VeriSign, Inc. (VRSN) reported a net loss of $10.6 million or $0.06 per diluted share compared to a net income of $35.2 million or $0.19 per share in the year-ago quarter.
Excluding one-time items but including stock-based compensation expense, net income came in at $0.32 per share, beating the Zacks Consensus Estimate of $0.30.
VeriSign reported revenue of $190 million in the second quarter of 2011, up 5% sequentially and up 13% from the year-ago quarter.
In 2010, VeriSign sold the Authentication Services business to Symantec (SYMC) and closed down the operations of non-core Content Portal Services (CPS).
The continuing operations of the company consist primarily of the results of the Naming Services business, which comprises Registry Services and Network Intelligence and Availability (NIA) Services. NIA Services include the Managed Domain Name System (Managed DNS), iDefense and Distributed Denial of Service (DDoS) mitigation businesses.
The base of registered names for .com and .net totaled 110 million active domain names, up from 108 million names at the end of March and growing 8% year over year. The company added 8.1 million net new domain names in the quarter, up 2% year over year.
Operating margin came in at 51.7% for the second quarter of 2011, up from 45.9% in the previous quarter.
VeriSign generated $13 million of cash from operating activities and used $14 million in capital expenditures. The company also repurchased shares for $100 million in the quarter. VeriSign still has $1.1 billion remaining under its existing share-repurchase program.
VeriSign ended the quarter with $1.22 billion of cash and equivalents, up from $1.947 billion at the end of the prior quarter.
Guidance
VeriSign announced that the Internet Corporation for Assigned Names and Numbers (ICANN) and Verisign have renewed Verisign's contract to serve as the authoritative registry operator for the .net registry for another six years till 2017.
Management stated that as the demands on the Domain Name System increased dramatically, VeriSign will continue to build and invest in the infrastructure that supports .net to ensure its continued secure and stable operation.
The company recently resolved its five-year long litigation with Coalition for ICANN Transparency (CFIT). VeriSign recently announced an increase in registry domain name fees for .com and .net a sper the agreement with ICANN.
As of January 15, 2012, the registry fee for .com domain names will increase from $7.34 to $7.85, and the registry fee for .net domain names will increase from $4.65 to $5.11. The fee increases will have no direct impact to 2011 revenue since the increases are not effective until January 15, 2012.
Meanwhile, ICANN also announced that its Board of Directors approved their plan to increase the number of generic top-level domains. VeriSign views the introduction of new gTLDs as an adjacent growth opportunity.
Going forward, management expects revenues between $765 million and $775 million in 2011, up 12% to 14% year over year and up from the earlier guidance of a growth of 11% – 14%. Excluding one-time items and stock based compensation expense, gross margin is projected around 79%.
Verisign also announced that CEO Mark McLaughlin resigned resigned as president and chief executive officer effective August 1, 2011. Jim Bidzos, Verisign's founder and previous CEO, will become the president and chief executive officer effective August 1, 2011.
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