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Share Name | Share Symbol | Market | Type |
---|---|---|---|
VeriSign Inc | NASDAQ:VRSN | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
-0.02 | -0.01% | 168.32 | 163.66 | 194.10 | 170.19 | 167.53 | 168.63 | 898,088 | 01:00:00 |
|
|
|
|
|
x
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
94-3221585
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
|
|
|
12061 Bluemont Way, Reston, Virginia
|
|
20190
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Large accelerated filer
|
x
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
o
|
Class
|
|
Shares Outstanding as of October 21, 2016
|
Common stock, $.001 par value
|
|
104,574,465
|
|
|
|
|
|
|
|
Page
|
|
|
|
|
|
|
Financial Statement Description
|
Page
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
ASSETS
|
|
|
|
||||
Current assets:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
177,785
|
|
|
$
|
228,659
|
|
Marketable securities
|
1,579,926
|
|
|
1,686,771
|
|
||
Accounts receivable, net
|
15,767
|
|
|
12,638
|
|
||
Other current assets
|
21,490
|
|
|
39,856
|
|
||
Total current assets
|
1,794,968
|
|
|
1,967,924
|
|
||
Property and equipment, net
|
270,165
|
|
|
295,570
|
|
||
Goodwill
|
52,527
|
|
|
52,527
|
|
||
Deferred tax assets
|
12,819
|
|
|
17,361
|
|
||
Deposits to acquire intangible assets
|
145,000
|
|
|
2,000
|
|
||
Other long-term assets
|
22,500
|
|
|
22,355
|
|
||
Total long-term assets
|
503,011
|
|
|
389,813
|
|
||
Total assets
|
$
|
2,297,979
|
|
|
$
|
2,357,737
|
|
LIABILITIES AND STOCKHOLDERS’ DEFICIT
|
|
|
|
||||
Current liabilities:
|
|
|
|
||||
Accounts payable and accrued liabilities
|
$
|
161,966
|
|
|
$
|
188,171
|
|
Deferred revenues
|
693,598
|
|
|
680,483
|
|
||
Subordinated convertible debentures, including contingent interest derivative
|
626,862
|
|
|
634,326
|
|
||
Total current liabilities
|
1,482,426
|
|
|
1,502,980
|
|
||
Long-term deferred revenues
|
287,214
|
|
|
280,859
|
|
||
Senior notes
|
1,236,731
|
|
|
1,235,354
|
|
||
Deferred tax liabilities
|
344,179
|
|
|
294,194
|
|
||
Other long-term tax liabilities
|
116,667
|
|
|
114,797
|
|
||
Total long-term liabilities
|
1,984,791
|
|
|
1,925,204
|
|
||
Total liabilities
|
3,467,217
|
|
|
3,428,184
|
|
||
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:324,088 at September 30, 2016 and 322,990 at December 31, 2015; Outstanding shares:105,095 at September 30, 2016 and 110,072 at December 31, 2015
|
324
|
|
|
323
|
|
||
Additional paid-in capital
|
17,123,629
|
|
|
17,558,822
|
|
||
Accumulated deficit
|
(18,290,506
|
)
|
|
(18,625,599
|
)
|
||
Accumulated other comprehensive loss
|
(2,685
|
)
|
|
(3,993
|
)
|
||
Total stockholders’ deficit
|
(1,169,238
|
)
|
|
(1,070,447
|
)
|
||
Total liabilities and stockholders’ deficit
|
$
|
2,297,979
|
|
|
$
|
2,357,737
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Revenues
|
$
|
287,554
|
|
|
$
|
265,780
|
|
|
$
|
855,896
|
|
|
$
|
786,741
|
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||||||
Cost of revenues
|
49,807
|
|
|
47,218
|
|
|
149,142
|
|
|
143,792
|
|
||||
Sales and marketing
|
18,647
|
|
|
20,966
|
|
|
58,431
|
|
|
67,677
|
|
||||
Research and development
|
14,324
|
|
|
15,019
|
|
|
45,355
|
|
|
48,518
|
|
||||
General and administrative
|
30,000
|
|
|
28,115
|
|
|
85,158
|
|
|
79,090
|
|
||||
Total costs and expenses
|
112,778
|
|
|
111,318
|
|
|
338,086
|
|
|
339,077
|
|
||||
Operating income
