VeriSign, Inc. (VRSN) Earnings & Analysis

Latest quarter

VeriSign reported third-quarter revenue of $443.0 million, above the consensus estimate of $441.8 million. Adjusted earnings of $2.41 per share missed the consensus estimate of $2.42, while reported diluted earnings were $2.35 per share, up from $2.27 a year earlier.

Revenue rose from $419.1 million a year earlier. The filing attributed the increase primarily to a larger domain name base and .com price increases. VeriSign said it processed 13,100,000 new .com and .net registrations during the quarter. Its filing also said growth in the domain base had benefited from registrar customer-acquisition efforts, engagement with VeriSign’s marketing programs and the evolution of AI tools for content and website creation.

Gross margin rose to 88.8% from 88.4%, while operating margin fell to 66.9% from 67.8%. The filing attributed higher selling, general and administrative expenses primarily to a loss on assets held for sale. Free cash flow declined to $260.7 million from $303.0 million; CFO John Calys attributed the decrease primarily to higher cash taxes and payments to employees and vendors, partly offset by higher customer collections.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Asked about the drivers of new registrations, CEO D. James Bidzos pointed to demand from businesses and new business starts, VeriSign’s marketing programs and AI. He said some registrars were reporting that AI was a factor, and that it made finding a domain name and developing and maintaining a website easier. Bidzos also said content creators wanted their work to be found through AI.

On renewals, CFO John Calys said a growing share of the domain base was coming up for its first renewal. “Those names renew at almost half the rate of previously renewed names,” he said, adding that VeriSign was forecasting a slight decline in the overall renewal rate in the fourth quarter. Calys also said the holiday season usually brings a seasonal downturn in that quarter, although he expected registration demand to hold up reasonably well.

Asked about pricing, Calys said VeriSign had tracked registrar prices following its announcement of a .com wholesale fee increase and had not seen a significant increase in new-registration or renewal prices. Bidzos noted that registrars set retail prices and said they could absorb or adjust to the wholesale increase. He also said .com remained competitively priced against other generic domain extensions.

Calys said the asset-related loss accounted for most of the sequential increase in operating expenses and reduced earnings per share. On investment, Bidzos described VeriSign Informed as a service using the company’s infrastructure to address gaps in certificate revocation. He said AI could speed up the identification of vulnerabilities and that closing those gaps would become more important.

Bidzos said the company was opening the service’s beta phase, with a pricing structure planned by year-end and availability in the first half of the following year. He said it was too early to predict exactly how the rollout would play out or what its milestones would be.

Guidance

VeriSign increased and narrowed its full-year 2026 .com and .net domain name base growth guidance to between 6.50% and 7.00%. Bidzos said the revised range reflected trends observed during the first three quarters and the company’s expectations for the rest of the year.