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VeriSign, Inc. (VRSN)
Q1 2019 Earnings Conference Call
April 25, 2019 4:30 PM ET
David Atchley - Vice President of Investor Relations & Corporate Treasurer
Jim Bidzos - Executive Chairman, President & Chief Executive Officer
Todd Strubbe - Executive Vice President & Chief Operating Officer
George Kilguss - Executive Vice President & Chief Financial Officer
Conference Call Participants
Sterling Auty - JPMorgan
Nick Jones - Citi
Rob Oliver - Baird
Previous Statements by VRSN
» VeriSign, Inc. (VRSN) CEO Jim Bidzos on Q4 2018 Results - Earnings Call Transcript
» VeriSign (VRSN) Q3 2018 Results - Earnings Call Transcript
» VeriSign (VRSN) Q2 2018 Results - Earnings Call Transcript
At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.
Thank you, operator, and good afternoon everyone. Welcome to VeriSign's first quarter 2019 earnings call. With me are Jim Bidzos, Executive Chairman, President and CEO; Todd Strubbe, Executive Vice President and COO; and George Kilguss, Executive Vice President and CFO. This call and our presentation are being webcast from our Investor Relations website, which is available under About VeriSign on verisign.com. There you'll also find our first quarter 2019 earnings release. At the end of this call, the presentation will be available on that site and within a few hours the replay of the call will be posted.
Financial results in our earnings release are unaudited and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q, which identify risk factors that could cause actual results to differ materially from those contained in the forward-looking statements. VeriSign retains its long-standing policy not to comment on financial performance or guidance during the quarter unless it is done through a public disclosure.
The financial results in today's call and the matters we will be discussing today include GAAP and non-GAAP measures used by VeriSign. GAAP to non-GAAP reconciliation information is appended to our earnings release and slide presentation as applicable, each of which can be found on the Investor Relations section of our website. In a moment, Jim and George will provide some prepared remarks and afterward, we will open the call for your questions.
With that, I would like to turn the call over to Jim.
Thanks, David. Good afternoon everyone. I'm pleased to report another solid quarter for VeriSign. First quarter results were in line with our objectives of offering security and stability to our customers, while generating profitable growth and providing long-term value to our shareholders. At the end of March, the domain name base in .com and .net totaled 154.8 million, consisting of 141 million names for .com and 13.8 million names for .net with a year-over-year growth rate of 4.4%.
During the first quarter, we processed 9.8 million new registrations and the domain name base increased by 1.82 million names. Although renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the first quarter of 2019 will be approximately 75%. This preliminary rate compares to 75.3% achieved in the first quarter of 2018. For 2019 full-year, we now expect the domain name base growth rate to be between 2.5% and 4.25%. Last quarter, we said that we began the process with ICANN to incorporate features of Amendment 35 to the Cooperative Agreement including the pricing terms into the .com Registry Agreement. There are no updates to share at this time, but we continue to be engaged in this process that may take some number of months to complete.
Just to remind those not familiar with this process under the 2016 amendment that extended the term of the .com Registry Agreement, we also agreed to negotiate in good faith the flow-through changes made in the Cooperative Agreement, including the pricing terms and to preserve and enhance the security and stability of .com or the Internet. We are negotiating these items now, and we'll update you as appropriate.
During the first quarter, we continued our share repurchase program by repurchasing 1.0 million shares of common stock for $175 million. Our financial position remains strong with $1.25 billion in cash, cash equivalents and marketable securities at the end of the quarter. We continually evaluate the overall cash and investing needs of the business and consider the best uses for our cash, including potential share repurchases.
And now, I'd like to turn the call over to George.
Thanks Jim, and good afternoon everyone. First quarter GAAP results produced revenue of $306 million, up 2.4% year-over-year. Operating expense totaled $106 million, compared to $114 million last quarter and $113 million in the first quarter a year ago. Within the quarter were lower sequentially, primarily due to the elimination of approximately $3 million of costs associated with our Security Services sale last quarter, and the seasonal timing of marketing program spend. Operating income totaled $200 million, compared with $185 million in the first quarter of 2018. The operating margin in the quarter came to 65.4%, compared to 62% in the same quarter a year ago.
Net income totaled $163 million, compared to $134 million a year earlier, which produced diluted earnings per share of $1.35 in the quarter this year compared to $1.09 for the same quarter last year.
As of March 31, 2019, the company maintained total assets of $1.9 billion and total liabilities of $3.3 billion. Assets included $1.25 billion of cash, cash equivalents and marketable securities of which $685 million were held domestically with the remainder held abroad. During the quarter, we repatriated $249 million from our international entities net of withholding taxes.