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    VERISIGN INC/CA (VRSN)

    Q4 2023 Earnings Summary

    Reported on Feb 8, 2024 (After Market Close)
    Pre-Earnings Price$201.02Last close (Feb 8, 2024)
    Post-Earnings Price$202.22Open (Feb 9, 2024)
    Price Change
    $1.20(+0.60%)

    What went wrong

    • Continued decline in domain registrations from China: VeriSign experienced a 2.2 million unit decline from China-based registrars in 2023, attributed to challenging economic conditions, a stringent regulatory environment, and foreign exchange issues. This decline is expected to continue negatively impacting revenue and domain name base growth in 2024. ,
    • Flat domain name base growth guidance for 2024: The company projects the domain name base to remain flat year-over-year, within a range of negative 1% to positive 1%, reflecting ongoing uncertainties in key markets, particularly in China. ,
    • Increasing operating expenses in 2024: Operating expenses are anticipated to grow by approximately 4.6% in 2024, higher than the adjusted growth rate of 3.3% in 2023, which may potentially impact profit margins.

    Q&A Summary

    1. China Impact on Revenue and Guidance
      Q: How is China affecting revenue and guidance?
      A: China has been a significant drag on our results, with a 2.2 million unit decline from China registrars in 2023. Revenue from China was down $14.4 million. We're assuming this impact will be similar in 2024, factoring it into the midpoint of our revenue and domain name base guidance.

    2. Margin Outlook and Investment
      Q: What is the margin outlook and investment plan for next year?
      A: In 2023, expenses grew by 2.2%, but adjusting for a $5 million reduction from the end of the Tuvalu contract, normalized expense growth was about 3.3%. For 2024, at the midpoint of our guidance, expenses are expected to grow 4.6%, similar to 2022. We'll continue to invest responsibly while returning excess capital to shareholders as we have in the past.

    3. .com Renewal
      Q: Any comments on the upcoming .com renewal?
      A: The .com renewal is based on a presumptive right of renewal, similar to the .net renewal last year, which was executed smoothly.

    4. .web Update
      Q: Any update on the status of .web?
      A: There's no new update on .web. ICANN published their response to the latest IRP, dismissing it and confirming the process was handled properly. We're confident the delays will end, and we look forward to bringing .web to market for our extended channel and their millions of customers.

    5. Global Trends Outside China
      Q: Can you elaborate on domain growth outside China?
      A: We saw growth of 1.2 million domain names outside of China, primarily from EMEA and our All Other segment. The U.S. was down about 500,000 units year-over-year, but many U.S. registrars are global, so the weakness isn't solely due to U.S. registrants. U.S. registrars focused more on ARPU in 2023, which could be a factor.

    6. Blockchain and Domain Names
      Q: Thoughts on GoDaddy's partnership with ENS and blockchain impacts?
      A: It's a positive development for the DNS, making it easier to link domain names to blockchain addresses and reinforcing the utility of domain names. Domain names serve as unique, stable global identifiers, benefiting from the reliable and secure DNS infrastructure.

    Analyst Coverage

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