On February 6, 2025, VeriSign Inc (VRSN, Financial), a global provider of critical internet infrastructure and domain name registry services, released its 8-K filing detailing the financial results for the fourth quarter and full year of 2024. The company reported a revenue of $395 million for the fourth quarter, exceeding the analyst estimate of $394.96 million. However, the diluted earnings per share (EPS) of $2.00 fell short of the estimated $2.01.
Company Overview
VeriSign Inc (VRSN, Financial) is the sole authorized registry for several generic top-level domains, including the widely utilized .com and .net domains. The company operates critical internet infrastructure to support the domain name system, including two of the world's 13 root servers used to route internet traffic. In 2018, VeriSign sold off its Security Services business to focus on its core registry operations.
Performance and Challenges
VeriSign Inc (VRSN, Financial) reported a 3.9% increase in revenue for the fourth quarter of 2024 compared to the same period in 2023. Operating income also rose to $264 million from $256 million in the previous year. Despite these positive indicators, the net income for the quarter decreased to $191 million from $265 million in Q4 2023, primarily due to the absence of certain income tax benefits recognized in the previous year.
The company faces challenges with a 2.1% decrease in .com and .net domain name registrations compared to the end of Q4 2023, and a decline in the renewal rate from 73.5% to 72.2% for the third quarter of 2024. These challenges could impact future revenue growth if not addressed.
Financial Achievements
For the full year 2024, VeriSign reported a revenue of $1.56 billion, a 4.3% increase from 2023, and an operating income of $1.06 billion, up from $1.00 billion. The company's ability to maintain a strong operating income is crucial in the software industry, where operational efficiency can significantly impact profitability.
Key Financial Metrics
VeriSign ended 2024 with cash, cash equivalents, and marketable securities totaling $600 million, a decrease of $326 million from the previous year. The company generated $903 million in cash flow from operations for the full year, up from $854 million in 2023. Deferred revenues increased by $58 million to $1.30 billion, indicating a healthy pipeline of future revenue.
| Metric | Q4 2024 | Q4 2023 | 2024 | 2023 |
|---|---|---|---|---|
| Revenue | $395 million | $380 million | $1.56 billion | $1.49 billion |
| Operating Income | $264 million | $256 million | $1.06 billion | $1.00 billion |
| Net Income | $191 million | $265 million | $786 million | $818 million |
| Diluted EPS | $2.00 | $2.60 | $8.00 | $7.90 |
Analysis and Commentary
VeriSign's financial performance in 2024 reflects its ability to generate consistent revenue growth and maintain strong operating income. However, the decline in net income and EPS highlights the impact of non-recurring tax benefits from the previous year. The company's focus on renewing key agreements, such as the .com Registry Agreement with ICANN, underscores its commitment to sustaining its market position.
In 2024 we extended our unparalleled record of uninterrupted availability for .com and .net resolution to more than 27 years. We also successfully renewed our .com registry agreement with ICANN and the Cooperative Agreement with the National Telecommunications and Information Administration," said Jim Bidzos, Executive Chairman and Chief Executive Officer.
Overall, while VeriSign Inc (VRSN, Financial) faces challenges in domain registration growth, its financial stability and strategic agreements position it well for future opportunities in the internet infrastructure sector.
Explore the complete 8-K earnings release (here) from VeriSign Inc for further details.
