VeriSign Inc. VRSN, a global provider of domain name registry services, recently reported first-quarter 2015 results. Quarterly earnings (excluding all one-time items but including stock-based compensation) of 69 cents were in line with the Zacks Consensus Estimate.
The company reported non-GAAP net income of $99 million or 74 cents a share compared with $95 million or 64 cents reported in the year ago quarter.
Revenues
Revenues increased 3.9% year over year to $258 million, compared with the Zacks Consensus Estimate of $259 million.
In the quarter, VeriSign Registry Services added 1.51 million net new names. Domain names in the zone for .com and .net together increased 3.1% year over year in the reported quarter to 133 million.
VeriSign processed 8.7 million new domain name registrations for .com and .net, increase from 8.6 million in the year-ago quarter.
VeriSign’s renewal rate for the fourth quarter was 72.5%, up 30 basis points (bps) year over year. Exact renewal rate figures will be available 45 days after the end of the quarter.
Margins
As a percentage of revenues, total operating expenses increased to 44.2% in the quarter compared with 43.9% in the year-ago quarter.
On a year-over-year basis, sales & marketing (S&M) expenses increased 50 basis points (bps) and general and administrative expenses rose120 bps while research & development (R&D) expenses decreased 80 bps.
Operating income stood at $144.2 million, up 3.3% year over year. Operating margin was 55.8% in the reported quarter compared with 56.1% in the year-ago period. The company’s non-GAAP operating margin was 59.7% for the quarter down from 60.1% in the prior-year quarter.
Other Financial Details
Exiting the quarter, the company’s cash and cash equivalents (including marketable securities) were $1.9 billion compared with $1.4 billion at the end of 2014.
Operating cash flow for the quarter was $133 million, down from $142 million reported in the prior-year quarter. The company’s capital expenditures for the quarter were $13 million.
VeriSign repurchased approximately $160 million worth of shares in the quarter. The total amount remaining under the company’s share buyback program is $917 million as of Mar 31, 2015.
Guidance
For 2015, VeriSign forecasts revenues in the range of $1.043 billion to $1.057 billion (previously projected range was $1.040 billion to $1.060 billion), which represents an annual growth rate of 3% to 5%.
Non-GAAP gross margin is expected to be at least 80%, while operating margin is forecast to be between 60% and 62%.