Verisign lowers full year domain guidance (again)

Company predicts full year growth of 1% or less.

Chart showing .com and .net domains at the end of Q3, down from Q2 but up 1.2% year over year
The line doesn’t always go up. Image from from Verisign earnings presentation.

Verisign (NASDAQ: VRSN) announced third quarter earnings after the market closed today.

The company’s revenue was $357 million, up 6.8% year over year. It ran an operating margin of 66.3% and generated operating cash flows of $262 million.

The .com and .net namespaces ended the quarter with 174.2 million domain names. That’s up 1.2% year over year but down about 160,000 domains compared to the end of Q2 2022. It’s the second consecutive quarter-over-quarter decline in the base.

For the year, Verisign expects the domain base to grow just 0.25% to 1.0%. That’s down from its previous forecast of 0.5% to 1.5%. At the beginning of the year, it forecasted that the base would grow 2.5% to 4.5%.

A number of factors are leading to the decline:

  1. A hangover from the Covid boom, with registration numbers returning to pre-pandemic levels
  2. Global macroeconomic headwinds
  3. Fewer registrations in China and higher registrations there last year that are renewing at lower rates
  4. .Com price increases – although Verisign hasn’t pointed to this, it’s probably losing some registrations because of the 7% .com price hike this year. Granted, the low price elasticity of .com domains has helped the company grow revenue despite the decline in domains under management.

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