Income tax expense | (14.6) | (15.5) | (14.6) | (15.6) | |||||||||||||||||||
| Net income | 50.6 | % | 51.4 | % | 50.1 | % | 50.9 | % | |||||||||||||||
Revenues
Our revenues are primarily derived from registrations for domain names in the.comand .netdomain name registries. We also derive revenues from operating domain name registries and technical systems for several other gTLDs and one ccTLD, all of which are not significant in relation to our consolidated revenues. For domain names registered in the .comand .netregistries, we receive a fee from registrars per annual registration that is determined pursuant to our agreements with ICANN. Individual customers, called registrants, contract directly with registrars or their resellers, and the registrars, who are our direct customers, in turn register the domain names with Verisign. Changes in revenues are driven largely by changes in the number of new domain name registrations and the renewal rate for existing registrations as well as the impact of new and prior price increases, to the extent permitted by ICANN and the Department of Commerce. New registrations and the renewal rate for existing registrations are impacted by continued growth in online advertising, e-commerce, and the number of internet users, as well as marketing activities carried out by us and our registrars. We also offer promotional incentive-based discount programs to registrars based upon market conditions and the business environment in which the registrars operate.
In November 2024, we renewed the .comRegistry Agreement with ICANN, pursuant to which we will remain the sole registry operator for the .comregistry through November 30, 2030. Under the .comRegistry Agreement, we are permitted to increase the price of a .comdomain name registration by up to 7% in each of the final four years of each six-year period. The current such six-year period began on October 26, 2024. We increased the annual registry-level wholesale fee for each new and renewal .comdomain name registration from $9.59 to $10.26 effective September 1, 2024. Under the .net Registry Agreement, we are permitted to increase the price of .net domain name registrations by up to 10% each year during the term of our agreement with ICANN, through June 30, 2029. We increased the annual registry-level wholesale fee for each new and
renewal .netdomain name registration from $9.92 to $10.91 effective February 1, 2024. All fees paid to us for .comand .netregistrations are in U.S. dollars.
A comparison of revenues is presented below:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | % Change | 2024 | 2025 | % Change | 2024 | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 409.9 | 6% | $ | 387.1 | $ | 812.2 | 5% | $ | 771.4 | |||||||||||||||||||||||||
The following table compares the .comand .net domain name registrations in the domain name base:
| June 30, 2025 | % Change | June 30, 2024 | |||||||||||||||
|
.comand .netdomain name registrations in the domain name base
|
170.5 million | -% | 170.6 million | ||||||||||||||
Revenues increased during the three and six months ended June 30, 2025, as compared to the same periods last year, primarily due to the .comand .netprice increases, partially offset by a slight decline in the .com and .netdomain name base as of June 30, 2025 compared to June 30, 2024.
Demand for .comand .netdomain names has been primarily driven by continued internet growth and marketing activities carried out by us and our registrars. However, competitive pressure from ccTLDs, other gTLDs, services that offer alternatives for an online presence, such as social media and artificial intelligence, ongoing changes in internet practices and behaviors of consumers and businesses, as well as the motivation of existing domain name registrants managing their investment in domain names, such as for resale at increased prices or for revenue generation through website advertising, and global economic conditions, has limited the demand for .comand .netdomain names and may continue to do so in the future. Our domain name base increased during the three and six months ended June 30, 2025 compared to December 31, 2024, with higher new registrations and renewal rates, as business conditions improved following a period of decline during 2024 and as registrars focus more on customer acquisition and have continued to engage with our marketing programs.
Geographic revenues
We generate revenues in the U.S.; Europe, the Middle East and Africa ("EMEA"); Australia, China, Japan, Singapore, and other Asia Pacific countries ("APAC"); and certain other countries, including Canada and Latin American countries.
The following table presents a comparison of our geographic revenues:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | % Change | 2024 | 2025 | % Change | 2024 | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| U.S. | $ | 270.5 | 5% | $ | 257.7 | $ | 536.6 | 5% | $ | 513.0 | |||||||||||||||||||||||||
| EMEA | 68.8 | 12% | 61.6 | 135.8 | 11% | 121.9 | |||||||||||||||||||||||||||||
|
APAC
|
45.5 | 4% | 43.8 | 89.9 | 1% | 88.7 | |||||||||||||||||||||||||||||
| Other | 25.1 | 5% | 24.0 | 49.9 | 4% | 47.8 | |||||||||||||||||||||||||||||
| Total revenues | $ | 409.9 | $ | 387.1 | $ | 812.2 | $ | 771.4 | |||||||||||||||||||||||||||
Revenues in the table above are attributed to the country of domicile and the respective regions in which our registrars are located; however, this may differ from the regions where the registrars operate or where registrants are located. Revenue growth for each region may be impacted by registrars reincorporating, relocating, or from acquisitions or changes in affiliations of resellers. Revenue growth for each region may also be impacted by registrars domiciled in one region, registering domain names in another region. While revenues increased in all regions during the three and six months ended June 30, 2025, compared to the same periods in 2024, the majority of our revenue growth was generated from registrars based in the U.S. and EMEA.
