VeriSign, Inc. (VRSN) reported a net income of $41 million or $0.24 per diluted share compared to a net income of $51 million or $0.28 per diluted share in the year-ago quarter.
Excluding one-time items but including stock-based compensation expense, net income came in at $0.25 per share missing the Zacks Consensus Estimate of 28 cents.
VeriSign reported revenue of $182 million in the first quarter of 2011, up 2% sequentially and up 12% from the year-ago quarter and beat the Zacks Consensus Estimate of $184 million.
In 2010, VeriSign sold the Authentication Services business to Symantec (SYMC) and closed down the operations of non-core Content Portal Services (CPS).
The continuing operations of the company consist primarily of the results of the Naming Services business, which comprises Registry Services and Network Intelligence and Availability (NIA) Services. NIA Services include the Managed Domain Name System (Managed DNS), iDefense and Distributed Denial of Service (DDoS) mitigation businesses.
The base of registered names for .com and .net totaled 108 million active domain names, up from 105.2 million names at the end of December and growing 9% year over year. The company added 8.3 million net new domain names in the quarter, up 3% year over year. VeriSign experienced an average daily query load of 57 billion in the first quarter, up from 54 billion in the previous quarter.
On a GAAP basis, operating margin came in at 36.1% for the first quarter of 2011, up from 33.5% in the year-ago quarter.
VeriSign generated $90 million of cash from operating activities and used $16 million in capital expenditures. The company also repurchased 6 million shares for $200 million in the quarter. VeriSign still has $1.2 billion remaining under its existing share-repurchase program.
VeriSign ended the quarter with $1.947 billion, down from $2.063 billion at the end of the prior quarter. As of March 31, 2011, deferred revenue was $699 million, an increase of $36 million from the previous quarter and $81 million from the year-ago quarter.
VeriSign announced a special cash dividend of $2.75 per share of its common stock. The special dividend will be paid on May 18, 2011 to shareholders of record as of close of business on May 9, 2011.
Guidance
Going forward, management expects revenues between $756 million and $780 million in 2011, up 11% to 14% year over year and up from the earlier guidance of a growth of 10% – 14%. Excluding one-time items and stock based compensation expense, gross margin is projected around 78%.
Investors were indifferent to the results as shares were up just 0.03% in after-hours trading to close at $37.25.
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