UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

____________________

FORM 10-Q

____________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September 30, 2022~~March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 000-23593

VERISIGN, INC.

(Exact name of registrant as specified in its charter)


Delaware		94-3221585
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

12061 Bluemont Way,
Reston,	Virginia	20190
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (703) 948-3200

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.001 par value per share	VRSN	Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:


Class						Shares Outstanding as of ~~October~~April 21, ~~2022~~2023
Common stock, $0.001 par value per share						~~106,016,456~~104,096,418

Table of Contents

TABLE OF CONTENTS


		Page
	PART I—FINANCIAL INFORMATION
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of ~~September 30, 2022~~March 3 1 , 202 3 and December 31, ~~2021~~202 2	3
	Condensed Consolidated Statements of Comprehensive Income for the Three ~~and Nine~~ Months Ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~202 2	4
	Condensed Consolidated Statements of Stockholders’ Deficit for the Three ~~and Nine~~ Months Ended ~~September 30, 2022~~M arch 3 1 , 202 3 and ~~2021~~202 2	5
	Condensed Consolidated Statements of Cash Flows for the ~~Nine~~Thr ee Months Ended ~~September 30, 2022~~March 3 1 , 202 3 and ~~2021~~202 2	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1211
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1716
Item 4.	Controls and Procedures	1716
	PART II—OTHER INFORMATION
Item 1.	Legal Proceedings	1816
Item 1A.	Risk Factors	1816
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1817
Item 6.	Exhibits	1917
Signatures		2018

Table of Contents

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

VERISIGN, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

(Unaudited)


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	560.6	$	223.5	Cash and cash equivalents	$	819.8	$	373.6
Marketable securities	Marketable securities	419.6		982.3		Marketable securities	195.2		606.8
Other current assets	Other current assets	68.3		62.9		Other current assets	58.1		58.3
Total current assets	Total current assets	1,048.5		1,268.7		Total current assets	1,073.1		1,038.7
Property and equipment, net	Property and equipment, net	235.2		251.2		Property and equipment, net	224.9		232.0
Goodwill	Goodwill	52.5		52.5		Goodwill	52.5		52.5
Deferred tax assets	Deferred tax assets	230.5		230.7		Deferred tax assets	232.6		234.6
Deposits to acquire intangible assets	Deposits to acquire intangible assets	145.0		145.0		Deposits to acquire intangible assets	145.0		145.0
Other long-term assets	Other long-term assets	32.7		35.7		Other long-term assets	28.9		30.6
Total long-term assets	Total long-term assets	695.9		715.1		Total long-term assets	683.9		694.7
Total assets	Total assets	$	1,744.4	$	1,983.8	Total assets	$	1,757.0	$	1,733.4
LIABILITIES AND STOCKHOLDERS’ DEFICIT	LIABILITIES AND STOCKHOLDERS’ DEFICIT					LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	$	199.0	$	226.6	Accounts payable and accrued liabilities	$	239.2	$	226.5
Deferred revenues	Deferred revenues	896.1		847.4		Deferred revenues	932.2		890.4
Total current liabilities	Total current liabilities	1,095.1		1,074.0		Total current liabilities	1,171.4		1,116.9
Long-term deferred revenues	Long-term deferred revenues	339.4		306.0		Long-term deferred revenues	328.7		328.7
Senior notes	Senior notes	1,787.4		1,785.7		Senior notes	1,788.5		1,787.9
Long-term tax and other liabilities	Long-term tax and other liabilities	64.9		78.6		Long-term tax and other liabilities	62.2		62.1
Total long-term liabilities	Total long-term liabilities	2,191.7		2,170.3		Total long-term liabilities	2,179.4		2,178.7
Total liabilities	Total liabilities	3,286.8		3,244.3		Total liabilities	3,350.8		3,295.6
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ deficit:	Stockholders’ deficit:					Stockholders’ deficit:
Preferred stock—par value $.001 per share; Authorized shares: 5.0; Issued and outstanding shares: none	Preferred stock—par value $.001 per share; Authorized shares: 5.0; Issued and outstanding shares: none	—		—		Preferred stock—par value $.001 per share; Authorized shares: 5.0; Issued and outstanding shares: none	—		—
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000.0; Issued shares: 354.5 at September 30, 2022 and 354.2 at December 31, 2021; Outstanding shares: 106.3 at September 30, 2022 and 110.5 at December 31, 2021		12,843.8		13,620.1
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000; Issued shares: 354.7 at March 31, 2023 and 354.5 at December 31, 2022; Outstanding shares: 104.3 at March 31, 2023 and 105.3 at December 31, 2022						Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000; Issued shares: 354.7 at March 31, 2023 and 354.5 at December 31, 2022; Outstanding shares: 104.3 at March 31, 2023 and 105.3 at December 31, 2022	12,434.2		12,644.5
Accumulated deficit	Accumulated deficit	(14,383.5)		(14,877.8)		Accumulated deficit	(14,025.3)		(14,204.0)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(2.7)		(2.8)		Accumulated other comprehensive loss	(2.7)		(2.7)
Total stockholders’ deficit	Total stockholders’ deficit	(1,542.4)		(1,260.5)		Total stockholders’ deficit	(1,593.8)		(1,562.2)
Total liabilities and stockholders’ deficit	Total liabilities and stockholders’ deficit	$	1,744.4	$	1,983.8	Total liabilities and stockholders’ deficit	$	1,757.0	$	1,733.4

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenues	Revenues	$	356.9	$	334.3	$	1,055.7	$	987.3	Revenues	$	364.4	$	346.9
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenues	Cost of revenues	50.0		47.8		150.2		142.6		Cost of revenues	49.9		50.7
Research and development	Research and development	21.0		19.6		64.2		59.7		Research and development	24.2		22.9
Selling, general and administrative	Selling, general and administrative	49.1		45.6		143.7		140.3		Selling, general and administrative	49.0		48.5
Total costs and expenses	Total costs and expenses	120.1		113.0		358.1		342.6		Total costs and expenses	123.1		122.1
Operating income	Operating income	236.8		221.3		697.6		644.7		Operating income	241.3		224.8
Interest expense	Interest expense	(18.8)		(18.8)		(56.5)		(64.4)		Interest expense	(18.8)		(18.8)
Non-operating income (loss), net		4.9		0.1		6.8		(1.5)
Non-operating income, net										Non-operating income, net	11.3		0.3
Income before income taxes	Income before income taxes	222.9		202.6		647.9		578.8		Income before income taxes	233.8		206.3
Income tax expense	Income tax expense	(53.4)		(46.0)		(153.6)		(124.1)		Income tax expense	(55.1)		(48.8)
Net income	Net income	169.5		156.6		494.3		454.7		Net income	178.7		157.5
Other comprehensive income		0.2		0.1		0.1		—
Other comprehensive loss										Other comprehensive loss	—		(0.2)
Comprehensive income	Comprehensive income	$	169.7	$	156.7	$	494.4	$	454.7	Comprehensive income	$	178.7	$	157.3

