VeriSign Inc.

10/22/2026 | Press release | Distributed by Public on 10/22/2026 14:34

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion in conjunction with the 2025 Form 10-K and the interim unaudited Condensed Consolidated Financial Statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements are based on current expectations and assumptions and involve risks, uncertainties, and other important factors, including, among other things, statements regarding the Company's quarterly dividend and our expectations about the sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility. In some cases, you can identify forward-looking statements by terms such as "assumes," "could," "estimates," "forecasts," "may," "plans," "potential," "predicts," "projects," "should," "targets," "will," "would," "seeks," "expects," "anticipates," "intends," "believes" and similar language intended to identify forward-looking statements. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. You should also carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in 2026. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.
For purposes of this Quarterly Report on Form 10-Q, the terms "Verisign," "the Company," "we," "us," and "our" refer to VeriSign, Inc. and its consolidated subsidiaries.
Overview
We are a global provider of critical internet infrastructure and domain name registry services, enabling internet navigation for many of the world's most recognized domain names. We help enable the security, stability, and resiliency of the DNS and the internet by providing Root Zone Maintainer Services, operating two of the thirteen global internet root servers, and providing registration services and authoritative resolution for the .com and .net gTLDs, which support the majority of global e-commerce.
As of September 30, 2026, we had 182.5 million .com and .net registrations in the domain name base. The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users, which is partially driven by greater availability of internet access, as well as marketing activities carried out by us and our registrars. The number of domain name registrations under our management may be negatively impacted by certain factors, including overall economic conditions, competition from country code top-level domains ("ccTLDs"), other gTLDs, services that offer alternatives for an online presence, and ongoing changes in the internet practices and behaviors of consumers and businesses. Factors such as the evolving practices and preferences of internet users, and how they navigate the internet, as well as the motivation of domain name registrants and how they will manage their investment in domain names, can negatively impact our business and the demand for new domain name registrations and renewals.
Business Highlights and Trends
•We recorded revenues of $443.0 million and $1,306.5 million during the three and nine months ended September 30, 2026, which represents an increase of 6% compared to the same periods in 2025.
•We recorded operating income of $296.5 million and $886.4 million during the three and nine months ended September 30, 2026, which represents an increase of 4% and 6%, respectively, compared to the same periods in 2025.
•As of September 30, 2026, we had 182.5 million .com and .net registrations in the domain name base, which represents a 6.1% increase from September 30, 2025, and a net increase of 3.4 million domain name registrations from June 30, 2026.
•During the three months ended September 30, 2026, we processed 13.1 million new domain name registrations for .com and .net compared to 10.6 million for the same period in 2025.
•The final .com and .net renewal rate for the second quarter of 2026 was 75.2% compared to 75.5% for the second quarter of 2025. Renewal rates are not fully measurable until 45 days after the end of the quarter.
•We generated cash flows from operating activities of $772.3 million during the nine months ended September 30, 2026, compared to $801.5 million for the same period in 2025.
•During the three months ended September 30, 2026, we repurchased 0.7 million shares of common stock for an aggregate cost of $189.1 million. As of September 30, 2026, there was $1.36 billion remaining for future share repurchases under the share repurchase program.
•On October 19, 2026, the Board of Directors declared a cash dividend of $0.81 per share of the Company's outstanding common stock to stockholders of record as of the close of business on November 17, 2026, payable on November 24, 2026.
Pursuant to our agreements with ICANN, we make available files containing all active domain names registered in the .com and .net registries. Further, we also make available a summary of the active zone count registered in the .com and .net registries and the number of .com and .net domain name registrations in the domain name base. The zone counts and information on how to obtain access to the zone files can be found at https://www.verisign.com/resources/zone-file. The domain name base is the active zone plus the number of domain names that are registered but not configured for use in the respective top-level domain zone file plus the number of domain names that are in a client or server hold status. The domain name base may also reflect compensated or uncompensated judicial or administrative actions to add or remove from the active zone an immaterial number of domain names. These files and the related summary data are updated daily. The update times may vary each day. The number of domain names provided in this Form 10-Q is as of midnight of the date reported.
