VeriSign, Inc. (VRSN) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance with an increase in free cash flow and domain name base growth. Despite a slight decrease in net income, the optimistic outlook on AI's impact and strategic marketing programs suggests positive trends. The Q&A indicates analyst interest and management confidence in future growth, although some uncertainties remain. Overall, the company's performance and strategic initiatives are likely to lead to a positive stock price movement over the next two weeks.
Key Financial Performance
Revenue For the year ended December 31, 2025, the company generated revenues of $1.66 billion, up 6.4% year-over-year. For the quarter ended December 31, 2025, the company generated revenue of $425 million, up 7.5% from the same quarter a year ago.
Operating Income Operating income totaled $1.12 billion in 2025, up 5.9% from the previous year.
Earnings Per Share (EPS) Full year EPS was $8.81, up 10.1% year-over-year. Fourth quarter diluted earnings per share was $2.23 compared to $2 for the same quarter of 2024.
Free Cash Flow 2025 free cash flow was $1.07 billion. Operating cash flow for the fourth quarter of 2025 was $290 million and free cash flow was $285 million, compared with $232 million and $222 million, respectively, in the year ago quarter. The increase in free cash flow is partly due to higher quarterly earnings, increased cash from working capital and lower cash tax payments.
Net Income Net income in the fourth quarter totaled $206 million compared to $213 million last quarter and $191 million in the fourth quarter of 2024. Net income reflects a higher income tax expense booked during the fourth quarter, primarily due to foreign base income taxes.
Operating Expenses Operating expense in Q4 2025 totaled $140 million which compares to $135 million last quarter and $132 million for the fourth quarter of 2024. The increase in operating expenses was due to an impairment charge on real estate intended for sale.
Domain Name Base During the year, the domain name base grew by 4.5 million names or 2.6%, leading to a 2025 ending .com .net domain name base of 173.5 million names. Net registrations added during the fourth quarter were 1.58 million names, driven by the strength of new registrations of 10.7 million, which is up from 9.5 million in Q4 of 2024, and a preliminary Q4 renewal rate of 75% compared to 74% a year ago.
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Operating Highlights
New services under evaluation: VeriSign is evaluating new services aimed at reducing vulnerabilities and enhancing information trust. These services align with their core mission and leverage their expertise in DNS and security technology.
Domain name base growth: The domain name base grew by 4.5 million names (2.6%) in 2025, ending with 173.5 million names. Growth was observed across the U.S., EMEA, and APAC regions.
New registrations: 2025 saw 41.7 million new domain registrations, the highest since 2021. Q4 2025 alone had 10.7 million new registrations, up from 9.5 million in Q4 2024.
Revenue growth: Revenue grew by 6.4% year-over-year in 2025, reaching $1.66 billion. Q4 2025 revenue was $425 million, up 7.5% from Q4 2024.
Free cash flow: 2025 free cash flow was $1.07 billion, with Q4 2025 free cash flow at $285 million, up from $222 million in Q4 2024.
Operating income: Operating income for 2025 was $1.12 billion, up 5.9% year-over-year. Q4 2025 operating income was impacted by an impairment charge on real estate.
Shareholder returns: $1.1 billion was returned to shareholders in 2025 through share repurchases and quarterly dividends, which were initiated in Q2 2025.
Capital expenditures: 2026 capital expenditures are expected to be higher, ranging between $55 million and $65 million, due to equipment replacement, capacity expansion, and corporate headquarters improvements.
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Risk or Challenges
Operating Expenses: An impairment charge on real estate intended for sale increased operating expenses in Q4 2025, which could impact profitability.
Income Tax Expense: Higher income tax expenses, particularly due to foreign base income taxes, reduced net income in Q4 2025.
Capital Expenditures: Planned capital expenditures for 2026 are higher than usual due to replacing end-of-life equipment, capacity expansion, and corporate headquarters improvements, all facing significantly higher costs driven by AI industry demand and supply constraints.
Interest Income: Lower expectations for interest income in 2026 due to lower short-term rates and cash balances could impact non-operating income.
Supply Constraints: Intense AI industry-driven demand and supply constraints are increasing costs for equipment replacement and capacity expansion.
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Guidance & Outlook
Domain Name Base Growth: For 2026, VeriSign expects a domain name base growth rate of between 1.5% and 3.5%.
Revenue Guidance: Revenue is expected to be between $1.715 billion and $1.735 billion for 2026.
Operating Income: Operating income is expected to be between $1.160 billion and $1.180 billion for 2026.
Interest Expense and Nonoperating Income: Expected to be an expense of between $57 million and $67 million due to lower short-term rates and lower cash balances.
Capital Expenditures: Expected to be between $55 million and $65 million, higher than typical due to replacing end-of-life equipment, planned capacity expansion, and corporate headquarters improvements.
GAAP Effective Tax Rate: Expected to be between 22% and 25%, reflecting a slight increase in forward taxes.
New Services: VeriSign is evaluating new services aimed at reducing vulnerabilities and enhancing information trust, leveraging their expertise in DNS and security technology. More details will be shared in the coming months.
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Shareholder Return Plan
Dividends Initiation: Quarterly dividends were initiated in the second quarter of 2025.
Dividend Amount: A cash dividend of $0.81 per share was declared for stockholders of record as of February 19, 2026, payable on February 27, 2026.
Dividend Increase: The quarterly dividend amount represents an increase of 5.2%, consistent with the increase in net income during 2025.
Future Dividend Plans: VeriSign intends to continue paying a cash dividend on a quarterly basis, subject to market conditions and Board approval.
