VeriSign Reports First Quarter 2005 Results
MOUNTAIN VIEW, Calif., April 20 -- VeriSign, Inc. (NASDAQ:VRSN) , the leading provider of intelligent infrastructure services for the Internet and telecommunications networks, today reported its results for the first quarter ended March 31, 2005.
VeriSign reported revenue of $401 million for the first quarter of 2005, a 75 percent increase compared to the same period of 2004. On a GAAP basis, VeriSign reported net income of $49 million for the first quarter 2005 and earnings per share of $0.19 per fully-diluted share. This compares with net income of $9 million and earnings per share of $.04 per fully-diluted share for the same period of 2004.
On a non-GAAP, after tax basis, using a 30% effective tax rate on non-GAAP pre-tax income of $95 million, earnings per share for the first quarter was $0.25 per fully-diluted share, as compared to non-GAAP pre-tax income of $50 million and earnings per fully-diluted share of $0.14 for the same period in 2004. These non-GAAP results exclude the following items, which are included under GAAP: amortization of intangible assets related to acquisitions, the net gain or loss on the sale of investments or the impairment of investments, restructuring and other recoveries/charges, and stock-based compensation charges related to acquisitions. A table reconciling the non-GAAP to GAAP numbers reported above is appended to this release.
"Our first quarter results represent a strong start to the year and an exciting beginning to our second decade as a company," said Stratton Sclavos, Chairman and Chief Executive Officer of VeriSign. "With continued growth in our Internet and Communications segments, we remain confident in, and committed to, our mission of enabling and protecting all forms of interactions across the world`s voice and data networks."
"Increased demand for our Internet and Communications services led to record revenues and operating income for Q1," said Dana Evan, Chief Financial Officer of VeriSign. "Given the strong unit volumes across our businesses in Q1 and the recurring nature of our revenues, we would expect to see solid performance throughout the year."
Within VeriSign`s Internet Services Group (ISG), the VeriSign Security Services (VSS) business achieved a number of milestones during the quarter. Highlights included the announcement of new products, channels and customers for the VeriSign Unified Authentication platform, including a contract award at Bank of America. In addition, an enhanced family of strong authentication tokens was announced in February including a multi-purpose USB token that combines one-time password (OTP) and PKI technology with secure flash storage as well as an OTP-only token that delivers among the industry`s lowest total cost of ownership.
The VeriSign Naming and Directory Services (VNDS) business saw increased new registrations and renewal rates for its .com and .net domain name business. The company was also notified by the Internet Corporation for Assigned Names and Numbers, or ICANN, that the VeriSign proposal to continue operating the .net domain registry was ranked highest among all bidders. Based on this designation, VeriSign and ICANN have entered into negotiations in order to reach a mutually acceptable registry agreement.
The VeriSign Communications Services (VCS) business saw continued momentum in its mobile content business in the first quarter with the expansion of services to certain US and European customers. In addition, VCS announced the availability of the VeriSign Push-To-Talk Service for evaluation by mobile operators to accelerate deployment of services that provide instant access to communications, multimedia content and mobile applications for enterprises and consumers. As part of VeriSign`s mobile content strategy, VeriSign announced on April 7th the successful completion of its acquisition of Santa Cruz, California-based LightSurf which is a global leader in multimedia messaging and interoperability solutions for the wireless market.
Additional Financial Information
-- VeriSign ended the quarter with Cash, Cash Equivalents, Restricted Cash and Short-term Investments of $872 million, an increase of $83 million from the prior quarter.
-- As part of a settlement with a carrier customer, VeriSign recorded an additional one-time gain to Other Income of $6 million dollars.
-- Net days sales outstanding (Net DSO), which takes into account the change in deferred revenue balance, was 49 days which remains within the VeriSign`s guidance of 40 to 50 days.
-- Deferred revenue on the balance sheet was $450 million as of March 31, 2005, up $37 million or 9% over last quarter.
-- Capital expenditures for the first quarter of 2005 were approximately $17 million, up from $15 million in the first quarter of 2004.
-- Non-GAAP operating income was $83 million and cash flow from operations was $74 million for the first quarter of 2005.
Internet Services Group
-- The Internet Services Group -- which includes VeriSign`s Security, Payments, and Naming & Directory services -- delivered $159 million of revenue in the first quarter of 2005. The results for the first quarter included strong sequential growth in both the Security Services and VeriSign`s Naming & Directory Services (VNDS) businesses.
-- VeriSign`s Web site certificate business issued approximately 122,000 new and renewed certificates in Q1, ending the quarter with a base of more than 462,000 certificates, up from 455,000 at the end of fourth quarter of 2004.
-- VeriSign`s Payments business ended the first quarter with approximately 136,000 merchants under management, an increase of approximately 9,000 merchants over the fourth quarter of 2004. Further, the business processed approximately 120 million individual transactions with an aggregate value of $10.6 billion during the quarter.
-- VeriSign`s Naming & Directory Services business ended the first quarter with over 41 million active domain names in .com and .net, a net increase of approximately 3 million names or 8% from the fourth quarter of 2004.
Communications Services Group
-- VeriSign`s Communications Services (VCS) Group -- which provides intelligent communications, commerce and content services to telecommunications carriers and next generation service providers -- delivered combined revenues of $242 million in the first quarter of 2005, up 19% from the fourth quarter of 2004.
-- VeriSign`s Communications Services Group ended Q1 with a base of approximately 7.1 million wireless billing customer subscribers up from a Q4 base of 6.5 million.
-- The VCS business supported 12.8 billion database queries in Q1 2005, up 27% from Q1 2004.
About VeriSign
VeriSign, Inc. operates intelligent infrastructure services that enable businesses and individuals to find, connect, secure, and transact across today`s complex global networks. Additional news and information about the company is available at www.verisign.com.
Statements in this announcement other than historical data and information constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties that could cause VeriSign`s actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results due to such factors as increasing competition and pricing pressure from competing services offered at prices below our prices and market acceptance of our existing services, the inability of VeriSign to successfully develop and market new services and the uncertainty of whether new services as provided by VeriSign will achieve market acceptance or result in any revenues and the risk that the VeriSign and Jamba! businesses as well as other businesses will not be integrated successfully and unanticipated costs of such integration. More information about potential factors that could affect the company`s business and financial results is included in VeriSign`s filings with the Securities and Exchange Commission, including in the company`s Annual Report on Form 10-K for the year ended December 31, 2004 and quarterly reports on Form 10-Q. VeriSign undertakes no obligation to update any of the forward-looking statements after the date of this press release.
NOTE: VeriSign is a registered trademark of VeriSign, Inc. Other names may be trademarks of their respective owners.
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