VeriSign (VRSN) 10 Feb 222021 Q4 Earnings call transcript

Good day, everyone, and welcome to VeriSign's Fourth Quarter and Full-Year 2021 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. David Atchley, Vice President of Investor Relations and Corporate Treasurer. sir. ahead, go Please

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

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

Good Thank and results, The solid operate and which and for team afternoon to required and XX financial and I'm We our our complied standards efforts navigation performance .com delivered we our of you provides years. critical would strong continuing increasingly agreements, you, dedicated to for everyone, strengthen for another commerce, .net people record extend ICANN connection. I enabled domain DNS XXXX, expertise and available like name education, operational full-year to report financial which on pleased the the Throughout of while we to depend to person-to-person critical for thank their infrastructure the these quarter with results. and high system VeriSign. us by internet healthcare, over us. David. infrastructure. realize our joining to world thank around service, operational

million the full-year and generating registrations, [Ph] million. of $XXX For XXXX, we revenue free processed cash delivered new of million] XX.X flow while [$X,XXX

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

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

the and operational quarter fourth registrations, increased by name domain million processed new million at Looking base results, X.XX names. we XX.X

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

As expect domain at of we name grow X.X% a base look to to rate we XXXX, between X.X%. and the

price term, years, out that can $X.XX, point register announced which a time wholesale X, domain XXXX. have to effective of a we should raises before lock in the $X.XX to the As domain of the that .com increase September any and up anyone full to of annual at up today's price .com notice XX names, I for for earnings in given for release, years. X price price from XX $X.XX to September

December, further, Turning reconsideration because was be awarded And .web. application to for findings. Since decision, affiliates' filing panel's that XXXX as application was the rejected. also one ICANN's final and of time had with decision of to in Since for arbitration May an you, with development, affiliates the noted Board directed was Directors to its for rejected affiliates the mid review of significant Board it it provide that filed the found committees which, January, that was reminder, .web, last its reconsideration we panel then, sanctioned "frivolous". standing last their in a final request the spoke we

panel's of to of final of will out the their of be delegation now .web, the the process. we roadblocks forward And monitoring decision on way. moving decision, the the be making rejection the with are ICANN those affiliates' With and reaffirmation application and looks

said and for And George. worldwide. option alongside have we .net additional individual to call the and to to continue over As an as and to end turn registry operator like I'd users it businesses look forward now, .web .com we before, becoming establishing the

and Jim, you, Thank afternoon, everyone. good

full-year and company flow [$X,XXX XXXX The delivered year. operating expense For $XXX was cash the $XXX up million, XXXX, totaled was from the million, from margin was generated million. X.X% income operating [Ph], up XX.X%, XXXX. year-ended December the X.X%, XX, up and of million] of X.X% and prior $XXX revenue Operating free

in ago. million came from a quarter, $XXX operating revenue up million, with X.X% same quarter fourth $XXX from up in of Operating the quarter the third a $X.XX compared XXXX, the quarter, of million, which earlier, same million the XXXX. marketing the fourth $XXX quarter. same Net $XXX produced XX.X% XXXX. share the was for earnings to $XXX year $XXX the compared in compared of of of increase the spend $XXX increased to and of to third totaled XXXX. the quarter result X.X% XXXX, The million per a to in totaled sequential and million quarter of XXXX, for in $X.XX margin primarily for of expense The same For operating fourth million, quarter the in income XX.X%, year in quarter XX.X% in quarter fourth $XXX the million income diluted quarter compared was to quarter, the

included previously increased income million recognition in tax for income $XXX.X benefit benefits, fourth per transfer share release income The included a million, which property and quarter. tax the unrecognized by net diluted which our the share deferred $XX.X per of income of of earnings the the involved international certain earnings intellectual the two net non-U.S. income Net increased XXXX As noted tax by quarter $X.XX benefit by earning quarter this of $X.XX. diluted recognition in fourth a increased related of to the of subsidiaries, recognition for our XXXX subsidiaries. of deferred today, between restructuring of of these

the and in million, release, quarter quarter we tax fourth expense noted quarter peer-company to SG&A financial GAAP for we with million, and to Operating was free XXXX, million, the be of statements, will line into compared for of fourth one expect sales for first $XXX As fourth effective $XXX marketing million was operating administrative XX% better with flow and $XXX the $XXX XXXX general our align flow XX%. rates XXXX. and lines with our combine Starting between earnings respectively, cash and reporting. cash our we quarter

and well mentioned to million Interest expense today. fluctuations now million expense would be in to $XX Revenue The MD&A, as $XX significant be addition, to are and of expected margin to X.X% $XX the our filings. XX.X%. and is between XXXX our new as domain growth full-year expenditures the discuss I'll expected income Capital $XX disclosed to non-operating $X,XXX continue an price range to XX.X% In be of that between and to revenue is any the within between increase million expected of of operating expectation impact This our be SG&A announced reflects Jim marketing .com $X,XXX expected is be million. of the in our sales and million. base section guidance. name range X.X% contained between earlier, in net million.

