VeriSign (VRSN) Q1 2026 Earnings Transcript

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Date

Thursday, April 23, 2026 at 4:30 p.m. ET

Call participants

• Executive Chairman and CEO — Jim Bidzos
• Chief Financial Officer — John Callis
• Vice President, Investor Relations — David Atchley

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Takeaways

• Total domain name base -- 176.1 million .com and .net names at quarter end, marking a record high with an increase of 2.54 million sequentially from year-end 2025.
• New registrations -- 11.5 million new .com and .net registrations in the quarter versus 10.7 million last quarter and 10.1 million in the prior-year quarter.
• Renewal rate -- 76.3% expected renewal rate for 2026, up from 75.5% in the prior year; first-time renewal rates are in the mid-40% range and previously renewed names are in the mid-80% range.
• Revenue -- $429 million, up 6.6% year over year as reported by John Callis.
• Operating income -- $294 million, which increased $22 million or 8.3% year over year and $9 million or 3.1% sequentially from the previous quarter.
• Net income -- $215 million, compared to $206 million in the previous quarter and $199 million in the year-ago period.
• Diluted EPS -- $2.34, up from $2.23 last quarter and $2.10 in the prior-year quarter, representing increases of 4.9% sequentially and 11.4% year over year.
• Free cash flow returned -- Over 100% of free cash flow returned to investors over the past 12 months, totaling $1.13 billion via share repurchases and dividends.
• Cash and marketable securities -- $556 million at quarter end.
• Share repurchase program -- $863 million remaining under the current share repurchase authorization, with no expiration.
• Quarterly dividend -- Board declared a $0.81 per-share cash dividend, payable on May 27, 2026, to holders of record as of May 19, 2026.
• 2026 revenue guidance -- Raised and narrowed to $1.73 billion to $1.745 billion.
• 2026 operating income guidance -- Updated to $1.17 billion to $1.185 billion.
• 2026 domain name base growth guidance -- Increased and narrowed to a range of 3.1%-4.3% for the year.
• .com wholesale price increase -- Announced a $0.71 increase to $10.97 per domain per year, effective November 1, 2026; this is the first allowable increase since February 2024.
• Domain infrastructure scale -- VeriSign infrastructure delivered 100% service availability, processing over 600 billion DNS queries daily (averaging 7 million per second).
• Operating expense -- $135 million versus $140 million last quarter and $131 million in the prior-year quarter; last quarter included an impairment charge.
• Operating cash flow -- $272 million for the quarter; free cash flow was $265 million.
• 2026 CapEx guidance -- $55 million to $65 million for the full year, including HQ facility improvements.
• 2026 GAAP tax rate guidance -- Expected to be between 22% and 25%.
• ICANN gTLD round participation -- VeriSign is technically preparing for the new ICANN round beginning in April, but has not committed to participate and continues to evaluate.

Summary

VeriSign (NASDAQ:VRSN) reported an all-time high in the .com and .net domain name base, driven by both the strongest level of new registrations since 2021 and improved renewal rates. Management confirmed an increase and tightening of domain base growth guidance and revenue forecasts for 2026, signaling ongoing confidence in market demand and operational execution. Announced plans to raise the .com wholesale price from $10.26 to $10.97 per year effective November 1, 2026, while also committing to a continued quarterly dividend policy. New gTLD opportunities were addressed, with the company taking technical steps to prepare for possible participation in ICANN's upcoming application round, though emphasizing a cautious approach given the expected multi-year process. Strategic focus remains on scaling secure, high-availability DNS infrastructure, with additional unspecified security services expected to be detailed in future communications.

• Jim Bidzos stated, "We extended our record of 100% service availability," discussing nearly 29 years of uninterrupted up time, a unique record among infrastructure peers.
• "Our authoritative DNS answers are cryptographically protected, and over 95% are processed in milliseconds globally, more than 600 billion transactions per day," Bidzos highlighted, emphasizing performance and security as competitive differentiators.
• Management attributed domain registration demand to tailwinds that include AI, noting a positive impact from AI-driven tools on customer acquisition and domain creation.
• John Callis identified that first-time renewal rates remain in the "mid-40% range," while previously renewed names hold in the "mid-80% range" with recent improvements observed among both cohorts.
• No decision has been announced regarding a potential .net price increase, though Bidzos confirmed, "We have available 10% annual price increases on .net."
• A new suite of additional security tools is under consideration, with further details to be shared publicly through a series of corporate blog posts starting next month.

