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Results from 'Magnificent Seven' duo show cloud revenue boosted by strong AI demand

VeriSign (VRSN) Q1 Earnings Top Estimates, Revenues Rise Y/Y

Zacks Equity Research
·4 min read

VeriSign VRSN reported first-quarter 2022 adjusted earnings of $1.43 per share, which beat the Zacks Consensus Estimate by 2.9% and increased 7.5% year over year.

Revenues jumped 7.2% year over year to $346.9 million and beat the Zacks Consensus Estimate by 1.1%.

Quarter Details

VeriSign ended the reported quarter with 174.7 million .com and .net domain name registrations, up 4% year over year.

VeriSign, Inc. Price, Consensus and EPS Surprise

VeriSign, Inc. Price, Consensus and EPS Surprise
VeriSign, Inc. Price, Consensus and EPS Surprise

VeriSign, Inc. price-consensus-eps-surprise-chart | VeriSign, Inc. Quote

The company processed 10.2 million new domain name registrations for .com and .net compared with 11.6 million in the year-ago quarter. VeriSign saw a decrease in new units in the first quarter due to many factors, which include the pandemic-induced higher growth witnessed in the year-ago quarter along with several global macroeconomic issues.

The final .com and .net renewal rate for fourth-quarter 2021 stood at 74.8% against 73.5% in the year-ago quarter. Renewal rates are not fully measurable until 45 days after the end of the quarter.

The company expects the renewal rate for first-quarter 2022 to be around 75.9% compared with 76% in the year-ago quarter.

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VeriSign’s research and development (R&D) expenses increased 12.8% from the year-ago quarter’s level to $22.9 million. As a percentage of revenues, R&D expenses increased to 6.6% compared with 6.3% in the year-ago quarter.

Selling, general and administrative (SG&A) expenses increased 5.7% year over year to $48.5 million. As a percentage of revenues, SG&A expenses declined 20 basis points (bps) on a year-over-year basis to 14%.

Operating income was $225 million, up 6.8% year over year. The operating margin contracted 20 bps to 64.8%.

Balance Sheet & Cash Flow

As of Mar 31, 2022, the company’s cash and cash equivalents (including marketable securities) remained unchanged at $1.2 billion compared with the quarter ended Dec 31, 2021.

Cash flow from operating activities was $207 million in the first quarter compared with $198 million in the previous-year quarter. Free cash flow was $200 million in the reported quarter compared with $192 million in the previous-year quarter.

In the first quarter, Verisign repurchased 0.9 million shares for $196 million. As of Mar 31, 2022, the company had shares worth $893 million available for future repurchases, with no expiration date.

2022 Guidance

VeriSign’s domain name base is expected to increase between 1.75% and 3.5%. The company’s earlier guided range was 2.5-4.5%.

VeriSign expects full-year revenues between $1.42 billion and $1.435 billion compared with the earlier guided range of $1.42-$1.44 billion. GAAP operating margin is expected in the 64.5-65.5% range.

Capital expenditures are anticipated in the range of $35-$45 million compared with the previous expectation of $40-$50 million.

Zacks Rank & Stocks to Consider

VeriSign currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader technology sector include Pure Storage PSTG, Jabil JBL and Camtek CAMT. Jabil sports a Zacks Rank #1 (Strong Buy), while Pure Storage, and Camtek carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1Rank stocks here.
The Zacks Consensus Estimate for Pure Storage’s fiscal 2022 earnings is pegged at 86 cents per share, up 22.9% over the past 60 days. The long-term earnings growth rate is pegged at 30.9%.

Pure Storage’s earnings beat the Zacks Consensus Estimate all the last four quarters, with the average being 99.2%. Shares of Pure Storage’s have risen 51.2% in the past year.

The Zacks Consensus Estimate for Jabil’s fiscal 2022 earnings is pegged at $7.25 per share, up 10.2% over the past 60 days. The long-term earnings growth rate is pegged at 12%.

Jabil’s earnings beat the Zacks Consensus Estimate each of the last four quarters, with the average being 13.5%. Shares of Jabil have risen 13.3% in the past year.

The Zacks Consensus Estimate for Camtek’s 2022 earnings is pegged at $1.72 per share, up 1.2% over the past 60 days. The long-term earnings growth rate is pegged at 6.2%.

Camtek’s earnings beat the Zacks Consensus Estimate in the last four quarters, with the average being 9.9%. Shares of Camtek have declined 9.5% in the past year.


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VeriSign, Inc. (VRSN) : Free Stock Analysis Report

Jabil, Inc. (JBL) : Free Stock Analysis Report

Camtek Ltd. (CAMT) : Free Stock Analysis Report

Pure Storage, Inc. (PSTG) : Free Stock Analysis Report

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Zacks Investment Research