and tax As is rate mentioned, between the expected effective XX%. XX% to GAAP be

continued VeriSign our the execution. and within XXXX we full-year for expect performance We XXXX. same be In financial tax forward rate the focused demonstrate the guidance fourth the range. summary, continuing to to cash look during sound quarter for And also to

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

Thank you, George.

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Sterling Thank Instructions] We'll [Operator of to go JPMorgan. Auty you.

Yes, guys. thanks. Hi,

I think probably still left? that that but as important, after taken about the price contract? you've And it's second increase, of now the question, how increases kind we final lately should period happens have me this of you two just what So, what know for a, done the you have six-year price

Thanks Okay. Sterling. for that question,

with of question, For briefly those not in me the structure, be refer on might. I the call, may familiar cover if that to you let the just who

in four announced now increases are are we we every X of where the of price at allowable the the which began four back six-year XXXX. increases. And allowed we the have year, price that the period, today October of in second September periods, years first in effective four six-year point So, we're this

period, so, And to pricing. guide we in this don't

is, that registrations in an announcement course, today's increase XXXX. begins of COM X, domain So, for September

second the future COM wholesale price don't the into I that or the pricing say Beyond This we guide decisions. discuss go XXXX. factors those of that is for will January increase announcement, since this. that

look half ten translates if actually. years, the over cost only X.X% XX back and So, increase the years you CAGR a last of that into last over a

that And just so, wanted point I out. to

the second years that's of six the agreement years. a part not start For the basically question, a part our XXXX, you And second as years to period, XXXX, XXXX, which know two period. is every eight cooperative years with renews automatically not Department, and price increases. will first your from from -- may of six-year allow This Commerce XXXX for or Sorry, or do recall, six-year may we six in so

till six-year continues cannot competitively. we of price exceed October two without fact, four a remaining we increases, as take we price $XX.XX. as took the future, COM do registration we'll So, what assume that of least if in be believe of meaning .com out And and the the to this XXXX, positioned all you in is period, if far in guiding the to at

are without taken period. in six-year we'll the in So, And back could guiding, since we're which only in come four. the a period the years, start And second none four first two. increases two in we've first of a then, the six-year

currently change was we long reiterate, price $XX.XX. more just that COM were -- a to two October That we've if that two current answer. take couldn't six-year exit until Hopefully So, those XXXX. And for at at the helpful. increase of least is more to the period and that's allows price taken

here it lot about there's that. of the appreciate us Yes, just the And giving domain X.X%, name context a 'XX watched growth of data I for you're is we're X.X% for I to within in then, the the of that and the helpful. think your like have timing normal year-to-date feel guide initial comments beginning. than very other do is start to a any the and or the off things But into you you thinking guide? give, factored the that of and investors year, be renewals how for that is slower should base there

Sure. George?

Yes, Jim. Thanks, sure. Yes, George. is Sterling this

and holidays how New do the example, about that from holiday relates our QX February year, Last on two the in few on is some earlier, February I This Chinese registrations slowdown call they certain the see started calendar. you as we XX. others for it the new to recover a is So, it on we seasonality had remind year over. would weeks just and fall Chinese Year before tend actual the X. holiday And weeks once was to then and registrar

as So, be of name in expect see mentioned, Web our we base. that playing But you into do some you continued could data overall, that the the on growth site. domain

as time similar to rate X.X%. got year that to it growth if We X.X% was have got that into last this And a at we well. recall, we

all with is market selling be 'XX? very And sense. in .web if that goes domains your makes the It it well you anticipation .web, would one Board, on ICANN in last then,

so that which the Board, second Well, that been process process I panel directed process. has and shutdown move all, held the basically years by of was ICANN that's with is this time now many that Yes. the a first during directed up litigation, to for mentioned for ICANN

we're to process. ICANN see is it. pleased doing That So, ICANN's

where that you're speak can't security trademark And Obviously, quite period launch as aware brief and given that issues TLD. be. their as will the standard some the first. period There's make are registrations can duration So, we where is any there I are it's secondly, for addressed. with a processes But that to There's associated holders the observed think are it of some I process. ICANN are an right take. hope a

variables speculate we or think any could, me certainly any all or in not of allows We'd that .web. like So, in have in I revenue the putting costs, to be all way your a but that launch answer that question. I will budgeted if together, to hard it's we really to marketing say for market me it come XXXX, market given it, certainly hope to intend bring and market. I it what beyond or can isn't helpful it will to and does whether speculate. plays even it web soon, those that don't with as be timeframe but to for think you to as to when speculate exactly that, We I we asked successful

appreciate I guys. it. you, Thank sense. makes It

Sure.