Industry glossary

• TLD (Top-Level Domain): The highest-level domain in the DNS hierarchy, such as .com or .net, managed by registries like VeriSign.
• gTLD (Generic Top-Level Domain): A category of TLDs that are not country-specific, including extensions like .com, .net, and others open to a broad range of registrants.
• Registrar: An entity accredited to sell domain name registrations to end users and interact directly with the registry operator.
• DNS (Domain Name System): The internet protocol system that translates human-readable domain names into IP addresses, enabling online navigation.
• ICANN (Internet Corporation for Assigned Names and Numbers): The global organization responsible for coordinating the maintenance and procedures of several internet databases, including distribution of TLDs.

Full Conference Call Transcript

Jim Bidzos: Thank you, David. Good afternoon to everyone, and thank you for joining us. I am pleased to report that VeriSign, Inc. delivered strong results in 2026, both operationally and financially. The combined .com and .net domain name base is now at a record 176.1 million names. New registrations are the largest we have seen since 2021, combined with very strong renewal rates. On the financial side, revenue was up 6.6% year-over-year, and EPS increased 11.4% year-over-year. After seeing to the needs of our operations, we returned over 100% of our free cash flow to the investing public in the last twelve months for a total of $1.13 billion through share repurchases and dividends.

Our financial and liquidity position remains stable with $556 million in cash, cash equivalents, and marketable securities at the end of the quarter. Also at quarter end, there was $863 million remaining available under our current share repurchase program, which has no expiration. As announced in today's earnings release, VeriSign, Inc.'s Board of Directors approved a cash dividend of $0.81 per share of VeriSign, Inc.'s outstanding common stock to stockholders of record as of the close of business on 05/19/2026, payable on 05/27/2026. VeriSign, Inc. intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by VeriSign, Inc.'s Board of Directors.

VeriSign, Inc.'s performance in the first quarter shows sustained demand for domain names. During the quarter, the domain name base for .com and .net grew by 2.54 million from year-end 2025. New registrations for the first quarter were 11.5 million compared with 10.7 million last quarter and 10.1 million for the first quarter of last year. The renewal rate for 2026 is expected to be 76.3% compared to 75.5% a year ago. The positive domain name base trends of 2025 continued to build strength to start 2026. We saw growth across our three main regions, with most of the strength coming from the U.S. and EMEA.

It is clear to us that end users are seeing value in domain names and the domain name system, as evidenced by our strong domain name metrics and the increasing reliance on our infrastructure. We see ongoing registrar focus on customer acquisition and engagement with our marketing programs. Also, we see a positive impact from AI tools, which make content and website creation faster and easier. With the trends we have observed thus far in 2026 and our expectations for the next three quarters, we are increasing and narrowing our guidance for domain name base growth to be between 3.1% and 4.3% for 2026.

As a reminder, you can monitor the progression of the domain name base on our [inaudible], which is updated daily. As announced in today's earnings release, we have given notice of a $0.71 increase to the annual wholesale price for .com domain names, which raises the wholesale price from $10.26 to $10.97, effective 11/01/2026. Even after this increase, we believe .com will remain highly competitive with other TLD choices. I would note that this is the first allowable price increase since the notice two years ago in February 2024 of a $0.67 increase. As a reminder, VeriSign, Inc. is prohibited from selling .com registrations to retail buyers.

We may only sell to accredited registrars and only at a capped, regulated price. The new $10.97 price that will become effective November 1 is the maximum price that we can charge registrars. Registrars, however, are entirely price-unrestricted and can sell .com registrations at any retail price they choose, and those prices often differ significantly from the price we are limited to. I would now like to turn the call over to John. I will return when John has completed his financial report and closing remarks. John?

John Callis: Thank you, Jim, and good afternoon, everyone. For the quarter ended 03/31/2026, the company generated revenue of $429 million, up 6.6% from the same quarter a year ago. Operating expense in Q1 2026 totaled $135 million, which compared to $140 million last quarter and $131 million for the first quarter a year ago. As noted last quarter, Q4 2025 results included an impairment charge. Operating income totaled $294 million, up $22 million, or 8.3%, from the previous year. Operating income was up $9 million, or 3.1%, on a sequential quarter basis. Net income for the first quarter totaled $215 million, compared to $206 million last quarter and $199 million for the same quarter a year ago.