Earnings per share:	Earnings per share:									Earnings per share:
Basic	Basic	$	1.58	$	1.40	$	4.55	$	4.05	Basic	$	1.70	$	1.43
Diluted	Diluted	$	1.58	$	1.40	$	4.55	$	4.04	Diluted	$	1.70	$	1.43
Shares used to compute earnings per share	Shares used to compute earnings per share									Shares used to compute earnings per share
Basic	Basic	107.1		111.7		108.7		112.4		Basic	104.9		110.2
Diluted	Diluted	107.1		111.8		108.7		112.5		Diluted	105.0		110.3

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions)

(Unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Total stockholders’ deficit, beginning of period	Total stockholders’ deficit, beginning of period	$	(1,455.0)	$	(1,417.9)	$	(1,260.5)	$	(1,390.2)	Total stockholders’ deficit, beginning of period	$	(1,562.2)	$	(1,260.5)

Common stock and additional paid-in capital	Common stock and additional paid-in capital									Common stock and additional paid-in capital
Beginning balance	Beginning balance	13,100.9		13,949.5		13,620.1		14,275.2		Beginning balance	12,644.5		13,620.1
Repurchase of common stock	Repurchase of common stock	(277.9)		(175.6)		(834.0)		(536.8)		Repurchase of common stock	(230.5)		(204.6)
Stock-based compensation	Stock-based compensation	16.7		14.9		45.4		42.3		Stock-based compensation	14.1		14.5
Issuance of common stock under stock plans	Issuance of common stock under stock plans	4.1		4.3		12.3		12.4		Issuance of common stock under stock plans	8.0		8.2
Excise tax on repurchase of common stock										Excise tax on repurchase of common stock	(1.9)		—
Balance, end of period	Balance, end of period	12,843.8		13,793.1		12,843.8		13,793.1		Balance, end of period	12,434.2		13,438.2

Accumulated deficit	Accumulated deficit									Accumulated deficit
Beginning balance	Beginning balance	(14,553.0)		(15,364.5)		(14,877.8)		(15,662.6)		Beginning balance	(14,204.0)		(14,877.8)
Net income	Net income	169.5		156.6		494.3		454.7		Net income	178.7		157.5
Balance, end of period	Balance, end of period	(14,383.5)		(15,207.9)		(14,383.5)		(15,207.9)		Balance, end of period	(14,025.3)		(14,720.3)

Accumulated other comprehensive loss	Accumulated other comprehensive loss									Accumulated other comprehensive loss
Beginning balance	Beginning balance	(2.9)		(2.9)		(2.8)		(2.8)		Beginning balance	(2.7)		(2.8)
Other comprehensive income		0.2		0.1		0.1		—
Other comprehensive loss										Other comprehensive loss	—		(0.2)
Balance, end of period	Balance, end of period	(2.7)		(2.8)		(2.7)		(2.8)		Balance, end of period	(2.7)		(3.0)

Total stockholders’ deficit, end of period	Total stockholders’ deficit, end of period	$	(1,542.4)	$	(1,417.6)	$	(1,542.4)	$	(1,417.6)	Total stockholders’ deficit, end of period	$	(1,593.8)	$	(1,285.1)

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERISIGN, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	494.3	$	454.7	Net income	$	178.7	$	157.5
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment	Depreciation of property and equipment	35.2		35.6		Depreciation of property and equipment	11.6		11.9
Stock-based compensation expense	Stock-based compensation expense	44.2		41.0		Stock-based compensation expense	13.8		14.2
Other, net	Other, net	0.7		5.4		Other, net	(2.9)		0.6
Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other assets	Other assets	(2.5)		(19.7)		Other assets	1.9		8.3
Accounts payable and accrued liabilities	Accounts payable and accrued liabilities	(26.8)		(5.5)		Accounts payable and accrued liabilities	11.6		(14.9)
Deferred revenues	Deferred revenues	82.1		94.9		Deferred revenues	41.8		28.3
Net deferred income taxes and other long-term tax liabilities	Net deferred income taxes and other long-term tax liabilities	(13.0)		(5.5)		Net deferred income taxes and other long-term tax liabilities	2.5		1.2
Net cash provided by operating activities	Net cash provided by operating activities	614.2		600.9		Net cash provided by operating activities	259.0		207.1
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Proceeds from maturities and sales of marketable securities	Proceeds from maturities and sales of marketable securities	1,475.0		2,246.1		Proceeds from maturities and sales of marketable securities	562.0		696.0
Purchases of marketable securities	Purchases of marketable securities	(909.3)		(2,421.7)		Purchases of marketable securities	(146.5)		(164.9)
Purchases of property and equipment	Purchases of property and equipment	(19.7)		(39.5)		Purchases of property and equipment	(5.7)		(6.6)
Net cash provided by (used in) investing activities		546.0		(215.1)
Net cash provided by investing activities						Net cash provided by investing activities	409.8		524.5
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repurchases of common stock	Repurchases of common stock	(834.0)		(536.8)		Repurchases of common stock	(230.5)		(204.6)
Proceeds from employee stock purchase plan	Proceeds from employee stock purchase plan	12.3		12.4		Proceeds from employee stock purchase plan	8.0		8.2
Repayment of borrowings		—		(750.0)
Proceeds from senior note issuance, net of issuance costs		—		741.1
Net cash used in financing activities	Net cash used in financing activities	(821.7)		(533.3)		Net cash used in financing activities	(222.5)		(196.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1.4)		(0.6)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(0.2)		(0.1)
Net increase (decrease) in cash, cash equivalents, and restricted cash		337.1		(148.1)
Net increase in cash, cash equivalents, and restricted cash						Net increase in cash, cash equivalents, and restricted cash	446.1		535.1
Cash, cash equivalents, and restricted cash at beginning of period	Cash, cash equivalents, and restricted cash at beginning of period	228.8		410.6		Cash, cash equivalents, and restricted cash at beginning of period	379.0		228.8
Cash, cash equivalents, and restricted cash at end of period	Cash, cash equivalents, and restricted cash at end of period	$	565.9	$	262.5	Cash, cash equivalents, and restricted cash at end of period	$	825.1	$	763.9
Supplemental cash flow disclosures:	Supplemental cash flow disclosures:					Supplemental cash flow disclosures:
Cash paid for interest	Cash paid for interest	$	49.6	$	61.8	Cash paid for interest	$	13.1	$	13.1
Cash paid for income taxes, net of refunds received	Cash paid for income taxes, net of refunds received	$	159.6	$	132.2	Cash paid for income taxes, net of refunds received	$	18.3	$	2.2

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

VERISIGN, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1. Basis of Presentation

Interim Financial Statements

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared by VeriSign, Inc. (“Verisign” or the “Company”) in accordance with the instructions to Form 10-Q pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) and, therefore, do not include all information and notes normally provided in audited financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals and other adjustments) considered necessary for a fair presentation have been included. The results of operations for any interim period are not necessarily indicative of, nor comparable to, the results of operations for any other interim period or for a full fiscal year. These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes contained in Verisign’s Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~“2021~~“2022 Form 10-K”) filed with the SEC on February ~~18, 2022.~~

~~Reclassifications~~

~~Certain reclassifications have been made to prior period amounts to conform to current period presentation. Such reclassifications have no effect on net income as previously reported.~~17, 2023.

