What VeriSign (VRSN) Said on Its Q3 Earnings Call

Key Points

• VeriSign’s Q3 revenue rose 5.7% year over year to $443 million, while .com and .net registrations reached a record 13.1 million and the combined domain base grew 6.1% to 182.5 million names. The company raised and narrowed its full-year domain-base growth outlook to 6.5%-7%.
• Management expects a 74.3% renewal rate, down from 75.4% a year earlier because of the growing share of first-time renewals, but said established renewal cohorts remain stable. The April .com price increase is expected to contribute roughly half its revenue impact in 2027 and most of the remainder in 2028.
• VeriSign is preparing to launch the .web domain, with a sunrise period expected in mid-December and limited registrations beginning in mid-January 2027. It also plans to begin production delivery of its VeriSign Informed certificate-status service in the first half of 2027.

VeriSign NASDAQ: VRSN reported third-quarter 2026 revenue of $443 million, up 5.7% from a year earlier, as demand for .com and .net domain names continued to accelerate. The company raised and narrowed its full-year outlook for domain-name-base growth to 6.5% to 7%.

The combined .com and .net domain-name base reached 182.5 million names at the end of the quarter, an increase of 6.1% year over year. The base expanded by 3.4 million names from the prior quarter, while new registrations totaled a record 13.1 million, compared with 12.7 million in the second quarter and 10.6 million in the year-ago period.

Executive Chairman, President and CEO Jim Bidzos said registrars’ customer-acquisition efforts, VeriSign marketing programs and the adoption of artificial-intelligence tools have contributed to registration growth. He said AI can make it easier to find a domain name, build a website and maintain online content.

“The ongoing strength in new registrations attests to the vital role that domain names play in discovering content and establishing digital credibility,” Bidzos said.

Financial Results and Guidance

Third-quarter operating income was $296 million, up 4.2% from a year earlier and flat sequentially. Net income was $213 million, unchanged from the same period last year and down from $217 million in the second quarter. Diluted earnings per share were $2.35, compared with $2.27 a year earlier and $2.38 in the prior quarter.

Operating expenses totaled $147 million, up from $135 million in the prior-year quarter. CFO John Calys said the company recognized a $7.5 million pre-tax operating loss tied to certain assets held for sale, accounting for most of the sequential increase in expenses. The charge reduced current-quarter EPS by $0.06.

Operating cash flow was $268 million and free cash flow was $261 million, compared with $308 million and $303 million, respectively, a year earlier. Calys attributed the year-over-year decline primarily to higher cash taxes and increased payments to employees and vendors, partly offset by greater customer cash collections.

VeriSign ended the quarter with $476 million in cash, cash equivalents and marketable securities. Over the last 12 months, it returned $1.14 billion to shareholders through dividends and share repurchases. The company had $1.36 billion remaining under its share-repurchase authorization at quarter-end.

The board approved a quarterly cash dividend of $0.81 per share, payable Nov. 24 to shareholders of record as of Nov. 17. VeriSign said it intends to continue paying a quarterly dividend.

• Full-year revenue guidance: $1.755 billion to $1.760 billion.
• Full-year operating income guidance: $1.188 billion to $1.192 billion, including the $7.5 million third-quarter asset-related expense.
• Expected net interest expense and non-operating expense: $59 million to $65 million.
• Expected capital expenditures: $55 million to $65 million.
• Expected GAAP effective tax rate: 22% to 25%.

Renewal Trends and Pricing

VeriSign expects its third-quarter renewal rate to be 74.3%, down from 75.4% a year ago. Management said the decline reflects a greater share of first-time renewing domains following strong new-registration activity over the past year.

Calys said first-time renewal rates have remained in the mid-40% range, while renewal rates for previously renewed names have remained in the mid-80% range. He said the increasing proportion of first-time renewing domains naturally lowers the overall renewal rate, although the company has not seen significant changes in either cohort’s renewal behavior.

Bidzos added that VeriSign’s analysis indicates many recent registrations fall within the company’s “online presence” cohort, which he described as its best-renewing cohort.

Management also said it had not seen a significant increase in registrar retail pricing following the April announcement of a .com price increase. Calys said average registrar pricing changes over the subsequent three months were around 1% or less. The company had not observed significant early renewal activity ahead of the price increase’s Nov. 1 effective date.

David Atchley, vice president of finance and corporate treasurer, reiterated that VeriSign expects about half of the .com price increase to be reflected in 2027 revenue, with most of the remaining impact expected in 2028.

.web Launch and VeriSign Informed

VeriSign said it is preparing to launch the .web top-level domain after its delegation into the internet’s root zone. The company plans to begin the required 30-day sunrise period in mid-December, followed by a limited registration period beginning in mid-January that could extend into early April 2027. General availability is expected after that period.

During the limited registration period, most holders of .com domains will have an opportunity to register an exact-match .web domain. VeriSign said it is finalizing pricing and expects to communicate its plans to registrars in the coming weeks. The .web registry agreement permits pricing flexibility, including premium-name pricing.

Bidzos said .web’s position as a short and generic top-level domain, combined with VeriSign’s infrastructure, should provide an enduring value proposition beyond any near-term timing advantage over future new top-level-domain launches.

The company also discussed VeriSign Informed, a certificate-status security service announced Oct. 5. The service is designed to provide current information on whether digital certificates have been revoked, supporting use cases including network access, secure email, software distribution and web certificates.

Bidzos said the service is already operational within VeriSign’s infrastructure and that expenses associated with it are included in financial results through 2026 guidance. The company expects to finalize pricing by year-end and begin production service delivery in the first half of 2027. VeriSign Informed is currently entering a beta phase, according to management.

About VeriSign (NASDAQ:VRSN)

VeriSign, Inc NASDAQ: VRSN provides internet infrastructure services that support the global domain name system. The company operates the authoritative registry for the .com and .net top-level domains and provides registry services for certain other domains, helping maintain the databases that connect domain names with internet addresses.

The company's services include domain name registry operations, domain name registration-related support for accredited registrars, and infrastructure designed to improve the availability, stability, and security of internet naming services.

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