This resulted in diluted earnings per share of $2.34 for the first quarter this year, compared to $2.23 last quarter and $2.10 for the first quarter of last year, representing increases of 4.9% and 11.4%, respectively. Operating cash flow for the quarter was $272 million; free cash flow was $265 million. Compared with [inaudible] and [inaudible], respectively, in the year-ago quarter. I will now discuss our updated full-year guidance for 2026. Revenue is now expected to be between $1.73 billion and $1.745 billion. Operating income is now expected to be between $1.17 billion and $1.185 billion. Interest expense and non-operating income, net, which includes interest income estimates, is still expected to be an expense of between [inaudible] and $7 million.

Capital expenditures are still expected to be between $55 million and $65 million, which includes some modest structural improvement projects at our HQ facility. The GAAP effective tax rate is still expected to be between 22% and 25%. I will now turn the call back to Jim for his closing remarks.

Jim Bidzos: Thank you, John. As I said, we are pleased to have delivered another solid quarter of operational and financial performance. We extended our record of 100% service availability. We saw strength in all metrics: new registrations, renewal rates, and solid financial performance, including paying our fourth quarterly dividend and additional share repurchases to return over 100% of our free cash flow to the investing public. We have seen broad participation in our marketing programs, which are now better tailored to our diverse and evolving channel. In short, we focused on what we can control and influence.

We also benefited from some tailwinds that include AI, which, as I said, has made it easier to find a good domain name, build a website, and get online. However, as we have said many times before, the delivery of our services is our primary mission. That is VeriSign, Inc.'s priority. In addition to .com/.net DNS, our services include the DNS root zone publication and the operation of two of the 13 global Internet root servers. Our employees are dedicated to support that mission, and the vast majority of them are highly skilled technical specialists directly engaged in the design, development, operation, maintenance, support, and protection of our unique, purpose-built, high-assurance critical infrastructure.

As we approach 29 years of uninterrupted availability—in fact, 100% availability spanning four decades—certainly one important aspect is availability. Performance and accuracy are equally important for many reasons, including for security. Our authoritative DNS answers are cryptographically protected, and over 95% are processed in milliseconds globally, more than 600 billion transactions per day on average that we see across our infrastructure. That is 7 million transactions per second every second of every day on average. Given the ever-increasing reliance on a global Internet, we believe high assurance, as we define it, will become increasingly important.

In the coming weeks, we will share a series of blogs about how we view the future of high-assurance infrastructure, the role it will play in enhancing online trust, and introduce enhanced security components. Thank you for your attention today. This concludes our prepared remarks. We will now open the call for questions. Operator, we are ready for the first question.

Operator: If you are using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. Once your question has been stated, please mute your line. We will take our first question from Rob Oliver with Baird.

Rob Oliver: Great. Thank you. Good afternoon, Jim. First question, and I had a couple of questions. First one for me is around, clearly, marketing programs that you guys announced that you intended to pursue—I think it was back in Q1 of 2024—are really starting to gain traction. You also called out tailwinds from AI, and so I am wondering the extent to which you could help us understand, as you look at the strength in domains, which I think you said we have not seen now in many years, what sort of the contributing factor balances are there. Is it more AI? Is it more things you can control, marketing? How should we think about the mix of those contributions?

Jim Bidzos: That is a good question, Rob. The way we see it, it is difficult to really separate the two. The reason is that they sort of collide in a good way with each other and blend together. The registrars benefit from the tailwind from AI, which essentially makes it easier for the registrars to service folks who can quickly find a domain, get online, and build a website. That gets easier. I believe that engagement with our programs, which we know for a fact is a significant contributor—but to what extent is difficult because that demand and our programs sort of collide. We put together programs that were responsive to what we heard from the channel.

The channel is evolving and diversifying constantly, and, as I have said before, we put together programs that were responsive to their diverse needs, and they are absolutely engaging with them. So there is greater drive from the tailwind engaging with more carefully tailored programs. Trying to separate those is really difficult. I wish I could give you a better answer, but they are both good news.

