Verisign(VRSN) - 2022 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues grew by 7.2% year-over-year, reaching $347 million for Q1 2022 [10][18] - Earnings per share (EPS) increased by 7.5% year-over-year, totaling$ 1.43 for Q1 2022 compared to $1.33 in Q1 2021 [10][20] - Operating income rose to$ 225 million, up 6.8% from $210 million in the same quarter a year ago [18] - Operating margin was 64.8%, slightly down from 65% in the same quarter last year [20] - Net income for the quarter was$ 158 million, compared to $150 million a year earlier [20] - Operating cash flow was$ 207 million, and free cash flow was $200 million, compared to$ 198 million and $192 million respectively for Q1 2021 [21] Business Line Data and Key Metrics Changes - The domain name base for .com and .net totaled 174.7 million, with .com at 161.3 million and .net at 13.4 million, reflecting a year-over-year growth rate of 4% [10][11] - New registrations processed in Q1 were 10.2 million, down from 11.6 million in Q1 2021 [11][39] - The renewal rate for Q1 2022 is expected to be approximately 75.9%, compared to 76% in Q1 2021 [12] Market Data and Key Metrics Changes - The company expects domain name base growth for 2022 to be between 1.75% and 3.5%, reflecting current trends [14][21] - Growth in the domain name base was primarily driven by the US, EMEA, and Asia Pacific regions [38] Company Strategy and Development Direction - The company remains focused on operating, protecting, and enhancing critical internet infrastructure [9] - Continued investments in personnel and infrastructure are planned to support growth [19] - The company is monitoring the process regarding becoming the .web registry operator, with no new updates available [16][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of global macroeconomic factors and the subsiding demand from pandemic-related growth on new registrations [13][30] - The company is studying the geopolitical environment's impact on business but has not made specific assumptions for the forecast [41] Other Important Information - The company has$ 1.2 billion in cash, cash equivalents, and marketable securities at the end of the quarter [14] - Share repurchases totaled $196 million for 895,000 shares, with$ 893 million remaining under the current repurchase program [14][15] Q&A Session Summary Question: Insights on Q1 performance and adjustments made - Management noted that various factors influenced the changes, including subsiding pandemic-related growth and global macroeconomic conditions [30][32] Question: Geographic impact of the war on business - Revenue from Russia, Ukraine, and Belarus is not material, but growth was primarily seen in the US, EMEA, and Asia Pacific regions [34][38] Question: Assumptions regarding geopolitical environment in forecasts - Management stated it is too early to make specific assumptions but acknowledged uncertainty in guidance [41] Question: Preparedness for cyber threats - The company has made significant investments in cybersecurity and continues to monitor the threat environment closely [44][46] Question: Update on .web registry status - Management confirmed no new information beyond what is publicly available from ICANN [48] Question: Components driving SG&A expenses - Increased labor costs and investments in cybersecurity and infrastructure were the main drivers of higher expenses [49]