Verisign(VRSN) - 2025 Q2 - Quarterly Report

PART I—FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Verisign's unaudited condensed consolidated financial statements, including balance sheets, income, deficit, and cash flows, are presented Condensed Consolidated Balance Sheets This section presents the company's financial position, detailing assets, liabilities, and stockholders' deficit for the reported periods Condensed Consolidated Balance Sheets (June 30, 2025 vs. December 31, 2024) | Metric (in millions) | June 30, 2025 | December 31, 2024 | | :------------------- | :------------ | :---------------- | | ASSETS | | | | Cash and cash equivalents | $314.3 | $206.7 | | Marketable securities | $279.5 | $393.2 | | Total current assets | $682.3 | $663.8 | | Total assets | $1,407.8 | $1,406.5 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Deferred revenues (current) | $1,034.3 | $973.5 | | Current senior notes | — | $299.8 | | Total current liabilities | $1,259.6 | $1,531.1 | | Long-term senior notes | $1,786.9 | $1,492.5 | | Total liabilities | $3,401.6 | $3,364.4 | | Total stockholders' deficit | $(1,993.8) | $(1,957.9) | | Total liabilities and stockholders' deficit | $1,407.8 | $1,406.5 | - Cash and cash equivalents increased by $107.6 million from December 31, 2024, to June 30, 2025, while marketable securities decreased by $113.7 million[10] - Current senior notes were fully repaid by June 30, 2025, while long-term senior notes increased by $294.4 million, reflecting new debt issuance[10] Condensed Consolidated Statements of Comprehensive Income The company's financial performance, including revenues, operating income, and net income, is presented for the reported periods Condensed Consolidated Statements of Comprehensive Income (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $409.9 | $387.1 | $812.2 | $771.4 | | Operating income | $280.7 | $266.2 | $551.9 | $525.1 | | Net income | $207.4 | $198.8 | $406.7 | $392.9 | | Basic EPS | $2.21 | $2.01 | $4.32 | $3.93 | | Diluted EPS | $2.21 | $2.01 | $4.31 | $3.93 | - Revenues increased by 6% for the three months ended June 30, 2025, and 5% for the six months ended June 30, 2025, compared to the same periods in 2024[12] - Net income grew by 4.3% for the three months and 3.5% for the six months ended June 30, 2025, year-over-year[12] Condensed Consolidated Statements of Stockholders' Deficit Changes in stockholders' deficit, including stock repurchases, dividends, and net income, are detailed for the reported periods Condensed Consolidated Statements of Stockholders' Deficit (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total stockholders' deficit, beginning of period | $(1,977.0) | $(1,635.7) | $(1,957.9) | $(1,581.0) | | Repurchase of common stock | $(166.8) | $(390.3) | $(408.5) | $(660.2) | | Common stock cash dividends | $(72.1) | — | $(72.1) | — | | Net income | $207.4 | $198.8 | $406.7 | $392.9 | | Total stockholders' deficit, end of period | $(1,993.8) | $(1,816.4) | $(1,993.8) | $(1,816.4) | | Cash dividends declared per common share | $0.77 | — | $0.77 | — | - The company initiated cash dividends of $0.77 per common share in 2025, totaling $72.1 million for the three and six months ended June 30, 2025[14] - Common stock repurchases decreased significantly, from $390.3 million in Q2 2024 to $166.8 million in Q2 2025, and from $660.2 million in H1 2024 to $408.5 million in H1 2025[14] Condensed Consolidated Statements of Cash Flows The company's cash inflows and outflows from operating, investing, and financing activities are presented for the reported periods Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30, in millions) | Metric | 2025 | 2024 | | :------------------------------------------ | :--- | :--- | | Net cash provided by operating activities | $493.8 | $417.7 | | Net cash provided by investing activities | $104.6 | $246.5 | | Net cash used in financing activities | $(491.0) | $(651.9) | | Net increase in cash, cash equivalents, and restricted cash | $107.5 | $12.0 | - Net cash provided by operating activities increased by $76.1 million (18.2%) for the six months ended June 30, 2025, primarily due to higher cash collections from customers[17][74] - Net cash used in financing activities decreased by $160.9 million, driven by proceeds from new senior note issuance and lower share repurchases, partially offset by debt repayment and dividend payments[17][77] Notes to Condensed Consolidated Financial Statements Additional information and explanations for the condensed consolidated financial statements, covering debt, equity, and