Earnings call transcript Q2 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, everyone. Welcome to VeriSign's Second Quarter 2023 Earnings Call. Today's conference is being recorded. [Operator Instructions]

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

David Atchley

second Welcome earnings operator. you, quarter to Thank VeriSign's XXXX call.

President George Joining me Strubbe, Executive and and Todd which being Relations webcast available and Chairman This from Vice presentation Kilguss, the are are Jim President under Bidzos, and About Executive and that call CFO. website a the Investor CEO; is VeriSign the end At hours, our earnings presentation be of will on will release. the verisign.com. within There, be you will site available replay the posted. on this few also call, and find call of COO;

Financial filed it are our financial release subject done with the the most the our detail on that and that risks results during quarter the unless in in uncertainties SEC, XX-K. update and specifically are include not unaudited report VeriSign does to we performance a recent statements documents earnings Form guidance our forward-looking or is discuss remarks in through in and Relations EBITDA information and of and to flow. results used presentation our appended adjusted X call. VeriSign, financial results be slide The to after on can non-GAAP by found GAAP today's available which non-GAAP GAAP the we disclosure. the will free Investor discussing include this call is public measures today be the reconciliation matters website cash section

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

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

Jim Bidzos

financial quarter by renewal us. a on the as David. included delivered you, our Thank afternoon quarter The and registry and agreement of infrastructure for to Good focusing the operator. solid .net critical We you results. everyone another successful thank joining mission

.net from operate, purpose-built is this protect billions made in platforms, resolution XX do XXX% pandemic and most. been availability the our domain years, matters to Throughout than Reaching of over investments infrastructure disasters to has XX various the network processes we work years the testament never the important cyber has week, evolving evolve threats, to people the connected marked more last people. mark challenges continuously Internet global name a natural The to our and today. worldwide Additionally, key to past system. in of .com, kept we ongoing what is it

the we agreement. renewal the the with The agreement On June XX, in of XXXX. will The for as given are pricing, renewal the registry ICANN, our our X-year of paid agreement renewal fees renewal and be such of agreement terms the of June next to right agreement announced registry .net .net business expected, unchanged. the of ICANN, presumptive rights term as the the

delivering business our addition financial I'm during on In during the the results quarter, with showed the macroeconomic continued to which this pleased second strength uncertain mission our period. of

year-over-year. domain X.X% second domain up end the the At June, base XX.X% EPS quarter, .net XXX.X of from the in revenues in grew end name million while For names at from XXXX XXX.X million and .com million names, QX up XXX.X and of year-over-year XXXX. grew the totaled

X the name the names, of the quarter. quarter, added first base domain million decreased X.X offsetting names million second domain the by some we During during

a approximately the for last million renewal year a X.X% year. the XX.X of a be We compared that second From compared registration perspective, million XX.X% to second to new new ago. increase quarter rate registrations XX.X year-over-year will XXXX quarter believe with delivered the XX.X%

value demand names the our broad-based there seeing domain for for that we're core strong channel. proposition remain names, engagement registrar drive factors While many are from domain and

especially the growth we between range full for domain China XXXX. primary X% uncertainty, see low demand intact, related rate growth. of the we name now to a this X% fundamentals on updated of With source of base weakness from these continue base with This remains overall domain However, trend, year the drag the name reflects current to expect continued China. and

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

Board During has Directors billion the the stock no quarter, million. the share increased of a and authorized which amount to available program billion third we for common repurchase repurchased of the Effective shares VeriSign for million repurchase of authorized $X.X by expiration. X $XXX $X.XX share total under today, has

on .web forward. with complaint, regarding by seen the On presumably was from consistent of .web, Board ICANN has to the a This Afilias' ICANN's hold directed Directors significant that application objections we're .web ICANN. decision. filed has role be the This many Board's to website, according X, NDC's the nor in not Afilias ICANN's as auction you May our dismissed has application was have move our of posted has Board and finding auction from and pleased statement been .web challenging on NDC's ICANN's policies. placed any Subsequently, IRP now. proved response another that filing

ICANN further an the is not and no delay involved but delegating it. see Given this in decision, yet .web any Board's basis process in we're for we