Rob Baird. we'll Oliver our last take from And question of

follow-up good Sterling on of guys. Thanks, Great. afternoon, lot Good asked a his. questions, I'll just

start So, left you just since off. with where .web Jim that's I'll

exactly out for have about they I and left. to further is Thanks. who's did mention how just your to been you're used say, your that feel And prepared be rattling perspective, the They've You And like, that I understand you in long. remarks that? wondering so going actions, the you just to as want this what stretch to well. from what monitoring doing avenues for that, I'm follow-up a able I vehicle, legal had then process monitor at what's actually then, ICANN, George

I the earlier was is tell a application that speak application sanctioned, only to in and direct answer word, for proceed. Well, panel's can't the you use of finding, result their their the to can to of last ICANN Okay. reiterating in affiliates, their "Frivolous" which I

terms of takes actions, In when ICANN's follow and that can information on these most some monitor Web we of actions ICANN's you that, is so how site. that of Board publicized, that these

the gave available in mentioned, direction was one I that their to standing information. of committees results the -- route publicly the example, For that ICANN fact,

monitor we'll on ICANN's can and be the Web you what as Board site So, monitoring, certainly yourself proceeds.

this we to expected we're taken But and If we of where has our far with reaffirmed that point, monitoring been without about were speak and the for I at affiliates again, beyond think position, we can and what them. blogs do That's claims firm that, happened our process has we proceed can web. blogged from believe delegation directed this, panel that we've and to that. now. are the demands its beginning affiliates' you merit. is ICANN anything can't see ICANN would What up the that affiliates, find some Thus I that be So, determine action will what you really next?

it. Got

already guide helpful margin assuming guide exactly That's think some that expenses as be assuming on were included to .web adjusted you for margin .web, point, wont, and guide were have, expenses guys past some speculate the to things then that you you just you. be Okay. guys a guys asking .web? guide George, Thank that. does operating be operating quick get have Jim and the initial not weren't then, I in with couple just the would you, that expenses 'XX of but to never understand proceed at on associated the may and And Jim. ones if got could not would in there .web, I'm those you we -- some instead we you include then for around said, that ramping -- what with assuming

Yes, the we've that Rob. are provide expenses, the to plan to revenue impact those clearly, to place. current We launch got in and extent .web us, our comes going that when clearly the updated guidance our annual extent year. To

it. Got

has you and that what because I guys higher early and you know, some well? to that how and you're as seen of here Okay. vagaries And just some trends and then, was global and New geographic course, follow-up of kind the color just Year, about kind on about the have Chinese Thanks. and EMEA any of domain for been looks of of -- wondering in mentioned seeing of year U.S. how Sterling's sort that question renewal just here again, trending you lastly, in and a rates of activity around the just is

Yes, Rob. sure.

$XX.X ads, was and XXXX. also in big new about in the to Jim units, remarks we solid was And base, that of generated and in the year-over-year. as million year-over-year, that saw X XXXX. registrar's. we experienced And XXXX, domain increase we look That year had up you gains million in up units increase XXXX. experienced gross it in base growth EMEA the million Asia in the or our name a unit So, from that new prepared U.S., our increase we unit primarily we is we million X% When our mentioned X at similar Pacific in X mentioned

saw growth perspective, we'll had the here we've we gains registrar's from demand Pacific XXXX as a new and the regions XXXX And consistent Asia pretty years. in good China. the few out we seeing to in we're provide more color So, time. last come From over and EMEA, as in unit trends that that at of

to and Great. going that. get you, to of hopefully Bowl. be I'm at Super to We're That's what for mean, year. right, we're one get be the going those this I guys. Thank .com, watching we going watching

Thank you, Rob.

David And Atchley so, that over back turn any will question-and-answer concludes the for session. to the final I now call comments.

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

does conclude that today's your you participation. for call. Again, Thank

You may now disconnect.