Non-GAAP Operating Margin for Continuing Operations Increases Over 190 Basis Points to 23.4%
VeriSign, Inc. last week reported financial results for the third quarter ended September 30, 2007.
VeriSign reported total revenue of $377 million for the third quarter of 2007 with revenue from continuing operations of $374 million.
On a GAAP basis, VeriSign reported net income of $19 million for the third quarter of 2007 and earnings per share of $0.08 per fully-diluted share. Net income from continuing operations was $16 million with earnings per share of $0.07 per fully-diluted share.
On a non-GAAP basis, VeriSign reported net income of $66 million for the third quarter of 2007 and earnings per share of $0.27 per fully-diluted share. Net income from continuing operations was $65 million with earnings per share of $0.26 per fully-diluted share.
A table reconciling the GAAP to non-GAAP results reported above is appended to this release.
“Our results this quarter highlight the continued strength of our Registry and SSL businesses,” said Bill Roper, president and chief executive officer of VeriSign. “The consistent growth in these markets, combined with the stability of our business model, drive solid financial results which in turn allow us to invest in our business and improve the efficiency of our capital structure. We will continue to take steps to focus our efforts on growing our core businesses, and to seek ways of creating additional shareholder value.”
“We are pleased with our third quarter results, particularly with regard to our ability to deliver margin expansion,” said Bert Clement, chief financial officer of VeriSign. “Solid revenue growth, coupled with disciplined expense management, generated cash flow from operations of $109 million.”
Business Highlights
VeriSign completed a $1.25 billion junior subordinated convertible bond offering in August.
During the quarter, the company repurchased 31.4 million shares of common stock at an average price of $30.12.
VeriSign Identity Protection (VIP) services announced several new VIP Network members, additional authentication form factor options available to consumers, and successful adoption of the PayPal Security Key amongst PayPal’s customers in Germany and Australia.
Building on the strength of early adoption of Extended Validation (EV) Secured Sockets Layer (SSL) in the U.S. and Europe, online leaders such as E*TRADE Australia, Travelocity.ca and HMV have extended this new technology’s footprint to all corners of the globe.
VeriSign recently announced that it has successfully completed key milestones for Project Titan, the expansion and diversification of its critical Internet infrastructure. Through Project Titan, VeriSign has increased its infrastructure capacity to 2 trillion DNS queries a day, continued to iversify its infrastructure globally and created new tools and processes to better monitor and manage traffic and to implement various system upgrades. These upgrades are vital to managing the surge in Internet interactions and protecting against cyber attacks that are growing in both scale and sophistication.
In August, VeriSign announced that its board of directors appointed D. James Bidzos as chairman of the board. Mr. Bidzos, who founded the company in 1995, previously served as chairman from April 1995 until December 2001, and as vice chairman until his recent appointment.
Subsequent to the end of the quarter, Mark McLaughlin, executive vice president of products, marketing and customer service, announced he will be leaving the company to spend time with his family before pursuing other opportunities. Mr. McLaughlin will remain through the end of November to help transition responsibilities.
VeriSign announced the hiring of Kevin A. Werner as senior vice president of corporate development and strategy. Mr. Werner will assume responsibility for strategic development activities.
VeriSign also announced the hiring of Grant L. Clark as senior vice president and chief administrative officer. Mr. Clark will have primary responsibility for improving business processes and will also oversee the company’s operational and risk management activities.
Internet Services Group
The Internet Services Group (ISG) – which includes VeriSign Information Services (VIS) and VeriSign Security Services (VSS) – delivered $236 million of revenue in the third quarter of 2007.
VeriSign Information Services ended the quarter with approximately 77 million active domain names in .com and .net, representing a 5% increase over Q2 2007 and 25% increase year over year.
VeriSign Information Services also registered a record 17.5 million new and renewed domain names in .com and .net during the third quarter.
VeriSign Security Services issued approximately 217,000 new and renewal certificates in Q3, bringing the total base to 912,000, up 3% from Q2 2007.
Communications Services Group
VeriSign Communications Services Group (CSG) – which provides intelligent communications, commerce and content services to telecommunications carriers, media and entertainment companies, and next-generation service providers – delivered revenues of $138 million in the third quarter of 2007.
Additional Financial Information
Capital expenditures in the third quarter were approximately $47 million.
VeriSign ended the third quarter with Cash, Cash Equivalents, Restricted Cash and Short-term Investments of $1.2 billion, an increase of approximately $370 million from the prior quarter.
Deferred revenue on the balance sheet was $711 million as of September 30, 2007, an increase of $26 million from the prior quarter.
Net days sales outstanding (Net DSO), which takes into account the change in deferred revenue balances, was 50 days at the end of Q3, an increase of six days from the second quarter.
Non-GAAP results exclude the following items which are included under GAAP: amortization of intangible assets, stock-based compensation, non-recurring legal costs and settlements, restructuring and ther charges, net loss on the sale or impairment of investments, unrealized gain on Jamba JV call option, gain on the sale of a subsidiary, realized and unrealized gains and losses on embedded derivative, and stock option investigation costs. A table reconciling the GAAP to non-GAAP net income is appended to this release.
Further information is available from the VeriSign news release at www.verisign.com/static/043021.pdf or the Associated Press story at www.forbes.com/feeds/ap/2007/11/01/ap4291548.html
Share This by email or social web