Note 2. Financial Instruments

Cash, Cash Equivalents, and Marketable Securities

The following table summarizes the Company’s cash, cash equivalents, and marketable securities and the fair value categorization of the financial instruments measured at fair value on a recurring basis:


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
		(In millions)					(In millions)
Cash	Cash	$	24.0	$	25.8	Cash	$	25.3	$	27.0
Time deposits	Time deposits	3.9		3.7		Time deposits	4.4		4.1
Money market funds (Level 1)	Money market funds (Level 1)	330.9		165.6		Money market funds (Level 1)	169.2		178.6
Debt securities issued by the U.S. Treasury (Level 1)	Debt securities issued by the U.S. Treasury (Level 1)	626.7		1,016.0		Debt securities issued by the U.S. Treasury (Level 1)	821.4		776.1
Total	Total	$	985.5	$	1,211.1	Total	$	1,020.3	$	985.8

Cash and cash equivalents	Cash and cash equivalents	$	560.6	$	223.5	Cash and cash equivalents	$	819.8	$	373.6
Restricted cash (included in Other long-term assets)	Restricted cash (included in Other long-term assets)	5.3		5.3		Restricted cash (included in Other long-term assets)	5.3		5.4
Total Cash, cash equivalents, and restricted cash	Total Cash, cash equivalents, and restricted cash	565.9		228.8		Total Cash, cash equivalents, and restricted cash	825.1		379.0
Marketable securities	Marketable securities	419.6		982.3		Marketable securities	195.2		606.8
Total	Total	$	985.5	$	1,211.1	Total	$	1,020.3	$	985.8

The gross and net unrealized gains and losses included in the fair value of the debt securities were not significant for the periods presented. All of the debt securities held as of ~~September 30, 2022~~March 31, 2023 are scheduled to mature in less than one year.

Fair Value Measurements

The fair value of the Company’s investments in money market funds approximates their face value. Such instruments are included in Cash and cash equivalents. The fair value of the debt securities consisting of U.S. Treasury bills is based on their quoted market prices. Debt securities purchased with original maturities in excess of three months are included in Marketable securities. The fair value of all of these financial instruments are classified as Level 1 in the fair value hierarchy.

The Company’s other financial instruments include cash, accounts receivable, restricted cash, and accounts payable. As of ~~September 30, 2022,~~March 31, 2023, the carrying value of these financial instruments approximated their fair value. The aggregate fair value of the Company’s senior notes is ~~$1.62~~$1.69 billion and ~~$1.88~~$1.65 billion as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. The fair values of these debt instruments are based on available market information from public data sources and are classified as Level 2.

Table of Contents

Note 3. Selected Balance Sheet Items

~~Other Current Assets~~

~~Other current assets consist of the following:~~

September 30, December 31,
2022 2021
(In millions)
Prepaid expenses $ 30.2 $ 24.8
Prepaid registry fees 24.7 24.2
Taxes receivable 7.7 7.7
Accounts receivable, net 5.2 5.3
Other 0.5 0.9
Total other current assets $ 68.3 $ 62.9

~~Other Long-Term Assets~~

~~Other long-term assets consist of the following:~~

September 30, December 31,
2022 2021
(In millions)
Long-term prepaid registry fees $ 9.5 $ 8.7
Operating lease right-of-use asset 8.5 8.4
Long-term prepaid expenses 7.3 11.0
Restricted cash 5.3 5.3
Other 2.1 2.3
Total other long-term assets $ 32.7 $ 35.7

The current and long-term prepaid registry fees in the tables above relate to the fees the Company pays to Internet Corporation for Assigned Names and Numbers (“ICANN”) for each annual increment of .~~com~~ domain name registrations and renewals which are deferred and amortized over the domain name registration term. The amount of prepaid registry fees as of September 30, 2022 reflects amortization of $9.9 million and $29.6 million during the three and nine months ended September 30, 2022 which was recorded in Cost of Revenues.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
		(In millions)					(In millions)
Accounts payable and accrued expenses	Accounts payable and accrued expenses	$	7.9	$	9.0	Accounts payable and accrued expenses	$	6.6	$	9.8
Customer deposits	Customer deposits	55.6		77.3		Customer deposits	71.9		72.0
Taxes payable						Taxes payable	71.8		37.4
Accrued employee compensation	Accrued employee compensation	47.9		58.5		Accrued employee compensation	36.7		59.0
Taxes payable		32.9		26.8
Interest payable	Interest payable	24.6		19.5		Interest payable	24.6		19.5
Accrued registry fees	Accrued registry fees	14.9		12.9		Accrued registry fees	14.2		12.7
Customer incentives payable	Customer incentives payable	6.2		13.3		Customer incentives payable	5.3		7.1
Other accrued liabilities	Other accrued liabilities	9.0		9.3		Other accrued liabilities	8.1		9.0
Total accounts payable and accrued liabilities	Total accounts payable and accrued liabilities	$	199.0	$	226.6	Total accounts payable and accrued liabilities	$	239.2	$	226.5

~~Table of Contents~~

~~The~~Taxes payable reflects amounts accrued for the income tax provision and payments made during the period. This balance ~~of Customer deposits varies~~fluctuates from period to period due to the timing of income tax payments ~~from certain large customers.~~in the Company’s major tax jurisdictions. Accrued employee compensation primarily consists of liabilities for employee leave, salaries, payroll taxes, employee contributions to the employee stock purchase plan, and incentive compensation. Accrued employee incentive compensation as of December 31, ~~2021~~2022 was paid during the ~~nine~~three months ended ~~September 30, 2022. Customer incentives~~March 31, 2023. Interest payable ~~includes amounts related to rebates payable to registrars. These amounts may vary from period to period~~varies at each period-end based on the payment due ~~to the timing of payments and the amount of rebates earned.~~

~~Long-term Tax and Other Liabilities~~

~~Long-term tax and other liabilities consist of the following:~~

September 30, December 31,
2022 2021
(In millions)
Long-term tax liabilities $ 62.9 $ 76.1
Long-term operating lease liabilities 2.0 2.5
Long-term tax and other liabilities $ 64.9 $ 78.6

Long-term tax liabilities as of September 30, 2022 reflects a $14.5 million reclassification from long-term to current of the next installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.dates for each Senior Note issuance.

