000-23593 | 94-3221585 | |
(Commission File Number) | (IRS Employer Identification No.) |
12061 Bluemont Way, Reston, VA | 20190 | |
(Address of Principal Executive Offices) | (Zip Code) |
c | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
c | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
c | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
c | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. | Results of Operations and Financial Condition. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit Number | Description | |
99.1 |
VERISIGN, INC. | ||||
Date: April 26, 2018 | By: | /s/ Thomas C. Indelicarto | ||
Thomas C. Indelicarto | ||||
Executive Vice President, General Counsel and Secretary |
Exhibit No. | Description | |
Exhibit 99.1 |
• | On Feb. 15, 2018, Verisign called for the redemption of all its outstanding subordinated convertible debentures, with a redemption date of May 1, 2018. If holders elect to convert their debentures, Verisign will settle the principal amount, up to $1.25 billion, in cash and the remaining value through the issuance of shares of Verisign’s common stock. |
• | Verisign ended the first quarter with cash, cash equivalents and marketable securities of $2.4 billion, a decrease of $58 million from year-end 2017. |
• | During the first quarter, Verisign repatriated $1.15 billion of cash held by foreign subsidiaries, net of foreign withholding taxes. |
• | Cash flow from operating activities was $90 million for the first quarter of 2018, compared with $148 million for the same quarter in 2017. The first quarter 2018 amount reflects approximately $61 million in withholding taxes paid in connection with the repatriation. |
• | Deferred revenues on March 31, 2018, totaled $1.03 billion, an increase of $27 million from year-end 2017. |
• | During the first quarter, Verisign repurchased 1.1 million shares of its common stock for $125 million. At March 31, 2018, $938 million remained available and authorized under the current share repurchase program which has no expiration. |
• | For purposes of calculating diluted EPS, the first quarter diluted share count included 25.6 million shares related to the subordinated convertible debentures, compared with 21.3 million shares for the same quarter in 2017. |
• | Verisign ended the first quarter with 148.3 million .com and .net domain name registrations in the domain name base, a 3.2 percent increase from the end of the first quarter of 2017, and a net increase of 1.91 million during the first quarter of 2018. |
• | In the first quarter, Verisign processed 9.6 million new domain name registrations for .com and .net, compared to 9.5 million for the same quarter in 2017. |
• | The final .com and .net renewal rate for the fourth quarter of 2017 was 72.2 percent compared with 67.6 percent for the same quarter in 2016. Renewal rates are not fully measurable until 45 days after the end of the quarter. |
March 31, 2018 | December 31, 2017 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 1,703,722 | $ | 465,851 | |||
Marketable securities | 652,740 | 1,948,900 | |||||
Other current assets | 52,066 | 31,402 | |||||
Total current assets | 2,408,528 | 2,446,153 | |||||
Property and equipment, net | 257,536 | 263,513 | |||||
Goodwill | 52,527 | 52,527 | |||||
Deferred tax assets | 15,425 | 15,392 | |||||
Deposits to acquire intangible assets | 145,000 | 145,000 | |||||
Other long-term assets | 26,307 | 18,603 | |||||
Total long-term assets | 496,795 | 495,035 | |||||
Total assets | $ | 2,905,323 | $ | 2,941,188 | |||
LIABILITIES AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities: | |||||||
Accounts payable and accrued liabilities | $ | 181,567 | $ | 219,603 | |||
Deferred revenues | 736,555 | 713,309 | |||||
Subordinated convertible debentures | 630,824 | 627,616 | |||||
Total current liabilities | 1,548,946 | 1,560,528 | |||||
Long-term deferred revenues | 289,970 | 286,097 | |||||
Senior notes | 1,783,159 | 1,782,529 | |||||
Deferred tax liabilities | 214,400 | 444,108 | |||||
Other long-term tax liabilities | 303,582 | 128,197 | |||||
Total long-term liabilities | 2,591,111 | 2,640,931 | |||||
Total liabilities | 4,140,057 | 4,201,459 | |||||
Commitments and contingencies | |||||||
Stockholders’ deficit: | |||||||
Preferred stock—par value $.001 per share; Authorized shares: 5,000; Issued and outstanding shares: none | — | — | |||||
Common stock—par value $.001 per share; Authorized shares: 1,000,000; Issued shares: 325,956 at March 31, 2018 and 325,218 at December 31, 2017; Outstanding shares: 97,005 at March 31, 2018 and 97,591 at December 31, 2017 | 326 | 325 | |||||
Additional paid-in capital | 16,305,653 | 16,437,135 | |||||
Accumulated deficit | (17,538,015 | ) | (17,694,790 | ) | |||
Accumulated other comprehensive loss | (2,698 | ) | (2,941 | ) | |||
Total stockholders’ deficit | (1,234,734 | ) | (1,260,271 | ) | |||
Total liabilities and stockholders’ deficit | $ | 2,905,323 | $ | 2,941,188 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Revenues | $ | 299,288 | $ | 288,614 | |||