Rob Oliver: Okay, great. That is helpful color. Thanks, Jim. Second question for me is around your comment that you have been pleased—I cannot remember your exact language—about renewal rates and what you have seen. I just wanted to double down on that a little bit. We are, I think, around the two-year anniversary of when you guys called out these marketing programs. So it is a little early to know if it was a two-year cohort, but I would specifically love to hear from you what you are hearing about the renewal cohorts around post those marketing changes and how those are holding up relative to your typical renewal rates on new domains.

Jim Bidzos: Yes, good question. John has been looking into that. John?

John Callis: Certainly, our renewal rate at 76.3% was very strong. Our programs, as we have talked about in the past, do have elements of design that incentivize our customers—our registrars—to sell and promote names to their customers that have a better renewal-rate characteristic. We do expect continued good, solid renewal rates through 2026. As we mentioned last quarter, the strength of new registrations in 2025 will present a little bit of a challenge this year because we will have a higher proportion of first-time renewing names through 2026. Our first-timer renewals are still averaging in the mid-40% range. Our previously renewed names are in the mid-80% range but have showed some improvement over the last year.

I think we are pleased with what our programs have delivered there and are seeing some improvement.

Rob Oliver: Okay. Thanks, John. I appreciate all that detail. And then I guess, last one for me, and then I will hand it over to others. Jim, I do not know the extent to which you will comment, but I wanted to ask about the upcoming round of ICANN TLD programs that is going to be coming up—I think the process may be kicking off even here in April or imminently. Any color you can provide on how we should be thinking about how you are thinking about that potential opportunity around the new TLD program? Thank you.

Jim Bidzos: Sure. Yes, ICANN is opening another round of applications for new gTLDs. The last one was in 2012, and you are right, this one opens up at the end of this month for submission of applications. ICANN is opening a window for a new round. We expect it to be a long process. The new generic TLDs that come out of this process are likely not launched until 2028. There are a lot of steps ICANN goes through after the application window. There is also a potential in this new round of multiple applicants for the same TLD. In this case, ICANN will run an auction process to sort out the winners of different contention sets.

So there is a lot of process to go on. We get asked a lot about VeriSign, Inc.'s participation, and we are taking the necessary technical steps to be ready should we choose to be an applicant in this round. As a reminder, in the 2012 round, we obtained several new gTLDs, some of which we have not yet launched. Also, .web, which we are continuing to pursue, was from the 2012 round. We are still evaluating our participation in this current round—the 2026 round—with the window of applications slated to open on the 30th of this month and not close until August 12.

We will update you as appropriate as we get closer to the end of the application close in August.

Rob Oliver: Okay. That is great. Thanks, Jim. Thanks, John. I appreciate all the color. Thanks a lot.

Operator: We will move to our next question from Citi.

Analyst: Good afternoon. Thank you for taking my questions. First off, with the upcoming .com price hike, what are your expectations for the price elasticity or renewal trends for these newer domains following the hike? I understand wholesale domain prices are fairly nominal relative to the end-customer costs, but any color there would be very helpful. And then also, how are you thinking about .net pricing?

John Callis: Yes, so if I understood your question, you are asking us what our expectations are around renewals post price increase. It is very dependent on what our retail registrars do with pricing. If they do take price increases, that could have an effect on either new registrations or renewals, and we have seen a little bit of that in the past. But we are still pretty confident in the trends that we are seeing in renewals at this point in time, and we will see what happens come, I guess, November 1 and thereafter.

Jim Bidzos: I would just add the new price—the $10.97 per-year price for a .com—works out to about $0.03 a day. I think for most registrants who are engaged in online activities, it is a relatively modest amount.

Analyst: Makes sense. And then any [inaudible] .net pricing?

Jim Bidzos: We have available 10% annual price increases on .net. We do not guide to pricing, of course. We take a lot of factors into consideration when we decide how to price the TLDs. I can tell you a couple of things. Number one is we have not, at this point today, announced a price increase for .net. We consider it to be a well-known, competitively priced TLD, and we invest in marketing programs for .net. If we announce a price increase, we will certainly give notice, but we have not at this point.

Analyst: Got it. Thank you very much. Follow-up question here on your infrastructure build-out. In context of the over 600 billion transactions per day that VeriSign, Inc. sees, AI agents and LLMs scraping the web at an accelerated rate—Is your current infrastructure sufficient to handle this expanding Internet? Were there incremental investments you might need to ensure that 100% uptime?

