VRSN - Earnings call transcript Q1 2018

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Operator

Good day, everyone. Welcome to VeriSign's First Quarter 2018 Earnings Call. Today's conference is being recorded and unauthorized recording of this call is not permitted. At this time, I would like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. sir. ahead, go Please

David Atchley, CFA

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

D. James Bidzos

everyone. I'm solid Thanks, report pleased VeriSign. for David, quarter afternoon and good another to

to profitable of were of to results delivered We quarter and line stability growth objectives while performance, $X.XX, including customers our year-over-year, XX% and up non-GAAP providing in EPS First long-term and generating X.X% million, offering up year-over-year. reported our with financial value $XXX security revenue of solid shareholders. our

bond billion subsidiaries measurement first redemption. convertible a redemption our held foreign May during of our we $X.XX our the completed in paused by convertible of intend repatriation George net X the which period as quarter, the repurchase activities we discuss with our later. to the of will for Also, debentures, use XX-day During conversion pending we cash conjunction

million result, million the $XXX of repurchase a quarter. As first shareholders we X.X shares returned the through to in

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

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

quarter X.XX%, expect name of but that and to between with XXXX for the cooperative We base which call of in year of say until are the of XXXX now rate an the X.X the registrations. Although be at first quarter million This achieved we over growth the And concerning more report quarter, we engaged will NTIA measurable the George. a after rate days want time. turn X.X second between that don't is the quarter to XXXX. fully million rates believe to XX first to now, full this increase also XX.X%. domain with I'd like XX.X% renewal in X.X% are the domain dialogue that to we of compares net to have XXXX end for preliminary not of base to agreement renewal I ongoing, the beyond name

George E. Kilguss III

everyone. afternoon totaled sequentially. year-over-year for first X.X% and good up million, and Jim, X.X% by the $XXX quarter Thanks, Revenue up

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

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

and company $X.X the of As of of assets March liabilities total billion. billion XX, total maintained XXXX, $X.X

earnings year discuss free non-GAAP then abroad. first margin, were cash cash $X.X on cash XXXX I our held will operating billion included of and remainder with flow. equivalents share, operating which review convertible flow will $X.X per updates redemption and financial of now debentures of provide the quarter full non-GAAP guidance. and include held our cash, the marketable metrics, some which I'll Assets billion domestically securities, additional

average operating same the of compared first resulting million XXX.X stock-based compensation, $XXX $X.XX in quarter operating $XXX diluted diluted per million non-GAAP XXXX of million $XXX quarter to same was Non-GAAP this of the compared million share it compares million, in weighted to income As count of quarter. which shares, both of the was totaled in non-GAAP quarter $XXX on for Non-GAAP to quarter the expense, share quarter a and million quarter XX.X% to quarter excludes ago. metrics, and last XXXX. margin $X.XX net year earnings first relates first last for first XX.X% a in $XX based the

in the beginning and noted this call, last result rate $XXX first earnings million first the XX%. per used to and non-GAAP is tax income results, the as quarter's for a our $XX with net for Act cash quarter respectively million Operating of our flow Tax the As last million flow was calculate year. and free share with million was cash quarter and compared $XXX $XX non-GAAP

with repatriation. paid $X.XX $XX billion reflects First the net flow quarter withholding cash XXXX connection approximately taxes million in in

quarter, Act, the capital were our light possible Tax the in last evaluating mentioned of of As our redemption we debentures. structure, convertible including

the company a principal domestic the company to XXXX, to to convertible on redemption cash, the You of that value The excess in seen $X.XX notice has elect ran settle the intends and issued XX, through based observation holders debentures. settled of the holders their is redemption liquidity shares will in and next settles X, period company outstanding who have March February the billion all settle that for redemption. for sufficient convert may May XX, shares convert be the week value This determined stock. actual an today. number to from company's the elect issued on If on debentures,

be to is the yet debenture million shares finalized, elect convertible all holders issued would approximately XX.X convert. if not calculation While

will during a to the company's shares of many the the in the shares debentures debentures instrument benefits first of the the important For calculating implemented based to capital tax year, convertible share generated convertible of results, redeem million tax settlement the was benefits quarter. company's reform reform, quarter. our the of the limited. last With during average diluted the diminished were comparison, first part our became debentures accounting convertible time, more capital second XX.X structure, on the we dilution quarter debentures. the U.S. Historically, were convertible by with related an price in post-tax structure. equity-like and decided Over occur tax this fully at the end for debentures The used the was in of which

