VRSN - Earnings call transcript Q4 2017

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Operator

Good day everyone. Welcome to VeriSign's Fourth Quarter and Full Year 2017 Earnings Call. Today's conference is being recorded. An unauthorized recording of this call is not permitted. At this time, I would like to turn the conference over to David Atchley, Vice President of Investor Relations and Corporate Treasurer. sir. go-ahead Please

David Atchley

your the release Strubbe, full of be fourth Kilguss, available and CFO. and XXXX And Executive quarter the will operator XX-Q, be quarter through a me discussing everyone. recent not to and could to non-GAAP identify matters The on and forward-looking reports most performance financial remarks year There, the today unless CEO; earnings disclosure. guidance is during materially retains under longstanding presentation policy XX-K in About SEC, VeriSign with its and and that on actual the Forms public This Relations on Investor GAAP or the also done the results quarter, include on call, and comment be call in factors Welcome the results financial specifically, Jim will in and we and today's we contained earnings President from the to subject that results within Thank those risk will which cause you release. webcast full from presentation differ filed in to forward-looking of statements. good At statements year call are it few hours, some fourth to VeriSign George to Todd Investor found and will provide being information President Jim. I With can our the and replay and earnings end Executive will Vice and we open applicable, in find presentation, measures remarks, With and are website each the Vice include XXXX call of over uncertainties George of Jim VeriSign's In the risks President Bidzos, like used turn that website. slide moment, the reconciliation be a the COO; detail a afterward, you, site. questions. Chairman, this afternoon, and is for that, to appended Executive discuss call prepared our our earnings VeriSign. call Relations our available and release by are to GAAP posted. are our which as will our our would which is unaudited documents verisign.com. that our call. Financial on section non-GAAP

Jim Bidzos

XXXX quarter afternoon everyone. performance reporting VeriSign another revenues, flow good resulting and line cash the .com a XX.X%. were solid strong for financial pleased and the in non-GAAP results XXX.X strong million the shareholders. delivered and operating links. generating XXXX stability year of was billion David term margins report free $XXX company of our security our year generating year name kept million with processed full to Thanks customers, Fourth finished with strong while .net the million and and which domain in in registrations in and $X.XXX in long base, profitable XX.X quarter In offering to and I'm XXXX to for our growth XXXX which full VeriSign. objectives value providing

availability VeriSign for agreement the .net more X marked last .com the of until DNS another During years year years we the registry we year uninterrupted XX XXXX. than renewed for .net. Also and of

million available billion share today authorized board amount full for year total and of our During the million Effective we the increased of under repurchase to authorized approximately repurchase the share stock directors million. for the quarter, program for million which share no X the VeriSign XXXX, have X.X $XXX by expression. we a common by shares $XXX during continued of X.X million. repurchase program $XXX repurchasing repurchased

the uses $XXX.X .net. domain overall totaled names XXX.X strong the cash, and at consisting name quarter. potential the our business needs in million continually securities .net of end base including At the for of .com December, evaluate and million and equivalents repurchases. million, with for in the of consider XX.X of share billion end names the cash cash, for We .com Our the and marketable in final position $X.X and best investing cash

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

associated to During surge renewal a remaining from the XXXX. second from see was quarter lower we China domestic continue registrars time names which strength offset late by the rate with

quarter, the are quarter of measurable rate not until for fully renewal the end will we renewal days the XXXX be rates that the XX after Although of fourth believe XX.X%.

X%. We guidance and to between expect domain be X% year base growth full name XXXX

the an X to positive the would base of recent now like a development on the in increase quarter between For to to efforts for we comment million registrations. I million name become our operator domain .web. registry first expect X.X to

the engaged You now Justice's Department of its seen division process in to .web .web domain. have level filed we disclosed move XK of U.S. may anti-trust it us in we in regarding that the the January, that We're it top closed the had delegation ICANN investigation forward. notified

will However year it's when cannot commence we conclude .web. from XXXX revenue provide the as guidance does it is possible .web ICANN's that this while this will our not revenue and say any we process include will operation of

would as the provide I turn will over with And Of George. to call course, updates like appropriate. to we now

George Kilguss

Jim, good afternoon, and you, Thank everyone.

company the from million XXXX. XXX million year For X% million, and sequentially. by the XXXX for the of delivered up up and $XXX X.X% fourth X% X.X% XX, income year XXXX ended generated X.XXX from Revenue for million XXX full of totaled December year-over-year GAAP quarter up revenue the up operating

was from abroad. XX% of our and XX% customers in During the customer from the U.S. was revenue quarter,

to $XXX XX.X% quarter last this year for results, $XXX in ago. to earlier, earnings quarter a $X.XX a fourth margin compared income $X.XX totaled income in fourth fourth compared relates produced million year diluted million quarter of Net in per The fourth million XXXX. the to year which the $XXX $XXX XX% operating the share in operating totaled GAAP of quarter million year. quarter same quarter it to compared the came As to with compared

