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Verisign (VRSN)
NASDAQ:VRSN
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Verisign
(NASDAQ:VRSN)68Neutral
Positive Factors
Market Outlook
Raising TP to $250 indicates a positive outlook on Verisign’s future performance.
Regulatory Agreements
The renewal of the DOC Cooperative Agreement with current pricing intact is seen as a significantly positive development for Verisign.
Negative Factors
Domain Growth Challenges
Ongoing challenges around .com domain name growth.
Verisign (VRSN) vs. S&P 500 (SPY)
Market Cap
$22.42B
Dividend YieldN/A
Average Volume (3M)824.29K
Price to Earnings (P/E)29.6
Beta (1Y)0.49
Revenue Growth4.31%
EPS Growth1.07%
CountryUS
Employees932
SectorTechnology
Sector Strength48
IndustrySoftware
Share Statistics
EPS (TTM)8.00
Shares Outstanding94,600,000
10 Day Avg. Volume991,979
30 Day Avg. Volume824,290
Financial Highlights & Ratios
PEG Ratio27.68
Price to Book (P/B)N/A
Price to Sales (P/S)14.59
Price to Cash Flow (P/CF)24.50
P/FCF Ratio24.00
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$252.50Price Target Upside4.80% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering2
Verisign Business Overview & Revenue Model
Company DescriptionVeriSign, Inc. provides domain name registry services and Internet infrastructure, which enables Internet navigation for many of the world's most recognized domain names. It enables the security, stability, and resiliency of key Internet infrastructure and services, including providing root zone maintainer services, operating two of the 13 global Internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce. The company was founded by D. James Bidzos on April 12, 1995 and is headquartered in Reston, VA.
How the Company Makes MoneyVerisign makes money primarily through its domain name registration services. The company charges fees for the registration and renewal of domain names under the .com, .net, and other top-level domains it manages. These fees constitute the majority of Verisign's revenue. Verisign has contracts and agreements with registrars worldwide who sell these domain names to end-users, and Verisign collects a fixed fee per domain name registered or renewed. Additionally, Verisign provides cybersecurity solutions, though this constitutes a smaller portion of its revenue. The company's earnings are significantly supported by its long-term contracts with the Internet Corporation for Assigned Names and Numbers (ICANN), which ensure its role as the operator of the .com and .net registries.
Verisign Financial Statement Overview
Summary
Verisign shows strong profitability and cash flow generation, with high margins and efficient operations. However, persistent negative stockholders' equity suggests high leverage and financial risk.Income Statement
Verisign has demonstrated consistent revenue growth over the years, with a 4.3% increase from 2023 to 2024. The gross profit margin is strong at 87.7% for 2024, indicating efficient cost management. The net profit margin slightly decreased to 50.5% in 2024, but remains robust. EBIT and EBITDA margins are both high at 67.9%, reflecting strong operational efficiency.85
Very Positive
Balance Sheet
The balance sheet presents a concerning level of negative stockholders' equity, which has been consistently negative over the years, reflecting high leverage. The debt-to-equity ratio is not applicable due to negative equity, indicating financial risk. Despite this, the company maintains a high equity ratio of -146.8% due to negative equity values.60
Neutral
Cash Flow
Verisign's cash flow is robust, with a 7.8% increase in free cash flow from 2023 to 2024, indicating strong cash generation capabilities. The operating cash flow to net income ratio remains healthy at 1.15, showing good conversion of net income to cash. The free cash flow to net income ratio is strong at 1.11, reflecting efficient cash management.80
Positive
| Breakdown | ||||
| Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 |
|---|---|---|---|---|
| Income Statement | Total Revenue | |||
| 1.56B | 1.49B | 1.42B | 1.33B | 1.27B | Gross Profit |
| 1.37B | 1.30B | 1.22B | 1.14B | 1.08B | EBIT |
| 1.06B | 1.00B | 943.10M | 866.80M | 824.20M | EBITDA |
| 1.13B | 1.10B | 1.00B | 913.41M | 886.74M | Net Income Common Stockholders |
| 785.70M | 817.60M | 673.80M | 784.80M | 814.89M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | |||
| 599.90M | 926.40M | 980.40M | 1.21B | 1.17B | Total Assets |
| 1.41B | 1.75B | 1.73B | 1.98B | 1.77B | Total Debt |
| 1.49B | 1.80B | 1.79B | 1.79B | 1.79B | Net Debt |
| 1.29B | 1.56B | 1.41B | 1.56B | 1.39B | Total Liabilities |
| 3.36B | 3.33B | 3.30B | 3.24B | 3.16B | Stockholders Equity |
| -1.09B | -1.58B | -1.56B | -1.26B | -1.39B |
| Cash Flow | Free Cash Flow | |||
| 874.50M | 808.00M | 803.70M | 754.12M | 686.79M | Operating Cash Flow |
| 902.60M | 853.80M | 831.10M | 807.15M | 730.18M | Investing Cash Flow |
| 286.30M | -97.40M | 355.70M | -269.25M | -72.26M | Financing Cash Flow |
| -1.22B | -889.80M | -1.04B | -719.13M | -764.88M |
Verisign Technical Analysis
Positive
240.93
Price Trends
217.51
Positive
201.98
Positive
190.80
Positive
Market Momentum
6.69
Negative
73.09
Negative
75.55
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For VRSN, the sentiment is Positive. The current price of 240.93 is above the 20-day moving average (MA) of 231.32, above the 50-day MA of 217.51, and above the 200-day MA of 190.80, indicating a bullish trend. The MACD of 6.69 indicates Negative momentum. The RSI at 73.09 is Negative, neither overbought nor oversold. The STOCH value of 75.55 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for VRSN.
