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Domain name registry operator Verisign (NASDAQ:VRSN) reported results in line with analysts' expectations in Q1 CY2024, with revenue up 5.5% year on year to $384.3 million. It made a GAAP profit of $1.92 per share, improving from its profit of $1.70 per share in the same quarter last year.
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VeriSign (VRSN) Q1 CY2024 Highlights:
- Revenue: $384.3 million vs analyst estimates of $381.8 million (small beat)
- EPS: $1.92 vs analyst estimates of $1.86 (3.3% beat)
- Gross Margin (GAAP): 87.2%, up from 86.3% in the same quarter last year
- Free Cash Flow of $253.5 million, up 27.3% from the previous quarter
- Market Capitalization: $18.58 billion
While the company is not a domain registrar and does not directly sell domain names to end users, Verisign (NASDAQ:VRSN) operates and maintains the infrastructure to support domain names such as .com and .net.
E-commerce SoftwareWhile e-commerce has been around for over two decades and enjoyed meaningful growth, its overall penetration of retail still remains low. Only around $1 in every $5 spent on retail purchases comes from digital orders, leaving over 80% of the retail market still ripe for online disruption. It is these large swathes of the retail where e-commerce has not yet taken hold that drives the demand for various e-commerce software solutions.
Sales GrowthAs you can see below, VeriSign's revenue growth has been unimpressive over the last three years, growing from $323.6 million in Q1 2021 to $384.3 million this quarter.
VeriSign's quarterly revenue was only up 5.5% year on year, which might disappoint some shareholders. We can see that revenue increased by $3.9 million in Q1, which was roughly the same as in Q4 CY2023.
Looking ahead, analysts covering the company were expecting sales to grow 5.9% over the next 12 months before the earnings results announcement.
Cash Is KingIf you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. VeriSign's free cash flow came in at $253.5 million in Q1, roughly the same as last year.
VeriSign has generated $808.2 million in free cash flow over the last 12 months, an eye-popping 53.4% of revenue. This robust FCF margin stems from its asset-lite business model, scale advantages, and strong competitive positioning, giving it the option to return capital to shareholders or reinvest in its business while maintaining a healthy cash balance.
Key Takeaways from VeriSign's Q1 Results It was good to see VeriSign beat analysts' revenue and EPS estimates this quarter as it processed 9.5 million new domain name registrations. Overall, we think this was a decent quarter, showing that the company is staying on target. The stock is up 1.8% after reporting and currently trades at $185.97 per share.
