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Verisign (NASDAQ:VRSN) is expected to announce its fiscal year 2011 Q2 earnings on July 28. We currently have a $38 Trefis price estimate for Verisign, which implies around 15% upside to the current market price. Verisign recently renewed its contract with ICANN, which cements its position as the exclusive .com and .net domain registrar. It currently competes with other domain name registry providers like NeuStar, Employ Media, and Afilias to win new and maintain existing registry rights from ICANN. The company is also followed by investors in Internet security names like Symantec (NASDAQ:SYMC) and Intel’s Mcfee (NASDAQ:INTC) as well as CDN provider Akamai (NASDAQ:AKAM)

Domain Registrations

While the percentage market share of .com and .net domain names is expected to decrease, the number of total domain names is expected to increase by a much higher percentage and is expected to reach almost 340 million by the end of the Trefis forecast period. The expected increase in domain registrations should improve Verisign’s top line growth.

(Chart created by using Trefis' app)

Improving Margins

The company has also announced an increase in domain name prices, hiking .com prices by 7% and .net prices by 10% as expected. This should help it improve operating profit margins in the short term. The price increase is expected to lead to only a marginal decrease in the number of .com and .net domain name registrations, as the hike isn’t substantial.

In line with its Q1 results, we expect Verisign to post positive results, improving its margins and increasing its net income faster than revenue.

Source: Verisign Earnings Preview: What to Watch