As of asset XX, the of maintained X.X December and of total XXXX, billion billion. total X.X company liabilities

XXX and operating with the equivalence metrics, guidance. securities margin, discuss our cash million abroad. cash, of now non-GAAP domestically which of billion cash And I'll review non-GAAP which marketable financial per earnings quarter flow and held X.X year share, include included we'll fourth then remainder held cash operating were additional some Assets full XXXX free flow.

fourth to as compared Dilution million and XXXX fourth As expenses the due million share year. for quarter of Non-GAAP during in $XXX.X count were share compared last of $X.X quarter the convertible $XXX the it margin $XXX.X in in the same average million Non-GAAP an respectively. of $XXX of XX.X% our metrics, $XX effect cash had $XX compares was net on debentures indicated per fourth spending million million in related shares million relates fourth by $X fourth the higher million on flow expense, flow million excludes XX.X $XX.X $XXX diluted to was and effect and the to quarter last quarter the compared diluted repurchase share based marketing share in to repurchased the of income non-GAAP call and weighted $X.XX $XXX the in XXXX the with XXX.X the stock-based shares shares fourth totaled operating compensation free quarter reduced for average full for last price operating quarter the and and resulting and operating to a XXXX. fourth year shares non-GAAP million XXXX The $XXX earnings quarter the last to was for during shares. the fourth fourth quarter million quarter This cash quarter. million quarter the a based with same $XXX ago. was million primarily was the same on million activity and respectively quarter of $XXX third million in the which Non-GAAP in quarter weighted a last million increase quarter. XX.X% quarter. million quarter the was of compared average we quarter weighted XX fourth count sales $X.XX for on based diluted Operating

on in Jobs Cuts Act. the Now, Tax as implications I'll to refer I'd to Tax the to the enacted which and provide an XXXX, update like Act December company of

year the resulting XX% our Tax Act in and from offset increase of foreign the today's for income As tax revaluation million federal tax is foreign quarter financial by the tax benefit release, Both in earnings expense U.S. triggered liabilities earnings $X increase on income comprised provisional credits. an net previously Act. onetime of tax This applying tax cumulative unrecognized net income Tax from This fourth full GAAP $XXX results of withholding to XXXX Act. include resulting the and stated the is Tax tax taxes XX% taxes. a expense deferred $XXX million from consisting a of expense million of by rate of U.S. related net

As approximately foreign XXXX taxes exchange of net intend a withholding cumulative $X.X of current held billion the early quarter rates. of we repatriate U.S. subsidiaries foreign result also on to foreign earnings the taxes in onetime based second cash by by of on

the increase the foreign Tax presently subsidiaries the capital the the evaluating of from without our associated Tax of the historically Act, entities. foreign of Also, interest ongoing and amount further annual earnings the by debentures. redemption deductibility taxation the cash go-forward the decreases distributable taxed for light our structure convertible over In deductions. repatriations U.S. due our and taxes of This U.S. allows on reserves including taxes basis interest capital on Additionally, will will value annual taxation Act, company of with paid. lower be rates foreign corporate of Act, expense has a possible we're The to of repatriation implemented earnings limitations tax withholding the Tax future by

a share. non-GAAP our since and income we've Finally, earnings XX% used of per non-GAAP to tax rate mid-XXXX, net calculate

share Looking more tax our non-GAAP ahead non-GAAP net is rate of we calculate believe and income per the to reasonable earnings estimate XX%. the

As respect X,XXX reporting expected a to range full million. of year XX.X%. be XXXX result, to the be will use still expected is Non-GAAP operating to margin guidance, XX.X% we With quarter non-GAAP results. XX% million rate when and is in to tax non-GAAP revenue to X,XXX XXXX first between begin

million XXXX impacts are income reflects to interest cash net and and million intended $XX is an of including the the Our Act non-GAAP estimate to various best $XX of continued of quarter summary, $XXX our cash our reaction. and full XXXX. company taxes to during million sound of $XX expense be demonstrate Tax In financial $XX and finally and expense to performance between $XXX the impacts non-operating million. are expenditures and the million, fourth the year be the guidance be expected between between This million. tax Capital expected repay expected non-GAAP

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

Jim Bidzos

XXXX George. XXXX .net another for you, VeriSign, generated another expansion name based return the and years six agreement to DNS until value years of the was for availability uninterrupted registry year .net. and of .com for revenues, Thank further renewed domain efficiently was and mark shareholders, solid than of we more XX VeriSign we there the an we

year Finally, or Department it early investigation as the domain. level with notified Justice of that top closed this the we discuss .net U.S. regarding

and in our work record on our and our to the efficient in focus our advance top protect us disciplined lines generating line execution our long-term to bottom continue growth to profitable the continued growth manner. of to We grow of We value allow providing extent shareholders most continuing and value our while returning track in consistent our focus think on shareholders. long-term and business, of

will ready the for take first Operator, question. questions. We your we're now

Operator

[Operator Company. question Gregg from We Moskowitz and Cowen our first will Instructions] take with