revenue, are provided - The company issued $500.0 million of 5.25% senior unsecured notes due June 1, 2032, on March 11, 2025, and used the proceeds to repay $500.0 million of 5.25% senior unsecured notes due April 1, 2025[28][29] - The Board of Directors authorized an additional $913.1 million for common stock repurchases on July 24, 2025, bringing the total available authorization to $1.50 billion[30] - Verisign declared a cash dividend of $0.77 per share on April 23, 2025, totaling $72.1 million, and intends to continue quarterly cash dividends[33] Revenues by Geography (in millions) | Region | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | U.S. | $270.5 | $257.7 | $536.6 | $513.0 | | EMEA | $68.8 | $61.6 | $135.8 | $121.9 | | APAC | $45.5 | $43.8 | $89.9 | $88.7 | | Other | $25.1 | $24.0 | $49.9 | $47.8 | | Total | $409.9 | $387.1 | $812.2 | $771.4 | ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses Verisign's financial condition and results of operations, focusing on business trends, revenue, expenses, and liquidity Overview This section provides an overview of Verisign's business, focusing on its critical internet infrastructure and domain name registry services - Verisign is a global provider of critical internet infrastructure and domain name registry services, operating Root Zone Maintainer Services and two global internet root servers[46] - The company provides registration and authoritative resolution services for .com and .net gTLDs, which support the majority of global e-commerce[46] - As of June 30, 2025, Verisign managed 170.5 million .com and .net registrations, a 0.1% decrease from June 30, 2024, but a net increase of 0.7 million from March 31, 2025[47][48] Business Highlights and Trends This section summarizes key financial and operational highlights, including revenue, domain registrations, renewal rates, and share repurchases Key Financial and Operational Highlights | Metric | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | YoY Change (3M) | YoY Change (6M) | | :-------------------------------- | :------------------------------- | :----------------------------- | :-------------- | :-------------- | | Revenues | $409.9 million | $812.2 million | +6% | +5% | | Operating income | $280.7 million | $551.9 million | +5% | +5% | | .com and .net registrations (June 30, 2025) | 170.5 million | N/A | -0.1% (vs. June 30, 2024) | N/A | | New .com and .net registrations (3M) | 10.4 million | N/A | +13% (vs. 9.2M in 2024) | N/A | | Q1 2025 .com and .net renewal rate | 75.5% | N/A | +1.4 pp (vs. 74.1% in Q1 2024) | N/A | | Cash flows from operating activities (6M) | N/A | $493.8 million | N/A | +18.2% (vs. $417.7M in 2024) | - The company repurchased 0.6 million shares of common stock for $162.6 million during Q2 2025, with $630.1 million remaining under the share repurchase program as of June 30, 2025[48] - A cash dividend of $0.77 per share was declared on April 23, 2025, totaling $72.1 million, and another was declared on July 22, 2025, payable on August 27, 2025[49] Results of Operations This section analyzes the company's financial performance, detailing changes in revenues, costs, expenses, and net income Results of Operations as a Percentage of Revenues | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | 100.0% | 100.0% | 100.0% | 100.0% | | Total costs and expenses | 31.5% | 31.2% | 32.1% | 31.9% | | Operating income | 68.5% | 68.8% | 67.9% | 68.1% | | Net income | 50.6% | 51.4% | 50.1% | 50.9% | - Revenues increased due to .com and .net price increases, partially offset by a slight decline in the domain name base compared to the prior year, but with improved new registrations and renewal rates compared to December 31, 2024[53][54] - Cost of revenues increased slightly due to higher compensation and benefits expenses, including stock-based compensation, and an increase in average headcount[58] - Selling, general and administrative expenses increased primarily due to higher compensation and benefits expenses, including stock-based compensation, driven by increased headcount, health insurance benefits, bonus expenses, and annual salary increases[61][62] - Non-operating income, net, decreased due to lower interest income from reduced investments in debt securities and slightly lower interest rates[64] Liquidity and Capital Resources This section discusses the company's liquidity position, capital resources, and cash flow activities to meet financial obligations Principal Sources of Liquidity (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $314.3 | $206.7 | | Marketable securities | $279.5 | $393.2 | | Total | $593.8 | $599.9 | - The company believes existing cash, cash equivalents, marketable securities, and funds from operations, along with borrowing capacity, are sufficient to meet capital requirements and service debt for the next 12 months and beyond[71] - Net cash provided by operating activities increased by $76.1 million to $493.8 million for the six months ended June 30, 2025, driven by increased cash from customers[72][74] - Net cash provided by investing activities decreased by $141.9 million to $104.6 million, primarily due to a decrease in net proceeds from marketable securities[72][75] - Net cash used in financing activities decreased by $160.9 million to $491.0 million, influenced by new senior note issuance and reduced share repurchases[72][77] ITEM 3. Quantitative and Qualitative Disclosures About Market Risk No significant changes in the company's market risk exposures have occurred since December 31, 2024 - No significant changes in market risk exposures have occurred since December 31, 2024[78] ITEM 4. Controls and Procedures Disclosure controls and internal control over financial reporting were effective as of June 30, 2025, with no material changes - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025[80] - There were no material changes in internal control over financial reporting during the three months ended June 30, 2025[81] - The company acknowledges the inherent limitations of control systems, which provide reasonable, not absolute, assurance against material errors or fraud[82] PART II—OTHER INFORMATION ITEM 1. Legal Proceedings This section outlines the company's legal proceedings, including an IRP against ICANN, with no material adverse effect expected on financial condition - Verisign was granted participation in an Independent Review Process (IRP) filed against ICANN by Afilias Domains No. 3 Limited (now Altanovo Domains Limited) on May 22, 2025, concerning the .web auction[84] - The company is involved in various routine investigations, claims, and lawsuits, none of which are currently expected to have a material adverse effect on its financial condition, results of operations, or cash flows[85] ITEM 1A. Risk Factors No material changes to the company's risk factors have occurred since the Form 10-Q for the period ended March 31, 2025 - There have been no material changes to the company's risk factors since the Form 10-Q for the period ended March 31, 2025[86] ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details common stock repurchase activity, including shares purchased, average price, and remaining authorization under the program Share Repurchase Activity (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased (thousands) | Average Price Paid per Share | Approximate Dollar Value of Shares That May Yet Be Purchased (millions) | | :----------------- | :----------------------------------------- | :--------------------------- | :-------------------------------------------------------------------- | | April 1 - 30, 2025 | 311 | $250.49 | $714.8 | | May 1 - 31, 2025 | 278 | $279.70 | $636.9 | | June 1 - 30, 2025 | 25 | $274.64 | $630.1 | | Total | 614 | | | - As of June 30, 2025, $630.1 million remained available for future share repurchases under the program, which has no expiration date[87][90] - Effective July 24, 2025, the Board authorized an additional $913.1 million for repurchases, bringing the total authorization to $1.50 billion[90] ITEM 5. Other Information Recent corporate governance updates, including Bylaws amendments and insider trading arrangements, are covered in this section - On July 21, 2025, the Board approved and adopted Amended and Restated Bylaws, updating procedural and disclosure requirements for stockholder nominations of directors or proposals of other business[89][90] - The amended Bylaws require stockholders conducting proxy solicitations to provide specific information and use a proxy card color other than white[90] - No directors or executive officers adopted, terminated, or modified Rule 10b5-1 plans or other trading arrangements during the quarter ended June 30, 2025[91] ITEM 6. Exhibits All exhibits filed as part of the Form 10-Q, including corporate governance documents, certifications, and interactive data, are listed - Key exhibits include the Restated Certificate of Incorporation, Certificate of Amendment, Restated Bylaws, and certifications from the Principal Executive and Financial Officers[92] - Interactive Data Files (XBRL) are also included, with XBRL tags embedded within the Inline XBRL document[92]