Verisign(VRSN) - 2018 Q4 - Annual Report

Domain Name Operations - The company operates as the exclusive registry for .com, .net, and .name gTLDs, managing a master directory of all second-level domain names [21]. - The company processes over 152 billion queries daily through its global DNS servers, ensuring reliable access to domain name services [29]. - The company has agreements with ICANN and the U.S. Department of Commerce, which impose certain pricing and operational restrictions on .com, .net, and .name [39]. - The company has experienced a higher volume of domain name transactions in the first quarter of the year, impacting its deferred revenue balance [25]. - The company offers promotional marketing programs for registrars to stimulate growth in the .com and .net domain name base [33]. - The .com Registry Agreement allows the company to operate as the sole registry operator for .com domain names until November 30, 2024, with a quarterly payment of $0.25 to ICANN for each domain registered or renewed [44]. - Under Amendment 35, the maximum price for a .com domain name can be increased by up to 7% in each of the final four years of each six-year period, starting from October 26, 2018 [47]. - The company is required to operate the .com TLD in a content-neutral manner and is restricted from acquiring more than a 15% ownership interest in any ICANN-accredited registrar selling .com domain names [47]. Infrastructure and Operations - The company maintains a robust operations infrastructure with three secure data centers and over 160 resolution sites worldwide [29]. - The company has disaster recovery and business continuity capabilities designed to handle the loss of entire data centers, ensuring no data loss [32]. - The company actively investigates and incubates new concepts through its innovation pipeline, focusing on enhancing current technologies and developing new services [35]. Financials and Investments - As of December 31, 2018, the company held$ 1.12 billion in fixed income securities, primarily U.S. Treasury bills with maturities of less than one year [215]. - The fair values of the company's senior notes as of December 31, 2018, were $741.3 million for notes issued in 2013,$ 502.2 million for notes issued in 2015, and $524.2 million for notes issued in 2017 [219]. - The company has foreign currency forward contracts totaling$ 28.5 million to mitigate exchange rate fluctuations, with gains or losses largely offset by the remeasurement of foreign currency denominated assets and liabilities [217]. - The company has not entered into any market risk sensitive instruments for trading purposes, focusing instead on managing interest rate and foreign exchange risks [214]. Workforce and Intellectual Property - The company has a total employee headcount of 900 as of December 31, 2018, down from 990 in 2016, indicating a reduction in workforce [55]. - The company relies on a combination of intellectual property protections, including patents and trademarks, to safeguard its proprietary technologies and methodologies [51]. Regulatory Environment - The company faces competition from over 1,200 operational gTLD registries and various service providers offering outsourced domain name registration [41]. - The company is subject to evolving industry regulations, including data privacy laws in the European Union and country-level regulations that may affect its operations [42]. - The company is engaged in ongoing discussions with ICANN regarding potential amendments to the .com Registry Agreement to enhance internet security and stability [44].