Verisign(US:VRSN)2024-02-09 01:00Financial Data and Key Metrics Changes - In 2023, revenue grew by 4.8% year-over-year to $1.493 billion, while operating income increased by 6.1% to $1 billion [9][19] - Operating expenses totaled $492 million, up 2.2% from the previous year, resulting in an operating margin of 67% [19][20] - Free cash flow for 2023 was $808 million, with Q4 free cash flow at $199 million [23][20] - Net income for Q4 2023 was $265 million, leading to diluted earnings per share of $2.860, compared to $1.70 in Q4 2022 [21][22] Business Line Data and Key Metrics Changes - The domain base in .com and .net totaled 172.9 million, down 0.6% from 2022, with a decrease of 1.2 million names in Q4 [11][12] - New registrations in Q4 were 9 million, down from 9.7 million in the same quarter last year, and total new registrations for 2023 were 39.4 million, a decrease of 490,000 from 2022 [12][13] - The renewal rate for Q4 2023 was approximately 73.1%, slightly down from 73.3% a year ago, with a full-year renewal rate of 73.9%, below 74.2% in 2022 [12][13] Market Data and Key Metrics Changes - The decline in domain names was primarily driven by a decrease in demand from China, with a loss of 2.2 million names from China-based registrars in 2023 [14][15] - Excluding China, the domain name base grew by 1.2 million names or 0.8% during 2023 [15] - The company expects the domain name base to remain flat in 2024, with a range of negative 1% to positive 1% [16] Company Strategy and Development Direction - The company announced a price increase for .com domain names from $9.59 to $10.26 effective September 1, 2024, while maintaining competitiveness [17] - The management emphasized responsible and disciplined business management, focusing on providing secure and reliable infrastructure services [27][28] Management's Comments on Operating Environment and Future Outlook - Management noted that the challenging economic conditions and regulatory environment in China are impacting demand, making it difficult to predict future trends [31] - The company remains cautious about guidance concerning China, expecting continued negative impacts on revenue and domain base growth in 2024 [15][31] Other Important Information - The company returned $883 million to shareholders through share repurchases in 2023, with $1.12 billion remaining authorized under the current share repurchase program [10] - Operating cash flow for 2023 was $854 million, with Q4 operating cash flow at $204 million [23][20] Q&A Session Summary Question: Update on China’s regulatory environment and its impact - Management highlighted that the decline in demand from China is due to a combination of challenging economic conditions, a more stringent regulatory environment, and foreign exchange issues [31] Question: Impact of China on domain base guidance - Management indicated that the negative impact from China is expected to continue into 2024, influencing both revenue and domain name base guidance [36] Question: Update on .web domain application - Management reiterated that there are no new updates on the .web application, emphasizing confidence in the eventual outcome [38] Question: Trends in domain growth outside of China - Management noted that growth outside of China primarily came from EMEA and other segments, while the US market was slightly down [43] Question: Margin outlook and investment plans for next year - Management discussed a projected expense growth rate of about 4.6% for 2024, with ongoing investments aligned with their strategic framework [44] Question: Thoughts on GoDaddy's partnership with Ethereum Name Service - Management viewed the partnership positively, seeing it as a reinforcement of the utility of domain names and their role as stable global identifiers [46]