Jim Bidzos: Sure. There are many qualitative and quantitative improvements that we are constantly making and adjusting to our network. The best answer I can give you is that we have multiple orders of magnitude in excess capacity as one component of our resiliency planning and execution.

Analyst: Great. Thank you.

Jim Bidzos: Sure.

Operator: We will take our last question from JPMorgan.

Analyst: Hello, Jim. I appreciate the commentary at the very end of your prepared remarks about the new services. Can you maybe provide a bit more color on what those new services will solve for your customers—maybe some additional insights on the security and stability mission that you are looking to achieve there?

Jim Bidzos: Sure. I can say a few more things about the foundational reasons that I alluded to concerning additional security services in high-assurance infrastructure like ours. Putting aside AI for a moment—which is, of course, a significant, major development—well, maybe not quite putting it aside, simply making the observation that with Anthropic’s research, we have seen that AI is capable of revealing vulnerabilities in various systems. So security is continuing to be important. In the many years that I ran the RSA Conference, my observation in every keynote was that the security situation provided more job security for the audience than any industry I could think of.

And here we are 35 years since that conference began, and it certainly turned out to be true. High-assurance infrastructure becomes important for a lot of reasons. AI is not only beneficial for all the reasons that it is, but it reveals vulnerabilities. With the increased reliance and use of the Internet—it is such a deep part of all of our lives, with so many different infrastructures now relying on it—we think high assurance will be important. I mentioned the components. The components I talked about are our own 100% availability record—100%, not five nines—now for 28 going on 29 years. That is one.

But also our performance: that we can deliver accurate, cryptographically protected answers to queries in milliseconds anywhere in the world, at a rate of 600 billion per day on average, and have multiple orders of magnitude capacity beyond it. The accuracy part is important, and the performance part is important because these are windows of vulnerability. The delays in answering queries related to secure navigation are important. We believe that there are additional security tools that would be synergistic with the type of high-assurance infrastructure that we have. I have alluded to services that we have been examining. They need to fit certain requirements: they need to fit well into our infrastructure, and work well within our channel.

Nothing significantly changes in offering them other than they benefit from the properties of our infrastructure, and we think that some of them are worth considering as an offering as a service. As I said, we will have a series of blogs that roll this out, starting as soon as next month, so you will have more information then. That is probably what I am comfortable saying right now.

Analyst: Okay. Perfect. Thank you, Jim. And I appreciate all the comments that you made around your own marketing activities, but can you comment on how registrar promotional intensity in Q1—for example, for GoDaddy, your biggest customer—or for other registrars, how it compared with 4Q, and how you think about promo-driven volume versus sustainable underlying demand?

Jim Bidzos: There are a lot of different ways that question could be answered. I will give you one way, and John can add if he has another. I mentioned the evolving and diverse nature of our channel. This is all true. Some website builders have turned into registrars. Some have been acquired. Some have merged. Some have a different focus. All of them have different models. That evolving part led us to take a careful look at our programs and make sure that we offered those that actually work for these different models.

Different models bring about issues like different lead times to prepare marketing campaigns, and so, as we learned and adapted, it was driven more by what the diverse needs were and the need to find something that could work for a larger group rather than a one-size-fits-all. We are also bound by some restrictions in how we market. We have to be careful to treat registrars equally and fairly. That is also a factor in that design. Our channel for .com and .net—I believe VeriSign, Inc.’s channel—has the broadest reach because of the popularity of .com and .net TLDs, so we service a very large number of registrars.

We thought that was the path that would lead to the most productive results in the short term: simply addressing the needs of a very large, diverse, and evolving channel. We concentrate on listening to them, learning what they are doing, engaging with them, returning, assessing, adapting, revising, and presenting—and we get engagement. So it is less driven by what we think a program will do and more by what they really need to go out and market our products, which are really great, reliable, trusted products.

Analyst: Makes sense. Thank you very much, Jim.

Operator: That concludes today's question and answer session. I will turn the conference back to David Atchley for final comments.

David Atchley: Thank you, operator. Please call the Investor Relations department with any follow-up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.

Unknown Speaker: Okay.

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