Results of Operations
The following table presents information regarding our results of operations as a percentage of revenues:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
Revenues 100.0 % 100.0 % 100.0 % 100.0 %
Costs and expenses:
Cost of revenues 11.2 11.6 11.4 12.0
Research and development 6.0 6.1 6.2 6.3
Selling, general and administrative 15.9 14.5 14.6 13.8
Total costs and expenses 33.1 32.2 32.2 32.1
Operating income 66.9 67.8 67.8 67.9
Interest expense (4.8) (4.5) (4.5) (4.7)
Non-operating income, net 1.0 1.5 1.0 1.6
Income before income taxes 63.1 64.8 64.3 64.8
Income tax expense (15.1) (14.0) (15.0) (14.5)
Net income 48.0 % 50.8 % 49.3 % 50.3 %
Revenues
Our revenues are primarily derived from registrations for domain names in the .com and .net domain name registries. We also derive revenues from operating domain name registries and technical systems for several other gTLDs and one ccTLD, all of which are not significant in relation to our consolidated revenues. For domain names registered in the .com and .net registries, we receive a fee from registrars per annual registration that is determined pursuant to our agreements with ICANN. Individual customers, called registrants, contract directly with registrars or their resellers, and the registrars, who are our direct customers, in turn register the domain names with Verisign. Changes in revenues are driven largely by changes in the number of new domain name registrations and the renewal rate for existing registrations as well as the impact of new and prior price increases, to the extent permitted by ICANN and the Department of Commerce. New registrations and the renewal rate for existing registrations are impacted by continued growth in online advertising, e-commerce, and the number of internet users, as well as marketing activities carried out by us and our registrars. We also offer promotional incentive-based discount programs to registrars based upon market conditions and the business environment in which the registrars operate.
In November 2024, we renewed the .com Registry Agreement with ICANN, pursuant to which we will remain the sole registry operator for the .com registry through November 30, 2030. Under the .com Registry Agreement, we are permitted to increase the price of a .com domain name registration by up to 7% in each of the final four years of each six-year period. The current such six-year period began on October 26, 2024. We increased the annual registry-level wholesale fee for each new and renewal .com domain name registration from $9.59 to $10.26 effective September 1, 2024. On April 23, 2026, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .com domain name registration from $10.26 to $10.97 effective November 1, 2026. Under the .net Registry Agreement, we are permitted to increase the price of .net domain name registrations by up to 10% each year during the term of our agreement with ICANN, through June 30, 2029. We
increased the annual registry-level wholesale fee for each new and renewal .net domain name registration from $9.92 to $10.91 effective February 1, 2024. On August 27, 2026, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .net domain name registration from $10.91 to $12.00 effective March 1, 2027. All fees paid to us for .com and .net registrations are in U.S. dollars.
A comparison of revenues is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 % Change 2025 2026 % Change 2025
(Dollars in millions)
Revenues $ 443.0 6% $ 419.1 $ 1,306.5 6% $ 1,231.3
The following table compares the .com and .net domain name registrations in the domain name base:
September 30, 2026 % Change September 30, 2025
.com and .net domain name registrations in the domain name base
182.5 million 6% 171.9 million
Revenues increased during the three and nine months ended September 30, 2026, as compared to the same periods last year, primarily due to an increase in the domain name base as of September 30, 2026 compared to September 30, 2025 and the .com price increases.
Demand for .com and .net domain names has been primarily driven by continued internet growth and marketing activities carried out by us and our registrars. However, the demand for .com and .net domain names may be limited by competitive pressure from other TLDs and alternatives for an online presence. Additionally, changes in internet practices, consumer behavior, and global economic conditions, as well as the motivation of existing domain name registrants managing their investment in domain names, such as for resale at increased prices or for revenue generation through website advertising, may impact demand for .com and .net domain names. Our domain name base increased during the three and nine months ended September 30, 2026 compared to September 30, 2025, as the positive domain name base trends that began in 2025 continued into 2026 with higher new registrations and renewal rates. Growth in the domain name base has been positively impacted by continued registrar focus on customer acquisition and engagement with our marketing programs, as well as the evolution of AI tools used in content and website creation.
Geographic revenues
We generate revenues in the U.S.; Europe, the Middle East and Africa ("EMEA"); Australia, China, Japan, Singapore, and other Asia Pacific countries ("APAC"); and certain other countries, including Canada and Latin American countries.
The following table presents a comparison of our geographic revenues:
Three Months Ended September 30, Nine Months Ended September 30,
2026 % Change 2025 2026 % Change 2025
(Dollars in millions)
U.S. $ 295.1 7% $ 275.9 $ 866.2 7% $ 812.5
EMEA 78.0 10% 71.2 227.4 10% 207.0
APAC
46.8 0% 47.0 142.3 4% 136.9
Other 23.1 (8)% 25.0 70.6 (6)% 74.9
Total revenues $ 443.0 $ 419.1 $ 1,306.5 $ 1,231.3
Revenues in the table above are attributed to the country of domicile and the respective regions in which our registrars are located; however, this may differ from the regions where the registrars operate or where registrants are located. Revenue growth for each region may be impacted by registrars reincorporating, relocating, or from acquisitions or changes in affiliations of resellers. Revenue growth for each region may also be impacted by registrars domiciled in one region, registering domain names in another region.
