IDN application and explains drop in .com/.net growth — Verisign withdraws

Verisign cites a number of headwinds in its existing TLD business while it withdraws one of its IDN applications.

Verisign held its quarterly investor conference call yesterday following releasing it first quarter earnings.

The firm processed 8.6 million fresh registrations across .com/.net, compared to 8.8 million in the same quarter a year ago. The renewal rate also dipped.

Here’s what Verisign discussed on the call.

Why the growth rate is shrinking

Verisign blamed a number of factors for slowing growth:

• Registrars focusing on bundles and average revenue per user instead of using domains for client-buyout. The firm has noticed some registrars returning to a domain-focused pitch, especially outside of the U.S.
• Changes in pay-per-click (e.g. parking, heavily monetized sites).
• The law of sizable numbers, which makes it more difficult to push the needle.

Additionally, CEO James Bidzos stated it was too early to tell how much impact fresh TLDs will have on growth:

…there are roughly 100 — over 100 fresh gTLDs that are delegated into the zone, and they’re accepting registrations right now, and have been pretty much for most of the first quarter, for roughly almost 3 months now. And in total, there are regarding 570,000 registrations in, collectively, all of the fresh gTLDs year-to-date. I think that information is current as of just a couple of days ago. So it’s too soon to tell if any of those registrations or what part of those registrations are at the expense of a .com or a .net registration, since until we see the first renewal cycle on these fresh gTLDs, it’s really going to be difficult to assess how much impact they might have on the .com/.net zone.

The firm expects 0.3 million to 0.8 million net adds in Q2.

Fresh TLDs

Verisign has withdrawn its application .com IDN transliteration in traditional Chinese while retaining its simplified Chinese application. This was due to ICANN’s policy on variants, which Verisign stated did not consider one applicant applying for variants. It hopes it will be able to reinstate the traditional Chinese application once this policy is settled. It went with simplified Chinese since it believes it’s a bigger market.

Also, Verisign thinks one of its back-end registry clients for fresh TLDs will launch in the second quarter.

Monetizing intellectual property

Verisign noted that it is beginning to receive inquiries from competing registry operators regarding using certain elements of its patented registry technology.