VeriSign (VRSN) 12 Feb 212020 Q4 Earnings call transcript

Good day, everyone. Welcome to VeriSign's Fourth Quarter and Full Year 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,

fourth Welcome full operator. you, quarter to Thank call. VeriSign's and earnings year XXXX

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

past been has and challenges for also our many remotely. when everyone. has year our a has all with David, spent good been uncertainties year year us. of of of Thanks, more relevant. working This most the mission afternoon, of and we never you, majority teams Like the This presented

DNS of our agreements. and of ICANN it us rely ever, During this XXXX continued time, maintain, to years of specialized navigation to to person-to-person network and for be our during the extended than operational invest we operate provide availability and critical by our the we required complying service accurately record on appears education, and enables more dedication infrastructure, our continue XX we commerce, healthcare team well over as while world standards in XXXX. we the into around to and Thanks the evolve as will the DNS and focus, resilience the working which remotely maintain, they reliably our people high with connection, will

excellence to pleased company. of that report I'm results. another our a quarter year solid for to Turning operational consistent concludes the

As DNS I VeriSign .net. for the .com more we availability uninterrupted than of mentioned XX years in of XXXX, and marked

million. delivered We billion revenue free million $XXX flow processed cash generated XX.X of registrations, also new of $X.XXX and

expiration. a for of total $X the amount $XXX authorized Directors repurchase Board full million. has has million by of to approximately billion year the VeriSign Effective for repurchased program, of increased today, available X.X under which XXXX, share share common and $XXX authorized stock the the During repurchase we shares million no

consider investing cash, needs equivalents the $X.XX the continually best of year-over-year position the in liquidity consisting with for base XXX.X million at .com and for At potential of business X%. .net overall quarter. billion cash, .com million names and repurchases. growth in of including rate evaluate totaled liquidity with name securities and We .net, and financial of names end XXX.X a marketable for Our uses domain and the the the cash remains and stable, December, of our end share the XX.X million

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

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

growth of and we name XXXX, the domain rate Looking X.X%. between X.X% expect base to

increase today's This announcement before XXth several with marketplace. consistent our I'd now, like raises in .com which to the since George. September notice we last given names the annual price wholesale Agreement. the statements and that effective the October to expected have $X.XX announced of earnings name Registry the limited over our in regulated we price an wholesale domain effectuate over XXXX As first to and We XXXX. $X.XX domain This And position to from believe increase wholesale the names, increase price a this of in months under release, $X.XX competitively permitted for of with domain in .com is of represents a alignment X, .com price to flexibility XXXX. the is turn call pricing price is

and everyone. Jim, good you, Thank afternoon,

the company XXst, year. was XXXX. last December and ended X.X% up million revenue the from generated X.X% of $X.XXX billion, totaled expense from XXXX, For $XXX year Operating up

million income, a XX.X%. totaled million, revenue, in quarter operating operating fourth million million increase, in up from For $XXX expense year Fourth The quarter ago. primarily was quarter same quarter income of quarter margin The unchanged X.X% margin marketing and quarter $XXX in delivered to fourth sales same Net the million quarter-over-quarter this same $X.XX earnings year operating of share ago to Fourth $XXX earlier and the income ago. for a year. the the $XXX X.X% compared operating which year, compared the last compared the $XXX million, year to expense $XXX the per XXXX. quarter in diluted million with expenses. compared $XXX to in quarter $XXX which up from operating year, totaled the is XX.X%, full Operating increased a a million, to year a came year-over-year. fiscal of and totaled of company quarter last of produced $XXX $XXX million result million came a $X.XX year

the continued $XX.X share, in earnings income year, to $X.XX. by of million This to flow between income and of to payment XX%. was investment annual increased benefit of are year our effective began fourth income the to our billion. income noted non-operating expected security, preserve flow expected fourth and and infrastructure and The rate million. Jim the a last that and of Internet. $XX This for This ongoing and XXXX. previously be release, net, now included the guidance the as be between limitations. net of $XXX this ICANN, and activities $X.XXX $XXX reflects certain this be rate $XXX expected discuss, infrastructure full name between in million. is quarter $X.XXX incremental unrecognized X.X% capital revenue earlier. $XX range our respectively, base the enhance reflects cash As margin GAAP reflects and and operational, DNS range quarter to which in expectation is tax quarter to in moved million our $X million and the and to expected million expense a to tax mentioned expected Capital cash well was million, of statutes guidance. support to compared between X.X%, for Also, year. $XX This of that benefits, is recognition be tax between investment, billion Operating range an result earnings domain an as of reflects XXXX The XXXX resiliency operating in to Revenue XX%. of XX% XXXX expenditures forecast the range lapse is our XX% expense I'll million with fourth $XXX free as $XX million of the be per XXXX. of the stability QX million Interest spend, diluted into range expected growth for