Cost of revenues
Cost of revenues consists primarily of salaries and employee benefits expenses for our personnel who manage the operational systems, depreciation expenses, operational costs associated with the delivery of our services, fees paid to ICANN, customer support and training, costs of facilities and computer equipment used in these activities, telecommunications expense and allocations of indirect costs such as corporate overhead.
A comparison of cost of revenues is presented below:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | % Change | 2024 | 2025 | % Change | 2024 | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Cost of revenues | $ | 49.1 | 4% | $ | 47.1 | $ | 98.5 | 2% | $ | 96.2 | |||||||||||||||||||||||||
Cost of revenues increased slightly during the three months ended June 30, 2025, compared to the same period last year, due to a combination of individually insignificant factors.
Cost of revenues increased slightly during the six months ended June 30, 2025, compared to the same period last year, primarily due to a $2.7 million increase in compensation and benefit expenses, including stock-based compensation expenses, as a result of annual salary increases, an increase in average headcount, and a combination of other individually insignificant factors.
Research and development
Research and development expenses consist primarily of costs related to research and development personnel, including salaries and other personnel-related expenses, consulting fees, facilities costs, computer and communications equipment, support services used in our service and technology development, and allocations of indirect costs such as corporate overhead.
A comparison of research and development expenses is presented below:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | % Change | 2024 | 2025 | % Change | 2024 | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Research and development | $ | 25.7 | 8% | $ | 23.8 | $ | 51.7 | 6% | $ | 48.6 | |||||||||||||||||||||||||
Research and development expenses increased slightly during the three and six months ended June 30, 2025, compared to the same periods last year, due to a combination of individually insignificant factors.
Selling, general and administrative
Selling, general and administrative expenses consist primarily of salaries and other personnel-related expenses for our executive, administrative, legal, finance, information technology, human resources, sales, and marketing personnel, travel and related expenses, trade shows, costs of computer and communications equipment and support services, consulting and professional service fees, costs of marketing programs, costs of facilities, management information systems, support services, and certain tax and license fees, offset by allocations of indirect costs such as facilities and shared services expenses to other cost types.
A comparison of selling, general and administrative expenses is presented below:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||
| 2025 | % Change | 2024 | 2025 | % Change | 2024 | ||||||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative | $ | 54.4 | 9% | $ | 50.0 | $ | 110.1 | 9% | $ | 101.5 | |||||||||||||||||||||||||
Selling, general and administrative expenses increased during the three months ended June 30, 2025, compared to the same period last year, primarily due to an increase in compensation and benefits expenses. Compensation and benefits expenses increased by $2.9 million primarily due to an increase in average headcount, higher expenses for certain employee health insurance related benefits, an increase in bonus expenses, and annual salary increases, partially offset by a combination of individually insignificant factors.
Selling, general and administrative expenses increased during the six months ended June 30, 2025, compared to the same period last year, primarily due to increases in compensation and benefit expenses and stock-based compensation expenses. Compensation and benefits expenses increased by $4.6 million primarily due to an increase in average headcount, higher expenses for certain employee health insurance related benefits, an increase in bonus expenses, and annual salary increases. Stock-based compensation expenses increased by $3.6 million primarily due to an increase in the total projected achievement levels on certain performance-based RSU grants and an increase in the total value of RSUs granted in 2025.
Interest expense
Interest expense increased slightly during the six months ended June 30, 2025, compared to the same period last year, primarily due to the period of overlap between the issuance of the 2032 Notes and repayment of the 2025 Notes.
Non-operating income, net
Non-operating income decreased during the three and six months ended June 30, 2025, compared to the same periods last year, primarily due to a decrease in interest income as a result of lower amounts invested in debt securities in the current periods and slightly lower interest rates on the Company's investments in debt securities.
Income tax expense
The following table presents income tax expense and the effective tax rate:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||
| Income tax expense | $ | 59.9 | $ | 60.1 | $ | 119.0 | $ | 120.0 | |||||||||||||||
| Effective tax rate | 22 | % | 23 | % | 23 | % | 23 | % | |||||||||||||||
The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21%, due to state income taxes and U.S. taxes on foreign earnings, net of foreign tax credits, partially offset by a lower foreign effective tax rate.
House Resolution 1, commonly referred to as the One Big Beautiful Bill Act, was enacted into law on July 4, 2025. We are currently evaluating the impact that the tax regulations included in the Act will have on our financial statements.
