Verisign(VRSN)2023-10-27 00:56Financial Data and Key Metrics - Revenue for Q3 2023 was $376 million, up 5.4% YoY [4] - Operating income for Q3 2023 was $254 million, up 7.4% YoY [4] - Net income for Q3 2023 was $188 million, compared to $169 million in Q3 2022 [26] - Diluted EPS for Q3 2023 was $1.83, up from $1.58 in Q3 2022 [26] - Operating cash flow for Q3 2023 was $245 million, down from $262 million in Q3 2022 [26] - Free cash flow for Q3 2023 was $217 million, down from $255 million in Q3 2022 [26] - The domain name base for .com and .net totaled 173.9 million at the end of Q3 2023, slightly up from 173.8 million at the end of 2022 [37] - The domain name base decreased by 0.5 million in Q3 2023 [37] - The renewal rate for Q3 2023 was approximately 73.4%, compared to 73.7% in Q3 2022 [23] Business Line Data and Key Metrics - New domain registrations in Q3 2023 were 9.9 million, flat YoY [2] - Revenue from China-based registrars was $22 million, down $5 million YoY [7] - Revenue from registrars outside China was $354 million, up $24 million YoY [7] Market Data and Key Metrics - China market demand remains weak due to challenging economic conditions, stringent regulations, and weaker local currency [7][43] - Ex-China registrars showed growth in both new registrations and domain name base [9][23] - The company expects the full-year 2023 domain name base change to be between -0.4% and +0.4%, reflecting uncertainty primarily due to China's weakness [23] Company Strategy and Industry Competition - The company is focused on delivering secure and reliable infrastructure services and managing expenses responsibly [27][35] - The introduction of .web is expected to add more registration choices and attract millions of potential customers [3] - The company continues to invest in infrastructure while managing expenses, with a focus on responsible expense control [16][31] Management Commentary on Operating Environment and Future Outlook - The company acknowledges ongoing macroeconomic and geopolitical turbulence, including high interest rates, inflation, and geopolitical issues [9][17] - The company remains optimistic about its business fundamentals and ability to deliver strong financial results despite external challenges [28] - The company expects full-year 2023 revenue to be between $1.490 billion and $1.495 billion, with operating income between $995 million and $1 billion [40] Other Important Information - The company repurchased 1.1 million shares for $220 million in Q3 2023, with $1.34 billion remaining under the share repurchase program [38] - The company ended Q3 2023 with $943 million in cash, cash equivalents, and marketable securities [38] Q&A Session Summary Question: China Market Outlook - The company noted weak demand in China due to economic conditions, regulatory environment, and currency issues [7][43] - Management believes the situation in China is a "perfect storm" and is uncertain when it will stabilize [44] Question: ICANN's .web Decision - The company supports ICANN's decision regarding .web and believes the IRP filed by Altanovo is for delay purposes [3][39] - The company intends to bring .web to market and is monitoring legal proceedings [45] Question: Domain Growth by Geography - The company does not break out domain name base by geography for competitive reasons but points to geographic revenue disclosures for growth insights [9][47] - The company charges the same price across all markets, and the domain name base remains resilient outside of China [47] Question: Cost Management and Investments - The company expects expenses to be lower by around 3% in 2023, with $5 million in cost savings from .tv migration [10] - The company will provide full-year 2024 guidance in the next earnings call [10][16] Question: Macroeconomic Impact - The company acknowledges macroeconomic and geopolitical challenges, including high interest rates and inflation, but remains focused on controlling what it can [12][17] - The company is cautious about the impact of global events, such as the Ukraine conflict and Middle East tensions, on the economy [17]