same XXXX, execution in the to expect and sound range. throughout for financial be our last also performance, within tax In focused continued demonstrate year guidance VeriSign rate continuing summary, the We XXXX. cash to we to forward look

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

maintain operate at our the critical be of have service Thanks, may safety predecessor, Internet acknowledge secure, our remote business way registration continue infrastructure some PKI I business George. efforts ensuring the we since. That was I'd scenes, the our during but Internet information we verisign.com. increasingly in think on our the maintaining still and operating are priorities focus that there can going just dedicated so to for accurate also that core team almost secure here Certificate sold years. infrastructure, More are have tightened entirely over Authority for like interruption an mission network. our be develop, to to of today that again, undertaken done of many and say what behind operate and people XXXX their and in people. of of purpose-built more, reliable and XXXX. hundreds RSA of want ever once all back operation work well the without And Even we built today, And our our VeriSign of challenges and XX on not to mission VeriSign's Data our even professionals Those SSL are services pandemic. working known, directory on at homepage hard that during our do found Security, a

to additional before which walk asked the opening of .web. mind are questions, any updates call on believe we the your for of Many there is Now like your we'd your status have on questions. you through

place of noted August quarter, took in final hearing As early we last a XXXX.

an granted a panel was bylaws ensuring the in these when party and don't a purpose is control under operating limited the not the in coming the procedures We a VeriSign of decisions. deadline. a reminder, participate from but right not for we the as and timing is any under is term proceedings And ICANN expect but ICANN in weeks IRP Also policies certain that panel decision follow the as to aspects. reminder, the IRP making

final .web related decision will a of .web. include the IRP, expectation to is of revenue The on not delegation expenses ICANN that today provided the does Our the TLD. guidance or Board following we the resolution make the

for Now we'll Operator your questions. the call to ready first question. the we're open

our [Operator We Rob with take will Instructions] first Robert Oliver W. Baird. from question

to happened that comment that sense but hired? wanted to which spend, our talked Thanks is process And also get bit where higher and was that little expense a structure the more XXXX? Great. just of taking And for also on this for for you understand have hoping my and what was it. a December, of a thought on CapEx question. could had recent on believe? through you we walk the you, guys Appreciate in maybe guys. bodies I wanted of out are bit given hire more maybe certainly than George, Thank last little need I on get the then in some the then to spending the into side wanted I on year on the that. get about whether I CapEx, you little more came sort bit just security been impression headlines color a model color it that in year to the just some know and looked quarters the

Hello?

able guys hear you Were my Yes. to question?

I heard you if just we mute George, checking. know but double question. on were Yes, your don't

I was. Yes sorry. I'm

So Rob. yes, for the thanks question

you make to answer Sorry placed George. through brilliantly

and this our both this I'll in about making invest talking best. That's numbers we've of software up areas our do bearing But to been And tools and and additional our most year those R&D out G&A in been cybersecurity personnel okay. both we've initiatives. we you investments that infrastructure the and and hardware see in in continue are those areas. as in my

the exception as as next be revenue most that year. As year we slightly the far on revenue expect similar expenses a to for of percent increase next percent for will cost our of of of revenue a we we expect with which report XXXX, of as categories

infrastructure year expected are As between far million. capital investment in in as our $XX as as as expenditures, we We some capital mentioned, guided million expenditures well million $XX $XX XXXX. into that reflects we at million this and between ongoing my expected – that spend and be as time. stated And prepared again XXXX Last between slipped to $XX million $XX $XX remarks, I million. capital guided and

continue but are infrastructure. we than appropriate year's range ensure to year last to slightly feel our So this stability these of is the investments and higher security

I Appreciate one for may. if Great. That's helpful. Thanks, just Jim you then George. And it.