Verisign Risk Analysis
Verisign disclosed 22 risk factors in its most recent earnings report. Verisign reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Verisign Peers Comparison
Overall Rating
UnderperformOutperform
Sector (59)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
74 Outperform | $251.67B | 27.72 | 20.02% | 2.52% | -5.34% | -30.57% | |
68 Neutral | $22.42B | 29.62 | -72.04% | ― | 4.31% | 1.07% | |
68 Neutral | $24.94B | 27.34 | 135.37% | ― | 7.82% | -32.24% | |
67 Neutral | $12.35B | 25.18 | 10.35% | ― | 4.70% | -7.33% | |
67 Neutral | $48.63B | ― | -8.71% | ― | 28.76% | 58.13% | |
59 Neutral | $22.39B | 11.53 | -18.05% | 2.31% | 5.00% | -25.89% | |
48 Neutral | $939.18M | ― | -16.25% | ― | 7.45% | -10.76% |
* Technology Sector Average
Performance Comparison
VRSN
Verisign
240.93
49.59
25.92%
AKAM
Akamai
82.82
-27.34
-24.82%
CSCO
Cisco Systems
63.96
16.30
34.20%
GDDY
GoDaddy
176.30
66.73
60.90%
FSLY
Fastly
6.99
-6.22
-47.09%
NET
Cloudflare
143.75
46.26
47.45%
Verisign Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 9.42% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Neutral
VeriSign demonstrated solid financial performance and operational resilience, maintaining a strong cash position and returning capital to shareholders. Despite challenges in the domain name base and a drop in net income, the company shows optimism for future growth with new marketing strategies and improved renewal rates.Highlights
Stable Financial Performance
VeriSign reported a 4.3% year-over-year revenue growth, reaching $1.557 billion for 2024, and a 5.7% increase in operating income. The company returned $1.2 billion to shareholders through share repurchases, and maintained a stable financial position with $600 million in cash and marketable securities.
Operational Achievements
VeriSign extended its record of uninterrupted .com and .net resolution to over 27 years, processing over 400 billion transactions daily. The renewal rate for the fourth quarter of 2024 improved to 73.9%.
Positive Market Responses
The company introduced new marketing programs, showing positive response from registrars, and reported an increase in new registrations to 9.5 million for Q4 2024, up from 9 million in the same quarter last year.
Lowlights
Decline in Domain Name Base
The domain name base for .com and .net decreased by 2.1% year-over-year, attributed to declines in the US and China markets.
Decreased Net Income
Net income for Q4 2024 dropped to $191 million from $265 million the previous year, partly due to the absence of prior year tax benefits.
Challenges in China Market
The decrease in domain volumes in China was in line with expectations, but still a concern. The China market now represents only 5% of the domain name base, reducing its impact.
Company Guidance
During VeriSign, Inc.'s 2024 earnings call, the company reported a 4.3% year-over-year revenue growth, reaching $1.557 billion, and a 5.7% increase in operating income, totaling $1.058 billion. The domain name base for .com and .net saw a decrease of 2.1%, equating to 3.7 million fewer names, with specific declines noted in the US and China regions. However, the fourth quarter showed signs of improvement with 9.5 million new registrations, up from 9 million the previous year. VeriSign returned $1.2 billion to shareholders through the repurchase of 6.6 million shares and ended the year with $600 million in cash and equivalents. For 2025, the company anticipates revenue between $1.615 billion and $1.635 billion, with operating income projected between $1.095 billion and $1.115 billion. Capital expenditures are expected to be between $30 million and $40 million, with an effective tax rate of 21% to 24%. Despite challenges, VeriSign remains optimistic about improving trends in the domain name base, driven by new marketing initiatives aimed at enhancing registrar engagement.Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.