Earnings Preview: VeriSign

| About: VeriSign, Inc. (VRSN)

VeriSign (NASDAQ:VRSN) is expected to report Q4 earnings after the market close on Thursday, January 26, with a conference call scheduled for 4:30 pm ET.


The consensus estimate is 41c for EPS and $203.52M for revenue, according to First Call. The company is looking to make a streak of three quarters of beating estimates. Guidance for Q4 called for domain name growth of 1.8M-2.1M, which implies 8% year-over-year unit growth. Domain names grew 1.99M in Q3. Pricing will add roughly another 5% to year-over-year, bringing the revenue growth estimate for Q4 to 13% year-over-year. Management had tightened up its prior FY11 revenue guidance range to $770M-$775M, from $765M-$775M. This implies year-over-year growth of 13%-14%. Management expects Q4 EBIT margins to approximate 50%, vs. prior forecast of 48%.

Analyst Views

Citigroup expects solid Q4 results -- with the registry tracking slightly above to the mid-point of guidance, the firm expect results to be modestly ahead of its estimates of 40c on $202M in revenue. Looking forward: Citigroup continues to expects registry strength in the seasonally strong Q1, however it believes there was some modest pull forward in registrations with price increase to go into effect at the start of 2012. Current January run rate points to approximately 2.4M-2.5M net adds in Q1; thus Citigroup is anticipating net adds guidance to be 2.2M-2.5M. The firm is expecting initial FY12 revenue target of about 12%-15% year-over-year to be paired with conservative margin expansion goals of 50%-51%.

What to listen for on the call: Commentary around FY12 revenue and margin expectations; Inputs on registry business and trends; Commentary on new gTLDs; Future growth initiatives.