Note 4. ~~Stockholders’ Deficit~~Share Repurchases

Effective ~~February 10,~~October 27, 2022, ~~the Company’s~~our Board of Directors authorized the repurchase of ~~its~~our common stock in the amount of ~~$705.4~~$803.0 million in addition to the ~~$294.6~~$197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.00 billion under the program. The program has no expiration date. Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions. During the three and nine months ended September 30, 2022, the Company repurchased 1.5 million shares and 4.4 million shares of its common stock, respectively, at an average stock price of $180.59 and $186.46, respectively. The aggregate cost of the repurchases in the three and nine months ended September 30, 2022 was $275.5 million and $820.4 million, respectively. As of ~~September 30, 2022,~~March 31, 2023 there was ~~$267.6~~approximately $638.8 million remaining available for future share repurchases under the share repurchase program. Effective October 27, 2022, the Company’s Board of Directors authorized the repurchase of its common stock in the amount of $803.0 million, in addition to the $197.0 million that remained available for repurchases under the ~~share repurchase program, for a total repurchase authorization of up to $1.00 billion under the~~ program.

During the nine months ended September 30, 2022, the Company placed less than 0.1 million shares, at an average stock price of $203.57, and for an aggregate cost of $13.6 million, into treasury stock for purposes relatedThe Company’s share repurchases are as following. Amounts may not add up due to ~~tax withholding upon vesting of Restricted Stock Units (“RSUs”).~~rounding:


	Three Months Ended March 31, 2023
	Shares	Total Costs		Average Price
	(In millions, except average price amounts)
Total repurchases under the repurchase plans	1.1	$	220.0	$	205.60
Total repurchases for tax withholdings	0.1	10.5		$	210.01
Total repurchases	1.1	$	230.5	$	205.80

Since inception, the Company has repurchased ~~248.1~~250.4 million shares of its common stock for an aggregate cost of ~~$12.54~~$12.98 billion, which is ~~presented~~recorded as a reduction of Additional paid-in capital. The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022. In the first quarter of 2023, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheet as of March 31, 2023. The share repurchase and authorization amounts disclosed in this Form 10-Q exclude the excise tax.

Table of Contents

Note 5. Calculation of Earnings per Share

The following table presents the computation of weighted-average shares used in the calculation of basic and diluted earnings per share:


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2022	2021	2022	2021		2023	2022
		(In millions)					(In millions)
Weighted-average shares of common stock outstanding	Weighted-average shares of common stock outstanding	107.1	111.7	108.7	112.4	Weighted-average shares of common stock outstanding	104.9	110.2
Weighted-average potential shares of common stock outstanding:	Weighted-average potential shares of common stock outstanding:					Weighted-average potential shares of common stock outstanding:
Unvested RSUs and ESPP	Unvested RSUs and ESPP	—	0.1	—	0.1	Unvested RSUs and ESPP	0.1	0.1
Shares used to compute diluted earnings per share	Shares used to compute diluted earnings per share	107.1	111.8	108.7	112.5	Shares used to compute diluted earnings per share	105.0	110.3

The calculation of diluted weighted average shares outstanding excludes performance-based RSUs granted by the Company for which the relevant performance criteria have not been achieved and any awards that are antidilutive. The number of potential shares excluded from the calculation was not significant in any period presented.

~~Table of Contents~~

Note 6. Revenues

The Company generates revenues in the U.S.; Europe, the Middle East and Africa (“EMEA”); China; and certain other countries, including Canada, ~~Australia,~~Japan, and ~~Japan.~~Singapore.

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In millions)									(In millions)
U.S.	U.S.	$	236.3	$	214.3	$	691.8	$	632.4	U.S.	$	242.8	$	224.6
EMEA	EMEA	55.0		58.6		170.0		172.7		EMEA	55.0		58.6
China	China	26.8		25.2		79.3		76.3		China	25.1		25.1
Other	Other	38.8		36.2		114.6		105.9		Other	41.5		38.6
Total revenues	Total revenues	$	356.9	$	334.3	$	1,055.7	$	987.3	Total revenues	$	364.4	$	346.9

Revenues in the table above are attributed to the country of domicile and the respective regions in which registrars are located; however, this may differ from the regions where the registrars operate or where registrants are located. Revenues for each region may be impacted by registrars reincorporating, relocating, or from acquisitions or changes in affiliations of resellers. Revenues for each region may also be impacted by registrars domiciled in one region, registering domain names in another region.

Deferred Revenues

As payments for domain name registrations and renewals are due in advance of our performance, we record these amounts as deferred revenues. The increase in the deferred revenues balance for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 was primarily driven by amounts billed in the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and ~~$719.6~~$324.5 million of revenues recognized that were included in the deferred revenues balance at the beginning of the period. The ~~higher deferred revenue balance as of September 30, 2022 also reflects an increase in the volume of early renewal transactions that occurred before the~~ ~~.com~~ ~~price increase became effective on September 1, 2022. The~~ balance of deferred revenues as of ~~September 30, 2022~~March 31, 2023 represents our aggregate remaining performance obligations. Amounts included in current deferred revenues are all expected to be recognized in revenues within 12 months, except for a portion of deferred revenues that relates to domain name renewals that are deleted in the 45-day grace period following the transaction. The long-term deferred revenues amounts will be recognized in revenues over several years and in some cases up to 10 years.

Table of Contents

Note 7. Stock-based Compensation

Stock-based compensation is classified in the Condensed Consolidated Statements of Comprehensive Income in the same expense line items as cash compensation. The following table presents the classification of stock-based compensation:

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
(In millions)
Cost of revenues $ 1.8 $ 1.6 $ 5.3 $ 4.9
Research and development 2.5 2.2 7.2 6.1
Selling, general and administrative 12.0 10.6 31.7 30.0
Stock-based compensation expense 16.3 14.4 44.2 41.0
Capitalization (included in Property and equipment, net) 0.4 0.5 1.2 1.3
Total stock-based compensation $ 16.7 $ 14.9 $ 45.4 $ 42.3

~~Table of Contents~~


	Three Months Ended March 31,
	2023		2022
	(In millions)
Cost of revenues	$	1.3	$	1.7
Research and development	2.5		2.4
Selling, general and administrative	10.0		10.1
Stock-based compensation expense	13.8		14.2
Capitalization (included in Property and equipment, net)	0.3		0.3
Total stock-based compensation	$	14.1	$	14.5

The following table presents the nature of the Company’s total stock-based compensation:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
		(In millions)									(In millions)
RSUs	RSUs	$	12.3	$	11.9	$	33.2	$	31.8	RSUs	$	10.9	$	10.2
Performance-based RSUs	Performance-based RSUs	3.3		1.9		9.0		7.3		Performance-based RSUs	2.1		3.2
ESPP	ESPP	1.1		1.1		3.2		3.2		ESPP	1.1		1.1
Total stock-based compensation	Total stock-based compensation	$	16.7	$	14.9	$	45.4	$	42.3	Total stock-based compensation	$	14.1	$	14.5

Note 8. Non-operating Income, Net

Non-operating income, net, primarily consists of interest income from the Company’s surplus cash balances and marketable securities. Interest income was $10.7 million and $0.3 million during the three months ended March 31, 2023 and 2022, respectively. The increase in interest income in the first quarter of 2023 reflects higher interest rates on the Company’s investments in debt securities.

