VRSN Q1 Earnings Call: Domain Growth and Dividend Initiation Highlight Strategic Shift
In This Article:
Domain name registry operator Verisign (NASDAQ:VRSN) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 4.7% year on year to $402.3 million. Its GAAP profit of $2.10 per share was in line with analysts’ consensus estimates.
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VeriSign (VRSN) Q1 CY2025 Highlights:
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Revenue: $402.3 million vs analyst estimates of $401.8 million (4.7% year-on-year growth, in line)
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EPS (GAAP): $2.10 vs analyst expectations of $2.09 (in line)
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Operating Margin: 67.4%, in line with the same quarter last year
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Free Cash Flow Margin: 71%, up from 56.1% in the previous quarter
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Market Capitalization: $26.42 billion
StockStory’s Take
VeriSign’s first quarter was defined by growth in its core domain name registry business and a significant capital allocation shift. Management pointed to a sequential improvement in new domain registrations and higher renewal rates, attributing these gains to increased registrar engagement and the rollout of targeted marketing programs. CEO Jim Bidzos emphasized, “We’re seeing registrars shift back toward customer acquisition, and our marketing initiatives are beginning to show results.”
Looking ahead, leadership remains cautious due to ongoing macroeconomic uncertainty but raised its outlook for the domain name base given encouraging early trends. VeriSign’s decision to initiate a quarterly dividend marked a notable evolution in its approach to returning capital, with CFO George Kilguss stating the company aims to balance ongoing share buybacks and dividends while maintaining liquidity and investing for growth.
Key Insights from Management’s Remarks
VeriSign’s management explained first quarter performance by referencing improved domain registration activity and operational changes, while also detailing a new dividend program and leadership transition.
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Domain registration momentum: Management attributed the higher new registrations and improved renewal rates to increased registrar engagement, especially through new marketing programs rolled out in late 2024 and early 2025. These programs allowed registrars greater flexibility and contributed to a net increase of 777,000 domain names.
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Geographic diversification: All three major regions—the US, EMEA (Europe, Middle East, Africa), and Asia Pacific—experienced domain base growth, which management noted as a positive trend compared to recent quarters.
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Shift in registrar behavior: CEO Jim Bidzos highlighted a return by registrars to customer acquisition strategies, moving away from a prior focus on average revenue per user (ARPU). This was evidenced by increased marketing spend, including Super Bowl advertising by registrars for the first time in years.
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Capital allocation changes: The introduction of a quarterly cash dividend alongside continued share repurchases represents a strategic shift in capital return. Management explained this diversification as a response to business stability and a desire to broaden return methods.
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Leadership transition: The upcoming retirement of CFO George Kilguss and the appointment of John Callis as the next CFO was described as a seamless transition, with Callis having previously served in interim CFO roles and worked closely with Kilguss.