Liquidity and Capital Resources
The following table presents our principal sources of liquidity:
| June 30, | December 31, | ||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Cash and cash equivalents | $ | 314.3 | $ | 206.7 | |||||||
| Marketable securities | 279.5 | 393.2 | |||||||||
| Total | $ | 593.8 | $ | 599.9 | |||||||
The marketable securities primarily consist of debt securities issued by the U.S. Treasury meeting the criteria of our investment policy, which is focused on the preservation of our capital through investment in investment grade securities. The cash equivalents consist of amounts invested in money market funds, time deposits and U.S. Treasury bills purchased with original maturities of three months or less. As of June 30, 2025, all of our debt securities have contractual maturities of less than one year. Our cash and cash equivalents are readily accessible. For additional information on our investment portfolio, see Note 2, "Financial Instruments," of our Notes to Condensed Consolidated Financial Statements in Part I, Item I of this Quarterly Report on Form 10-Q.
Effective July 25, 2024, the Board of Directors authorized the repurchase of common stock in the amount of $1.11 billion, in addition to the $388.0 million that remained available for repurchases under the prior share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program. During the three months ended June 30, 2025, we repurchased 0.6 million shares of common stock for an aggregate cost of $162.6 million. As of June 30, 2025, there was $630.1 million remaining available for future share repurchases under the share repurchase program. Effective July 24, 2025, the Board of Directors authorized the repurchase of common stock in the amount of $913.1 million, in addition to the $586.9 million that remained available for repurchases under the prior share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program.
On April 23, 2025, the Board of Directors declared a cash dividend of $0.77 per share of outstanding common stock, totaling $72.1 million, which was paid on May 28, 2025. On July 22, 2025, the Board of Directors declared a cash dividend of $0.77 per share of outstanding common stock to stockholders of record as of the close of business on August 19, 2025, payable on August 27, 2025. We intend to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by the Board of Directors.
On March 11, 2025, we issued $500.0 million of the 2032 Notes. On March 31, 2025, we used the net proceeds from the 2032 Notes, along with cash on hand, to fund the repayment of all of our $500.0 million aggregate principal amount of outstanding 2025 Notes. As of June 30, 2025, we also had $750.0 million principal amount outstanding of 2.70% senior unsecured notes due 2031 and $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027. As of June 30, 2025, we had no outstanding borrowings and $200.0 million in borrowing capacity under our credit facility which matures in 2028.
We believe existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our ability to arrange for additional financing should be sufficient to meet our working capital, capital expenditure requirements, fund our dividend program, and to service our debt for the next 12 months and beyond. We regularly assess our cash management approach and activities in view of our current and potential future needs. Our cash requirements have not changed materially since the 2024 Form 10-K.
In summary, our cash flows for the six months ended June 30, 2025 and 2024 were as follows:
| Six Months Ended June 30, | |||||||||||
| 2025 | 2024 | ||||||||||
| (In millions) | |||||||||||
| Net cash provided by operating activities | $ | 493.8 | $ | 417.7 | |||||||
| Net cash provided by investing activities | 104.6 | 246.5 | |||||||||
| Net cash used in financing activities | (491.0) | (651.9) | |||||||||
| Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 0.1 | (0.3) | |||||||||
| Net increase in cash, cash equivalents, and restricted cash | $ | 107.5 | $ | 12.0 | |||||||
Cash flows from operating activities
Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel-related expenditures and other general operating expenses, as well as payments related to taxes, interest and facilities.
Net cash provided by operating activities increased during the six months ended June 30, 2025, compared to the same period last year, primarily due to an increase in cash received from customers, partially offset by increases in cash paid for income taxes and cash paid for interest. Cash received from customers increased primarily due to the .comand .netprice increases and higher .comdomain name registrations and renewals. Cash paid for income taxes increased primarily due to comparatively higher state and non-U.S. income taxes. Cash paid for interest increased due to the payment of interest on our 2032 Notes in June 2025.
Cash flows from investing activities
The changes in cash flows from investing activities primarily relate to purchases, maturities and sales of marketable securities, and purchases of property and equipment.
Net cash provided by investing activities decreased during the six months ended June 30, 2025, compared to the same period last year, primarily due to a decrease in proceeds from maturities and sales of marketable securities, net of purchases of marketable securities.
Cash flows from financing activities
The changes in cash flows from financing activities primarily relate to proceeds from and repayment of borrowings, share repurchases, dividend payments, payment of excise tax on share repurchases, and proceeds from our employee stock purchase plan.
Net cash used in financing activities decreased during the six months ended June 30, 2025, compared to the same period last year, primarily due to proceeds received from the issuance of our 2032 Notes and a decrease in share repurchases, partially offset by the repayment of our 2025 Notes, dividend payments to common shareholders in May 2025, and payment of excise tax on share repurchases.
VeriSign Inc. published this content on July 24, 2025, and is solely responsible for the information contained herein. Distributed via Edgar on July 24, 2025 at 20:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]