VeriSign (VRSN) 27 Oct 222022 Q3 Earnings call transcript

Good day, everyone, and welcome to VeriSign's Third Quarter 2022 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized.

At this time, I would like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. sir. ahead, go Please

Welcome Third operator. Call. XXXX to you, Quarter VeriSign's Earnings Thank

President me Chairman and and Vice Executive Jim George CFO. CEO; Executive Joining Bidzos, President and are Todd Strubbe, Kilguss, and COO;

which and There, the are the presentation site, end release. on a about from Relations -- and call presentation also hours, available the is on find that being under verisign.com. This available VeriSign At call, will will few the be of webcast of be within Investor this website, you call the ] posted. earnings [ our replay will

Financial public filed it are unaudited, financial and subject done with the the most the results detail on that our that risks release during quarter the unless in statements uncertainties SEC, XX-K. update and specifically forward-looking in disclosure. not our report VeriSign does to we performance a recent earnings documents remarks Form guidance our are or is discuss include in through

The be and GAAP financial after the information to Investor this discussing presentation, VeriSign: results used non-GAAP and measures GAAP cash results section include to website the can adjusted the be will by our flow. appended non-GAAP in which available reconciliation today and matters found free X we on is today's EBITDA Relations slide call of call.

afterward, open the will we call will And questions. George remarks. and your prepared Jim some provide for

over the Jim. turn With would call to to that, like I

Thanks, thank David. for Good to afternoon everyone, and us. you joining

within to we challenges and the we we acknowledge other ability said quarter, that control. was focus what uncertainty would presented, that and macroeconomic on Last our

what indicated that also meant. We

our First, maintaining critical infrastructure. operating in investing and

control where exercising Next, expense appropriate. careful

long-term and allocation on building shareholder our activities keeping capital efficiently meant it value. Additionally, focused returning

XX of quarter, third our extended over .com for the During and .net to uninterrupted DNS years. record availability we

Also third quarter. the during

X.X% also the our quarter, XX.X% by year-over-year Sorry, we grew revenues we -- year-over-year. third and by our during EPS

and equivalents with the of $XXX marketable remained the end cash million financial quarter. in cash, liquidity stable position securities and Our at

During million quarter, X.X we million. $XXX the third repurchased shares for

Directors has repurchase the of total Board under million common the domain base authorized end At share in share totaled to the .com .net has no today, stock name a rate authorized for expiration. domain XXX.X names billion September, amount $X the VeriSign available of increased which and and of of program repurchase year-over-year Effective the growth by approximately a $XXX X.X%. of with million

XXXX, X.X are quarter. quarter for million million In million the lower in were this many compared and X registrations there from registrations China. last in factors we of XX.X pandemic-driven in as new that to have the that calls. And XXXX and quarters while subsided These drive and already factors new recent third global new a have ago seen have prior year first year the macroeconomic headwinds result quarter, XX.X I names, new demand of of a acceleration mentioned reduced there include registrations which in domain registrations

renewal final approximately the XX.X% renewal ago. that a the registered last XXXX renewed last a year were last year-over-year, previously quarter rate as that rates, of of remained to We quarter, rate renewal China year-over-year greater names from believe are due third similar which same first-time renewing similar renewal while XX% will predominantly has lower names the to year. and proportion for be XX.X%, to quarter, compares for rate the The

between domain macro geopolitical adjusting base global uncertainty, registrations, of expect economic guidance to still name XXXX and we domain That our that We of do conditions said, name current and towards introduce continue a growth see stabilize XXXX. and X%. some uncertainty are through pre-pandemic Because remainder to continue signs levels. the rate while base now of new slow, this X.XX%

to submissions their made for parties we The process. ICANN its QX, ICANN now .web. and to during to waiting complete are Turning

like the return report with has his over George when closing financial turn remarks. completed Now George. to I'll to call I'd

Thanks, Jim, and good afternoon, everyone.

