Jumps on dividend, upgraded forecast — Verisign stock
.Com and .net registry changes return-of-capital strategy and upgrades its outlook.
Shares of Verisign (NASDAQ: VRSN) are up over 9% in trading so far today while the NASDAQ is mostly flat.
The jump comes following the firm released earnings yesterday.
In addition to a return to growth in the domain base, the firm disclosed its first dividend in 14 years.
The firm also upped its guidance for this year.
Previously, it predicted the base of .com and .net domains to shrink by 2.3% to 0.3% this year. Now, it has set its bottom range at -0.7% and its upper range at a growth rate of 0.9%.
The upper bound of its previous revenue forecast, $1.635 billion, has now become its lower bound. It states that revenue could reach as high as $1.65 billion.
It expects operating income of $1.11 billion to $1.125 billion, up from its previous guidance of $1.095 billion to $1.115 billion.
During yesterday’s earnings call, the firm stated that registrars are engaging with its marketing programs. In other words, it’s finding registrants when it pushes rebates to registrars.
Still, the firm cautioned regarding macroeconomic trends and noted that Q1 is typically the firm’s strongest quarter for registrations.
The investor call did not include a discussion regarding Google effectively killing AdSense for Domains and any impact this could have on registration growth.
In its 10-Q, the firm noted that “the motivation of existing domain name registrants managing their investment in domain names, such as for resale at increased prices or for revenue generation through website advertising” has limited demand for .com and .net domains. This language remains unchanged from its previous SEC filing.
Verisign also includes domain investing and monetization as a risk factor in its SEC filings, and the verbiage has not changed over the past quarter.
Firms that register domains to monetize the traffic or use them for arbitrage may have decreased demand for domains as monetization revenue declines.
Verisign has publicly railed against domain investors, a group that has fought back against wholesale price increases. Still, the firm relies on these investors as an notable part of its client base.
