VeriSign, Inc. (VRSN)

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VeriSign, Inc. (VRSN)

Q4 2009 Earnings Call

February 2, 2010 5:00 pm ET


Nancy Fazioli – Investor Relations

Mark McLaughlin – President, Chief Executive Officer

Brian Robins – Executive Vice President, Chief Financial Officer


Katherine Egbert - Jefferies & Company

Todd Raker - Deutsche Bank Securities

Steven Ashley - Robert W. Baird & Co. Inc.

Philip Winslow - Credit Suisse

Rob Owens - Pacific Crest Securities

Kash Rangan - BofA Merrill Lynch

Sterling Auty - J.P. Morgan

Craig Nankervis - First Analysis Corporation

Shaul Eyal - Oppenheimer & Co.



Good day and welcome to the fourth quarter 2009 earnings call. Today’s conference is being recorded. At this time I would like to turn the conference over to Ms. Nancy Fazioli. Please go ahead, ma’am.

Nancy Fazioli

Thank you, operator. Good afternoon everyone and thank you for joining us for VeriSign’s fourth quarter 2009 earnings conference call. I’m Nancy Fazioli, Director of Investor Relations and I’m here today with Mark McLaughlin, President and CEO, and Brian Robins, Executive Vice President and CFO.

Please note that this call and accompanying Slide presentation are being webcast from our Investor Relations website located at investor.versign.com. Please refer to our website for important information including the Q4 2009 earnings press release and a reconciliation of our GAAP to non-GAAP information. A replay of this call will be available on our website within a few moments. Today’s Slide presentation will also be available for download after the call.

Financial results in today’s press release are un-audited and the matters we will be discussing today include forward-looking statements and as such are subject to the risks and uncertainties that we discuss in details in our documents filed with the SEC, specifically the most recent report on Forms 10-K and 10-Q and any applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

I would like to remind you that in light of Regulation FD, VeriSign retains its longstanding policy to not comment on financial guidance during the quarter unless it is done through a public disclosure.

The financial results in today’s press release and the matters we will be discussing today include non-GAAP measures used by VeriSign. Detail of the items excluded from our non-GAAP financial information are located on the VeriSign Investor Relations website.

In a moment, Mark and Brian will provide some prepared remarks and afterward we will open up the call for your questions. Unauthorized recording of this conference call is not permitted.

With that, I’d like to turn the call over to Mark. Mark?

Mark McLaughlin

Thanks, Nancy. Good afternoon everyone. Let me add my welcome to all of you joining today’s call.

As the results indicate, Q4 2009 capped a solid finish to the year for VeriSign with the year-over-year growth in core revenue of 8%, while non-GAAP net income attributable to VeriSign and subsidiaries grew 23% from 2008 to 2009. Also during the year, we concluded a significant restructuring effort that was initiated in late 2007 and involved the bundling and eventual sale of 14 non-core businesses. We are pleased with the accomplishments and the results for 2009, particularly in light of the challenging economic backdrop during the year.

Although the year was not without its challenges, we remained focused on our customers, operations and disciplined investments in growth prospects. For 2010 and beyond, as the economy continues to improve, we believe that we’re in a good position for future growth given our market leading position and our two core businesses of Naming and Authentication Services. We believe both businesses are indispensable to our customers and have made VeriSign’s brand synonymous with trust on the Internet. Also, our infrastructure is unmatched in our industries and provides a significant and unique competitive advantage for the future.

I appreciate the hard work from our dedicated team over the last year and would like to thank them for their efforts and achievements.

In terms of the business unit results for the quarter, I’ll start with Naming. Naming had a strong quarter. The base of registered names in dot com and dot net totaled 96.7 million names at the end of the quarter. This is an increase of 1.8 million net names added to the domain name base quarter over quarter compared to 1 million in the same quarter last year or a 7% in net names year-over-year. We ended the quarter with registered domain names ahead of our forecast as we saw strengthening in renewal rates and good international growth.

During the fourth quarter we processed 7.3 million new names. This is a 4% increase quarter over quarter and up from 6.3 million new names in Q4 2008. The Q3 renewal rate was approximately 70.5%, an improvement over Q2 which had rounded up to 70%. While renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for Q4 2009 will be closer to 71%. As a reminder, in mid-December we announced that effective July 1, 2010 registry fees for dot com, dot net names will increase 7% and 10% respectively to $7.34 for dot com and $4.65 for dot net per year.

As we look forward, given the data we have at this point in the quarter we would expect the Q1 net names added to the domain name base to be between 1.8 and 2.1 million names. To close out the Naming discussion, we have no updates from our analyst day in November regarding the status of the case filed against VeriSign by the Coalition for I Can Transparency or CFIT. The petition for re-hearing is still pending and there is no prescribed timeframe for the court to respond.

Read the rest of this transcript for free on seekingalpha.com