$XXX year X.X% up up of same delivered million, income For generated $XXX the and quarter XXXX, the company September ended X% the ago. from operating revenue quarter million, XX, of a

first revenue to up million totaled is as X XXXX. million the income year X $XXX with up and X.X% For operating months X.X% Operating XXXX, expense of compared of first the earlier. a $XXX is months compared

the of X XXXX, months operating of XXXX. as first the are to first months X.X% expenses up For compared X

which of per third $XXX quarter XXXX. to earlier, for the growth. on remain long-term $X.XX quarter income compared of our optimizing a same diluted million and focused continue profitable million of to earnings XXXX to share expenses driving We $XXX compared produced year Net the totaled for $X.XX

million third net the million, For the respectively X.X% and is the XXXX. third was with $XXX to X up of flow months as $XXX million XXXX, free flow for was $XXX million, and quarter Operating first months of X for first XXXX. $XXX compared income quarter compared of cash cash the

QX from the last benefited flow increase the X, year, primarily renewal forward September quarter revenue, The impact renewals main XXXX. year. domain to this the was these in early from increase with As pulling activity an future early on this of related name cash of quarters cash before is which quarter third into deferred flow dot-com price

billion of revenue to updated be X% now rate mentioned expected that full expectation between of the XXXX and reflects billion. Jim base year growth $X.XXX guidance I'll name range domain now earlier. $X.XXX Revenue our range This our is X.XX% to discuss in guidance. updated

between interest The between to net, between are and be effective The be $XX is operating expected to Interest between XX.XX% an $XX million. which million. expected to expenditures expense nonoperating now $XX margin GAAP expected to be million rate income is still Capital XX% $XX to of expected to is XX%. expense tax now million now and be includes income estimates, XX.XX%. and

We the be to also rate tax range. expect cash guidance same the XXXX for within

execution financial the performance during continuing forward sound third to in quarter our XXXX. look demonstrate we continued VeriSign summary, and In focused to

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

George. Thanks,

As did is on we focus strong. fundamentals delivering managing what we on focus well long-term all we and of remains the with of complicated our long shareholders, our efficiently will while serve our what control: global This our to the you manage continue risk term. constituents inflation can macroeconomic unconditional mission. our of we said can, our that the focus parties, by prioritization business on last that and being confident for and employees quarter, outlook relying recession, We're business can remain customers, expect geopolitics, the to of continue. Those within

open ready for the concludes remarks, questions. question. your we're the attention your for prepared our Operator, to today. Thanks This call first now and we'll

And go [Operator with Oliver Instructions] to we will Rob Baird.

Great. as kind second are Yes, appreciate focus Jim, row some within laid things, them? this us just a you things of thanks in curious versus really you at I'm is for kind on the those the of the the where And control particular that that out of there's since control. in you look are change could things are if your of the color. within quarter not been remind any your as quarter? see things what those if last you

things, sense control. Yes, we do. first on what I last sort of and beyond man these to can on us, that proper Rob. on question, focusing it's easy you focusing and dwelling we it common foremost, is just To need to means factors can't obvious did, do But that control what not the I the planning. What is something this did, once wise we quarter. simple the a simple, guess doesn't because said but is think, for are fairly mean Thanks

opportunities all is more the shareholders. is Second managing effectively Those infrastructure we being meaning return alert -- has going getting done the to for And focus continue it sort to investments on. to the necessary in our to threat are our value be environment. right, with keep third being evolving focus to category to up We're things continuing about that of to think on. make an expenses I while cyber

fundamentals of I It's add users, say think us I business. that's the addition that, have in gives in the every the focus. mean, an a fundamental strength do, same domain of that contribution names our this should value that long-term a enduring have what also, you the certainly keep to of at the and we another is to I thing confidence report we this long to quarterly to And term. eye on the but value have the and quarter, time, We business. obviously,

And challenges, we when right ourselves ask like, ask business. this would things to a a health this, improve questions going getting when what certainly and So well. than look us and through the like anybody like. longer we it's we're in bump from years we a and all look, I these questions in guide had will -- think at done back long-term that the called But ourselves order of through road, fundamentals other now, that COVID helps we our it wish I've we bump as through now everything

So hopefully, helps little that a bit.

Great. That's helpful.

did base. comment, about the some of stabilization seen in make domain You numbers. We've the Jim, a that in some

ask general ask that just wanted Or geographies. And I I to stabilization was to curious talked Todd about just can relative about then to China. but sure that I comment? going that Was also make one well, comment You understood. as that just a comment? a domains? about China-specific

comment think I Well, general was I made. that a it

And saw provided quarterly all, see did we at we we some that. the see of in normalization. last general, some of We First we did it toward indication indicate report again. trends that of that

a sort be it's uncertain China general But is a broad always that times. statement some Domains I use how of their bit have domain unique domains challenges think had they precise think and difficult China I regulations, China bit they China different. has is about them. situation. and particular a and a in to from names. course, there about buy COVID. qualities of domain investors them, own how was

we rates names saw that early you having renewal that the the some names to certainly very saw long-term to data China, in many first-time of saw. provided pre-pandemic are contributed renewal rate. the similar But renewal We surged that also lower that of rates on

we in were a sense much names. broader got of high-quality So what

Got it.