|
174,776
|
|
|
154,462
|
|
|
517,810
|
|
|
447,664
|
|
||||
Interest expense
|
(28,919
|
)
|
|
(28,544
|
)
|
|
(86,582
|
)
|
|
(79,064
|
)
|
||||
Non-operating income (loss), net
|
3,262
|
|
|
(3,975
|
)
|
|
8,092
|
|
|
(6,329
|
)
|
||||
Income before income taxes
|
149,119
|
|
|
121,943
|
|
|
439,320
|
|
|
362,271
|
|
||||
Income tax expense
|
(34,692
|
)
|
|
(29,486
|
)
|
|
(104,227
|
)
|
|
(88,565
|
)
|
||||
Net income
|
114,427
|
|
|
92,457
|
|
|
335,093
|
|
|
273,706
|
|
||||
Realized foreign currency translation adjustments, included in net income
|
—
|
|
|
—
|
|
|
85
|
|
|
(291
|
)
|
||||
Unrealized (loss) gain on investments
|
(485
|
)
|
|
565
|
|
|
1,301
|
|
|
799
|
|
||||
Realized gain on investments, included in net income
|
(11
|
)
|
|
(26
|
)
|
|
(78
|
)
|
|
(99
|
)
|
||||
Other comprehensive (loss) income
|
(496
|
)
|
|
539
|
|
|
1,308
|
|
|
409
|
|
||||
Comprehensive income
|
$
|
113,931
|
|
|
$
|
92,996
|
|
|
$
|
336,401
|
|
|
$
|
274,115
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
1.08
|
|
|
$
|
0.82
|
|
|
$
|
3.10
|
|
|
$
|
2.38
|
|
Diluted
|
$
|
0.90
|
|
|
$
|
0.70
|
|
|
$
|
2.58
|
|
|
$
|
2.06
|
|
Shares used to compute earnings per share
|
|
|
|
|
|
|
|
||||||||
Basic
|
106,307
|
|
|
112,955
|
|
|
107,982
|
|
|
115,235
|
|
||||
Diluted
|
127,750
|
|
|
131,721
|
|
|
129,967
|
|
|
132,925
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
335,093
|
|
|
$
|
273,706
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation of property and equipment
|
44,114
|
|
|
46,554
|
|
||
Stock-based compensation
|
35,745
|
|
|
34,351
|
|
||
Excess tax benefit associated with stock-based compensation
|
(15,566
|
)
|
|
(19,420
|
)
|
||
Unrealized (gain) loss on contingent interest derivative on Subordinated Convertible Debentures
|
(2,411
|
)
|
|
9,058
|
|
||
Payment of contingent interest
|
(13,385
|
)
|
|
(10,759
|
)
|
||
Amortization of debt discount and issuance costs
|
9,971
|
|
|
9,122
|
|
||
Other, net
|
(2,944
|
)
|
|
(961
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(3,536
|
)
|
|
(1,319
|
)
|
||
Prepaid expenses and other assets
|
17,814
|
|
|
2,967
|
|
||
Accounts payable and accrued liabilities
|
(8,285
|
)
|
|
14,658
|
|
||
Deferred revenues
|
19,470
|
|
|
49,787
|
|
||
Net deferred income taxes and other long-term tax liabilities
|
56,397
|
|
|
55,203
|
|
||
Net cash provided by operating activities
|
472,477
|
|
|
462,947
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Proceeds from maturities and sales of marketable securities
|
3,029,699
|
|
|
1,965,767
|
|
||
Purchases of marketable securities
|
(2,917,743
|
)
|
|
(2,443,865
|
)
|
||
Purchases of property and equipment
|
(19,889
|
)
|
|
(28,659
|
)
|
||
Deposits to acquire intangible assets
|
(143,000
|
)
|
|
—
|
|
||
Other investing activities
|
171
|
|
|
(3,666
|
)
|
||
Net cash used in investing activities
|
(50,762
|
)
|
|
(510,423
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from issuance of common stock from option exercises and employee stock purchase plans
|
13,670
|
|
|
14,690
|
|
||
Repurchases of common stock
|
(501,934
|
)
|
|
(492,575
|
)
|
||
Proceeds from borrowings, net of issuance costs
|
—
|
|
|
492,237
|
|
||
Excess tax benefit associated with stock-based compensation
|
15,566
|
|
|
19,420
|
|
||
Net cash (used in) provided by financing activities
|
(472,698
|
)
|
|
33,772
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
109
|
|
|
(33
|
)
|
||