Finally, in release, increase the today’s have wholesale raise from to $X.XX X, price $X.XX the .net a effective of for of which notice price price February we will $XX.XX as annual announced for XXXX. earnings given domain names

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

George Kilguss

and good afternoon, Jim Thanks, everyone.

share of a of million, June up expense of same second $XXX in ended quarter year same from the Operating an delivered the from XXXX, the and million, XX, X.X% totaled $XXX of $XXX the quarter quarter generated increase the operating For revenue $XXX ago. quarter of for XXXX quarter X.X% the earlier to company income earlier. produced Net for million compared totaled diluted a which $X.XX earnings of quarter second quarter the and of million compared XXXX XXXX. to last year a per $X.XX $XXX compared to $XXX million same million $XXX million year income

and $XXX flow respectively, free flow a period second totaled $XXX from X-month million, June similar $XXX cash and free Operating of the for and were ended which same both was and year XXXX XX flow quarter the ago $XXX Operating cash levels for of $XXX were million period was X-month flow cash for quarter. the cash million, million ago. the up $XXX million at year million and in

between I'll full updated between Revenue billion between be expectation revenue $X.XXX XXXX year still Operating $X.XXX our the and nonoperating mentioned. now And Capital of an income now expense expenditures GAAP and million. $XX expected million the $XX to be name and to million. in net $X.XX which base XX%. million $XX expected X% to tax This be be range now now expected is to range between effective reflects XX% domain the still guidance. expense rate billion. estimates be X%, expected million be that are updated to discuss Interest includes income billion. is income $XXX is Jim expected as interest is rate between will of to to $XX to growth and our

sound second the we continued quarter and of financial continuing VeriSign forward demonstrate year. mission performance XXXX summary, our to during to to objectives look on our throughout deliver the In and

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

Jim Bidzos

to secure you, value infrastructure business teams We in for serve us our our provided focus and management responsibly quarter reliable their managed believe to dedication focus. deliver Thank we which us and and strongly strategic our well, and want to thank disciplined return George. solid allowing efficiently shareholders. and another I services, our continue to

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

Operator

the comes question first line Our Instructions] Oliver Rob [Operator of Baird. from with

Rob Oliver

my first questions for But is and question .com. for total. I've is X it's Jim, you. first got on you

And back it market. China there of hear of bit a but view And some has you your on stimulus, had China to think over the I love appreciate would or to be looks like in was called sort just to other in levels sluggishness little real-time happening, just more guys we see of sounds are what's I remarks the know prepandemic like know all in if prepared relative come in Yellen commentary China, about maybe .com Janet hoped. kind there's activity I coming. for whether of can some it there your really domain factors? the kind and as not

you gets hear love to us also of would out just I rut. this what So think

Jim Bidzos

I the inflation Well, happy which I best. and new to still but wish affecting business economy declining the I my improving, me what I'm rate do the and starts there's factors share while rates, recovery can. let geopolitics still high highs. are the macro answer COVID that knew obvious of extended first, still but their to growth off

factors factor and seem rates. as the As the it, to Stringent business, specific channel main COVID remain continues for registrations both to factor. challenging a soft U.S., it far In registration renewal a new Rob, single how to focus factors in rules don't the China. know and recovery there's is put be and largest there. our It's I

That slower to new they focus their shift in partners channel some than cyclical. is some customer point, At of acquire ARPU before, seen activity. acquisition got you times new we've As to rather economic customers. --

they'll And so to return that.

Our recognizes uncertainty revised of for factors the all that represent the these XXXX. remainder guidance

key things shareholders. and strategy. focus as allocation to us meeting I'll can those the obviously our long-term Continuing creation just for as on add on contractual deliver practicing responsible we and that's we expense can management include our areas but our control, far requirements, capital these control, for value focusing that to

that's helpful. hopes So

Rob Oliver

I is what's X-, the stepping us think that the yes. need whether been the to appreciate this the which going on helpful, back almost very remarks sort into whether next on. process landscape step prepared just that. .web. now you and IRP would beginning some And of think in Very investors this back are journey resets process circumvent your do And it's confused And a the with to hard now. to the in know of X-year also went or it's a And detail I I by now;

perhaps you us currently little view can. help that could how bit you the you a to that color extent If as to provide more

Jim Bidzos

here that that. for keep notes handy, couple Happy of to just do I a purpose.

