VeriSign (VRSN) 23 Jul 202020 Q2 Earnings call transcript

Good day, everyone. Welcome to VeriSign's Second Quarter 2020 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless preauthorized. At this time, I'd like to turn the conference over to Mr. of and President Treasurer. Vice Atchley, Investor Corporate Relations David Please sir. go ahead,

and second Welcome for earnings today, of operator. healthy. you, safe quarter are joining hope staying you to call everyone Thank to VeriSign's XXXX and each you call. our we Thank

Joining call that Executive locations Jim Vice advance CFO. during you Chairman which their President At issues Bidzos, be call. and interference, verisign.com. unaudited the risks hours, release adjusted free of from on this it and There SEC of COO; delays under remarks matters available detail include you in found the presentation, for financial most this today to on performance respective Strubbe, or in our call. also available a website reconciliation update Jim CEO; to not GAAP discuss GAAP the non-GAAP afterward, we include and done I will in prepared call a by measures over Relations and Todd George two like our statements during earnings our to President patience through from forms most your are financial remarks will the and subject quarter results in This will filed About within the moment, if XX-Q. release. Investor In discussing end EBITDA me be that, of With will cash Executive and turn section public we presentation presentation would be the replay the for we with and your results posted. VeriSign quality we will today's remotely call and are information non-GAAP experience call, flow. questions. open our The our any does the in some find and specifically George and VeriSign, to a and sound the the will disclosure. results Investor on uncertainties after Kilguss, is XX-K will second provide appended and Financial or VeriSign today's site documents being webcast the call Relations that slide call earnings used is website, are Thank available Jim. that recent to and and reports of on are few XXXX be the quarter is forward-looking and guidance the which

and everyone. David, Thanks, afternoon, good

during COVID-XX With operation the increased services the demand reliable even important. crises, more of internet our securing infrastructure for on becomes and reliance

Our focus remains on is our to of ensure availability infrastructure. critical mission, which the our

have performance and operating of governed prepared been all more services availability for including continue dotnet employees standards our and of of and registry and are to with the to services at rigorous We our our continuing ICANN by remotely. operations route dotcom work

prices Today price response raise crisis, TLDs XXXX. our through our we're of a Our marked the the the TLDs the our including emphasized is is mission the last in the specialized dotcom as of This system. team and dedication that and of March COVID-XX the of by in our dotcom environment fact company dotnet name of of wholesale of and in focus end prices achievement that of Also extending announced availability of XX to XX, resolution all further March the our infrastructure. result on freeze all domain years expertise XXXX. through part XXX% the the we for given wholesale week current

of also through we're extending the wholesale names of the end XXXX. expired restore Additionally, waiver for domain fee the

delivered consistent QX business, in and our solid expanded on the name XXXX was core results. Now quarter I'll domain VeriSign another address base focused for which financial of quarterly results. our we

end for the million June with million at dotnet names quarter base of for XX.X a of totaled names consisting domain second XXX.X and dotcom operational name dotnet of $XXX.X dotcom the highlights, and year-over-year million in Regarding rate X.X%. growth

quarter the name X.XX by increased the and new domain we XX.X names. million registrations million base During second processed

rates until XX.X% quarter, XX that of of and are the days XX.X for measurable renewal the of renewal the preliminary fully after Although quarter. end in second This rate second not last approximately XXXX be the believe compares the quarter will XXXX quarter rate we to XX.X%. achieved

and seen growth rate presented we balance in uncertainty XXXX, This the domain growth For year. for the the which strength our expect COVID-XX and domain registrations a X.XX% we've base new X%. range name expectation updated of now base the ongoing of by name between recognizes reflects for

XXX,XXX During program, which has $XXX quarter, no in the second resulted share XXXX, for At stock $XXX share remained authorized common current available shares that repurchase repurchased our under and repurchase program million. million June of the we XX, continued expiration.

marketable Our our liquidity end securities at best of overall evaluate financial the cash including potential and and the remains continually billion cash We quarter. of business with liquidity repurchases. investing and needs cash, for position uses the the equivalents share the consider in stable and $X.X