Net decrease in cash and cash equivalents
|
(50,874
|
)
|
|
(13,737
|
)
|
||
Cash and cash equivalents at beginning of period
|
228,659
|
|
|
191,608
|
|
||
Cash and cash equivalents at end of period
|
$
|
177,785
|
|
|
$
|
177,871
|
|
Supplemental cash flow disclosures:
|
|
|
|
||||
Cash paid for interest
|
$
|
84,930
|
|
|
$
|
68,678
|
|
Cash paid for income taxes, net of refunds received
|
$
|
14,474
|
|
|
$
|
13,289
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Cash
|
$
|
30,089
|
|
|
$
|
99,027
|
|
Money market funds
|
155,055
|
|
|
137,593
|
|
||
Time deposits
|
4,439
|
|
|
4,007
|
|
||
Debt securities issued by the U.S. Treasury
|
1,577,537
|
|
|
1,685,882
|
|
||
Equity securities of public companies
|
2,389
|
|
|
890
|
|
||
Total
|
$
|
1,769,509
|
|
|
$
|
1,927,399
|
|
|
|
|
|
||||
Included in Cash and cash equivalents
|
$
|
177,785
|
|
|
$
|
228,659
|
|
Included in Marketable securities
|
$
|
1,579,926
|
|
|
$
|
1,686,771
|
|
Included in Other long-term assets (Restricted cash)
|
$
|
11,798
|
|
|
$
|
11,969
|
|
|
|
|
Fair Value Measurement Using
|
||||||||||||
|
Total Fair Value
|
|
(Level 1)
|
|
(Level 2)
|
|
(Level 3)
|
||||||||
|
(In thousands)
|
||||||||||||||
As of September 30, 2016:
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments in money market funds
|
$
|
155,055
|
|
|
$
|
155,055
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities issued by the U.S. Treasury
|
1,577,537
|
|
|
1,577,537
|
|
|
—
|
|
|
—
|
|
||||
Equity securities of public companies
|
$
|
2,389
|
|
|
$
|
2,389
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Foreign currency forward contracts (1)
|
124
|
|
|
—
|
|
|
124
|
|
|
—
|
|
||||
Total
|
$
|
1,735,105
|
|
|
$
|
1,734,981
|
|
|
$
|
124
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent interest derivative on the Subordinated Convertible Debentures
|
$
|
14,330
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
14,330
|
|
Foreign currency forward contracts (2)
|
84
|
|
|
—
|
|
|
84
|
|
|
—
|
|
||||
Total
|
$
|
14,414
|
|
|
$
|
—
|
|
|
$
|
84
|
|
|
$
|
14,330
|
|
As of December 31, 2015:
|
|
|
|
|
|
|
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments in money market funds
|
$
|
137,593
|
|
|
$
|
137,593
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Debt securities issued by the U.S. Treasury
|
1,685,882
|
|
|
1,685,882
|
|
|
—
|
|
|
—
|
|
||||
Equity securities of public companies
|
890
|
|
|
890
|
|
|
—
|
|
|
—
|
|
||||
Foreign currency forward contracts (1)
|
230
|
|
|
—
|
|
|
230
|
|
|
—
|
|
||||
Total
|
$
|
1,824,595
|
|
|
$
|
1,824,365
|
|
|
$
|
230
|
|
|
$
|
—
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Contingent interest derivative on the Subordinated Convertible Debentures
|
$
|
30,126
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
30,126
|
|
Foreign currency forward contracts (2)
|
164
|
|
|
—
|
|
|
164
|
|
|
—
|
|
||||
Total
|
$
|
30,290
|
|
|
$
|
—
|
|
|
$
|
164
|
|
|
$
|
30,126
|
|
(1)
|
Included in Other current assets
|
(2)
|
Included in Accounts payable and accrued liabilities
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(In thousands)
|
||||||||||||||
Beginning balance
|
$
|
22,611
|
|
|
$
|
25,841
|
|
|
$
|
30,126
|
|
|
$
|
26,755
|
|
Payment of contingent interest
|
(6,841
|
)
|
|
(5,534
|
)
|
|
(13,385
|
)
|
|
(10,759
|
)
|
||||
Unrealized (gain) loss
|
(1,440
|
)
|
|
4,747
|
|
|
(2,411
|
)
|
|
9,058
|
|
||||
Ending balance
|
$
|
14,330
|
|
|
$
|
25,054
