Earnings call transcript Q4 2022

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Operator

Good day, everyone. Welcome to VeriSign's Fourth Quarter and Full Year 2022 Earnings Call. Today's call is being recorded. Recording of this call is not permitted unless preauthorized.

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

David Atchley

Fourth Welcome Full operator. you, Quarter to Thank Call. VeriSign's and Earnings Year XXXX

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

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

in our Financial documents SEC, the the to in include risks filed forward-looking most unaudited, that specifically on Form recent earnings results detail and the our we remarks XX-K. our release are that and with subject are uncertainties report statements in discuss

website performance matters update done results during VeriSign the and through financial be and GAAP two public results quarter is in disclosure. Investor a does call. or by The financial discussing section measures today can we free to unless GAAP be call it flow. include guidance not presentation, is EBITDA on the reconciliation adjusted will today's the information found the non-GAAP cash non-GAAP appended our which this and of to VeriSign: available used after slide Relations

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

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

Jim Bidzos

our of agreements operational We .net XX financial infrastructure. and availability .com thank performance standards to results strong and afternoon critical extended and while another required I'm to continuing strengthen you Good XXXX, our quarter to record complied David. everyone, Throughout we for solid financial with joining you, to operational the for years. report over DNS Thank pleased and our VeriSign. high of ICANN delivered by us. Internet

from name efforts, these we system results. provides to their us The our domain I'd much which for depend the operate and people more. the on education, which dedicated to around like infrastructure commerce, healthcare critical thank world enabled home, work navigation team service to realize for

that ability beyond influence acknowledged During our focus that was uncertainty what control. within said presented XXXX, on we the and ability we to our would other and to macroeconomic we challenges

indicated We what meant. also that

our First, operating Internet and infrastructure. maintaining reliably investing in critical

careful exercising And Next, additionally, meant of capital. and where return long-term expense focused value it control on appropriate. efficient keeping creation

During operating and XXXX, income X.X% X.X% revenue year-over-year year-over-year. by grew

Additionally, those shares end XXXX. from the the outstanding outstanding end XXXX at decreased of of X.X% by at

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

year the million X.X $XXX $X full share domain the base of At repurchased the and XXXX, During X.X%. we million current with authorized available XXX.X .net and domain .com in year-end, remained totaled XXXX, has which year-over-year under names no name expiration. program, for of billion. end a of repurchase rate shares the million At growth

quarter, fourth million to the new there last the were in registrations In year quarter. X.X and XX.X X.X compared ago quarter million million

of We to we domain a XX.X% XXXX will XXXX factors factors acceleration believe include registrations headwinds, the of as calls. approximately renewal has macroeconomic These that registrations registrations last lower new XXXX many and and reduced quarter there quarter year which rate While fourth result subsided, compared ago. rate first-time China for renewal new XX.X% drive global lower already and the final from rates. the that are during be XXXX prior for renewal XX.X% a new names, that in in I've mentioned demand of saw pandemic-driven

XXXX, year-over-year. the renewal full For names year rate for previously similar the renewed remained

were renewing registered largest China, driver which single lower from names However, rates were first-time the renewal XXXX. year-over-year during with being

channel knowledge about and XXXX, is the X% guidance base, our between our rate and backdrop. reflects domain XXXX X.X%. growth This macroeconomic base to expected broader our Looking name name domain our

names, As $X.XX the of price we to .com today's the annual release, domain $X.XX, price notice announced wholesale from increase for have given price a raises September XXXX. which in of effective to X, earnings $X.XX

believe other increase, will TLD remain we Even after with competitive highly choices. .com this

As may XX be the up any registered domains price. to reminder, our for a of of current at terms years

the say, While .com we pricing at least of of limited changes, I XXXX. to flexibility guide do not year, we a I the $XX.XX pricing exceed until cannot that registration can did last as under price October have wholesale

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

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

George Kilguss

everyone. and Jim, afternoon, Thanks, good

was was up The X.X% a and prior the X.X% compared year XXXX. For operating the year income X.X% experienced revenue ended X.X% margin XX.X% year totaled and expense to of cash $XXX up fiscal and Operating XXXX billion, from increase XXXX. up $X.XXX similar of December million, million operating generated XX, XXXX, full from flow million. the was in $XXX $XXX company free delivered

