Earnings Preview: VeriSign

VeriSign (VRSN) is expected to report Q3 earnings after the market close on Thursday, November 5, with a conference call scheduled for 5:00 pm ET.

Guidance

The consensus estimate is 32c for EPS and $258.79M for revenue, according to First Call. For Q3 Oppenheimer is modeling 33c on $258.9M in revenue, and estimates that VeriSign added approximately 1.4M domain names, or DNs, in Q3, which is up 27% quarter-over-quarter. The firm believes recovering DNs net adds removes the element of risk for Q3. Longer term Opco remains optimistic regarding a rebound in net adds on the back of a macro recovery, especially as international growth rebounds. Earlier this month AT&T's (T) acquisition of VeriSign's global security consulting business marked the closure of a long drawn divestiture process.

Analyst Views

Opco believes a leaner VeriSign can now focus wholly on its core business. Opco believes SSL certificates continue to show healthy unit growth of up 11% year-over-year. However, product mix remains a drag on AUR as lower cost Geotrust continues to outpace market growth. As the economy recovers the firm expects to see product mix turn in the company's favor with an uptick in higher priced VeriSign brand SSLs, especially EV certificates. Opco sees the CFIT lawsuit continuing to be an overhang on the company, especially as resolution timing remains uncertain. Under the current circumstances Opco believes it would be well near impossible for VeriSign to increase prices for .COM/.NET. Regardless Opco dos not see the company's position as the sole registrar of .COM/.NET at risk. Opco's Q4 estimate is 34c on $264.5M in revenue. Consensus is 34c and $264.16M.

Next Event: VeriSign will be hosting its Analyst Day in New York City on November 19.