Earnings Preview: VeriSign

| About: VeriSign, Inc. (VRSN)

VeriSign (NASDAQ:VRSN) is expected to report Q1 earnings after the market close on Thursday, April 28, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 32c for EPS and $184.44M for revenue, according to First Call.

Analyst Views

Citigroup’s checks validate strength of public zone file trackers. The firm estimates VeriSign will print 2.8M net adds to .COM /.NET, ahead of Cirgroup's original 2.5M estimate and above the high end of the guidance range of 2.3M-2.6M. Citigroup expects strength in Q1 name adds to bolster street confidence in estimates. With the .NET renewal out of the way, the .COM contract looks increasingly like an automatic, which provides a catalyst to increased earnings visibility that Citigroup believes will be positive for shares. Guidance Expectations – Q2 net adds are typically down versus seasonally strong Q1. Citi expects Q2 net adds guidance to be 2.1M-2.4M. The firm does not expect any revisions to margin target of 46%-48% exit margins. Citi believes management continues to control the expense run rate of the core business. Company job listings in Q1 were consistent with Q4 levels and Mar. closed lower than Jan. and Feb. SSL transition costs remain a bit of a wild-card, but should end in 2H11.

What to listen for: Update to 2011 guidance and margin trajectory; Inputs on business metrics; Accounting impact of convertible debt; Future growth initiatives; Commentary on .NET contract and expectations for .COM renewal; and uses of cash. A good quarter is likely anticipated but Citigroup continues to believe shares are suppressed by concerns around the .COM / .NET contract renewal over the coming 18 months. Consensus for Q2/FY11 is: 36c/$1.48 on $191.13M/$774.23M in revenue.