VeriSign, Inc. ( NASDAQ : VRSN ), reported financial results for the third quarter ended Sept. 30, 2012 today after the market closed and the news disappointed the market as shares are down over 11% in after market trading, a huge move for a stock like Verisign.
VeriSign, Inc. (“Verisign”) reported revenue of $224 million for the third quarter of 2012, up 13% from the same quarter in 2011.
Verisign reported net income of $78 million and diluted earnings per shares (EPS) of $0.47 for the third quarter of 2012, compared to net income of $59 million and diluted EPS of $0.36 for the same quarter in 2011.
The operating margin was 51.9 percent for the third quarter of 2012 compared to 45.2 percent for the same quarter in 2011.
Financial Highlights
- Verisign ended the third quarter with Cash, Cash Equivalents, Marketable Securities and Restricted Cash of $1.50 billion, an increase of $147 million from year-end 2011.
- Cash flow from operations was $122 million for the third quarter compared with $108 million for the same quarter in 2011.
Business Highlights
- Verisign Registry Services added 1.37 million net new names and ended the third quarter with approximately 119.9 million active domain names in the zone for .com and .net, representing a 7.1% increase year over year.
- In the third quarter, Verisign processed 7.8 million new domain name registrations for .com and .net, representing a 1.1% year over year.
Although ICANN approved the renewal of the .Com contract back in June the Contract to operate the .Com registry has not been signed off by the Dept Of Commerce
“We have concluded that the Commerce Department may not complete its review and approve the renewal of the .com Registry Agreement prior to its expiration on Nov. 30, 2012, and that the Commerce Department, together with the Department of Justice, is reviewing the .com Registry Agreement’s pricing terms. Pursuant to the terms of the Cooperative Agreement, if the .com Registry Agreement is not approved by the Commerce Department prior to its expiration, the Commerce Department is required to agree to the extension of the .com Registry Agreement for six months, or such other reasonable period of time as the Commerce Department and Verisign may mutually agree.”
“”We remain committed to providing unparalleled network and registry services performance as we work with the Commerce Department to renew the .com Registry Agreement. Additionally, an area of emphasis for us is further enhancing our infrastructure to strengthen security and stability for both our customers and our own operations, in the face of new and ever-increasing cyber threats,” said Bidzos.
According to Citibank “inputs from public zone trackers suggest the Naming business is likely to settle in around approximately 1.4M adds, which is well below the firm’s estimate of 1.7M, and short of the low end of management’s guidance. The shortfall suggests that the renewal rates in Q3 will come in below 72% for the first time since 4Q09”
Hate to tell you so but you guys should have listened to me when I wrote about this a month ago, the domain registrations are slowing to a crawl.
The Department of Justice should reject the registry agreement. It’s odd that the DOJ is apparently going to go after Google for antitrust, but has ignored VeriSign to date. VeriSign undoubtedly costs consumers at least $500 million/yr in excess registration fees, via their monopoly on dot-com. Other registries (Neustar, Afilias, PIR for .org) are also gouging consumers, who would be much better of if all registry contracts were tendered regularly.
George
Won’t get any argument from me
Shares are now trading down 16%
All we need now is for Google to offer to manage .com for $1.50/yr per domain. Instead of having “toy” new TLD registries, Charleston Road Registry should go after the big one.
George
Unfortunately Google is going to give domains away for free not for $1.50 not for $.05 but FREE
I chatted about that months and months ago.
I have meet Joost of .TK had an interview with him also months ago, and he is a smart guy but if he is screwing up Verisign numbers what are they going to do when Google starts giving away domains for free?
I am surprised that no other company has wrote to Commerce Dept and DOJ offering to provide COM/NET registry services at a fraction of what Verisign is doing!
GoDaddy or Google or Yahoo or even companies like Amazon or even affilias can jump in to the fray and offer com/net prices like $2 per domain and they can easily add few hundred million dollars to their revenue.
It’s the FTC, not the DOJ, that is rumored to be readying an antitrust lawsuit against Google, so perhaps the protracted DOJ review of .com renewal reflects some inter-agency rivalry on the antitrust front.
Ironically, one of the reasons VRSN cited for slowing domain growth and lower .com renewal rates was Google search practices that disfavor low content or ad-link populated domains.
I think that the antitrust/competition issues issues raised by Google being the #2 bidder for new gTLDs, with many of them closed single-registrant, and in a process where contention sets are settled by auction and Google has $50 billion cash on hand, are more than sufficient without adding the prospect of Google supplanting VRSN as the registry operator of .com.
As to what contract changes DOJ might want as a precondition to contract approval, we can only speculate right now.