|
|
|
$
|
14,330
|
|
|
$
|
25,054
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Prepaid expenses
|
$
|
16,043
|
|
|
$
|
14,823
|
|
Income tax receivables
|
3,714
|
|
|
23,098
|
|
||
Other
|
1,733
|
|
|
1,935
|
|
||
Total other current assets
|
$
|
21,490
|
|
|
$
|
39,856
|
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Accounts payable
|
$
|
16,028
|
|
|
$
|
23,298
|
|
Accrued employee compensation
|
45,216
|
|
|
51,851
|
|
||
Customer deposits, net
|
37,944
|
|
|
48,307
|
|
||
Interest Payable
|
32,779
|
|
|
27,701
|
|
||
Income taxes payable and other tax liabilities
|
16,551
|
|
|
16,943
|
|
||
Other accrued liabilities
|
13,448
|
|
|
20,071
|
|
||
Total accounts payable and accrued liabilities
|
$
|
161,966
|
|
|
$
|
188,171
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
|||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|||
|
(In thousands)
|
|||||||||
Weighted-average shares of common stock outstanding
|
106,307
|
|
112,955
|
|
|
107,982
|
|
|
115,235
|
|
Weighted-average potential shares of common stock outstanding:
|
|
|
|
|
|
|
|
|||
Conversion spread related to Convertible Debentures
|
20,789
|
|
18,024
|
|
|
21,244
|
|
|
16,936
|
|
Unvested RSUs, stock options, and ESPP
|
654
|
|
742
|
|
|
741
|
|
|
754
|
|
Shares used to compute diluted earnings per share
|
127,750
|
|
131,721
|
|
|
129,967
|
|
|
132,925
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(In thousands)
|
||||||||||||||
Cost of revenues
|
$
|
1,779
|
|
|
$
|
1,722
|
|
|
$
|
5,367
|
|
|
$
|
5,202
|
|
Sales and marketing
|
1,129
|
|
|
1,683
|
|
|
4,219
|
|
|
4,800
|
|
||||
Research and development
|
1,676
|
|
|
1,478
|
|
|
4,966
|
|
|
4,890
|
|
||||
General and administrative
|
8,270
|
|
|
7,339
|
|
|
21,193
|
|
|
19,459
|
|
||||
Total stock-based compensation expense
|
$
|
12,854
|
|
|
$
|
12,222
|
|
|
$
|
35,745
|
|
|
$
|
34,351
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(In thousands)
|
||||||||||||||
RSUs
|
$
|
10,276
|
|
|
$
|
9,871
|
|
|
$
|
28,034
|
|
|
$
|
27,375
|
|
Performance-based RSUs
|
2,216
|
|
|
2,041
|
|
|
6,878
|
|
|
5,879
|
|
||||
ESPP
|
924
|
|
|
958
|
|
|
2,594
|
|
|
3,152
|
|
||||
Capitalization (Included in Property and equipment, net)
|
(562
|
)
|
|
(648
|
)
|
|
(1,761
|
)
|
|
(2,055
|
)
|
||||
Total stock-based compensation expense
|
$
|
12,854
|
|
|
$
|
12,222
|
|
|
$
|
35,745
|
|
|
$
|
34,351
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(In thousands)
|
||||||||||||||
Contractual interest on Subordinated Convertible Debentures
|
$
|
10,156
|
|
|
$
|
10,156
|
|
|
$
|
30,469
|
|
|
$
|
30,469
|
|
Contractual interest on Senior Notes
|
15,235
|
|
|
15,235
|
|
|
45,704
|
|
|
39,505
|
|
||||
Amortization of debt discount on the Subordinated Convertible Debentures
|
2,802
|
|
|
2,581
|
|
|
8,235
|
|
|
7,585
|
|
||||
Credit facility fees and other interest expense
|
726
|
|
|
572
|
|
|
2,174
|
|
|
1,505
|
|
||||
Total interest expense
|
$
|
28,919
|
|
|
$
|
28,544
|
|
|
$
|
86,582
|
|
|
$
|
79,064
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(In thousands)
|
||||||||||||||
Unrealized gain (loss) on contingent interest derivative on Subordinated Convertible Debentures
|
$
|
1,440
|
|
|
$
|
(4,747
|
)
|
|
$
|
2,411
|
|
|
$
|
(9,058
|
)
|
Interest income
|
1,728
|
|
|
639
|
|
|
4,292
|
|
|
1,271
|
|
||||
Other, net
|
94
|
|
|
133
|
|
|
1,389
|
|
|
1,458
|
|
||||
Total non-operating income (loss), net
|
$
|
3,262
|
|
|
$
|
(3,975
|
)
|
|
$