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

quarter executed fourth a registry transition of the new a XXXX, the operator. agreement to of we During .tv

decided was for agreement we longer to strategic RFP. million the As our proposal, to proposed the year contract in $XX framework, was this which $XX fourth of in recorded new the full aligned quarter. terms in no the the not approximately million, participate of XXXX related approximately request during Revenue .tv with

a which $X.XX to for $X.XX $XXX Operating per same the the share XXXX earlier. compared quarter fourth XXXX. earnings year expense of compared $XXX $XXX to of compared totaled the diluted year quarter million income in for million a Net of in QX produced to quarter fourth earlier, million totaled million $XXX

earnings XXXX diluted per benefit increased a related income wholly-owned $X.XX. a million net As income properties reminder, for non-U.S. fourth intellectual by tax of recognition of share between subsidiaries quarter the which of $XXX.X net the deferred income to transfer included certain by increased and the

and the million $XXX flow was $XXX $XXX Operating of compared XXXX fourth cash million quarter free flow for the with respectively, $XXX for million, cash XXXX. quarter and million, was of fourth

expected Revenue be range a between range $X.XXX rate by and is will our name full transition is also domain of I base $X.XXX income X.X% XXXX mentioned grow will reflects at revenue Jim is and as the impacted the now the X% to between to billion. of be discuss This agreement at expectation billion $X.XX the Operating billion. that XXXX. our end guidance. in year and expected the to $XXX million .tv of

expected of a million range non-operating XX%. expected million. are tax and is to rate million. estimates, income The $XX be between million expense is an GAAP to and interest net, Capital to $XX $XX income in Interest be between $XX XX% be includes in XXXX expense also between to which to expected effective expenditures

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

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

Jim Bidzos

during you, financial us as in employees critical operation only the is and important the stability pandemic. We economy recover deliver stability, VeriSign's our not Thank in results strategic caused disruption a focus from solid us is our challenging to George. XXXX, about but believe also served environment allowing and management to and well disciplined infrastructure, the struggled financial customers, our for mission of security shareholders. by

flexibility expense domain revenue Today, for growth We our to responsible name possible long-term we for XXXX, limited the modest believe pricing growth, strong. growth XXXX. reported business and through This base and that profitable fundamentals revenue remain we profitable of management. was guided

efficient to As long-term I said earlier, return value of and creation uninterrupted our infrastructure, shareholders along operation its efficient reliable, consistent, with prioritizes strategy management. our critical with

the term, We attention today. believe this expect serve will our us and for focus. long constituents you Thanks can for strategy this all to well maintain of your

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

Operator

will Instructions] Rob W. [Operator question with Baird. Oliver come And Robert first our from

Rob Oliver

opportunity Appreciate the a ask question. to

of just First And obviously, the on think year guys served of one around a macro. that moving control focused the of can you really half parts you that, operationally, approach me in kind for I what really you last macro, well. is, lot second

macro on also of other Looking into China tremendous parts, amount the hand, reopening. layoffs, uncertainty; out 'XX, here moving obviously,

just So offered X.X%? domain guide then the cycles of guys a a as And follow-up. outlook, to well seen had points could relative as to few your the to add I curious that you finer quick the thoughts you X% if having to many

Jim Bidzos

soon Okay. as all efficiencies. recognize Thanks was subsiding, that what look for question. in I'd the control, that investments and necessary then growth pandemic-driven we on as Well, for make first, year, we XXXX, called expense looking and our meaning for planning foremost, began back for everywhere that, first infrastructure responsible that we

years. nine pandemic-driven tenure the also we far many As hiring point at period. did during companies as that growth not, the accelerate employee as average is And I VeriSign over would layoffs, out did

try So that out, we loyal with of also did employee our retiring as we're These also nearly I more should fortunate in shareholders to we have and to to take of control. our stable experienced of the to business outstanding. are all XXXX, opportunities a point can effect advantage parts base. shares X% return value we

