What To Expect From VeriSign This Earnings Season?

VeriSign Inc. VRSN is scheduled to report fourth-quarter 2017 results on Feb 8.

We note that the company has surpassed the Zacks Consensus Estimate in each of the trailing four quarters, delivering an average positive surprise of 4%.

Last quarter, VeriSign's earnings of $1 per share outpaced the consensus mark by a couple of cents. The bottom line increased 7.2% on a year-over-year basis.

Revenues increased 1.7% year over year to $292.4 million, which was slightly ahead of the consensus estimate. The improvement was driven by increase in the domain name registration in the global market.

For fourth-quarter 2017, VeriSign expects revenues between $1.161 billion and $1.166 billion.

Factors to Consider

VeriSign holds a dominant position in the highly regulated .com and .net domain industry. In fact, the company is an exclusive registrar of the .com, .net and .name domains per its agreements with The Internet Corporation for Assigned Names and Numbers (ICANN).

Additionally, it experienced a combined growth of 1.2% year over year to 145.8 million in domain name registrations for .com and .net. Notably, there were 8.9 million new registrations for .com and .net, gained 7.2% compared with 8.3 million in the year-ago-quarter. Per VeriSign, .com continued to maintain its position as the largest TLD followed by .cn (China) and .tk (Tokelau).

VeriSign's "The Domain Name Industry Brief" stated that domain name registration declined slightly 0.4% sequentially to approximately 330.7 million across top-level domains (TLDs) at the end of the third quarter. However, the same increased 3.7 million or 1.1% year over year.

Additionally, Country Code Top-Level Domains (ccTLDs) increased 3.2% year over year and 0.3% sequentially to 144.7 million in the third quarter.

Meanwhile, the company is benefiting from strong gTLD prospects. Markedly, new gTLDs (ngTLD) represent 6.4% of total domain name registrations. Further, gTLD prospects, international expansion through IDNs and investments in intellectual properties are likely to boost results.

Improving trade in bitcoin and cryptocurrency sectors is also a favorable contributing factor for rising domain name registrations.

For 2017, VeriSign has revised the guidance for its domain name base growth rate. Per the company's prediction, the metric is expected to grow in the range of 2.8% to 3.1%, up from its earlier forecast of 2% to 2.75%. The domain name registration is likely to increase within a range of 0.4 million to 0.9 million in the to-be-reported quarter.

VeriSign, Inc. Price and EPS Surprise

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