well, -- to use, experienced that completely like understand they about in talk didn't wouldn't that. of IRP lot easy get me terms a every even there are first operate with we I familiar and and a There's -- this lot quarter if be all, confused. ICANN we the it's world. CEP acronyms lawyers of Let of that

I can of a some bit these background terms. simplify define Maybe with little happened. maybe of So what's even

ICANN. arbitration IRP, a court someone that's can bring we not panel, but review when against So talk about an independent an that lawsuit, first, more like demand in

in put ICANN IRP. ahead during actions violation filer automatically However, based a issue is use last of allowed the cooperative potential the the the behind And are what the hold IRP on process, that, that's been we've its heard IRP you've on CEP claims A are kind bylaws. a discussion ICANN and of a CEP, between few engagement only and all us for or of by those an with associated weeks.

Co Dot about Nu You've that's that also for an and heard another that NDC, agreement that's -- into .web. with entered a acronym, company stands VeriSign

So want give to let history the how really me are because not just it to easier me ICANN just happen you but don't try is terms But with of that just brief ours. going litigation .web. not to speculate to simplify forward, process it's pending much what's some I got here. a now that's we let going of understand about

.web And lengthy VeriSign's, NDC. XXXX, years the an after So backing. plaintiff, Afilias panel IRP pay .web. The the objected But an panel the asking panel and and like them few to a seeking our essentially NDC with sanction to fees. issue to because motion do-over. there once Afilias, auction filed our, Afilias' XXXX that the called disqualify legally was and answer to review attorney In the request IRP issue. A no. auction have owns auction they and time, panel the ordering the the IRP Afilias, panel a ICANN's in a tells company maneuverings, the for in said, Afilias and go award NDC XXXX, Afilias But later ICANN that for tells panel with participation files follow-up to won this frivolous a Afilias, call they ICANN decide to doesn't no. said, again and to

Board XX-month thorough early During it panel's 'XX, a vote a had announced May that filed Afilias They .web the review the XXXX paused .web. CEP staff was the the without that directed Board processing then processing automatically early then follow its process. ICANN by recommendation. of proceed and In with had ICANN's objection, that and NDC's Board review concluded, then year, Afilias' accusations were this and which and the application. ICANN wrong then undertook of to that completed --

the should without that's Afilias be from that that now awarded true. their and allowed use be objection, So Board by IRP, ICANN's and firms, VeriSign .web something in another who substantial. reviewed There's work finding the vote vote a X-year .web awarded ruling a were from to even has working entire with from IRP, XX-month Directors, a submissions new again, But new time, who law supplement and this resulted Afilias, that vote that filed legal earlier of staff resulting the and included to the there's ICANN by affirmative to process record a definitive NDC, a should NDC.

We not delay. litigating and for So believe that has that's is new that's still been trivial. and Afilias

continue Now in the we be this delay be any will should further the next to could ICANN's that to believe see hold with within although IRP, the there terms or during .web delegation challenged. the IRP. continue work decision that not and don't process We but system. have of PLD processing we'll on continues whether ICANN steps, .web, during could ICANN the .web is

I don't that background I helpful. it's of and was what happens I history next? on, to litigation pending comment bit but So as said, want hope

Rob Oliver

really glad although because it's Jim going one, summary, and looked on at of appreciate to I've lot back the I it's I'm know a look I Yes, that for helpful. at need that, it. I'm to transcript

Jim Bidzos

there lot -- a yes. but there's Yes,

Rob Oliver

really. Yes,

that's anymore, even year it. I last not. ask, are in relative price changed a -- know period I and lot wanted in one your your and a you mentality anything, on on it. .net have for yourself guys And I appreciate .net. so is just coming You a What's -- the not that the long did now has so you and one really opportunity view will of just price where second in What, of through it's I'm question to take to I'll row to of to .net? to you if for pricing? guys on where relative availing squeeze changed off me raise there .net. mindset, only terms

George Kilguss

quite at I time. George. if of increase you is a This mean look a Rob. taken I price Thanks, we for Yes. not mean, back .net, had period

think we the here to in last announced one took obviously, and was price we I took increase XXXX. in just February And $X.XX.

we'll where competes just positioned So raising look the at .net we're price as is with. with to within we the other at the keeping the marketplace which .net, industry, think TLDs we about the competitive it's we and think that announced we'll look it within it -- that

Operator

with from of the Ygal will our take question We last line Arounian Citigroup.

