VeriSign (NASDAQ:VRSN) Reports Q3 In Line With Expectations

Domain name registry operator Verisign (NASDAQ:VRSN) met Wall Street’s revenue expectations in Q3 CY2024, with sales up 3.8% year on year to $390.6 million. Its GAAP profit of $2.07 per share was 4% above analysts’ consensus estimates.

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“By continuing to deliver on our mission of maintaining the security, stability, and resiliency of the critical internet infrastructure we operate, we deliver for all our stakeholders,” said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Company Overview

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 Software

While 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 Growth

A company’s long-term performance is an indicator of its overall business quality. While any business can experience short-term success, top-performing ones enjoy sustained growth for multiple years. Over the last three years, VeriSign grew its sales at a weak 5.7% compounded annual growth rate. This shows it failed to expand in any major way and is a rough starting point for our analysis.

This quarter, VeriSign grew its revenue by 3.8% year on year, and its $390.6 million of revenue was in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to grow 3.7% over the next 12 months, a slight deceleration versus the last three years. This projection is underwhelming and shows the market believes its products and services will see some demand headwinds.

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Customer Acquisition Efficiency

The customer acquisition cost (CAC) payback period measures the months a company needs to recoup the money spent on acquiring a new customer. This metric helps assess how quickly the business can break even on its sales and marketing investments.

VeriSign does a decent job acquiring new customers, and its CAC payback period checked in at 44.9 months this quarter. The company’s performance indicates relatively solid competitive positioning, giving it the freedom to invest its resources into new growth initiatives.

Key Takeaways from VeriSign’s Q3 Results

Although its EPS beat Wall Street's estimates, we struggled to find many strong positives in these results. The stock remained flat at $185.70 immediately following the results.

So should you invest in VeriSign right now?When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.