Note 9. Income Taxes

The following table presents Income tax expense and the effective tax rate:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2022			2021			2022			2021				2023			2022
		(Dollars in millions)													(Dollars in millions)
Income tax expense	Income tax expense	$	53.4		$	46.0		$	153.6		$	124.1		Income tax expense	$	55.1		$	48.8
Effective tax rate	Effective tax rate	24		%	23		%	24		%	21		%	Effective tax rate	24		%	24		%

The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21%, due to state income taxes and U.S. taxes on foreign earnings, net of foreign tax credits, partially offset by a lower foreign effective tax rate. The effective tax rate in the three and nine months ended September 30, 2022 reflects an increased foreign effective tax rate primarily as a result of the transfer of intellectual property between certain non-U.S. subsidiaries that took place in the fourth quarter of 2021.

1110

Table of Contents

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with the ~~2021~~2022 Form 10-K and the interim unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item I of this Quarterly Report on Form 10-Q.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties, including, among other things, statements regarding our expectations about the ~~impact from the effects of the COVID-19 pandemic and the~~ sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility. Forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part I, Item 1A of the ~~2021~~2022 Form 10-K. You should also carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in ~~2022.~~2023. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.

For purposes of this Quarterly Report on Form 10-Q, the terms “Verisign,” “the Company,” “we,” “us,” and “our” refer to VeriSign, Inc. and its consolidated subsidiaries.

Overview

We are a global provider of domain name registry services and internet infrastructure, enabling internet navigation for many of the world’s most recognized domain names. We enable the security, stability, and resiliency of key internet infrastructure and services, including providing root zone maintainer services, operating two of the 13 global internet root servers, and providing registration services and authoritative resolution for the .com and .net generic top-level domains (“~~TLDs”~~gTLDs”), which support the majority of global e-commerce.

As of ~~September 30, 2022,~~March 31, 2023, we had ~~174.2~~174.8 million .com and .net registrations in the domain name base. The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users, which is partially driven by greater availability of internet access, as well as marketing activities carried out by us and our registrars. Growth in the number of domain name registrations under our management may be hindered by certain factors, including overall economic conditions, competition from country code top-level domains (“ccTLDs”), other ~~generic top-level domains (“gTLDs”),~~gTLDs, services that offer alternatives for an online presence, such as social media, and ongoing changes in the internet practices and behaviors of consumers and businesses. Factors such as the evolving practices and preferences of internet users, and how they navigate the internet, as well as the motivation of domain name registrants and how they will manage their investment in domain names, can negatively impact our business and the demand for new domain name registrations and renewals.

Business Highlights and Trends

•We recorded revenues of ~~$356.9 million and $1,055.7~~$364.4 million during the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, an increase of 5% compared to the same period in 2022.

•We recorded operating income of $241.3 million during the three months ended March 31, 2023, an increase of 7% compared to the same ~~periods~~period in ~~2021.~~

•We recorded operating income of $236.8 million and $697.6 million during the three and nine months ended September 30, 2022, an increase of 7% and 8%, respectively, compared to the same periods in 2021.2022.

•As of ~~September 30, 2022,~~March 31, 2023, we had ~~174.2~~174.8 million .com and .net registrations in the domain name base, which represents a 1%0.1% increase from ~~September 30, 2021,~~March 31, 2022, and a net ~~decrease~~increase of ~~0.2~~1.0 million domain name registrations from ~~June 30,~~December 31, 2022. The net decrease in the domain name base from June 30, 2022, was driven primarily by decreased demand for domain name registrations compared with the higher demand observed during the first 12 to 18 months of the COVID-19 pandemic, recent global economic uncertainty, and reduced demand, primarily in China, for new domain name registrations and renewals.

•During the three months ended ~~September 30, 2022,~~March 31, 2023, we processed ~~9.9~~10.3 million new domain name registrations for .com and .net compared to ~~10.7~~10.2 million for the same period in ~~2021.~~2022.

•The final .com and .net renewal rate for the ~~second~~fourth quarter of 2022 was ~~73.8%~~73.3% compared to ~~75.4%~~74.8% for the ~~second~~fourth quarter of 2021. Renewal rates are not fully measurable until 45 days after the end of the quarter.

~~Table of Contents~~

•During the three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased ~~1.5~~1.1 million shares of our common stock for an aggregate cost of ~~$275.5~~$220.0 million. As of ~~September 30, 2022,~~March 31, 2023, there was approximately ~~$267.6~~$638.8 million remaining available for future share repurchases under our share repurchase program.

•Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $803.0 million, in addition to the $197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.00 billion under the program.

•We generated cash flows from operating activities of ~~$614.2~~$259.0 million during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to ~~$600.9~~$207.1 million for the same period in ~~2021.~~2022.

•Table of Contents~~On July 28, 2022, we announced that we will increase the annual registry-level wholesale fee for each new and renewal~~ ~~.net~~ ~~domain name registration from $9.02 to $9.92, effective February 1, 2023.~~

Pursuant to our agreements with the Internet Corporation for Assigned Names and Numbers (“ICANN”), we make available files containing all active domain names registered in the .com and .net registries. Further, we also make available a summary of the active zone count registered in the .com and .net registries and the number of .com and .net domain name registrations in the domain name base. The zone counts and information on how to obtain access to the zone files can be found at https://www.Verisign.com/zone. The domain name base is the active zone plus the number of domain names that are registered but not configured for use in the respective top-level domain zone file plus the number of domain names that are in a client or server hold status. The domain name base may also reflect compensated or uncompensated judicial or administrative actions to add or remove from the active zone an immaterial number of domain names. These files and the related summary data are updated daily. The update times may vary each day. The number of domain names provided in this Form 10-Q are as of midnight of the date reported.

~~COVID-19 Update~~

As discussed in prior periods, we believe that the effects of the COVID-19 pandemic initially led to an incremental increase in the demand for domain names, particularly as businesses and entrepreneurs sought to establish or expand their presence online in the beginning of the pandemic. This incremental increased demand appears to have subsided. For further discussion, see “Risk Factors – The effects of the COVID-19 pandemic have impacted how we operate our business, and the extent to which the effects of the pandemic will impact our business, operations, financial condition and results of operations remains uncertain” in Part I, Item 1A of the 2021 Form 10-K.

