VeriSign Earnings: Continued Domain Base Expansion Drives Guidance Rise

Key Morningstar Metrics for VeriSign

• Fair Value Estimate: $217
• Morningstar Rating: ★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Low

What We Thought of VeriSign’s Earnings

We have raised our fair value estimate for VeriSign VRSN to $217 from $210, following a solid first-quarter 2025 earnings report and an upward revision of full-year guidance by the wide-moat firm. Quarterly revenue and profitability were in line with FactSet consensus expectations. This performance was driven by modest domain base expansion and improved renewal rates. Encouraged by these trends, management raised guidance for the fiscal year to revenue of $1.635 billion to $1.650 billion (previously $1.615 billion to $1.635 billion), and operating income between $1.110 billion and $1.125 billion. We view this increase positively and believe VeriSign’s resilient business model will help it weather ongoing macroeconomic headwinds. Additionally, the firm also declared its first-ever quarterly dividend of $0.77. Our valuation model has been updated accordingly. We view the shares as slightly overvalued.

First-quarter revenue rose 4.7%, driven by solid contract renewals and new customer acquisitions. Renewal rates for the quarter are expected to be 75.3%, up from 74.1% in the same period last year. The domain name base for .com and .net registrations increased by a net 0.78 million, bringing the total to 169.8 million. This includes 10.1 million new domain name registrations, compared with 9.5 million in the prior-year period.

Management’s confidence in the updated revenue guidance is supported by higher-than-anticipated domain base growth, now expected in the range of negative 0.7% to 0.9% (previously negative 2.3% to negative 0.3%). This new guidance factors in caution about ongoing macroeconomic uncertainties, but we expect internet domain registrations to be relatively insulated and look to ongoing marketing programs and strong contract renewals to support revenue growth in the coming quarters.