|
8,092
|
|
|
$
|
(6,329
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Income tax expense
|
$
|
34,692
|
|
|
$
|
29,486
|
|
|
$
|
104,227
|
|
|
$
|
88,565
|
|
Effective tax rate
|
23
|
%
|
|
24
|
%
|
|
24
|
%
|
|
24
|
%
|
•
|
We recorded revenues of
$287.6 million
and
$855.9 million
during the
three and nine
months ended
September 30, 2016
. This represents an increase of
8%
and 9%, respectively , as compared to the same periods in
2015
.
|
•
|
We recorded operating income of
$174.8 million
and
$517.8 million
during the
three and nine
months ended
September 30, 2016
. This represents an increase of
13%
and
16%
, respectively, as compared to the same periods in
2015
.
|
•
|
On October 20, 2016, we announced that the U.S. Department of Commerce approved the extension amendment to the .
com
Registry Agreement with the Internet Corporation for Assigned Names and Numbers (“ICANN”), pursuant to which Verisign will remain the sole registry operator for the .
com
registry through November 30, 2024.
|
•
|
We finished the third quarter with 144.1 million
.com
and
.net
registrations in the domain name base, which represents a 7% increase from September 30, 2015, and a net increase of 0.9 million domain name registrations from June 30, 2016.
|
•
|
During the three months ended
September 30, 2016
, we processed
8.3 million
new domain name registrations for
.com
and
.net
as compared to
9.2 million
for the same period in
2015
.
|
•
|
The final .
com
and .
net
renewal rate for the second quarter of 2016 was 73.8% compared with 72.7% for the same quarter in 2015. Renewal rates are not fully measurable until 45 days after the end of the quarter.
|
•
|
During the three months ended
September 30, 2016
, we repurchased
2.2 million
shares of our common stock under the share repurchase program for
$177.0 million
. As of
September 30, 2016
,
$588.9 million
remained available for further repurchases under our share repurchase program.
|
•
|
Through October 26, 2016, we repurchased an additional 0.7 million shares for $52.3 million under our share repurchase program.
|
•
|
We generated cash flows from operating activities of
$472.5 million
during the
nine
months ended
September 30, 2016
, compared to
$462.9 million
in the same period last year.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Costs and expenses:
|
|
|
|
|
|
|
|
||||
Cost of revenues
|
17.3
|
|
|
17.8
|
|
|
17.4
|
|
|
18.3
|
|
Sales and marketing
|
6.5
|
|
|
7.9
|
|
|
6.8
|
|
|
8.6
|
|
Research and development
|
5.0
|
|
|
5.6
|
|
|
5.3
|
|
|
6.2
|
|
General and administrative
|
10.4
|
|
|
10.6
|
|
|
10.0
|
|
|
10.0
|
|
Total costs and expenses
|
39.2
|
|
|
41.9
|
|
|
39.5
|
|
|
43.1
|
|
Operating income
|
60.8
|
|
|
58.1
|
|
|
60.5
|
|
|
56.9
|
|
Interest expense
|
(10.0
|
)
|
|
(10.7
|
)
|
|
(10.1
|
)
|
|
(10.0
|
)
|
Non-operating income (loss), net
|
1.1
|
|
|
(1.5
|
)
|
|
0.9
|
|
|
(0.8
|
)
|
Income before income taxes
|
51.9
|
|
|
45.9
|
|
|
51.3
|
|
|
46.1
|
|
Income tax expense
|
(12.1
|
)
|
|
(11.1
|
)
|
|
(12.1
|
)
|
|
(11.3
|
)
|
Net income
|
39.8
|
%
|
|
34.8
|
%
|
|
39.2
|
%
|
|
34.8
|
%
|
|
September 30, 2016
|
|
% Change
|
|
September 30, 2015
|
|
.com
and
.net
domain name registrations in the domain name base
|
144.1 million
|
|
7
|
%
|
|
135.2 million
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
2016
|
|
% Change
|
|
2015
|
|
2016
|
|
% Change
|
|
2015
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
U.S.
