Verisign’s domain base fell last quarter. Is it peak .com?

The pandemic played a role, but the future is uncertain.

Chart showing consistent growth of .com and .net domain base — It didn’t go up in Q2. (Chart from Verisign Q1 2022 earnings report.)

Verisign (NASDAQ: VRSN) reports earnings this Thursday, and there will be something unusual for the company to report: a drop in the base of registered .com and .net domain names.

For years, the company has reported a modest but upward trend in domain registration, quarter to quarter (see chart). It added over a million domains in the first quarter of this year.

But it appears the number went negative in Q2.

Verisign concluded Q1 with 174.7 million .com and .net domains under management. According to the zone data on its website, it finished Q2 with between 174.2 and 174.3 million domains. It’s down to 174.1 million as of today.

Both .com and .net lost registrations during the quarter. .Com dropped from 161.3 million to 161.0 million. .Net fell from 13.4 million to 13.2 million according to the Verisign data.

So, is this peak .com? Has the world’s appetite for domains ending in .com been satiated?

It’s an interesting question with a lot of nuance.

Verisign saw this coming. It saw a reversal in fortunes and lowered its annual guidance after Q1. (It no longer provides quarterly guidance for the domain base.)

I suspect the main reason for the dip is pull-forward demand. During the pandemic, many businesses that would have finally “gotten online” during 2022 or 2023 or 2024 suddenly rushed to do so. We saw increased registrations and the domain base grew at a fast clip, especially in Q2 2020 and Q2 2021:

Verisign chart shows strong new registration growth in 2020 and 2021 — Chart shows new registrations each quarter. Note Q2 2020 and Q2 2021. (Chart from Verisign Q1 earnings presentation.)

Now, that company that registered a domain a couple of years earlier than it would have doesn’t need to register a new domain this year.

And a lot of those new registrations during the pandemic are coming up for renewal, too. 39.5 million .com/.net domains were set for renewal or expiration in Q2, compared to 36.6 million in the year before. As the chart above shows, Q2 was very strong for new registrations during the pandemic.

Remember that first-year registrations typically renew at lower rates than mature domains.

So the optimistic view is that this is just a come-down from the pandemic. Just like Zoom saw huge growth as everyone worked from home, Verisign benefited with new domain registrations.

There’s another take, of course. That it’s peak .com, people are substituting different domains, and the domain base has gotten so big that it’s going to be impossible to grow going forward.

People said that 20 years ago, and look where we are now.

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