Gregg Moskowitz

.com incremental top as how for and searches several past the quarter the so. In while crypto third currency in black do and keyword form months has .com the growth crypto been or chain, of you some driving think over five

Jim Bidzos

seen direct précis registrations of them. that think the I in I contributions I are but that that the the don’t in with there huge crypto believe any secondary any numbers they is we've are I don’t and market a that registrations amount the crypto them. interest markets you it lot specifically activity as in would of reported. now -- that cryptocurrencies of net it say what in materially, trading I've don’t to of in have tip Bitcoin is have names think the just value know in that at meaningful has a a numbers secondary my new multiple comp keyword exchanges. in we've There But spike I seen of in fingers And

Gregg Moskowitz

would I'm this that on have I Jim. another to but know you told to sales QX thanks then dating quarter Okay, marketing more basis. And then and and absolute in much the spend George, in where have and expense way did you grew here, us to go myself I a sequential back marketing would find XXXX all dollars

maybe you on well you the QX bit what and XXXX? color in sort of strategy is can little So, more as give the that a marketing just for as sales activities undertook

George Kilguss

mind keep in our total marketing pretty I mean on though flat annual Sure. an expense year-over-year. is basis,

marketing brands expenses I programs. we the domestically make our about ago, as think year did out. .com talked sometimes from on XXXX both programs to the shift some we abroad. some of and and both we a execute programs, to for our and direct We returns bit programs As marketing in middle away drive few best We talked register about had and we coming clearly advertising marketing .net quarters didn't we've the during look to some little a pivot have we for lighter of marketing the that finally and got those programs more company

in been And first little as bit to quarter will the a here. XXXX more fourth direct so, run of continue half the and we've marketing a in of came And programs doing those out that. result

Gregg Moskowitz

then yield valuable you Can question [indiscernible] XXXX? Okay, associated going much on convert? reform? that why expand tax the me. the one so forward for as just with are your of cash great. tax less is And Is And last higher under that part taxes in

George Kilguss

Yes.

offset from for a by made remarks, tax perspective of as From GAAP the GAAP a to our So partially that from prepared tax $XX an million this a revaluation and guiding perspective, up cash in was $X about $XX my mentioned and we're perspective, mentioned million to about the that transition onetime from accrual as in million DTLs million. was and you year. $XX XXXX that's we

going with of a are impended limitations tax then tax rate takes the the partially think tax variety the And this the the impacts repatriation. deductions I the tax forward calculation, impacting Act our on really foreign offset a U.S. include I cash it perspective does sense the including the all by mentioned Tax impacts don't and as our on U.S. earnings, that puts reflects think and the on repatriation. the from while tax well As from of impact U.S. interest earnings the make items big with but from amount foreign company

U.S. interest we'll limitations looking capital at there. diminished structure interest for of some convert expense, structure, a we're as part them as there As evaluating limitations our has far I it, are at well. we'll tax reforms we capital result, And clearly it. And benefits mentioned that be as entire are at as look looking to our

Operator

Rob Baird. to with We'll go next Oliver

Matt Lemenager

around is no doing to for be you I but Good would around Any realize, or any look, marketing realize in early but going. expectation I .com that afternoon this might and than there thoughts different up early be extra Maybe is guidance brand Rob. I Matt anything looking thoughts. just to in just might any get the early, see if any -- plan how things that .web? go-to-market,

Jim Bidzos

lot at would more I we launch any when for discuss of closed think it's process because this sure too just point now will a or at we to completes, plan details ICANN engaged premature. just in Department an are have .web. this early but and investigation .web I'm about with that that of process say Justice their having point to be go-to-market

Matt Lemenager

talked know China I of, United if this in the in the any phenomenon on and any that international, X% kind economy has roll expectations starting to know X% U.S. come international in the strength domain of markets the And difference to I States the were expectations back. for the growth for for don’t about you versus year,

George Kilguss

a said the year their for markets we don’t but XXXX been U.S. good well in markets that performances. absolutely In European that have market have specific we good is expectation will we to markets over next seen our international U.S. but both see done guide have growth and us, also

Matt Lemenager

to you repurchases had, share to the for would Would repatriation. and the the would it the use you other would do question be avenues deploy or look it primary last be case I cash? assume be that Got there on think that repatriated fair