Now to I'd George. like to turn the call over

everyone. Thanks afternoon, and Jim good

in expense to and delivered year marketing XX.X% For the XXXX, of operating from up sequential from X.X% primarily the the $XXX The in second quarter result up came million compared operating is compared $XXX year. the million last up $XXX second same $XXX US XX.X% permitted $XXX margin a operating was Operating last in of share The during income approximately quarter totaled a until due last increase a June generated million the million and quarter flow produced the the quarter in million million in company quarter a which sales compared $XX free cash expense XX, year million the tax quarter. quarter. same in from second cash year. with increased spend ended income was to year revenue in per X.X% same earlier, XXXX. million cash the quarter the Operating and the earnings Net payments up $XXX ago. compared $XXX ago federal the this $XXX million payments $X.XX and same quarter of flow flow cash million lower in from in totaled quarter XXXX ago. $XXX from million to of $XXX for in year quarter the deferral benefited $XXX of year second the to for quarter million quarter third and Operating million second $X.XX a to $XXX respectively tax the quarter diluted

X% to is be reflects the of in during expense still to reflects gain is balance range be mentioned $XX tax remainder expectation our the now expect continued domain the of between incremental guidance. and revenue will compensation a forecast range non-operating quarter rate X% million. earlier. expected as income name Operating and reflects our to This our million is to $X.XXX which includes capabilities expected expected of registrations. $X.XXX reflects be million new first the to million XX.X%. expected and Additionally business. marketing We stock-based revenue increased between Capital $XX effective million. growth the which and billion. expenditures to income and strength $XXX recognized expense investment second the net now during discuss the margin quarter security our now between of securing billion deferred million Interest updated expense recognized to between in updated $XX base and and tax the full in of of year guidance range as of benefit $XX the between range be year an X% still This XXXX. infrastructure, sales be I XXXX services still of operational benefit and quarter. $X Jim sale Revenue X.XX% in additional are a result XX.X% the the This full and during

XX% income For percent the expense now we in the taxes during between of to the XXXX, we a of second to quarter Cash to are demonstrate continuing of performance Verisign the XX%. half to our pretax for financial that forward expect In XXXX. focused range XXXX summary, of sound continue XX% pretax as expected to XX% in execution second be of still balance and look of income.

Jim the remarks. Now I'll turn closing his call for back to

again people. mission ensuring the on infrastructure availability like our of online of the more of critical services I'd George. say even Internet and usage our and that our reliance increased the has you, Thank priorities safety are our pandemic so. to during

who their livelihood. working internet services For depend many online at critical people and are on for network individuals from and businesses home, home isolating infrastructure more and and are

for the pandemic. Our their even record record maintaining dotcom during and Verisign uptime hard our in of work

are call we participants few questions on your call, that for a walk like for through before I'd this remotely are we the open believe additional which your to questions. mind in Given dialing

should reminder, has registry that how for pricing. unchanged the which freeze, price end of our by regulation actually the pays price have reminder, First you pricing user the name of governed extension announced think today's a wholesale by since with ICANN. as been is for price a retain retail $X.XX prices for a question, The have agreement limited is set years first dotcom dotcom? for no The their with about the dotcom are who domain XXXX. eight names our channel, Also the for as domain registrars we wholesale at flexibility

dotcom permitted years dotcom for under there's domain that the to four final unregulated Additionally, period. is names. price year of Verisign six of up the secondary to market in domain X% every names the to by each not With wholesale background, raise three a amendment agreement, registry of

ends effectuate the price a -- we Within the that the October current date. date wholesale XX price before expect XXXX XX, October dotcom six we year year which and may XXXX in wholesale to first increase period, increase on

quarter, on XXXX. on is we initiated are to in hearing a IRP hearing question, scheduled Review XX there videoconferencing. begin take updates in August that place noted the second last dotweb? affiliates any November to Answer, Independent of status as final on the Process scheduled currently is or That The

IRP IRP its ensuring ICANN Verisign purpose as policies when a and under ICANN's but to reminder follow these participate proceedings, Also granted not the procedures an bylaws aspects. limited reminder is right certain party is own the was decisions. in making a in As a of that for

Our for strength registrations the what the better can of the the quarter? ICANN from is quarterly delegation you rate second the the new help three, dotweb Most renewal IRP Question preliminary me the the America. resolution in board expectation in is that the registrations PLT. increase of make of decision North registrars new in understand final following will impacting came the lower on and

don't from slower demand registrars we small from seeing in based are This was the from do, increased visibility that partially they While by offset businesses have our activity strength retailers retailers same on online. China. getting feedback

renewal rate related rate, to Yes, announced renewal year-over-year to there first the is As decrease there the overall year? relatively quarterly Year-over-year this are. the you previous Question remained preliminary time lower the it rate. donations updates relates the primarily any consistent. overall renewal are four, to earlier