– the price Just increases. obviously

through. able you get So those were guys to I'm glad

the process wide wanted And probably X.X%. year, a but I the just given get just On maybe bit on X.X% to you takes And that. of domain it's wanted sense. to macroeconomic guess that of a I lot for outlook Appreciate range. think a understandable said puts I your thought to get your and

just clarification? did want you sorry, I'm

Yes.

Just will -- some your will we you -- give a on right, I mean, on it range? clarity thought just process that have

not guess. your question. sure, Maybe beyond I can detail give I'm any I more I understand you don't that,

me... Let

Yes.

activity or we So would other the number be And is maybe of, year GDP initial that above range you below spring. range at potentially ended some low the of that's I there which guys guidance elements end big mean high where that growth have to some the domain you that that's, expected probably would at of where -- due your -- of we didn't I the think nobody when end your pull-forward growth. COVID in up saw just saw a the

there the that from be end that color possible domains? hangover factored? on we is just a great. low if why bit any sense would And is have there So be of would a a that And

is in bit. just Rob, George. here little Yes, I a can this Maybe

very quarter general and the have functionality demand China. activity and EMEA both trends there's would which last people about been from in increased we year as the registrations from slightly And in registrars the that regions looking in slower delivering offset trends from we're performing some the well seeing and online say a has registrar in new by are quarters the in some few solid get yes, fourth similar in base growth XX.X I from about to been quarter we in from up million XX.X seeing are new you America year as starts domain we saw, that was pretty that So the been community had during builders. based in a to registrars seen North ago. the we've those talked name business website created But

still those trends look year, we into see next As we continuing.

will we're react environment. out not market However, sure how come as work-from-home of we the this

And January pretty X.X% so sit as do we here expectation update But into is off start. a this we go to right our a the you we're between year. And and have the -- year range we being range. through typically good slide going X.X%. now we'll that's on that

Thank Great. you.

idea COVID your in that a I I George macroeconomic gives the associated around associate a understand influence how question. is to and of, certainly downs is wanted them said sort obviously some affected. we biggest think, are Yes. if and -- say I and the there's probably that obviously considerations about only the as uncertainty some and can that I guidance to gave, indicator there's play that with I But go into macroeconomic say would the thing ups to relate is some That's guess of going range. you takes out I if that somehow factor of really a the that lot in one But there's uncertainty single range. COVID. is that probably There lot and XXXX. factors

again. you Thank Okay.

Citi. from go question and We'll take ahead Jones with Nick next our

I follow-up have then, clarity splitting questions. like is or guess the -- go guess, taken guess, I the slightly I first probably Great. increase because taking But in is can't? Thanks over price could is ahead. there? hairs. you it you for a And X% this any it's $X.XX and another

sorry. I'm

in $X.XX. with fractions in that -- pennies. actual right the of the right. came to The on in -- X.X we if points it increase bill problem got And You've don't you decimal the of a apply is the

we though so And we nine over rounded because even the otherwise X%. a the number slightly would down be was

how think and to Is investors from cadence Got the over open? should it. the that's helpful. the them you something COVID, next the annually? room the into we expect earlier? here? How on about Got That's increases how windows like increases. think are potentially thinking about timeframe it. of compress of, happen wrinkle of, guess, the I I a about just through is mean, then it I few And were price cadence years thinking as you, kind there to the take kind price

Nick, this George. is

sorry. I'm And is increases. to future I Mute sorry. weigh and of will George. basically don't an increase we announcement in today's let begins this that's for only was I'm registration tricky. on on but year. guide mute, is fee, .com effective I September domain price one in George

don't we ahead. comment? guide. to want go do that, obviously, George, Beyond you Please

Those Jim comments as my be to are well. going

for... Yes, sorry, mute there I was on

in trends US in solutions? Okay. trends? these in give digital seeing to any pause out. of question just XXXX change may anything in restrictions any COVID just of certain Are kind of or as impact loosened, leaning kind certain markets meaningful people the may we to regions, One changes to registrations people's the in Is kind last in of early solutions, the kind online be into the reopening of rolling and as you trends Thanks. of even terms are switching you kind SMBs year within vaccines of there how terms saw in

that get our is, we is George. thing business any bit in Yes. saw holidays even Chinese New to and little we do is the I'll materially through just Year impacted a time time difference The the from have year later. little a do I Nick, this see last don't in we mention trends and only this by January. quarter seasonality

