Earnings Preview: VeriSign

| About: VeriSign, Inc. (VRSN)

VeriSign (NASDAQ: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.

Analyst Views

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. :