COVID-XX an quarter, to initial donation During those the by first assisting organizations impacted and nationally. made locally million we $X

During quarter, in contribution made the second cash work. their to of $X the million we support of Justice initiative Equal a

you an Program impacted the questions our the only ready to further and these we're talk open the we'll first be We half to VeriSign sure the for those during along additional on next efforts Operator, I call now focus donated are quarter. crisis. first providing again expansion actively again Cares for questions. COVID-XX the a your $X have company question. And the with the to time million during you should year that say the I'm can working beyond we by on assistance of

take [Operator Oliver Robert we'll instructions] first our question Baird. with now from And

Great. color. for taking the for my all thanks and guys Thank you question

is it maybe bit back a a So can little least domain which is on at remarkable. now of where lower was try growth remarkably end more above range, I if pretty pre-COVID the the

little one follow-up? and economic and seeing of guys more we get guys then bit color well then maybe there and the have and what responsible being perhaps puts a takes can for mentioned strength, are the around you lower as some You renewal Thanks. the SMBs China drivers I of above on weakness little there a some you more that Can you rate. that geographically had bit as

from Okay. think to have comment predominantly of all Rob simply visibility, the but try George just businesses invite America geography I let let say online think that with as me I I small further. me basically limited strength came we can North getting first the

Jim the thanks for thanks question Rob. and Yes

lower. on improved we say mentioned new and North year-over-year So as you APAC QX EMEA additions quarter were in and gross America and bit in strengthened in strongly. was also little the basically China They registrations a will also

gross the were they levels quarter the far similar were from ad year they levels. but As gross as ago China there to we ads had last down

markets visibility were into eye a and mentioned, primarily itself down thin renewal in saw about we in As as mentioning Jim also registry time decline they also lower before. total We renewal we're year-over-year were they that we on. first that to most X.X% in rates have down far rates, direct as manifests talk track, we an And the keep end user. don’t Jim and

difficult a economic for gross very impact per us quarter. understand se, in but were little more So the it's ads strong to this general

totaled Our net were above million. second quarter slightly ads with XXXX was good. $X.X were million only $X.X They two the of

that yourself that if of the flush terms want anything increase, George, I in of the if suspension pandemic just the just get secure. think I avail to a there's so then guess Thanks you appreciate and which can anything final sure properly lot of draw ask the much increase sense and it price out. there you the and it very years on do sand the or would given you the four again and believe rationale else the there obvious gentlemen. will guys Okay. understand of beyond then add a I follow-up I would we just you to the makes in I of that make guys price line

I I anything Rob. that thanks Sure can it don’t you accurately. meet think summarized

October taking the date. and price wholesale XX, XX, is through period to freeze that is you price that another our the XXXX We XXXX year expect prices dotcom that are accurately of available environment effectuate March via increase of we stated current data before increase first to related

I operator. think we're question, ready for another

move with We'll to Citi. Jones Nic

first that some what fees are the generate off, restore fall domain group go follow-up out me restore you of these that? walkthrough recognize and then fees, The build the building Is money extend of coming any would potentially one guess little as and you as implications can as a retail is on up the provide tell kind and one there? there of after color fee for those out you churn, bit are I've I you waiver a the of maybe dynamic could kind from there that

Okay.

to Let me answer hand George your question. it to

the guidance and our registrar is waiving off the time First we a a the the then registrar provided impact financials deletes fees today. the There accounted restore domain is immaterial and XX general period to in availability. chance to a of revenue redemption is the a after of our day it's name get and period still name this has rates, is for the back of before those

seen actual a the restore wholesale they fee and is registrar is registration charged are pass disclose already fee fee course domain the and addition perspective. so for we waiver registrar deleted we've names the what our restore this standard determine don’t those been So the which of from many retail the is restore and by in retail renewal the talking about. renewal with name to fee on and associated It's registrars

believe individuals businesses benefitting are and So waiver. from that small our anecdotally we

it. as Thank presence. sales operating one there SMB be you need on margin and And the kind of increased a OpEx thanks. interest you. as follow-up bucket don’t an in the of leverage advertise one, potential year Got aggressive rest or the throughout with in digital Is this in having marketing to just

sales our up of but sure Sales marketing expect but we to of at to rest expenses marketing activities into each business. marketing profitable spending was looking of do we again we're appropriate we're amount and drive continue factored support the in quarter, every clearly and for to expense mean year. to provided, in costs categories I the the XXXX continue Nick. and Thanks plans and sequentially have guidance growth making activity the invest year, the those throughout do in that are we the