some $X.XXX still to billion now the XXXX Non-GAAP call. operating Revenue range last $X.XXX to our provide on the provided $X.XXX Now, and full be between to billion to I'd now expected is updates be billion is margin like in our of from you to billion XX.X%. expected to guidance. year $X.X XX.X%

call. the income decreased In to non-GAAP interest million The is $XX the and our taxes first provided expected decrease be range provided million to primarily be expense between still operating an expenditures expense million on to company to of on the from between summary, $XX million, net be redemption last to change million, continued $XX last and convertible financial due million from non-GAAP range expected notes. in our is during $XX now call. now of million are $XX Our to million and are million and $XXX $XX Capital $XXX the $XX the quarter. performance our between expected range $XX million. million Cash demonstrate sound the to $XX

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

D. James Bidzos

another efficiently Thank VeriSign. base solid of further this to generated Overall, returned We and quarter shareholders. you, for value George. has expansion was the and been name There revenues. domain

to of our extend continue value focus execution track first trend your work and to ready and question. efficient our focus value our We'll and on top returning line, and take to our for shareholders. our continuing now growth continued providing while our profitable in And us record We manner. growth will long business, on consistent We think in grow to and allow protect, generating long-term shareholders operator, lines the we're most the bottom the of questions. our manage disciplined the

Operator

JPMorgan. we Sterling Thank first go from with question ahead. take our will Please you. And Auty

Sterling Auty

talked agreement. Yeah. to your with the remarks, the a with Thanks. prepared now you Jim, NTIA in on regarding guys. cooperative going start discussion Hi, Wanted about

want set. we Just make sure to level

this a in date? there So, they cooperative to could any agreement is that it let chance an whether November And announcement XXth to extend sunset? should does between that XX, of come that see or November terms we the and mean that prior now conclusion

D. James Bidzos

you're that as is to or cooperative first sunset. Let's let all, see. Well, the of may decide correct NTIA agreement it extend

mutually and of Amendment amend cooperative agree the to per of VeriSign the NTIA agreement. XX it Additionally, could terms

look milestones, early see It's than more I too but we would engaged, it's think As – unfortunately. think really far like. early and what just I I say what to as now did mean, we're to what and early too you they anything say might between this when then,

Sterling Auty

the at to discussion made November the public November cooperative has before And look announcement around just some they come think came a the timeline, your or were study, is a at there of agreement I that public interest been – the process? or part that that's up in that there discussions would follow-up that. When anything XXth in

D. James Bidzos

Yeah.

for if appropriate certainly that be said, As about you but to you is just in me engaged. I can it's don't it'd they're the to I all we're I report, there keep we're up posted, And we'll it ongoing. and that discussions come any say – or are milestones anything do promptly. having, anything think tell what's we'll are

Sterling Auty

All right.

the of you one at at sustainability particular, the what that and names. think at went international really with then sourced of looking on question you are the you the areas I'm when domestic/international business, And seeing where of split, biggest the But good. in in look we Chinese Sounds about growth the do the through how curious, moment it? terms timeframe growth

George E. Kilguss III

and be is internet we to think do growth we the growth talk adoption, of domain name George. penetration, drivers this mean, I about when of e-commerce. internet continue growth, continued Sterling,

think from bode does metrics quarter So, vary. Where to our we comes business. growth those quarter for well that worldwide

saw in quarter, our of This in European out of U.S., to and the we first registrars be out all growth well good China, the for continued those us. quarter, seem areas results registrars, out of performing

Sterling Auty

Okay. Thank you.

Operator

And question our go Wells ahead. we Please with Matthew from will Citi. take next

Matthew Wells

if I ask Citi. Hi, .web? update on had any you This with Matt Jim. is wanted to

D. James Bidzos

.web. Nothing. last move the for with forward And we Nothing weren't ICANN's process, familiar to since or the those here for can't ICANN's That's say status conclude. in we what it'll delegation process spoke. when so is, aren't who engaged we're

but not of guidance give updates that's you .web our start all revenue of for include operation not too the .web, any at available, course, reminder while revenue now. guidance of you a looking XXXX give include, that as from can more it's you we year, and possible the does as I all Just provided we'll unfortunately did this will

Matthew Wells

with And that that. your on Has more with NTIA .web at question. have and the come I up Thanks one all? purchase discussions

D. James Bidzos

No.

NTIA are about Department And its discussions Our we of agreement, view .web. of cooperative the with of Justice, open investigation course, the .web closed separately.

wouldn't We expect come up. not it has it to. So,

Matthew Wells

helpful. you. That's Thank Yes.

