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VeriSign (VRSN)

Q4 2010 Earnings Call

January 27, 2011 4:30 pm ET


Mark McLaughlin - Chief Executive Officer, President and Director

Brian Robins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President

Nancy Fazioli - Investor Relations


Ignatius Njoku

Sterling Auty - JP Morgan Chase & Co

Daniel Cummins - ThinkEquity LLC

Philip Winslow - Crédit Suisse AG

Edward Maguire - Credit Agricole Securities (USA) Inc.

Steven Ashley - Robert W. Baird & Co. Incorporated

Walter Pritchard - Citigroup Inc

Rob Owens - Pacific Crest Securities, Inc.

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Todd Raker - Deutsche Bank AG

Scott Kessler - S&P Equity Research



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Good day, and welcome to the Fourth Quarter and 2010 Earnings Call. [Operator Instructions] At this time, I would like to turn the conference over to Ms. Nancy Fazioli. Please go ahead.

Nancy Fazioli

Thank you, operator. Good afternoon, everyone, and thank you for joining us for VeriSign's Fourth Quarter and Full Year 2010 Earnings Conference Call. I'm Nancy Fazioli, Director of Investor Relations, and I'm here today with Mark McLaughlin, President and CEO; and Brian Robins, Executive Vice President and CFO.

Please note that this call and accompanying slide presentation are being webcast from the Investor Relations section of our new corporate website, Please refer to that website for important information, including the Q4 and full year 2010 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call.

Financial results in today's press release are unaudited and the matters we will be discussing today includes forward-looking statements, and as such are subject to the risks and uncertainties that we've discussed in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q, and the applicable amendments which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

Please note that we have not fully completed the tax provision calculation process and therefore, the tax provisions for both the fourth quarter and the full year 2010 are still preliminary and the tax provision, GAAP net income loss and GAAP earnings loss per share for those periods reported in our Form 10-K may differ materially from what we discuss today.

I would like to remind you that in light of Regulation FD, VeriSign retains it's long-standing policy to not comment on financial performance or guidance during the quarter unless it's done through a public disclosure. The financial results in today's press release and the matters we will be discussing today include non-GAAP measures used by VeriSign. GAAP to non-GAAP reconciliation information is appended to our press release and slide presentation, as applicable, each of which can be found on the Investor Relations section of our website.

In a moment, Mark and Brian will provide some prepared remarks, and afterwards, we will open up the call for your questions. Unauthorized recording of this conference call is not permitted. With that, I would like to turn the call over to Mark. Mark?

Mark McLaughlin

Thanks, Nancy, and good afternoon, everyone. The fourth quarter capped a solid year of execution and growth at VeriSign. We're proud of the progress that we made in the quarter and in 2010. During the past year, we refocused our business, improved operating efficiency and continued to scale and enhance our world-class infrastructure, all while maintaining a healthy balance sheet and returning approximately $1 billion to our investors.

We entered 2011 as a leading provider of Internet infrastructure services, and believe we are well positioned to help our customers benefit from the continued growth of the Internet and cloud computing.

I'll comment now on fourth quarter results. In Registry Services, the base of registered names in .com and .net totaled 105.2 million names at the end of December. This represents a 9% year-over-year increase in the base. In the fourth quarter, we processed 7.6 million new registrations which is a 4% increase year-over-year. We added 1.75 million net names to the name base in the quarter.

On the renewal rates side, the Q3 2010 renewal rate were 72.8%. While the renewal rates are not fully much measurable until 45 days after the end of the quarter, we believe the renewal rate in the fourth quarter of 2010 will be between 72.5% at 73%. As we look forward to the first quarter, we expect the Q1 net names added to the base to be between 2.3 million to 2.6 million names which reflect the continued growth in Internet usage, online advertising and e-commerce.

In addition to the business metrics for Registry Services for the quarter, I also wanted to highlight a couple of developments during the quarter related to our continued technology and thought leadership around Internet Infrastructure. First, we successfully implemented DNSSEC in the .net zone in December, and we are on track with DNSSEC enabled to .com zone in the first quarter.

In addition, during the fourth quarter, we made a DNSSEC signing service available to the registrars to assist in DNSSEC implementation for the customers. The continued reliability and availability of our network is a constant strategic priority, and we are proud of our performance record in 2010. Last year, we processed over 22 trillion DNS queries, all without any unplanned downtime and in the face of well-publicized cyber attacks. We continue to be vigilant in anticipation of the growth of Internet usage and the accompanying scale of attacks.

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