just geographic about perspective I'd to was geographic standard any from or call you, else know Okay. And quarterly Todd, just a for I a talked trends? relative China, to around little out renewals trends. asked sort which anything bit question Jim there of about question, if

perspective, Most our new lower from Yes. of year-over-year. regions registrations' a remained

year-over-year new increases see decreases China Europe America, new both in in North America. had registrations, while registrars and in Latin did we registrations APAC and from So

Okay.

great. more if you, for I Jim, Okay. may. couple That's a

give be there might or ICANN that one else a had frame guys to fulfilling Was guys submission you anything .web. mentioned fulfilled like feels the as you guys else time you communication anything what share indication an to would else Any there? or other that submission? submissions can to made. you It other anything You many the have guys on you than of

Sure.

say, submission bit So just of submission this different was to the sense the processes. an that submissions in made this actually all, panel, to on through directing panel that first to a their and let was other me a little think I IRP were now them we is acting pursue many who ICANN the the

in a here. in the In of to claims March, directly their instructed accountability evaluate to March that were ICANN. Board X parties fact, submissions ICANN committees relating one -- resolution early And adopted those mechanism made the board the to

to that's we were past just in over wanted So that different the litigation. clarification. offer than what actually few doing I years

did conclusion in hands. the IRP was what this the ICANN's of basically put back So

our it's submissions. made We've submissions. our have So They process. ICANN's

them to waiting And when just so process, it's ICANN hear from they've what concluded. we're an -- and

Got it.

of guys Okay. any, to increase or to but in just feedback that of could increase. in price quarter just around others take the then you've from heard share wanted going .net terms get .net you you know price last in I to what, a .net, and going were channel there roll you partners sense here, that's And what if a on announced

ensure be continues a recognized in around and TLD [ ] that widely a and brand the with the continue channel Well, invest -- widely our Internet look, competitive strong, it it strong very and faces it's to world, global like .com, we work available. to marketing and in competition to recognized .net and

to our So that. and with registrars looking continue on our to forward we're channel

Got it.

Okay.

Helpful. love just get know [ for Okay. get Jim, again just this ] to just we surface out all one it there. the and it I I to you. time

to if blowing is all, please, winds risk can you any if impact lot questions what, there's different just you any Cooperative on guys a for there been to And remind political obligations? contract continue political guys your around Just of [ at in your ] to political D.C. fulfill us, decisions or the around just ability Agreement you ever

not, more and was ] XX. agreements effort their it specific provided Cooperative -- provisions, regulatory XX have the of approval of part do. turn the ICANN, also that now the Agreement the to -- provided [ global IT .com a that do Department enter the into Internet provided limited that Amendment required. and as And provide provision the cannot action to be regulatory X for some And to different right the Amendment a parties. a a October organization Cooperative in and provided the approval priority -- XXXX, VeriSign without to past, to ] into Commerce Cooperative Well, approval [ That's priority every Cooperative the it's renew that also in global we We of last are relief XX to where both amendment given XX amended [ of governance Agreement of which sorry, pricing to some been which in Agreement with sunset agreement. termination was also, to .com But of sort transition a the Agreement that unilaterally for to for that flexibility was has amendment also years, they ]. relief VeriSign the broader

the certainly regulation view ICANN government. move So you that of came component the by the towards governed It I of can XXXX it this away sort U.S. as following think the that of from Internet. transition was so-called a depoliticizing

bit maybe So sense. that I context, little you a if in makes see more think it broader it

happened that a I relief, from. was benefit thing we which to respect So move that certainly the regulatory with provide last think

it. Got

within impact Okay. really impact a FX Can you dollar-denominated And just FX through that. running Yes, you're of I talk the purchases. one for there? that's anything and helpful. about the on have just business that you you on appreciate then George, guys quick just you seeing your overall

sure, Yes, Rob.

bill customers we of U.S. our all know, you dollars. registrar As in

So on income the exposure we statement. don't of FX have a lot

amount to small of have We expenses. with a some regard FX exposure

a have employees the world, their them local and small for around in amount relatively that's But We obviously we pay us there. currency.

this back time, call comments. for to like would over David at And Atchley the final I to turn

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

concludes this participation. call. your Thank again, And today's you for

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