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Factors Settings the Tone for Verisign's (VRSN) Q1 Earnings

VeriSign VRSN is set to report first-quarter 2021 results on Apr 22.

The Zacks Consensus Estimate for first-quarter earnings has remained steady at $1.27 per share over the past 30 days, implying a decline of 10.5% from the figure reported in the year-ago period.

The consensus mark for revenues is pegged at $322.3 million, indicating an increase of 3.14% from the year-ago quarter reported figure.

Notably, the company’s earnings beat the Zacks Consensus Estimate in the trailing four quarters, with the average surprise being 10.8%.

Let’s see how things have shaped up for the upcoming announcement.

VeriSign, Inc. Price and EPS Surprise

VeriSign, Inc. price-eps-surprise | VeriSign, Inc. Quote

Factors to Note

Growth in .com and .net domain name registrations is likely to have benefited the company’s performance in the to-be-reported quarter.

Notably, the company ended fourth-quarter 2020 with 165.2 million .com and .net domain name registrations, up 4% year over year. The figure reflects a net increase of 1.46 million registrations during the quarter.

VeriSign has been benefiting from its “exclusive” contract with The Internet Corporation for Assigned Names and Numbers (ICANN) for .com, .net and .name generic top-level domains which, among other changes, permitted Verisign to increase the price of .com domain name registrations by up to 7% over the previous year, in each of the final four years of each six-year period. The first such six-year period began on Oct 26, 2018.

Notably, ICANN is not a price regulator and depends on the U.S. government for .com prices. The price increase from the current wholesale price of $7.85 to the maximum price of $10.26 in 2024 indicates an annual increase of $2.41.

Markedly, VeriSign announced that from Sep 1, 2021, it will increase the annual registry-level wholesale price for new and renewal .com domain name registration by 54 cents from $7.85 to $8.39.

VeriSign processed 10.5 million new domain name registrations for .com and .net compared with 10.3 million in the year-ago quarter. Markedly, renewal rates are not fully measurable until 45 days after the end of the quarter.

Per VeriSign’s latest The Domain Name Industry Brief report, domain name registrations decreased 4.4 million or 1.2% sequentially to 366.3 million across TLDs at the end of fourth-quarter 2020. Markedly, domain name registrations increased 4 million or 1.1% year over year.

However, increasing operating expenses related to research and development as well as sales and marketing are likely to have weighed on the company’s first-quarter bottom-line performance.

What Our Model Says

According to the Zacks model, the combination of a positive Earnings ESP and Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here.

Verisign has an Earnings ESP of 0.00% and a Zacks Rank #3. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Stocks to Consider

Here are a few companies you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:

Fox Corporation FOXA has an Earnings ESP of +13.64% and is Zacks #1 Ranked. You can see the complete list of today’s Zacks #1 Rank stocks here.

Sirius XM Holdings Inc. SIRI has an Earnings ESP of +12.90% and carries a Zacks Rank of 2, at present.

Snap Inc. SNAP has an Earnings ESP of +5.26% and a Zacks Rank #3.

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Sirius XM Holdings Inc. (SIRI): Free Stock Analysis Report
 
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Snap Inc. (SNAP): Free Stock Analysis Report
 
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