Ygal Arounian

the that. Two back on I overall to want domains. to come growth in parts

smaller comment I China base. about the piece revenue dig of being wanted and of your China First, into biggest the this kind to of part is a overall much

want just impact. driving understand I So like how it's that to

then, Like their adds, U.S. channel growth can So registration? the to any focus their relatively partners a other push be? how are focusing on how So an color demand? in the versus net ex-China that of they there the like? driving the you is saying Is healthy? growth? on Is in U.S. might can channel bit? little what it what you the Can spurring domain up interesting. and the marketing looks comment growth regions can that are give domain and help And for was the in and point and is ARPU for responsible you really Like on the elaborate what just you -- have much role that impact the channel

George Kilguss

Sure, This George. Yes. Ygal. is

perspective. base question was domain from first kind a name your of So

out seen name growth and seen domain on segments China, segment our the But have base base would we We other year-over-year I the here from growing. have regions all that in EMEA been a say decline. domain all that QX. we've name report U.S.,

you at XX-Q revenue look the to afternoon our in those want growth of that's some you segments. relative look this if can think and rates probably filed terms, get I

that You'll about was XX% X% the was of China weighted category quarter -- and up about EMEA comprised the down up all X% was was see about X.X%. XX%, in up comprised the that average really and and U.S. the that about of

growth. seeing So we're still

say up. relatively would China, on new in we that But here new as U.S. were is units, a The the second unit quarter down. from report the other far As markets I flat again, was perspective.

but on growth as a seeing revenue on well. here So Jim the unit mentioned, in drag has here some growth growth been, really still new and a market bit China as little

Jim Bidzos

Jim. Ygal, Yes,

Your just this, user, can upfront, the after question thing limited one know but through let have say that end you want we obviously, but registrars. clarify only to about -- ARPU, I sell the we if visibility want just question me into you of say you think I sort

think is typical is, ARPU customer cost of those I to business. acquisition in is on for them the and conditions. rather activities point phenomenon. results certain advantageous In economic conditions, different of more that of the So focus as economic certain a becomes ARPU more the it efficient are and any vary than sort It's

based phenomenon just that the is understand we affects our on else, it. a anything So everybody like that's channel that observation about unique on not see or particularly

And we this or can does, to bundle how their something they looking websites their behavior, observe at obviously, is products. this registries, DNS, through monitoring every unique the own and and registrations our not just But registrars to just business clarify. that

new there's while it's a there you they then not -- we on So to focus mean it ARPU an what We for cycles, limit tends a to a back go through see acquisition. see insight customer And and a factual go there's observation that that, you I obviously, observe. into and be observation, -- on based cyclical. just what great

it was went through. this very XXXX, So in had we we a we see I of that that -- think cycle visible

Ygal Arounian

like partners consolidation spend. pull back on within key efficiencies I and of then you've we of materially the was what think the marketing on tie some space about, marketing And some saw and the [indiscernible]. from also interesting channel kind those just seen talked Okay. comment because asking levers from to really I'm we've it the

not marketing it I'm about has the if that impact think tying an sure expenses. to what So likely if you that, to it,

Jim Bidzos

last difficulty retailers has that. some we've the of another obviously, during an apologize, their again. anything I going of effect certainly factor hearing part affected question, that bit and in the marketing a is ask registrations in If line pandemic to vary is last Obviously, had the us. that that as some I missed and I The your are any Marketing various economic seen spend circumstances. And spend please part of behavior well. fuzzy. on recently,

Ygal Arounian

that's it. No,

really I haven't think it to question. the really I It's so thought I about that way, got interesting. helpful mean you've interesting hear. and

Jim Bidzos

I helpful. it great. Okay, was was glad

David Atchley

Ygal. Thanks, Great.

Operator

concludes This I today's back Atchley David for question-and-answer session. the call now turn will final to comments.

David Atchley

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

Operator

call. Thank may today's concludes you and your disconnect. This now participation you for

VeriSign (VRSN) 27 Jul 232023 Q2 Earnings call transcript