RESTON, VA – VeriSign Inc (NASDAQ:VRSN)., a global provider of domain name registry services and internet infrastructure, announced on Monday the renewal of its .com Registry Agreement with the Internet Corporation for Assigned Names and Numbers (ICANN). The renewed agreement, which takes effect on December 1, 2024, follows the expiration of the prior agreement on November 30, 2024.
The updated contract introduces provisions to better align with ICANN's Base Registry Agreement, such as permissible fee increases tied to the U.S. Consumer Price Index, and new obligations aimed at mitigating Domain Name System (DNS) abuse. Additionally, the agreement stipulates service level requirements for the Registration Data Access Protocol and includes commitments to enhance the security, stability, and resiliency of the .com Top-Level Domain (TLD), with new security incident reporting commitments.
Notably, the agreement maintains the current pricing structure for .com domain names, with no changes to the cost that VeriSign can charge.
In conjunction with the registry agreement, VeriSign and ICANN also amended a separate Letter of Intent (LOI), originally dated March 27, 2020, and amended on July 1, 2023. This amendment continues the collaboration between the two entities to bolster the security and stability of the .com and .net TLDs and the broader DNS.
The amendment includes discussions on Internationalized Domain Names and the renewal of the LOI on similar terms before its expiration on December 31, 2025.
In other recent news, VeriSign reported its third-quarter 2024 results, indicating a modest revenue growth of 3.8% to $391 million. However, the company also reported a decline in its total domain name base and projected lower renewal rates. Despite these challenges, VeriSign's earnings per share increased by 13.1% to $2.07.
The company is planning new marketing initiatives to stimulate growth in the domain name base, with full engagement expected to extend into 2025. For the full year of 2024, VeriSign expects revenue to be between $1.554 billion and $1.559 billion, with operating income projected between $1.054 billion and $1.059 billion.
Concurrently, VeriSign maintains a stable liquidity position with $645 million in cash and has repurchased 1.7 million shares for $301 million during the quarter. Despite the declining domain name base and lower renewal rates, the company remains committed to returning excess cash to shareholders.
InvestingPro Insights
VeriSign's renewal of its .com Registry Agreement with ICANN underscores the company's strong position in the domain registry market. This is reflected in InvestingPro data, which shows VeriSign's impressive gross profit margin of 87.58% for the last twelve months as of Q3 2024. This high margin demonstrates the company's efficiency in managing its core business of domain registry services.
InvestingPro Tips highlight that VeriSign operates with a moderate level of debt and has been aggressively buying back shares, indicating confidence in its financial stability and future prospects. These factors align well with the company's commitment to maintaining the integrity of the .com domain, as outlined in the renewed agreement.
The company's market capitalization stands at $17.79 billion, reflecting its significant presence in the internet infrastructure sector. With a P/E ratio of 21.39, VeriSign is trading at a level that suggests investors are optimistic about its future earnings potential, particularly in light of the renewed agreement that maintains the current pricing structure for .com domain names.
For readers interested in a deeper analysis, InvestingPro offers 11 additional tips on VeriSign, providing a comprehensive view of the company's financial health and market position.
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