|
$
|
167,796
|
|
|
4
|
%
|
|
$
|
160,708
|
|
|
$
|
497,595
|
|
|
4
|
%
|
|
$
|
477,424
|
|
EMEA
|
51,615
|
|
|
6
|
%
|
|
48,891
|
|
|
155,280
|
|
|
8
|
%
|
|
144,130
|
|
||||
China
|
33,224
|
|
|
62
|
%
|
|
20,478
|
|
|
97,150
|
|
|
69
|
%
|
|
57,447
|
|
||||
Other
|
34,919
|
|
|
(2
|
)%
|
|
35,703
|
|
|
105,871
|
|
|
(2
|
)%
|
|
107,740
|
|
||||
Total revenues
|
$
|
287,554
|
|
|
|
|
$
|
265,780
|
|
|
$
|
855,896
|
|
|
|
|
$
|
786,741
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
2016
|
|
% Change
|
|
2015
|
|
2016
|
|
% Change
|
|
2015
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Cost of revenues
|
$
|
49,807
|
|
|
5
|
%
|
|
$
|
47,218
|
|
|
$
|
149,142
|
|
|
4
|
%
|
|
$
|
143,792
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
2016
|
|
% Change
|
|
2015
|
|
2016
|
|
% Change
|
|
2015
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Sales and marketing
|
$
|
18,647
|
|
|
(11
|
)%
|
|
$
|
20,966
|
|
|
$
|
58,431
|
|
|
(14
|
)%
|
|
$
|
67,677
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
2016
|
|
% Change
|
|
2015
|
|
2016
|
|
% Change
|
|
2015
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
Research and development
|
$
|
14,324
|
|
|
(5
|
)%
|
|
$
|
15,019
|
|
|
$
|
45,355
|
|
|
(7
|
)%
|
|
$
|
48,518
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||
|
2016
|
|
% Change
|
|
2015
|
|
2016
|
|
% Change
|
|
2015
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||
General and administrative
|
$
|
30,000
|
|
|
7
|
%
|
|
$
|
28,115
|
|
|
$
|
85,158
|
|
|
8
|
%
|
|
$
|
79,090
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
2016
|
|
2015
|
|
2016
|
|
2015
|
|||||||||
|
(In thousands)
|
||||||||||||||
Contractual interest on Subordinated Convertible Debentures
|
$
|
10,156
|
|
|
$
|
10,156
|
|
|
$
|
30,469
|
|
|
$
|
30,469
|
|
Contractual interest on Senior Notes
|
15,235
|
|
|
15,235
|
|
|
45,704
|
|
|
39,505
|
|
||||
Amortization of debt discount on the Subordinated Convertible Debentures
|
2,802
|
|
|
2,581
|
|
|
8,235
|
|
|
7,585
|
|
||||
Credit facility fees and other interest expense
|
726
|
|
|
572
|
|
|
2,174
|
|
|
1,505
|
|
||||
Total interest expense
|
$
|
28,919
|
|
|
$
|
28,544
|
|
|
$
|
86,582
|
|
|
$
|
79,064
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(In thousands)
|
||||||||||||||
Unrealized gain (loss) on contingent interest derivative on Subordinated Convertible Debentures
|
$
|
1,440
|
|
|
$
|
(4,747
|
)
|
|
$
|
2,411
|
|
|
$
|
(9,058
|
)
|
Interest income
|
1,728
|
|
|
639
|
|
|
4,292
|
|
|
1,271
|
|
||||
Other, net
|
94
|
|
|
133
|
|
|
1,389
|
|
|
1,458
|
|
||||
Total non-operating income (loss), net
|
$
|
3,262
|
|
|
$
|
(3,975
|
)
|
|
$
|
8,092
|
|
|
$
|
(6,329
|
)
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Income tax expense
|
$
|
34,692
|
|
|
$
|
29,486
|
|
|
$
|
104,227
|
|
|
$
|
88,565
|
|
Effective tax rate
|
23
|
%
|
|
24
|
%
|
|
24
|
%
|
|
24
|
%
|
|
September 30,
|
|
December 31,
|
||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Cash and cash equivalents
|
$
|
177,785
|
|
|
$
|
228,659
|
|
Marketable securities
|
1,579,926
|
|
|
1,686,771
|
|
||
Total
|
$
|
1,757,711
|
|
|
$
|
1,915,430
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(In thousands)
|
||||||
Net cash provided by operating activities
|
$
|
472,477
|
|
|
$
|
462,947
|
|
Net cash used in investing activities
|
(50,762
|
)
|
|
(510,423
|
)
|
||
Net cash (used in) provided by financing activities
|
(472,698
|
)
|
|
33,772
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
109
|
|
|
(33
|
)
|
||
Net decrease in cash and cash equivalents
|
$
|
(50,874
|
)
|
|
$
|
(13,737
|
)
|
•
|
regional internet infrastructure development, expansion, penetration and adoption;
