VeriSign (VRSN) is expected to report Q3 earnings after the market close on Thursday, October 27, with a conference call scheduled for 4:30 pm ET.
The consensus estimate is 37c for EPS and $196.16M for revenue, according to First Call. Citigroup expects Q3 results to meet its estimates of $196M and 36c -- as it sees registry tracking to the mid-point of guidance.
Declines in job postings and first quarter of being consolidated to East Coast headquarters suggest the company continues to control costs, giving Citigroup comfort in its 48% operating margin estimate. Citi estimates the company will print just north of 1.9M net adds, in-line with its estimate, and at mid-point of guidance range of 1.8-2.1M. Additionally, the run rate of registrations strengthened in the final weeks of the quarter, which bodes well for Q4.
Looking forward: Q4 registry seasonality has been choppy in recent years, but Citi believes net adds bias is flat to up. The firm expects a slight pull forward in registrations with price increase in 1Q12. Current October run rate points to ~1.9M in Q4; thus, Citi expects net adds guidance to be 1.9M-2.2M. With recent management turnover, Citi is not expecting preliminary FY12 targets or revisions to exit margin guidance of at least 48%. Investors/analysts on the conference call will be looking for 1) Update on the management CEO/CFO search; 2) Commentary around FY12 revenue and margin expectations; 3) Inputs on registry business and trends; 4) Future growth initiatives; 5) Uses of cash. Citigroup views the shares as likely "range-bound" while the company completes its CEO/CFO search. Consensus for Q4/FY12: 39c/$1.82 on $201.99M/$866.70M in revenue. :