So that's where in focused we 'XX.

should what Looking from fully uncertainty. to more all Many suppose 'XX and the economists one to take the and is some pandemic and in surprise be global you're year talking say XXXX forward, continued about with XXXX suggest it that macroeconomic hearing. we're hearing I factors the recovery geopolitical impact CEOs recover. the no and that going than

into our XXXX, So guidance seems to it uncertainty which for factor that did. prudent we

as as XXXX And year. is in we continuation actually can expect us do from of try that a you what to strategy. our what every It's strategy, far different from XXXX not

Rob Oliver

early, preliminary marketing Okay. the just where particularly we've get been Great. rather bit at stage thoughts times years demise this many is wanted very there couple over But at around just new road we're that. of news thoughts technology obviously guys potential domain. the And to risks, now and now. I calls Thanks, to in with your information seems seen to websites I've direct last And wanted seen to and and of your I outset and the And ChatGPT. directing your than to thoughts? relative get people the for -- just it It's the towards the for you ChatGPT them high Jim. the least wanted get a to relative on the weeks have towards in

Jim Bidzos

looks beneficial I'll like right and that's very ChatGPT mean, Okay. question. for a interesting first say potentially I all, an us. thing now, Well, this. of interesting Well,

We it are closely. looking quite at actually

NameStudio at to capabilities its the enhance equally good better some name you users to a it's happens. by they go if which somebody we have channel NameStudio, a already name, domain find product register help looking even actually we're which our NameStudio about ChatGPT when what will to and them similar using maybe see ChatGPT use or We called else, and in help a closely of and taken to does.

see had Internet by are -- searching And I as replace me I report ChatGPT the one So to similar. lot to and I DNS" the head. assistants shaking of that's out is people data DNS. my the just would say, seek. collect efforts. going that that benefit found mean, data the go a and I voice to it a guess, they actually said, that And I at those using you. point, collect one they assistants Voice data it the relevant navigated "Well, for

So complementary. they're completely

Operator

And Citi. we'll our with Ygal question last Arounian from take

Ygal Arounian

starting just on Maybe China.

expectations there You a there driving factors, kind or and -- puts the needle reopening next of just your of given moving the about before think But are the some some impacting of bit. it year? that mentioned takes the for little and

Jim Bidzos

Well, well, Do just you all, an I hear I'm of there. getting echo just that? Oh, -- understanding. guess first

David Atchley

Yes. do. I

Jim Bidzos

if I know now. the be gone to don't echo. hearing it. hearing my I'm audience is Seems

Operator

while proceed. you're Okay. responding. just That's Yes. participant's all. Please line muted I the

Jim Bidzos

there Maybe was right. some there. All Okay. feedback

China of lockdowns, pandemic as XXXX, regulation, China, that So sense. And were the a somewhat rates. the that's in that zero from COVID differently. increased are lot factors economic XXXX. contributed you proportion has renewing in in renewing higher. names It's those unique factor the uncertainty, XXXX, with policy did we see was are China registered treated first-time which And know, lower to ongoing. That of a renewal names in that also, There's

did year signs that some we see returning. We mentioned last of

still my people exists if there's think about bit what about is that slower I any XXXX, a the I the little consensus than comments recovery think that uncertainty thought. -- and maybe -- it's

that changing is things are of sort in. certainly of just factoring it. part China we're in China. But So

economy too be. it's lifting. seems there think that exactly be in some direction impact a what to will moving certainly, early with the I the say different But COVID of restrictions to

our the think and about doing after we if a XXXX guidance say. early of it's trend. just outlook. to we'll too meaningful Maybe tell this quarter, that consider At we'll able representing that's And a obviously, point, reporting next I to worthy be update to you something we quarter more what see

Ygal Arounian

guys Okay. Hopefully, any not one hear -- but me? part, more you on can mute

David Atchley

you. Yes, hearing we're

Jim Bidzos

not You're on mute. Go ahead.