Results of Operations

The following table presents information regarding our results of operations as a percentage of revenues:


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenues	Revenues	100.0	%	100.0	%	100.0	%	100.0	%	Revenues	100.0	%	100.0	%
Costs and expenses:	Costs and expenses:									Costs and expenses:
Cost of revenues	Cost of revenues	14.0		14.3		14.2		14.4		Cost of revenues	13.7		14.6
Research and development	Research and development	5.9		5.9		6.1		6.0		Research and development	6.6		6.6
Selling, general and administrative	Selling, general and administrative	13.8		13.6		13.6		14.3		Selling, general and administrative	13.5		14.0

Total costs and expenses	Total costs and expenses	33.7		33.8		33.9		34.7		Total costs and expenses	33.8		35.2
Operating income	Operating income	66.3		66.2		66.1		65.3		Operating income	66.2		64.8
Interest expense	Interest expense	(5.3)		(5.6)		(5.4)		(6.5)		Interest expense	(5.2)		(5.4)
Non-operating income (loss), net		1.5		—		0.7		(0.2)
Non-operating income, net										Non-operating income, net	3.2		0.1
Income before income taxes	Income before income taxes	62.5		60.6		61.4		58.6		Income before income taxes	64.2		59.5
Income tax expense	Income tax expense	(15.0)		(13.7)		(14.6)		(12.5)		Income tax expense	(15.2)		(14.1)
Net income	Net income	47.5	%	46.9	%	46.8	%	46.1	%	Net income	49.0	%	45.4	%

Revenues

Our revenues are primarily derived from registrations for domain names in the .com and .net domain name registries. We also derive revenues from operating domain name registries and technical systems for several other ~~TLDs,~~gTLDs and ccTLDs, all of which are not significant in relation to our consolidated revenues. For domain names registered in the .com and .net registries we receive a fee from registrars per annual registration that is determined pursuant to our agreements with ICANN. Individual customers, called registrants, contract directly with registrars or their resellers, and the registrars, who are our direct customers, in turn register the

~~Table of Contents~~

domain names with Verisign. Changes in revenues are driven largely by changes in the number of new domain name registrations and the renewal rate for existing registrations as well as the impact of new and prior price increases, to the extent permitted by ICANN and the Department of Commerce (“DOC”). New registrations and the renewal rate for existing registrations are impacted by continued growth in online advertising, e-commerce, and the number of internet users, as well as marketing activities carried out by us and our registrars. We also offer promotional incentive-based discount programs to registrars based upon market conditions and the business environment in which the registrars operate.

Under the .com Registry Agreement, we are permitted to increase the price of a .com domain name by up to 7% in each of the final four years of each six-year period beginning on October 26, 2018. We increased the annual registry-level wholesale fee for each new and renewal .com domain name registration from ~~$7.85 to $8.39 effective September 1, 2021, and from~~ $8.39 to $8.97 effective September 1, 2022. On February 9, 2023, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .com domain name registration from $8.97 to $9.59, effective September 1, 2023. We have the contractual right to increase the fees for .net domain name registrations by up to 10% each year during the term of our agreement with ICANN, through June 30, 2023. ~~On July 28, 2022,~~Effective February 1, 2023, we ~~announced that we will increase~~increased the annual registry-level wholesale fee for each new and renewal .net domain name registration from $9.02 to ~~$9.92, effective February 1, 2023.~~$9.92. All fees paid to us for .com and .net registrations are in U.S. dollars.

A comparison of revenues is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2022 % Change 2021 2022 % Change 2021
(Dollars in millions)
Revenues $ 356.9 7% $ 334.3 $ 1,055.7 7% $ 987.3


	Three Months Ended March 31,
	2023		% Change	2022
	(Dollars in millions)
Revenues	$	364.4	5%	$	346.9

Table of Contents

The following table compares the .com and .net domain name registrations in the domain name base:

~~September 30, 2022~~March 31, 2023

% Change

~~September 30, 2021~~March 31, 2022

.com and .net domain name registrations in the domain name base

~~174.2~~174.8 million

1%—%

~~172.1~~174.7 million

Revenues increased by ~~$22.6 million and $68.4~~$17.5 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, as compared to the same ~~periods~~period last year, primarily due to an increase in revenues from the operation of the registry for the .com ~~TLD driven~~gTLD supported by the price ~~increase~~increases that became effective September 1, ~~2021,~~2022 and ~~to a lesser extent, an~~2021. This increase in revenue was partially offset by the ~~domain name base for~~elimination of revenue from the operation of the .~~com~~tv. ccTLD which was transitioned to another service provider in the fourth quarter of 2022.

Demand for domain names has been primarily driven by continued internet growth and marketing activities carried out by us and our registrars. However, competitive pressure from ccTLDs, other gTLDs, services that offer alternatives for an online presence, such as social media, ongoing changes in internet practices and behaviors of consumers and business, as well as the motivation of existing domain name registrants managing their investment in domain names, such as for resale at increased prices or for revenue generation through website advertising, and global economic uncertainty, has limited the demand for domain names and may do so in the remainder of ~~2022~~2023 and beyond.

Geographic revenues

We generate revenues in the U.S.; Europe, the Middle East and Africa (“EMEA”); China; and certain other countries, including Canada, ~~Australia,~~Japan, and ~~Japan.~~Singapore.

The following table presents a comparison of our geographic revenues:


		Three Months Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
		2022		% Change	2021		2022		% Change	2021			2023		% Change	2022
		(Dollars in millions)											(Dollars in millions)
U.S.	U.S.	$	236.3	10%	$	214.3	691.8		9%	$	632.4	U.S.	$	242.8	8%	$	224.6
EMEA	EMEA	55.0		(6)%	58.6		170.0		(2)%	172.7		EMEA	55.0		(6)%	58.6
China	China	26.8		6%	25.2		79.3		4%	76.3		China	25.1		—%	25.1
Other	Other	38.8		7%	36.2		114.6		8%	105.9		Other	41.5		8%	38.6
Total revenues	Total revenues	$	356.9		$	334.3	$	1,055.7		$	987.3	Total revenues	$	364.4		$	346.9

Revenues in the table above are attributed to the country of domicile and the respective regions in which our registrars are located; however, this may differ from the regions where the registrars operate or where registrants are located. Revenue growth for each region may be impacted by registrars reincorporating, relocating, or from acquisitions or changes in affiliations of resellers. Revenues in the U.S. benefited from several such changes during ~~2022,~~the first quarter of 2023, while revenues in EMEA were negatively impacted. Revenue growth for each region may also be impacted by registrars domiciled in one region, registering domain names in another region. Revenues increased in ~~all regions for~~ the ~~periods presented except~~U.S. and certain other countries during the three months ended March 31, 2023 compared to the same period last year. Revenues in China remained consistent and revenues in EMEA ~~which~~ declined in the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023, compared to the same period last year, due to the factors described above.

~~Table of Contents~~

Cost of revenues

Cost of revenues consist primarily of salaries and employee benefits expenses for our personnel who manage the operational systems, depreciation expenses, operational costs associated with the delivery of our services, fees paid to ICANN, customer support and training, costs of facilities and computer equipment used in these activities, telecommunications expense and allocations of indirect costs such as corporate overhead.