|
•
|
market acceptance and adoption of products and services based upon technologies other than those we use, which are substitutes for our products and services;
|
•
|
public perception of the security of our technologies and of IP and other networks;
|
•
|
the introduction and consumer acceptance of new generations of mobile devices, and in particular the use of alternative internet navigation mechanisms other than web browsers;
|
•
|
increasing cyber threats and the associated customer need and demand for our Security Services offerings;
|
•
|
government regulations affecting internet access and availability, domain name registrations or the provision of registry services, or e-commerce and telecommunications over the internet;
|
•
|
preference by markets for the use of their own country’s ccTLDs as a substitute or alternative to our TLDs; and
|
•
|
increased acceptance and use of new gTLDs as substitutes for established gTLDs.
|
•
|
power loss, transmission cable cuts and other telecommunications failures;
|
•
|
damage or interruption caused by fire, earthquake, and other natural disasters;
|
•
|
attacks, including hacktivism, by miscreants or other nefarious actors;
|
•
|
computer viruses or software defects;
|
•
|
physical or electronic break-ins, sabotage, intentional acts of vandalism, terrorist attacks and other events beyond our control;
|
•
|
risks inherent in or arising from the terms and conditions of our agreements with service providers to operate our networks and data centers;
|
•
|
state suppression of internet operations; and
|
•
|
any failure to implement effective and timely remedial actions in response to any damage or interruption.
|
•
|
our customers’ continued growth and development of their businesses and our customers’ ability to continue as going concerns or maintain their businesses, which could affect demand for our products and services;
|
•
|
current and future demand for our services, including decreases as a result of reduced spending on information technology and communications by our customers;
|
•
|
price competition for our products and services;
|
•
|
the price of our common stock;
|
•
|
our liquidity and our associated ability to execute on any share repurchase plans;
|
•
|
our ability to service our debt, to obtain financing or assume new debt obligations; and
|
•
|
our ability to obtain payment for outstanding debts owed to us by our customers or other parties with whom we do business.
|
•
|
competition with foreign companies or other domestic companies entering the foreign markets in which we operate, as well as foreign governments actively promoting ccTLDs, which we do not operate;
|
•
|
legal uncertainty regarding liability, enforcing our contracts and compliance with foreign laws;
|
•
|
tariffs and other trade barriers and restrictions;
|
•
|
difficulties in staffing and managing foreign operations;
|
•
|
currency fluctuations;
|
•
|
potential problems associated with adapting our services to technical conditions existing in different countries;
|
•
|
difficulty of verifying customer information, including complying with the customer verification requirements of certain countries;
|
•
|
more stringent privacy policies in some foreign countries;
|
•
|
additional vulnerability from terrorist groups targeting U.S. interests abroad;
|
•
|
potentially conflicting or adverse tax consequences;
|
•
|
reliance on third parties in foreign markets in which we only recently started doing business; and
|
•
|
potential concerns of international customers and prospects regarding doing business with U.S. technology companies due to alleged U.S. government data collection policies.