Ygal Arounian

Okay.

couple seeing a was let's of the on One the We've call normalized know But pandemic. get for macro into different counter think on or -- guidance the early get the regularly but one prior domain is, in We're X%. going we duration this domains. I were I cyclicality. the So of question growth ask the now. formation, domains can of other been questions part Is the to your environment starting in to indications then a are is people any now that that business thing growing tech lead X% projects. of lot here, people right about layoffs well new And of all? us that often We've Are you seeing year. factored that? forward, world growing kind of that headwinds kind some got about about plus X%, we at And it about at below pandemic, how right? there just X%,

a for that Or think below year. factors to do guys back Return to rate about for well the levels about? domain? think How growth next pre-COVID? other normalized is guidance of Our there are you

Jim Bidzos

see. let's Well,

although I layoffs starts think of is and data do impact we there's your -- of tried assess have, business of there. might directly point in couple not to we all, have a in to factor that guess, that questions new I question, But we of a the the track. answer part first

new with a then. business jump think going map good can fairly starts to I you back XXXX sized

And and XXXX. some elevated you then activity in it in XXXX, see declining

correlate bit and what. to that domain tend name does the activity a activity we that to So registration saw

say, value part future? for sure that I'll planned to and of for invite going tricky That's business of business and great the is tremendous will names established, year a strong. prospects to think and XXXX. it's we for not and our pre-pandemic be XXXX think I have are think comment We a mean fundamentally as the return But guidance registrations. in. to levels. long-term the are it a to I'm fundamentals it's not We just Domain business to tremendous utility long-term, But George the will our well. predict.

that point. far predicting as a So we haven't return as gone at

is factors So sort than the one COVID of all thought. longer just recovery I and complicated do a overriding people from think, macro of of this

want I ups to bumps think of clear seeing pretty that we're encountering. it's some we're that? do that that the the anything add you and downs George, to and

George Kilguss

I adoption, well think is down, domain statistics The factors for XXXX look that and what if at growing penetration there's growth come And only of saw back we've as during influencing you add, and increase XXXX, look still, Internet business. lot bodes trend think, thing while look I they've longer a I'd of our we clearly, business those a you I significantly. the indicated, at names. e-commerce previously Ygal, Internet our such and we And think that when

Jim Bidzos

would exclusive names one registered in XXXX the now are that at rate, even mid-XXs. I traditional is trend And third just names and some previously second China time, the or renewing of in the we renewed the of is renewing time which Yes. are the that that one statistic, XXXX for the add even

indicator business. good of about a the the So that's I think strength long-term

Ygal Arounian

thing? that what expense that you a trends Last how Can than that XQ. for Great. question. operating control is driving That's talk on it better about? applied have agree if it on we're I'm talking looking in that. about into quite fits e-commerce I separate Or margins, The is just come guidance the since helpful, correctly, the and the and at and where all

George Kilguss

Ygal. Thanks, Yes.

I think of things. a couple

transition prepared As I management remarks, in actually mentioned we did revenue $X.X that of of million in it and year, so, contract in late in $XX my was revenue completed we quarter, all doing in Again, we did during about we recognize the .tv million. at fourth there, as about was for deferred quarter. the TLD XXXX fourth -- the our total out obligations

I management -- this expenses, did year about expenses we of pretty which expenses our were we and get X.X% mentioned, Jim quarter, the at we in looking say, expenses down. as those grew to those our able the in But closely and started beginning, to responsible would second is similar Overall, year. by more last

quarter. As fourth the in quarter, a quarter, seasonal the far we fourth had than in marketing did as the little more done we do bit of third

And there marketing so, increase a some of some sequentially activities. the result was of of those

Operator

turn question-and-answer Atchley. And that conclude conference over back to the the David I'll now does Mr. session.

David Atchley

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

Operator

that today's We day. have for Thank conclude and do you. does thank conference. excellent participation, And an your you

David Atchley	Vice President, Investor Relations and Corporate Treasurer
Jim Bidzos	Executive Chairman and Chief Executive Officer
George Kilguss	Executive Vice President and Chief Financial Officer
Todd Strubbe	President and Chief Operating Officer
Rob Oliver	Robert W. Baird
Ygal Arounian	Citigroup

VeriSign (VRSN) 9 Feb 232022 Q4 Earnings call transcript