A comparison of ~~Cost~~cost of revenues is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2022 % Change 2021 2022 % Change 2021
(Dollars in millions)
Cost of revenues $ 50.0 5% $ 47.8 $ 150.2 5% $ 142.6


	Three Months Ended March 31,
	2023		% Change	2022
	(Dollars in millions)
Cost of revenues	$	49.9	(2)%	$	50.7

Cost of revenues ~~increased~~decreased by ~~$2.2 million and $7.6~~$0.8 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, compared to the same ~~periods~~period last year, due to a combination of individually insignificant ~~factors.~~factors, including the elimination of the registry fees for the .tv ccTLD which was transitioned to another service provider in the fourth quarter of 2022.

Table of Contents

Research and development

Research and development expenses consist primarily of costs related to research and development personnel, including salaries and other personnel-related expenses, consulting fees, facilities costs, computer and communications equipment, support services used in our service and technology development, and allocations of indirect costs such as corporate overhead.

A comparison of ~~Research~~research and development expenses is presented below:

Three Months Ended September 30, Nine Months Ended September 30,
2022 % Change 2021 2022 % Change 2021
(Dollars in millions)
Research and development $ 21.0 7% $ 19.6 $ 64.2 8% $ 59.7


	Three Months Ended March 31,
	2023		% Change	2022
	(Dollars in millions)
Research and development	$	24.2	6%	$	22.9

Research and development expenses increased by ~~$1.4 million and $4.5~~$1.3 million during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, compared to the same ~~periods~~period last year, due to a combination of individually insignificant factors.

Selling, general and administrative

Selling, general and administrative expenses consist primarily of salaries and other personnel-related expenses for our executive, administrative, legal, finance, information technology, human resources, sales, and marketing personnel, travel and related expenses, trade shows, costs of computer and communications equipment and support services, consulting and professional service fees, costs of marketing programs, costs of facilities, management information systems, support services, and certain tax and license fees, offset by allocations of indirect costs such as facilities and shared services expenses to other cost types.

A comparison of ~~Selling,~~selling, general and administrative expenses is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2022 % Change 2021 2022 % Change 2021
(Dollars in millions)
Selling, general and administrative $ 49.1 8% $ 45.6 $ 143.7 2% $ 140.3


	Three Months Ended March 31,
	2023		% Change	2022
	(Dollars in millions)
Selling, general and administrative	$	49.0	1%	$	48.5

Selling, general and administrative expenses increased by ~~$3.5~~$0.5 million during the three months ended ~~September 30, 2022,~~March 31, 2023, compared to the same period last year, due to a combination of individually insignificant factors.

Selling, general and administrative expenses increased by $3.4 million during the nine months ended September 30, 2022, compared to the same period last year, primarily due to increases in equipment and software expenses and several other individually insignificant factors. Equipment and software expenses increased by $2.6 million due to expenses related to network security and other software services.

Interest expense

Interest expense remained consistent during the three months ended ~~September 30, 2022. Interest expense decreased by $7.9 million in the nine months ended September 30, 2022,~~March 31, 2023 compared to the same period last ~~year, due to the lower interest rate on our 2031 Notes compared to the 2023 Notes which were refinanced in the second quarter of 2021.~~

~~Table of Contents~~

year.

Non-operating income, ~~(loss),~~ net

Non-operating income, ~~(loss),~~ net increased by ~~$4.8~~$11.0 million ~~and $8.3 million in~~during the three ~~and nine~~ months ended ~~September 30, 2022, respectively,~~March 31, 2023, compared to the same ~~periods~~period last year, primarily due to an increase in interest income driven by higher interest rates on our investments in debt ~~securities and the $2.1 million loss on extinguishment of debt recognized in the second quarter of 2021.~~securities.

Income tax expense

The following table presents Income tax expense and the effective tax rate:


		Three Months Ended September 30,						Nine Months Ended September 30,							Three Months Ended March 31,
		2022			2021			2022			2021				2023			2022
		(Dollars in millions)													(Dollars in millions)
Income tax expense	Income tax expense	$	53.4		$	46.0		$	153.6		$	124.1		Income tax expense	$	55.1		$	48.8
Effective tax rate	Effective tax rate	24		%	23		%	24		%	21		%	Effective tax rate	24		%	24		%

The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21%, due to state income taxes and U.S. taxes on foreign earnings, net of foreign tax credits, offset by a lower foreign effective tax rate. ~~The foreign effective tax rate increased in the three and nine months ended September 30, 2022 compared to the same periods~~

Table of ~~the prior year, primarily as a result of the transfer of intellectual property between certain non-U.S. subsidiaries that took place in the fourth quarter of 2021.~~Contents

Liquidity and Capital Resources

The following table presents our principal sources of liquidity:


		September 30,		December 31,			March 31,		December 31,
		2022		2021			2023		2022
		(In millions)					(In millions)
Cash and cash equivalents	Cash and cash equivalents	$	560.6	$	223.5	Cash and cash equivalents	$	819.8	$	373.6
Marketable securities	Marketable securities	419.6		982.3		Marketable securities	195.2		606.8
Total	Total	$	980.2	$	1,205.8	Total	$	1,015.0	$	980.4

The marketable securities primarily consist of debt securities issued by the U.S. Treasury meeting the criteria of our investment policy, which is focused on the preservation of our capital through investment in investment grade securities. The cash equivalents consist of amounts invested in money market funds, time deposits and U.S. Treasury bills purchased with original maturities of three months or less. As of ~~September 30, 2022,~~March 31, 2023, all of our debt securities have contractual maturities of less than one year. Our cash and cash equivalents are readily accessible. For additional information on our investment portfolio, see Note 2, “Financial Instruments,” of our Notes to Condensed Consolidated Financial Statements in Part I, Item I of this Quarterly Report on Form 10-Q.

During the three months ended ~~September 30, 2022,~~March 31, 2023, we repurchased ~~1.5~~1.1 million shares of our common stock for an aggregate cost of ~~$275.5~~$220.0 million. As of ~~September 30, 2022,~~March 31, 2023, there was approximately ~~$267.6~~$638.8 million remaining available for future share repurchases under the share repurchase program which has no expiration date. Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $803.0 million, in addition to the $197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.00 billion under the program.

As of ~~September 30, 2022,~~March 31, 2023, we had $750.0 million of 2.70% senior unsecured notes due 2031, $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027, and $500.0 million principal amount outstanding of 5.25% senior unsecured notes due 2025. As of ~~September 30, 2022,~~March 31, 2023, there were no borrowings outstanding under our $200.0 million credit facility that will expire in 2024.

We believe existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our ability to arrange for additional financing should be sufficient to meet our working capital, capital expenditure requirements, and to service our debt for the next 12 months and beyond. We regularly assess our cash management approach and activities in view of our current and potential future needs. Our cash requirements have not changed materially since the ~~2021~~2022 Form 10-K.