Operator

question last Rob our Oliver ahead. from And will go with we take Baird. Please

Matt S. Lemenager

And quarter expected Matt than the highest renewal churning rate, in we're and I've things this recent it's Good question is bit But afternoon. drove anything and through on the rate names know Rob. up. on been XX.X% the the renewal that Lemenager Because trending. that, that rate? there China up was the Thanks. It's a for from of higher a renewal kind to XX.X% like metric might be years. at least ticked I go

D. James Bidzos

thanks. Matt, Yeah.

out, first quarter XXXX XXXX. first up still it rate when year-over-year rate was XXXX with that XX.X% primarily related quarter renewal aging the XX.X%, renewal for a really that surge depressed names As you rate to from not domain there preliminary still as the in renewal of of normal those was expectations China our by alluded to our XXXX, renewal of you I negatively in impacted when you XXXX a also QX point our impacts is that rate the is renew the us, name I a QX while consistent was of associated with rising rate base. change of to, but did that slightly really And were good compare registered XXXX think exclude an

So, the proportion rates a renewal think up call anything renewed previous to slight unusual to out result, than become base. large tend a other there's the names pick as overall continues the and I age, to don't as of there, amount a base

Matt S. Lemenager

paused guess the a And a capital on new structure? this step cash there Got any the and buyback up bit. we little just just question the forward Are the structure, quarter Thanks. then repatriation, it. plans buyback to allocation, going capital given I just allocation given

D. James Bidzos

as Matt, we in the buybacks. to past, guide don't

determine we of allocation quarter, the to, protect, do try to we need every active we business an framework, for strategic return have what we grow the to we what to needs have liquidity have through business, quarter, look and every and much business, the need our capital that We and to do we process at how and invest need manage the to what we in meet shareholders. then

look but at to determination, regard guidance and quarter every we not we So, provide buybacks. a with that do make

Matt S. Lemenager

you. Thank it. Got

Operator

go a question from And Please Wells will our follow-up question last be Matthew with ahead. Citi.

Matthew Wells

the allocation, issuing you and Hi, Jim. along a question the you're same at redemption does repurchases just asked. looking to tax is law But for changes This was that the dividend? when thread framework at of capital your potentially how look debt the versus change,

D. James Bidzos

Go ahead, George.

George E. Kilguss III

capital say, of change. really I the and or that we're in to of business of whether review was Sure. really would it needs our business. the look, constantly reform expect Again, structure post-tax the are don't post-redemption I to philosophy make or our trying interest decisions convertible we capital best allocation the debenture,

the been Historically, return we that of shareholders. the the So, way interest at clearly to shareholders. that look to repurchases capital we share have best the felt best in

D. James Bidzos

complete obviously, a soon. repatriation different of look mean, will be $X.XX bond. complete and the process I that did the Yeah. forward. going We will billion, of not the we're redemption yet quite That with make

still of we're really long-term the evaluating law. think the significance I tax all

possible. our of efficient to a in bit. is I The in generated the that most you one protect, I can hasn't think going the manage of that, thing we're and category, that the way when shareholders, comes assure And priority return do it that manage. drives course to grow to value changed we sure that making is philosophy

in think would of rethinking but more hasn't some the or our and that relative yield, reallocation our in and I some a that looking or returning to our what's would appropriate. capital that's to guide changes, bit. in think of at we're situation, lead to to fundamentally, long-term or changed efficiently nothing or gives there if as you're as tactical of a not opportunities, dynamic a interest dividend it just tactical where of we very But sort generated certainly really and asking that strategy of analysis says difference tax the a analysis buybacks has when whether question would to assessing some still George don't share allocation dividends. terms law ongoing capital best them said, something a changed. I for We're looking question that us we structure shareholders and And value, shift

Matthew Wells

Okay. Appreciate really Thanks. time. That helpful. color your was

D. James Bidzos

Thank you.

Operator

today. our this And to session turn this does for over to final back time, for conclude At question-and-answer would I like the David call Atchley comments.

David Atchley, CFA

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

Operator

you today's once thank Ladies we concludes and participation. and gentlemen, this your again, for call,

You may now disconnect.

David Atchley, CFA	VeriSign, Inc.
D. James Bidzos	VeriSign, Inc.
George E. Kilguss III	VeriSign, Inc.
Sterling Auty	JPMorgan Securities LLC
Matthew Wells	Citigroup Global Markets, Inc.
Matt S. Lemenager	Robert W. Baird & Co., Inc.

VeriSign (VRSN) 26 Apr 182018 Q1 Earnings call transcript