February that we've early seen our other in I question, think nothing year. change year than it January to answer your last late that views. to this was and yet it's in But,

question. for taking Great, the thanks

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

saw When Hi, you announced the increase, on that now ask I'm you call the I announced increase? guys. price going damn, what like the am I Yeah. Thanks. to that

-- question? is the Well, that that

All course of not. No, right. No.

with last Anything let's month, down XX,XXX; base was down there So, year, particular start I that whether the this domain where was renewal down over one noticed be -- of was like the bps it another XXX. rate, year-over-year. XX a one I think you saw the in couple days: that that

of purges. I usually some doing registrars to that equate and some going through Sometimes the

quarter? So, anything rate have renewal in like that may the that impacted the

the out, year-over-year. Sterling, renewal as relatively flat rate was pointed you

I think versus quarter in the of XX.X% XXXX. in fourth the fourth quarter XX.X%

very XXXX we year from as And international performance did I And little a relatively before, registrars. did was a renewal similar. group was a we as the out have But this pressure, result. think put whole. overall that group I first strong would We first XX.X% to come on that China-based a time bit So, rates renewing our rates again, lower. a little as cohort talked see for renewing downward pretty a time say, good as tend

Now that makes sense.

the that approval of up move neither might launch? be muscle and expect that get thoughts cost of you and marketing what revenue we around it the get running, you of your made the to some put you You levels some comment forward spend just behind If and are the say expenses, the at or can getting that should it .web, in guidance. that terms hypothetically perhaps factored launched, investors should into to the

have think It's the repeat the just what I which part of early. hope with to indication on, give closer guess, that can timeline associated just waiting, any IRP it. away is earlier, of that we're say time think certainly think We're to there I said or -- -- weeks it's something a I panel. from of process and of all the web the launch early Sterling any moves of I too we're complete -- we're of the we kind from costs with I but as from I

summer And fall. if spiked business then the from the early my last new they US Okay. at is, question applications, side look late in you

the time is So, to basis. new XX.X, your elevated domain year-over-year on frame, registrations about been you even relative registrations will norms vaccines back historical there? still quarter August, hopefully for I fourth a a but new that they're I correlation a of and there does think September actually XXXX? we that perhaps relative in in that while have think up could If especially the up back to now, faster on see And some the domain confidence opens the growth give economy

And So, seen data. that you thin we're same know Sterling, we've a registry. as

business can to get from helps they finding facilitate from starts do we some serve from that. ergo we website them. hear what their So our insights companies new domain and and customers partners a registrar having name by better and Yes, that

our I for think that's good business here environment. been this in work-for-home

up, little not mentioned, either or things a Jim and as I when start opening pandemic As could We're it this pandemic clearly just somewhat could slow the probably whole it think go sure a we either subsides react would accelerate bit. when it how that market were possibility. it is the way could but just uncertain started

a the that. that mix given maybe are them that years just of in category past, impact gain -- think business? On your follow-up to TLDs on you I some saw we saw any seeing of the that mix And back domains, share having have new

mix of I -- I this. the am not understood I sure guess,

on they back you the .com and expected with you be traction hundreds want that behind a of thin global more more marketing they're TLDs? that because to seeing just muscle to in registrars perhaps work you're they do coming registrars to Are registry, the a put Well, suggesting given new that basis. specific but not programs you

don't found is guess, specific the George shift answer want well-established -- question think best helps a one, aware popular you add of .com I informed we've fact I'm that recognizable is describing. which -- not deliberate It's to simple is you're that? is, kind people to I I give just a brand get I of would like anything just can think you any that been that that do effort online. any I to a brand. know a I of

Yeah.

to earnings I question our mean great of the beginning right But that's they're to as seeing registrar's think specifically. I for be Jim. the but calls programs one to probably set the I what anything relatively tend of think year. at a that's we them more to Jim think don't change We or say. But would and than too what year-over-year not add them much rolled them I tend intra-year have out I commented we on. announced I

much. you so Thank Understood.

Thanks.

now back like to call comments. the any David turn I'd for Mr. Atchley to final

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

Thank concludes This call. you your for participation. today's

now may disconnect. You