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    VRSN
    Earnings call· Jun 2026(Q2 FY26)

    VERISIGN INC/CA VRSN

    Jul 23, 2026 Source

    Executive summary

    VeriSign Q2 FY26 — Record New Registrations and .web Delegation

    VeriSign delivered strong operational and financial results in Q2 FY26, driven by record new domain name registrations and effective marketing programs, further boosted by AI tailwinds. The company successfully delegated .web into the root zone, opening a new avenue for growth with greater pricing and marketing flexibility. Management is focused on leveraging its high-assurance infrastructure for both existing and new security-focused products, while maintaining a strong capital return program.

    Highlights

    5

    • Combined .com and .net domain name base reached 179.1 million names, growing 3.05 million QoQ.

    • Record 12.7 million new registrations in Q2 2026, up 21% YoY.

    • Revenue increased 6% year-over-year to $435 million.

    • Diluted EPS grew 7.7% year-over-year to $2.38.

    • Increased share repurchase authorization by $884 million, totaling $1.5 billion available.

    Concerns

    3

    • Expected Q2 2026 renewal rate of 75.2% is slightly down from 75.5% a year ago.

    • Anticipated elevated and potentially higher prices for server memory chips in the coming years, impacting future CapEx.

    • Potential for some pull-forward of registrations ahead of the November .com wholesale price increase, though management views it as non-material.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Domain Name Base Growth
    5.2% to 6%
    high materiality
    High
    Full-year 2026 Revenue
    $1.745 billion to $1.755 billion
    high materiality
    High
    Full-year 2026 Operating Income
    $1.185 billion to $1.195 billion
    high materiality
    High
    Full-year 2026 Interest Expense and Nonoperating Net
    $59 million to $65 million
    medium materiality
    High
    Full-year 2026 Capital Expenditures
    $55 million to $65 million
    medium materiality
    High
    Full-year 2026 GAAP Effective Tax Rate
    22% to 25%
    medium materiality
    High
    .web Revenue and Expenses
    not meaningful
    low materiality
    High

    Operational metrics

    17
    Revenue growth
    6%YoY
    Q2 FY26

    Revenue was up 6% year-over-year.

    Operating expense
    $138 millionvs $135 million last quarter and $121 million a year ago
    Q2 FY26

    Operating expense in Q2 2026 totaled $138 million.

    Operating income
    $296 millionup $16 million (5.6%) YoY, up $3 million (0.9%) QoQ
    Q2 FY26

    Operating income totaled $296 million, up $16 million or 5.6% from the previous year, and up $3 million or 0.9% sequentially.

    Net income
    $217 millionvs $215 million last quarter and $207 million a year ago
    Q2 FY26

    Net income for the second quarter totaled $217 million.

    Diluted EPS
    $2.38vs $2.34 last quarter and $2.21 a year ago
    Q2 FY26

    Diluted earnings per share of $2.38 for the second quarter this year.

    Cash and investments balance
    $1.34 billion
    Q2 FY26

    Financial and liquidity position remained stable with $1.34 billion in cash equivalents and marketable securities at the end of the quarter.

    Net proceeds from senior notes issuance
    $546 million
    Q2 FY26

    Amount included $546 million of net proceeds from the issuance of 5.1% senior notes maturing in 2031.

    Redeemed senior notes
    $550 million
    July 2026

    On July 20, 2026, the company redeemed its $550 million of outstanding 4.75% senior notes due in 2027.

    Capital returned to shareholders
    $1.17 billionmore than 100% of free cash flow
    LTM

    Returned more than 100% of our free cash flow to our shareholders in the last 12 months, totaling $1.17 billion in share repurchases and dividends.

    Share repurchase authorization increase
    $884 million
    Q2 FY26

    Board of Directors has increased the amount authorized for share repurchases by $884 million for a total of $1.5 billion available under the current share repurchase program.

    Cash dividend per share
    $0.81
    Q2 FY26

    Board of Directors approved a cash dividend of $0.81 per share.

    Renewal rate
    75.2%vs 75.5% a year ago
    Q2 FY26

    The renewal rate for the second quarter of 2026 is expected to be 75.2%.

    First-time renewal rate
    mid-40% range
    several quarters

    The first time renewal rate has stayed in a tight range in the mid-40% range for several quarters.

    Previously renewed rate
    mid-80% range
    ongoing

    Once the name renews at least once, it becomes part of our previously renewed base. The previously renewed rate is in the mid-80% range.

    New registrations growth
    14%YoY
    Q1 FY26

    Significant increase in new registrations, up 14% year-over-year in the first quarter.

    New registrations growth
    21%YoY
    Q2 FY26

    Significant increase in new registrations, up 21% year-over-year in the second quarter.

    DNS transactions
    substantial increase
    Q2 FY26

    We've seen a substantial increase in the number of DNS transactions to our servers.