Sterling Auty And we'll JPMorgan. take our last from question with

Couple of quarters renewal new in last of what the two you the the the full terms of so registrations guidance the growth for rate? questions, factored new for domain pace and year, in have the for

George?

through year half gross net first registrations guide product We rates. the Clearly we expect done guide the continued renewal the gross So demand of well specifically the ads, but don’t into zone and that the left the happen pretty what published a far to We here to as for in we've side. wait name we information to gross quarter, as on will ads, or and rate increase. renewal the see. base we'll the the new domain

You the quarterly. is on going can provided we see is there, out breaking our guidance full year but what on guidance

So think saw and qualitatively, this I maybe tend closures business the and at qualitatively? we we to follow-up incorporating the new June some to rate manifest when cycles lower increased point, at rate of if in you half of way in at a and previous I we try quarter. get see a higher in the back look it maybe in just renewal economic itself Are renewal think idea we different a the just that the in least elevation registrations least

guide hard our and do methodology planning. forecast to over and reliable and the have at. very here data have down been not algorithmic before model put our and level. forecast that's period the accurate for that algorithms model at results the we a to is It's also It's the We us here that our us are use guidance. models algorithms which do go that range We that giving out lot that that of said and relatively registrar or country very use I way. algorithmic to we like voluminous have we only that so by of look by a or in through and we're a for those end We clearly but that user results demand the fairly us the prior active looking so proven quarters been computations by but

what just for what number domain Can us June September look the the does and how year really against quarter in September compare That you a to give names of renewal makes you ago? sense. that like in looks had up what versus like and

the quarter So that XX.X XXXX in number renewal second for up names was the million. were of

up to next was We quarter and quarter second When ago XXXX million renewal third for year a was expect to quarter in of the the XXXX back XX.X third closer go in that million. of the go quarter. XX.X XX.X I

deadline. it think a going to October the investor We been are timeframe terms last you that anyway increase to and I know you I announcement, on possibility still of based that it's of freezes? the you leaving the you the answer I open one given extended that then to advantage that you’ve have increase ask window the a least announce of March in the mentioned the you because might at can And six-month price prior lot take are but conversations, guess price want the have comments before price topic but that of

am will is the state XX, provide to year our XXXX. of we announcement entirely and TLDs that. year XX, be of prior question, six can the I we the of freezing but today's The available of that's effectuate all I before six through months in have six-month a having answer March date a period price is there we sure increases determined not your price in course the October first prices expiration notice are of wholesale do as the four XXXX maybe point I to you a required by increase out understand think to and nearly obviously notice

little math that right. a could point think of I answer question. your bit So somewhere Till

say the their you might influence view to acquisition and sound moving registry stronger state how into bring one into of assets you registries that registry a operations, you financially let's that consolidation the company entrance how sneak think do Go saw And registry last maybe in, forward? Daddy's just one do

that to has an TLDs. be certainly Daddy is TLDs these started tremendous expect those it build obviously see value should know Registry, since Google point not with is also in We Several each Well to partner to we probably and users been TLD as just to new. channel TLDs I company. and operate and all a partners Go value XXX to of important name.com it been that continue. their recognize well. us our End channel of channel over those continue. register integration has in expect Parsons dotnet back of for registrars in I dotcom and cases Bob those other when that our ever partner that out an important vertical Verisign continue Google relationships to has partners for channel has registries. donuts to our

session. back David our conclude does turn remarks. Mr. closing conference question-and-answer like for the over to That to I'd

department call. good this Investor Please you, our any participation. call. follow-up concludes you Relations operator. with questions Thank a Thank Have the for call evening. your from This

We And that today's conclude does your all once conference. again, thank for you participation.

disconnect. now may You