Share Repurchase Program: $1.1 billion was returned to shareholders through share repurchases and quarterly dividends in 2025.
Remaining Authorization: $1.08 billion remains available under the current share repurchase program, which has no expiration.
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Key Q&A
Q:What is the impact of AI on the domain base and how is it contributing to domain resurgence?
A:AI is having a significant impact on the domain base, contributing to its resurgence. AI tools developed by registrars make it easier for users to build websites and select domain names. Additionally, AI's use of DNS for tasks like data collection and navigation increases dependence on DNS, enhancing the value and utility of domain names. The established governance structure of DNS also supports its growing importance.
Q:What impact have the new strategic marketing programs introduced in 2024 had, and are there any planned changes for 2026?
A:The new strategic marketing programs introduced in 2024 have had a positive impact, particularly by providing registrars with flexibility to choose from a basket of programs tailored to their needs. These programs incentivize registrations in categories with stronger renewal rates. Adjustments have been made to continue this momentum into 2026.
Q:Can you provide more details about the new services related to AI and DNS mentioned during the call?
A:The company is exploring enhancements to its infrastructure and services, focusing on security and stability. While no specific details were provided, the company is conducting R&D and considering small enhancements that could add value. More information will be shared in the coming months.
Q:What are the assumptions behind the 2026 domain growth guidance?
A:The 2026 domain growth guidance is based on positive trends observed in 2025, with growth across major regions and improved renewal rates. The guidance reflects the most likely outcomes based on these trends and feedback from the channel. However, a higher mix of first-time renewal rates in 2026 may slightly lower overall renewal rates.
Q:What is the company's approach to the upcoming ICANN auction for new generic top-level domains (gTLDs)?
A:The company is studying the upcoming ICANN round for new gTLDs, which opens in April. While no specific plans were disclosed, the company is interested in opportunities that align with its strategic role as a critical infrastructure provider. Details about applications will become public after the round opens.
Q:What are the expectations for .com and .net domain growth in 2026?
A:The company does not provide specific guidance for .com and .net separately but treats them as a combined domain base. While .net has seen a slight decrease, programs targeting .net aim to improve its performance. Positive trends in 2025, including improved renewal rates, are expected to continue into 2026.
Q:Will the company raise prices for .com domains in 2026?
A:The company has the ability to raise .com prices by 7% annually during the last four years of a six-year period, with the next opportunity starting in October 2026. An announcement regarding a potential price increase could be made in April 2026, but the company does not guide on pricing decisions.
Q:Review of Unclear Management Responses
A:Management avoided providing direct answers or specific details on the following topics: 1) The exact contribution of AI to domain resurgence, as it is difficult to measure with precision. 2) Specific details about the new services related to AI and DNS, as they are still under exploration. 3) The company's specific plans for participation in the ICANN auction for new gTLDs. 4) Whether the company will raise .com prices in 2026, as it is against their policy to guide on pricing decisions.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AI industry
APAC end
DNS year
EMEA APAC
Full Bidzos
Full Today
VeriSign Directors
VeriSign Full
VeriSign cash
afternoon revenue
amount end
amount increase
balance Capital
base income
base name
base rate
base website
capacity expansion
capital cash
capital improvement
cash balance
cash capital
cash tax
charge estate
close amount
com DNS
constraint capital
delivery com
demand supply
dividend domain
effort domain
end life
end user
income tax
increase income
name domain
registration name
strength registration
term
utilization
VRSN Transcript
VeriSign, Inc. (VRSN) Q4 2025 Earnings Call Transcript
Positive2-5
The earnings call highlights strong financial performance with an increase in free cash flow and domain name base growth. Despite a slight decrease in net income, the optimistic outlook on AI's impact and strategic marketing programs suggests positive trends. The Q&A indicates analyst interest and management confidence in future growth, although some uncertainties remain. Overall, the company's performance and strategic initiatives are likely to lead to a positive stock price movement over the next two weeks.
VeriSign, Inc. (VRSN) Q3 2025 Earnings Call Transcript
Positive10-23
The earnings call reflects strong financial performance with a 7.3% revenue increase and 9.7% EPS growth. The share repurchase program and improved domain trends further bolster sentiment. Despite some uncertainties in the Q&A, the overall outlook is optimistic, particularly with AI's positive impact and strategic marketing adjustments. The lack of negative guidance and ongoing strategic initiatives suggest a positive market reaction.
VeriSign, Inc. (VRSN) Q2 2025 Earnings Call Transcript
Positive7-24
The earnings call highlights strong financial performance with revenue and net income growth, improved renewal rates, and significant shareholder returns. The Q&A section reveals positive sentiment towards marketing programs and domain growth, especially in Asia-Pacific. Despite some cautious forecasts for China and future marketing program details, the overall outlook remains optimistic. The increase in share repurchase authorization and positive impact of AI on domain growth further boost sentiment. However, the lack of specific long-term forecasts slightly tempers expectations, resulting in a 'Positive' rating with anticipated stock price movement between 2% to 8%.
VeriSign, Inc. (NASDAQ:VRSN) Q1 2025 Earnings Call Transcript
Unknown4-26
The earnings call reflects a mixed outlook: slight revenue growth and stable financials are offset by macroeconomic uncertainties, competitive pressures, and a minor EPS miss. Positive shareholder returns through dividends and buybacks are countered by cautious guidance and regulatory concerns. The Q&A highlights management's uncertainty about macroeconomic impacts, which tempers optimism. The neutral sentiment suggests limited short-term stock movement.
VRSN Slides
VRSN Report
Frequently Asked Questions
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