~~Table of Contents~~

In summary, our cash flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
		(In millions)					(In millions)
Net cash provided by operating activities	Net cash provided by operating activities	$	614.2	$	600.9	Net cash provided by operating activities	$	259.0	$	207.1
Net cash provided by (used in) investing activities		546.0		(215.1)
Net cash provided by investing activities						Net cash provided by investing activities	409.8		524.5
Net cash used in financing activities	Net cash used in financing activities	(821.7)		(533.3)		Net cash used in financing activities	(222.5)		(196.4)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash	Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(1.4)		(0.6)		Effect of exchange rate changes on cash, cash equivalents, and restricted cash	(0.2)		(0.1)
Net increase (decrease) in cash, cash equivalents, and restricted cash		$	337.1	$	(148.1)
Net increase in cash, cash equivalents, and restricted cash						Net increase in cash, cash equivalents, and restricted cash	$	446.1	$	535.1

Cash flows from operating activities

Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel-related expenditures, and other general operating expenses, as well as payments related to taxes, interest and facilities.

Net cash provided by operating activities increased during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to the same period last year, primarily due to increases in cash received from customers and cash received from interest on investments, ~~and decreases~~partially offset by increases in cash paid for ~~interest~~income taxes and cash paid to employees and ~~vendors, partially offset by an increase in cash paid for income taxes.~~vendors. Cash received from customers increased primarily due to the ~~impact of the~~ .com price increases that ~~were~~became effective on each of September 1, 2021 and September 1, ~~2022.~~2022, changes in customer deposit balances, and higher new and renewal domain name registrations. Cash received from interest on investments increased due to higher interest rates on our investments in debt securities. Cash paid for ~~interest decreased~~income taxes increased primarily due to the ~~lower interest rate on our 2031 Notes compared to the 2023 Notes which were refinanced in the second quarter~~timing of ~~2021.~~certain foreign income tax payments. Cash paid to employees and vendors ~~decreased~~increased primarily due to the timing of payments. ~~Cash paid for income taxes increased primarily due to comparatively higher U.S. federal, state, and foreign income taxes.~~

Table of Contents

Cash flows from investing activities

The changes in cash flows from investing activities primarily relate to purchases, maturities and sales of marketable securities, and purchases of property and equipment.

~~We had net~~Net cash ~~inflows from~~provided by investing activities indecreased during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared ~~to net cash outflows during~~ the same period last year, primarily due to ~~an increase~~a decrease in proceeds from maturities and sales of marketable securities, net of purchases of marketable ~~securities, and a decrease in purchases of property and equipment.~~securities.

Cash flows from financing activities

The changes in cash flows from financing activities primarily relate to share repurchases and proceeds from ~~and repayment of borrowings, and~~ our employee stock purchase plan.

Net cash used in financing activities increased during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to the same period last year, primarily due an increase in share ~~repurchases, partially offset by the net impact of the redemption of our 2023 Senior Notes and the issuance of the 2031 Senior Notes during 2021.~~repurchases.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no significant changes in our market risk exposures since December 31, ~~2021.~~2022.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer (our principal executive officer) and our Chief Financial Officer (our principal financial officer), evaluated the effectiveness of our disclosure controls and procedures. Based on this evaluation, as of ~~September 30, 2022,~~March 31, 2023, our principal executive officer and principal financial officer have concluded that our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

~~Table of Contents~~

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the three months ended ~~September 30, 2022~~March 31, 2023 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

Inherent Limitations of Disclosure Controls and Internal Control over Financial Reporting

Because of their inherent limitations, our disclosure controls and procedures and our internal control over financial reporting may not prevent material errors or fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to risks, including that the control may become inadequate because of changes in conditions or that the degree of compliance with our policies or procedures may deteriorate.

PART II—OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, in our opinion, will have a material adverse effect on our financial condition, results of operations, or cash flows. We cannot assure you that we will prevail in any litigation. Regardless of the outcome, any litigation may require us to incur significant litigation expense and may result in significant diversion of management attention.

ITEM 1A. RISK FACTORS

Our business, operating results, financial condition, reputation, cash flows or prospects can be materially adversely affected by a number of factors including but not limited to those described in Part I, Item 1A of the ~~2021~~2022 Form 10-K under the heading “Risk Factors.” In such case, the trading price of our common stock could decline and you could lose part or all of your investment. Additional risks and uncertainties not currently known to us or that we currently deem immaterial may also materially adversely affect our business, operating results, financial condition, reputation, cash flows and prospects. Actual results could differ materially from those projected in the forward-looking statements contained in this Form 10-Q as a result

Table of Contents

of the risk factors described in Part I, Item 1A of the ~~2021~~2022 Form 10-K and in other filings we make with the SEC. There have been no material changes to the Company’s risk factors since the ~~2021~~2022 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table presents the share repurchase activity during the three months ended ~~September 30, 2022:~~March 31, 2023:

Total Number
of Shares
Purchased Average
Price Paid
per Share Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (1) Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans or
Programs (1) (2)
(Shares in thousands)
July 1 - 31, 2022 607 $ 174.02 607 $ 437.4 million
August 1 - 31, 2022 358 $ 195.84 358 $ 367.3 million
September 1 - 30, 2022 560 $ 177.97 560 $ 267.6 million
1,525 1,525


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1)	Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (1) (2)
	(Shares in thousands)
January 1 - 31, 2023	306	$	210.56	306	$	794.3	million
February 1 - 28, 2023	291	$	210.91	291	$	733.0	million
March 1 - 31, 2023	473	$	199.13	473	$	638.8	million
	1,070			1,070

(1) Effective February 10, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $705.4 million, in addition to the $294.6 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.00 billion under the program.

~~(2)~~ Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $803.0 million, in addition to the $197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.00 billion under the program. The share repurchase program has no expiration date. Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions.

(2) Amounts presented are exclusive of the excise tax on share repurchases.

~~Table of Contents~~

ITEM 6. EXHIBITS

As required under Item 6—Exhibits, the exhibits filed as part of this report are provided in this separate section. The exhibits included in this section are as follows:

Exhibit
Number

Exhibit Description

Incorporated by Reference

Form

Date

Number

Filed Herewith

31.01

Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a).

31.02

Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a).

32.01

Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). *

32.02

Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). *

101

Interactive Data File. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

104

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


*			As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the SEC and are not incorporated by reference in any filing of VeriSign, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.

1917

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		VERISIGN, INC.

Date: ~~October~~April 27, ~~2022~~2023	By:	/S/ D. JAMES BIDZOS
		D. James Bidzos
		Chief Executive Officer


Date: ~~October~~April 27, ~~2022~~2023	By:	/S/ GEORGE E. KILGUSS, III
		George E. Kilguss, III
		Chief Financial Officer

2018