|
•
|
adverse changes in the value of the properties, due to interest rate changes, changes in the commercial property markets, or other factors;
|
•
|
ongoing maintenance expenses and costs of improvements;
|
•
|
the possible need for structural improvements in order to comply with environmental, health and safety, zoning, seismic, disability law, or other requirements;
|
•
|
the possibility of environmental contamination or notices of violation from federal or state environmental agencies; and
|
•
|
possible disputes with neighboring owners, tenants, service providers or others.
|
•
|
our stockholders may take action only at a duly called meeting and not by written consent;
|
•
|
special meetings of our stockholders may be called only by the chairman of the board of directors, the president, our Board, or the secretary (acting as a representative of the stockholders) whenever a stockholder or group of stockholders owning at least thirty-five percent (35%) in the aggregate of the capital stock issued, outstanding and entitled to vote, and who held that amount in a net long position continuously for at least one year, so request in writing;
|
•
|
vacancies on our Board can be filled until the next annual meeting of stockholders by a majority of directors then in office; and
|
•
|
our Board has the ability to designate the terms of and issue new series of preferred stock without stockholder approval.
|
|
Total Number
of Shares
Purchased
|
|
Average
Price Paid
per Share
|
|
Total Number
of Shares
Purchased as
Part of Publicly
Announced
Plans or
Programs (1)
|
|
Approximate
Dollar Value of
Shares That May
Yet Be Purchased
Under the Plans or
Programs (1)
|
||||||
|
(Shares in thousands)
|
||||||||||||
July 1 – 31, 2016
|
558
|
|
|
$
|
84.24
|
|
|
558
|
|
|
$
|
718.9
|
million
|
August 1 – 31, 2016
|
801
|
|
|
$
|
79.82
|
|
|
801
|
|
|
$
|
655.0
|
million
|
September 1 – 30, 2016
|
863
|
|
|
$
|
76.57
|
|
|
863
|
|
|
$
|
588.9
|
million
|
|
2,222
|
|
|
|
|
2,222
|
|
|
|
Exhibit
Number
|
|
Exhibit Description
|
Incorporated by Reference
|
|
|
||
|
|
|
Form
|
Date
|
Number
|
|
Filed Herewith
|
|
|
|
|
|
|
|
|
10.01
|
|
Amendment to the Registry Agreement between VeriSign, Inc. and the Internet Corporation for Assigned Names and Numbers, entered into on October 20, 2016
|
8-K
|
10/20/16
|
10.1
|
|
|
|
|
|
|
|
|
|
|
10.02
|
|
Amendment Number Thirty-Three (33) to the Cooperative Agreement between VeriSign, Inc. and Department of Commerce, entered into on October 20, 2016
|
8-K
|
10/20/16
|
10.2
|
|
|
|
|
|
|
|
|
|
|
10.03
|
|
Amendment Number Thirty-Four (34) to the Cooperative Agreement between VeriSign, Inc. and Department of Commerce, entered into on October 20, 2016
|
8-K
|
10/20/16
|
10.3
|
|
|
|
|
|
|
|
|
|
|
31.01
|
|
Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
31.02
|
|
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(a).
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
32.01
|
|
Certification of Principal Executive Officer pursuant to Exchange Act Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). *
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
32.02
|
|
Certification of Principal Financial Officer pursuant to Exchange Act Rule 13a-14(b) and Section 1350 of Chapter 63 of Title 18 of the U.S. Code (18 U.S.C. 1350). *
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.INS
|
|
XBRL Instance Document
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.SCH
|
|
XBRL Taxonomy Extension Schema
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase
|
|
|
|
|
X
|
|
|
|
|
|
|
|
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase
|
|
|
|
|
X
|
*
|
As contemplated by SEC Release No. 33-8212, these exhibits are furnished with this Quarterly Report on Form 10-Q and are not deemed filed with the SEC and are not incorporated by reference in any filing of VeriSign, Inc. under the Securities Act of 1933 or the Securities Exchange Act of 1934, whether made before or after the date hereof and irrespective of any general incorporation language in such filings.
|
Date: October 27, 2016
|
By:
|
/
S
/ D. J
AMES
B
IDZOS
|
|
|
D. James Bidzos
|
|
|
Chief Executive Officer
|
Date: October 27, 2016
|
By:
|
/
S
/ G
EORGE
E. K
ILGUSS
, III
|
|
|
George E. Kilguss, III
|
|
|
Chief Financial Officer
|
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