George Kilguss

don’t Well, we capital allocation. there approach in think in be I a how think general, will I change

to using manage we look think and grow the always, protect, strategic of As business. and work to do business our need what we best for frame we is

for and of for protect both think As invest tomorrow, form. and been we return technology the what once then we business accomplish capital to you continue network profitable may continue corporation. frame today and frame for to to to service will innovation liquidity our much making business excess growth invest the We as in strategic for well that recall to evaluate for it and to our have capital and adequate think work we goals, amount that and mission using then and business in will use our work needs how relates think the maintain past we appropriate shareholders we includes tomorrow, to six we which today the those we we frame for the years what work that the in sure think drive and are as

Operator

go JPMorgan. Auty will next to We with Sterling

Ugam Kamat

Sterling Ugam for Kamat is Auty. on This

renewal renewal China you out mentioned was disappointing, the rate Jim, that rate. the second-time So, of especially

in So would are just but the you gave China? rate, future expect left? out region? China? that this the rate how rates come names to was And be from wondering was renewal what what wondering, rate renewal what And especially blended the just many you renewal in the Like renewal

George Kilguss

was the year from and don’t rate coming of XXXX by about X.X basis renewal rates the be may renewal that search guide XX%, originally out cohort. probably that China cohort for blended mentioned names that the cohort was that million was We about as into country

So, within we names. to portion would fell have I system would in guidance we the of come I names the but the of the expect rates that, range say cohort that of however normalized we did through to that is material quarter last that and were guidance now did more rates. anticipating if many comment back out, those renewal most was a and go that on gave we we

Ugam Kamat

you're on any That's give secondly, allow Cooperative might are in since date Agreement All they done Cooperative renewal you expire? Commerce? particular the particular right, process to with the to we that that Agreement the it Department helpful. that allow of us Or perfect. survey coming October, of have any And update closer the or can having just to

Jim Bidzos

first approved of time, NTIA agreement. Well, the that extended all, to to late to not guess extend In to NTIA I the remind agreement cooperative the call. XX, just on .com XXXX. registry chose XXXX, September At everybody be November

currently and on to agreement So, scheduled that it or November process. XX, decision is their as not to Whether terminate cooperative NTIA's XXXX. extend

on they And purpose I interest so, have right the can't agreement. will exercise of public that. conduct not to review comment the cooperative their of for whether the the right to terminating or they term sole extend the

Mr. that you comment NTIA time the the Redl's there update there, XXXX. regard Redl update that's their we not new theirs talked can is the ours. or we've I agreement confirmed November last appointment since cooperative on to to the in the related no NTIA is progress and that give can't one of administrator Now as is Unfortunately, in was that secretary of assistant David

do As we'll though. have share soon information we as whatever we can,

Operator

Walter from Citi. question last with our Pritchard take we'll

Walter Pritchard

thank. Hi

I my think been questions all answered. have

sure I one clarified. wanted Just I to make

of redeem And scenario talked about. Does tax reform additional XX%. not you've have the the in million in within the convert. potentially outlined beyond the to you've convert million of tax the impact what contemplate tax does $XX that out if On $XX the that

George Kilguss

we're So, in with our as just evaluating evaluating conjunction our I convertible Walter mentioned, capital structure. debentures

looking So, at we're that. still

see So, what fact. changes we our at it. is doing really doesn't guidance that evaluating We're looking based today from involve it, we're on where or still it's any

Walter Pritchard

rate, having that about like to sounds talking [Technical that cash is X companies XX then Difficulty]. are XX year it tax doesn't most an mean, And

George Kilguss

you allows Tax would Act referring taxes have Yeah I tax, been look so, Act the what they the transition at think with or Tax to your you're to and without.

of calculation. So, Tax without a years that by do over defer us with Act. the the for it's or to X when that actually And we we tax calculation, amount expect allowed

Walter Pritchard

Okay.

be say next X-year So, pretty to will number a the that that XX That the several too? good period of XX years. include

George Kilguss

guide rate. cash we tax a as So, don't to previously, we mentioned long-term

as At And term to However, utilize credits. credits. say X we foreign our next short I to end foreign we now up be those million years. would rate expect of we to the that still in rate XXXX of below expect about that GAAP $XXX tax had we X the the use tax over tax

Walter Pritchard

some here. does XX to those benefit those some still point credits includes of XX the expire of and tax the But then foreign would at

George Kilguss

That’s correct.

Walter Pritchard

Okay, year detail that how of good can any on XXX? use you per much

George Kilguss

somewhat and overseas. Like bit, is you’re in can perfectly little is I I utilize an variety it’s recognized foreign be probably up they give how in what is to because they of overtime it depended full number so of that the they income will will idea a have probably three on more to complex the using be and probably year it's but two three FTC depending obviously a factors, change years, premature of over clearly on and but next candid said so one year less the utilization

Operator

back with David for the that, any like closing Atchley over call remarks. I'd turn or to And additional to

David Atchley

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

Operator

call. Again, conclude this does today's

disconnect. You may now

VeriSign (VRSN) 8 Feb 182017 Q4 Earnings call transcript