Costs and expenses: | |||||||
Cost of revenues | 48,152 | 50,669 | |||||
Sales and marketing | 17,275 | 18,322 | |||||
Research and development | 15,375 | 13,344 | |||||
General and administrative | 33,067 | 31,008 | |||||
Total costs and expenses | 113,869 | 113,343 | |||||
Operating income | 185,419 | 175,271 | |||||
Interest expense | (40,788 | ) | (29,023 | ) | |||
Non-operating income, net | 7,804 | 1,301 | |||||
Income before income taxes | 152,435 | 147,549 | |||||
Income tax expense | (18,172 | ) | (31,137 | ) | |||
Net income | 134,263 | 116,412 | |||||
Other comprehensive income | 243 | 346 | |||||
Comprehensive income | $ | 134,506 | $ | 116,758 | |||
Earnings per share: | |||||||
Basic | $ | 1.38 | $ | 1.14 | |||
Diluted | $ | 1.09 | $ | 0.94 | |||
Shares used to compute earnings per share | |||||||
Basic | 97,250 | 102,467 | |||||
Diluted | 123,506 | 124,464 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 134,263 | $ | 116,412 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation of property and equipment | 12,117 | 13,102 | |||||
Stock-based compensation | 12,978 | 12,563 | |||||
Amortization of debt discount and issuance costs | 3,918 | 3,493 | |||||
Amortization of discount on investments in debt securities | (4,128 | ) | (1,764 | ) | |||
Other, net | 87 | 328 | |||||
Changes in operating assets and liabilities: | |||||||
Other assets | (987 | ) | 14,196 | ||||
Accounts payable and accrued liabilities | (36,271 | ) | (67,608 | ) | |||
Deferred revenues | 27,120 | 36,689 | |||||
Net deferred income taxes and other long-term tax liabilities | (59,108 | ) | 20,775 | ||||
Net cash provided by operating activities | 89,989 | 148,186 | |||||
Cash flows from investing activities: | |||||||
Proceeds from maturities and sales of marketable securities | 1,931,930 | 1,049,795 | |||||
Purchases of marketable securities | (631,456 | ) | (813,459 | ) | |||
Purchases of property and equipment | (7,662 | ) | (9,654 | ) | |||
Other investing activities | (160 | ) | 11,748 | ||||
Net cash provided by investing activities | 1,292,652 | 238,430 | |||||
Cash flows from financing activities: | |||||||
Proceeds from employee stock purchase plan | 7,811 | 7,997 | |||||
Repurchases of common stock | (152,741 | ) | (173,048 | ) | |||
Net cash used in financing activities | (144,930 | ) | (165,051 | ) | |||
Effect of exchange rate changes on cash, cash equivalents, and restricted cash | 167 | 738 | |||||
Net increase in cash, cash equivalents, and restricted cash | 1,237,878 | 222,303 | |||||
Cash, cash equivalents, and restricted cash at beginning of period | 475,139 | 241,581 | |||||
Cash, cash equivalents, and restricted cash at end of period | $ | 1,713,017 | $ | 463,884 | |||
Supplemental cash flow disclosures: | |||||||
Cash paid for interest | $ | 43,326 | $ | 28,189 | |||
Cash paid for income taxes, net of refunds received | $ | 72,959 | $ | 17,861 |
Three Months Ended March 31, | |||||||||||||||
2018 | 2017 | ||||||||||||||
Operating Income | Net Income | Operating Income | Net Income | ||||||||||||
GAAP as reported | $ | 185,419 | $ | 134,263 | $ | 175,271 | $ | 116,412 | |||||||
Adjustments: | |||||||||||||||
Stock-based compensation | 12,978 | 12,978 | 12,563 | 12,563 | |||||||||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | — | 893 | |||||||||||||
Non-cash interest expense | 3,918 | 3,493 | |||||||||||||
Contingent interest payable on subordinated convertible debentures | — | (3,808 | ) | ||||||||||||
Tax adjustment | (19,081 | ) | (10,642 | ) | |||||||||||
Non-GAAP | $ | 198,397 | $ | 132,078 | $ | 187,834 | $ | 118,911 | |||||||
Revenues | $ | 299,288 | $ | 288,614 | |||||||||||
Non-GAAP operating margin | 66.3 | % | 65.1 | % | |||||||||||
Diluted shares | 123,506 | 124,464 | |||||||||||||
Diluted EPS, non-GAAP | $ | 1.07 | $ | 0.96 |
Three Months Ended March 31, | Four Quarters Ended March 31, | ||||||||||
2018 | 2017 | 2018 | |||||||||
Net Income | $ | 134,263 | $ | 116,412 | $ | 475,099 | |||||
Interest expense | 40,788 | 29,023 | 148,101 | ||||||||
Income tax expense | 18,172 | 31,137 | 128,799 | ||||||||
Depreciation and amortization | 12,117 | 13,102 | 48,893 | ||||||||
Stock-based compensation | 12,978 | 12,563 | 53,322 | ||||||||
Unrealized loss on contingent interest derivative on the subordinated convertible debentures | — | 893 | — | ||||||||
Unrealized (gain) loss on hedging agreements | (117 | ) | 495 | (355 | ) | ||||||
Gain on sale of business | — | — | (10,421 | ) | |||||||
Non-GAAP Adjusted EBITDA | $ | 218,201 | $ | 203,625 | $ | 843,438 |
Three Months Ended March 31, | |||||||
2018 | 2017 | ||||||
Cost of revenues | $ | 1,609 | $ | 1,735 | |||
Sales and marketing | 1,448 | 1,429 | |||||
Research and development | 1,721 | 1,496 | |||||
General and administrative | 8,200 | 7,903 | |||||
Total stock-based compensation expense | $ | 12,978 | $ | 12,563 |
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