Cost of revenues
Cost of revenues consists primarily of salaries and employee benefits expenses for our personnel who manage the operational systems, depreciation expenses, operational costs associated with the delivery of our services, fees paid to ICANN, customer support and training, costs of facilities and computer equipment used in these activities, telecommunications expense and allocations of indirect costs such as corporate overhead.
A comparison of cost of revenues is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 % Change 2025 2026 % Change 2025
(Dollars in millions)
Cost of revenues $ 49.8 2% $ 48.8 $ 149.0 1% $ 147.3
Cost of revenues increased slightly during the three months ended September 30, 2026, compared to the same period last year, due to a combination of individually insignificant factors.
Cost of revenues increased slightly during the nine months ended September 30, 2026, compared to the same period last year, primarily due to increases in allocated overhead expenses and compensation and benefits expenses, including stock-based compensation expenses, partially offset by a decrease in depreciation expenses. Allocated overhead expenses increased by $3.1 million due to an increase in the total allocable expenses and a slight increase in average headcount relative to other cost types. Compensation and benefit expenses, including stock-based compensation expenses, increased by $2.8 million primarily due to annual salary increases, a slight increase in average headcount, and a combination of several other individually insignificant factors. Although purchases of property and equipment increased in the nine months ended September 30, 2026, depreciation expenses decreased by $4.0 million due to a decrease in capital expenditures in recent prior periods.
Research and development
Research and development expenses consist primarily of costs related to research and development personnel, including salaries and other personnel-related expenses, consulting fees, facilities costs, computer and communications equipment, support services used in our service and technology development, and allocations of indirect costs such as corporate overhead.
A comparison of research and development expenses is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 % Change 2025 2026 % Change 2025
(Dollars in millions)
Research and development $ 26.5 4% $ 25.4 $ 81.5 6% $ 77.1
Research and development expenses increased during the three and nine months ended September 30, 2026, compared to the same periods last year, due to a combination of individually insignificant factors.
Selling, general and administrative
Selling, general and administrative expenses consist primarily of salaries and other personnel-related expenses for our executive, administrative, legal, finance, information technology, human resources, sales, and marketing personnel, travel and related expenses, trade shows, costs of computer and communications equipment and support services, consulting and professional service fees, costs of marketing programs, costs of facilities, management information systems, support services, and certain tax and license fees, offset by allocations of indirect costs such as facilities and shared services expenses to other cost types.
A comparison of selling, general and administrative expenses is presented below:
Three Months Ended September 30, Nine Months Ended September 30,
2026 % Change 2025 2026 % Change 2025
(Dollars in millions)
Selling, general and administrative $ 70.2 16% $ 60.6 $ 189.6 11% $ 170.7
Selling, general and administrative expenses increased during the three months ended September 30, 2026, compared to the same period last year, primarily due to a $7.5 million loss recognized in the current period to adjust assets held for sale to their estimated fair value, less costs to sell.
Selling, general and administrative expenses increased during the nine months ended September 30, 2026, compared to the same period last year, primarily due to increases in other expenses, stock-based compensation expenses, equipment and software expenses, and compensation and benefit expenses, partially offset by an increase in overhead expenses allocated to other cost types. Other expenses increased by $8.4 million primarily due to a $7.5 million loss recognized in the current period to adjust assets held for sale to their estimated fair value, less costs to sell. Stock-based compensation expense increased by $6.2 million primarily due to an increase in the total projected achievement levels on certain performance-based RSU grants. Equipment and software expenses increased by $5.9 million primarily due to increases in expenses related to network security and other software services. Compensation and benefit expenses increased by $3.7 million primarily due to higher expenses for certain employee health-insurance related benefits and annual salary increases. Overhead expenses allocated to other cost types increased by $5.0 million primarily due to an increase in the total allocable expenses.
Interest expense
Interest expense increased slightly during the three and nine months ended September 30, 2026, compared to the same period last year, due to interest accrued on the 2026 Notes issued on June 26, 2026.
Non-operating income, net
Non-operating income decreased during the three and nine months ended September 30, 2026, compared to the same periods last year, primarily due to a decrease in interest income as a result of lower amounts invested in debt securities in the current period and a decrease in interest rates on the Company's investments in debt securities.
Income tax expense
The following table presents income tax expense and the effective tax rate:
Three Months Ended September 30, Nine Months Ended September 30,
2026 2025 2026 2025
(Dollars in millions)
Income tax expense $ 67.0 $ 58.9 $ 197.0 $ 177.9
Effective tax rate 24 % 22 % 23 % 22 %
The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21%, due to state income taxes and U.S. taxes on foreign earnings, net of foreign tax credits, partially offset by a lower foreign effective tax rate.