    Industry KPIs

    3
    MetricValueDetails
    Rpo current rpo179.1 million namesnames
    Genai ai book of businessAI is definitely enhancing demand for domain names
    Net revenue dollar retention75.2%%

    Orderbook & backlog

    2
    Combined .com and .net Domain Name Base179.1 million namesQ2 FY26 end

    up 3.05 million QoQ

    Represents the total number of registered .com and .net domain names.

    New Registrations12.7 millionQ2 FY26

    vs 11.5 million last quarter and 10.4 million a year ago

    Represents new domain name registrations during the quarter.

    Product announcements

    2
    ProductTypeDetails
    .weblaunch
    New Security Productslaunch

    Risks & headwinds

    3
    Elevated component pricing for CapExnext couple of years

    Prices in the server memory chip markets are expected to stay elevated and probably be more elevated.

    Mitigation: Technology teams are adapting to get more value; some spend pulled forward from 2027 to avoid future price increases. Company will make necessary investments regardless of market price.

    Security challenges in AI-related online servicesongoing

    Evolving threat environment will demand greater and deeper deployment of security technology and practices, which will come with performance security and scalability challenges.

    Mitigation: VeriSign's new security products and high-assurance infrastructure are designed to address these challenges.

    Potential pull-forward of registrations due to .com price increaseahead of November .com wholesale price increase

    Cannot say that it's not a factor, but not seen as anything close to a material factor in current registration strength.

    Mitigation: Management believes current strength is driven by broader factors like AI and marketing programs.

    What to watch in Q3 FY26

    5

    .web General Availability and Pricing

    next quarter / early FY27
    CurrentExpected late 2026 or very early 2027
    TargetSpecific launch date and wholesale pricing details

    Why it matters

    The launch of .web represents a new revenue stream with greater flexibility, and its pricing strategy will be key to its market adoption and financial contribution.

    So that puts general availability. We think it will be either late this year or very, very early next year.

    Q&A highlights

    6

    How much of the strong domain name trends are due to VeriSign's marketing programs versus AI tailwinds and other factors? Can these be broken down?

    Management stated that it's a synergistic convergence of factors including high-assurance infrastructure, AI tools making content creation easier, and active registrar engagement with improved marketing programs. They cannot precisely parse out the individual contributions but emphasize the combined effect and the quality of new registrations leading to long-term profitable growth. They also clarified that the upcoming .com price increase is not a material factor in current strength.

    “A synergistic convergence of some of the AI tailwind and other tailwinds like the ongoing registrar focused now on customer acquisition, where we saw this sort of cyclical trend some time ago to ARPU. Now we're seeing things shift as we predicted they would.”

    asked by Robert Oliver · answered by D. Bidzos

    2 min read5 chapters

    Detailed Narrative

    01

    .web Delegation and Launch Strategy

    VeriSign announced the delegation of .web into the global domain name system's root zone, with VeriSign as the registry operator. This follows the resolution of all previous disputes. The company plans to begin offering .web domains through channel partners later this year or very early next year. Unlike .com, .web offers complete wholesale pricing flexibility (subject to a 6-month notice period) and the ability to sell premium names. A 90-day security testing period and a 30-day trademark holder registration period are required before a Limited Registration Period (LRP) for existing .com holders, pushing general availability to late 2026 or early 2027.

    02

    New Product Development and Security Focus

    VeriSign has continued development on new security-focused products, which have been operational in test mode since early 2026. The rollout was paused to prioritize .web delegation but will resume in the coming months⏳. These products leverage VeriSign's high-assurance, high-performance infrastructure and long history in public key infrastructure and DNS security. They are designed to address the increasing reliance on online services, particularly AI-related ones, and the evolving threat environment, providing performance, security, and scalability.

    03

    Drivers of Domain Name Base Growth

    The strong growth in the domain name base and new registrations is attributed to a synergistic convergence of factors. These include VeriSign's high-assurance infrastructure, AI tools making content and website creation easier, active registrar engagement with improved marketing programs focused on customer acquisition, and the inherent credibility of domain names. Management noted that the strength is primarily in the U.S. and EMEA, which tend to have stronger renewal rates. The company does not believe the upcoming .com price increase is a material factor in the current registration strength.

    04

    Capital Allocation and Shareholder Returns

    VeriSign returned over 100% of its free cash flow to shareholders in the last 12 months, totaling $1.17 billion through share repurchases and dividends. The Board of Directors increased the share repurchase authorization by $884 million, bringing the total available under the program to $1.5 billion. A quarterly cash dividend of $0.81 per share was approved, payable on August 27, 2026, to shareholders of record as of August 19, 2026.

    05

    Impact of .com Price Increase on Revenue Recognition

    The November 1 .com wholesale price increase will flow through revenue gradually due to VeriSign's ratable revenue recognition method over the life of the domain name subscription. For a 1-year subscription, the price increase will not be fully recognized until two years after the renewal date. Management estimates approximately 50% of the November 7% price increase on .com will be recognized in 2027 revenues, with the remainder in 2028 and beyond.

    AI-generated summary of the company’s earnings call. Not investment advice.