VRSN

VeriSign, Inc. (VRSN)

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VeriSign (VRSN)

Q2 2011 Earnings Call

July 28, 2011 4:30 pm ET

Executives

Mark McLaughlin - Chief Executive Officer, President and Director

James Bidzos - Chairman

David Atchley -

Brian Robins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Analysts

Sterling Auty - JP Morgan Chase & Co

Daniel Cummins - ThinkEquity LLC

Philip Winslow - Crédit Suisse AG

Edward Maguire - Credit Agricole Securities (USA) Inc.

Walter Pritchard - Citigroup Inc

Steven Ashley - Robert W. Baird & Co. Incorporated

Kash Rangan - BofA Merrill Lynch

Gregg Moskowitz - Cowen and Company, LLC

Presentation

Operator

Good day, and welcome to the VeriSign Second Quarter 2011 Earnings Conference Call. As a reminder, today's conference is being recorded. At this time, I'd like to turn the conference over to Ms. David Atchley. Please go ahead, sir.

David Atchley

Thank you, operator. Good afternoon, everyone, and thank you for joining us for VeriSign Second Quarter 2011 Earnings Conference Call. I'm David Atchley, Corporate Treasurer and Director of Investor Relations, and I'm here today with Jim Bidzos, Executive Chairman and Chairman of the Board; 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 the Investor Relations section of our new corporate website, www.verisigninc.com. Please refer to that website for important information, including the Q2 2011 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call.

Financial results in today's press release are unaudited, and the matters we will be discussing today includes forward-looking statements and, as such, are subject to the risks and uncertainties that we discussed in detail 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 long-standing policy to not comment on financial performance or 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. GAAP to non-GAAP reconciliation information is appended to our press release and slide presentations, as applicable, each of which can be found on the Investor Relations section of our website.

In a moment, Jim, 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 would like to turn the call over to Jim. Jim?

James Bidzos

Thanks, David, and good afternoon, everyone. Before we discuss the quarter, let me say a few words. As you've read in our second quarter earnings press release, Mark McLaughlin will be leaving the company on August 25, and I will be reassuming the positions of President and CEO effective August 1. Mark is leaving VeriSign to become CEO of a private company. We will discuss this transition in more detail after we review our second quarter results.

With that, I'll now turn the call over to Mark.

Mark McLaughlin

Thanks, Jim. Good afternoon, everyone. Second quarter was another quarter for VeriSign, and we continue to be pleased with the company's performance. In our Naming business, we exceeded 8 million new domain name registrations for the second consecutive quarter. In addition, through continued disciplined operations, we were able to achieve ongoing operating margin expansion. Also, our balance sheet remains healthy, which allowed us to repurchase $100 million in shares in the second quarter, leaving us with approximately $1.1 billion under the current share repurchase authorization program.

Before I get into Q2 results, I want to highlight and comment on a few key events from a busy quarter. First, on May 11, we announced that VeriSign entered into a settlement agreement and mutual release with the Coalition for ICANN Transparency, or CFIT, which resolved the over 5-year long CFIT litigation. As we indicated in the press release and 8-K, under the terms of the agreement, CFIT filed a dismissal with prejudice of all claims in the litigation. Further, there was no payment associated with the dismissal, and the parties executed mutual releases from all claims now and in the future related to the litigation. As we've stated in the past, we always believe the case to be without merit.

Second, on June 20, ICANN announced that its Board of Directors had approved their plan to increase the number of generic top-level domains. We view the introduction of new gTLDs as an adjacent growth opportunity. We believe that VeriSign's experienced and trusted brand should make us a logical choice to operate the registry for many organizations applying for new gTLDs. ICANN announced they will begin accepting applications for new gTLDs on January 12, 2012.

On June 28, we were pleased to announce that ICANN and VeriSign had renewed VeriSign's contract to serve as the authoritative registry operator for the .net registry for another 6 years. With the steady growth of the Internet and the ever-increasing demand on the DNS, VeriSign is committed to invest in, scale and enhance our world-class infrastructure that supports .net to ensure its continued, secure, stable operation. We are proud that we have been entrusted with the continued responsibility of running .net.

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