Liquidity and Capital Resources
The following table presents our principal sources of liquidity:
September 30, December 31,
2026 2025
(In millions)
Cash and cash equivalents $ 206.8 $ 307.9
Marketable securities 269.3 272.6
Total $ 476.1 $ 580.5
The marketable securities primarily consist of debt securities issued by the U.S. Treasury meeting the criteria of our investment policy, which is focused on the preservation of our capital through investment in investment grade securities. The cash equivalents consist of amounts invested in money market funds, time deposits and U.S. Treasury bills purchased with original maturities of three months or less. As of September 30, 2026, all of our debt securities have contractual maturities of less than one year. Our cash and cash equivalents are readily accessible. For additional information on our investment portfolio, see Note 2, "Financial Instruments," of our Notes to Condensed Consolidated Financial Statements in Part I, Item 1 of this Quarterly Report on Form 10-Q.
Effective July 23, 2026, the Board of Directors authorized the repurchase of common stock in the amount of $884.2 million, in addition to the $615.8 million that remained available for repurchases under the prior share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program. During the three months ended September 30, 2026, we repurchased 0.7 million shares of common stock for an aggregate cost of $189.1 million. As of September 30, 2026, there was $1.36 billion remaining available for future share repurchases under the Company's share repurchase program.
In the nine months ended September 30, 2026, we paid dividends of $220.8 million. On October 19, 2026, the Board of Directors declared a cash dividend of $0.81 per share of the Company's outstanding common stock to stockholders of record as of the close of business on November 17, 2026, payable on November 24, 2026. We intend to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by the Board of Directors.
On June 26, 2026, we issued $550.0 million of the 2026 Notes. On July 20, 2026, we used the net proceeds from the 2026 Notes and cash on hand to redeem all of our $550.0 million aggregate principal amount outstanding of the 2017 Notes. As of September 30, 2026, we also had $750.0 million aggregate principal amount of outstanding 2.70% senior unsecured notes issued in 2021, and $500.0 million aggregate principal amount of outstanding 5.25% senior unsecured notes issued in 2025. As of September 30, 2026, we had no outstanding borrowings and $200.0 million in borrowing capacity under our credit facility, which matures in 2028.
We believe existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our ability to arrange for additional financing should be sufficient to meet our working capital, capital expenditure
requirements, fund our quarterly dividend, and to service our debt for the next 12 months and beyond. We regularly assess our cash management approach and activities in view of our current and potential future needs. Our cash requirements have not changed materially since the 2025 Form 10-K.
In summary, our cash flows for the nine months ended September 30, 2026 and 2025 were as follows:
Nine Months Ended September 30,
2026 2025
(In millions)
Net cash provided by operating activities $ 772.3 $ 801.5
Net cash (used in) provided by investing activities (32.9) 0.6
Net cash used in financing activities (841.0) (777.3)
Effect of exchange rate changes on cash, cash equivalents, and restricted cash 0.5 0.1
Net (decrease) increase in cash, cash equivalents, and restricted cash $ (101.1) $ 24.9
Cash flows from operating activities
Our largest source of operating cash flows is cash collections from our customers. Our primary uses of cash from operating activities are for personnel-related expenditures and other general operating expenses, as well as payments related to taxes, interest and facilities.
Net cash provided by operating activities decreased during the nine months ended September 30, 2026, compared to the same period last year, primarily due to increases in cash paid to employees and vendors and cash paid for income taxes, partially offset by an increase in cash received from customers and a decrease in cash paid for interest. Cash paid to employees and vendors increased primarily due to an increase in operating expenses and the timing of payments. Cash paid for income taxes increased primarily due to an increase in taxable income compared to the prior period and higher non-U.S. income tax payments which were driven by the Organization for Economic Cooperation and Development ("OECD") Pillar 2 minimum tax adopted by Switzerland. Cash received from customers increased primarily due to the .com price increases and higher .com domain name registrations and renewals. Cash paid for interest decreased primarily due to the timing of interest payment dates for each senior note issuance.
Cash flows from investing activities
The changes in cash flows from investing activities primarily relate to purchases, maturities and sales of marketable securities, purchases of property and equipment, and other investing activities.
We had net cash outflows from investing activities during the nine months ended September 30, 2026, compared to net cash inflows from investing activities during the same period last year, primarily due to increases in purchases of property and equipment and other investing activities, and a decrease in proceeds from maturities and sales of marketable securities, net of purchases of marketable securities.
Cash flows from financing activities
The changes in cash flows from financing activities primarily relate to proceeds from and repayment of borrowings, share repurchases, dividend payments, payment of excise tax on share repurchases, and proceeds from our employee stock purchase plan.
Net cash used in financing activities increased during the nine months ended September 30, 2026, compared to the same period last year, primarily due to an increase in dividend payments to stockholders, partially offset by decreases in shares repurchases and payment of excise tax on share repurchases.
VeriSign Inc. published this content on October 22, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on October 22, 2026 at 20:35 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]