Q3 2011 Earnings Call
October 27, 2011 4:30 pm ET
John Calys - Interim Chief Financial Officer, Vice President and Controller
David Atchley -
Patrick S. Kane - Senior Vice President and General Manager of Naming Services
D. James Bidzos - Executive Chairman, Chief Executive officer, President and Founder
Gregg Moskowitz - Cowen and Company, LLC, Research Division
Steven M. Ashley - Robert W. Baird & Co. Incorporated, Research Division
Edward Maguire - Credit Agricole Securities (USA) Inc., Research Division
Rob D. Owens - Pacific Crest Securities, Inc., Research Division
Sterling P. Auty - JP Morgan Chase & Co, Research Division
Philip Winslow - Crédit Suisse AG, Research Division
Scott H. Kessler - S&P Equity Research
Walter H. Pritchard - Citigroup Inc, Research Division
Previous Statements by VRSN
» VeriSign's CEO Discusses Q2 2011 Results - Earnings Call Transcript
» VeriSign's CEO Discusses Q1 2011 Results - Earnings Call Transcript
» VeriSign's CEO Discusses Q4 2010 Results - Earnings Call Transcript
Good day, and welcome to the third quarter 2011 earnings call. Today's call is being recorded. At this time, I'd like to turn the conference over to David Atchley. Please go ahead, sir.
Thank you, operator. Good afternoon, everyone, and thank you for joining us for VeriSign's Third Quarter 2011 Earnings Conference Call. I'm David Atchley, Corporate Treasurer and Director of Investor Relations, and I'm here today with Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Vice President, Interim CFO and Controller.
Please note that this call and accompanying slide presentation are being webcast from the Investor Relations section of our corporate website, www.verisigninc.com. Please refer to that website for important information, including the Q3 2011 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 include forward-looking statements and as such are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent report on forms 10-K and 10-Q and any applicable amendments, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.
I would like to remind you that in light of Regulation FD, VeriSign retains its strong standing policy, long standing policy, to not comment on financial performance or guidance during the quarter, unless it is 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, Jim and John will provide some prepared remarks, and afterward, we will open up the call for your questions. Unauthorized recordings of this conference call are not permitted.
With that, I would like to turn the call over to Jim. Jim?
D. James Bidzos
Thanks, David, and good afternoon, everyone. The third quarter was another solid quarter for VeriSign. In our Naming business, the base of registered names in .com and .net totaled approximately 112 million at the end of September. In our NIA business, we again saw a strong bookings growth. Also, our strong balance sheet allowed us to repurchase 235 million in shares in the third quarter, leaving us with approximately 831 million under the current share repurchase program authorization. I'll comment now on third quarter operating highlights.
As I've mentioned previously, in our Naming business, the base of registered names in .com and .net totaled approximately 112 million at the end of September. This represents an 8% increase year-over-year in the base and an approximately 2% increase quarter-over-quarter.
In the third quarter, we added 1.994 million, 1,994,000, net names to the domain name base, and we processed 7.9 million new registrations, which is an increase of approximately 5% year-over-year and our largest third quarter on record for new registrations. The Q2 2011 renewal rate was 73.1%. Our renewal rates are not fully measurable until 45 days after the end of the quarter. We believe that the renewal rate for the third quarter of 2011 will be approximately 73.4%.
We expect the Q4 net names added to the base to be between 1.8 million and 2.1 million names, which reflects the continued growth and the underlying drivers of Internet growth as well as seasonality.
With regard to our NIA business, the team performed very well and exceeded target bookings for the third quarter. We continue to study this fast-growing and evolving market for the best ways we might leverage our core strengths and optimize our offerings to scale for long-term success with an emphasis on quality of revenue.
Finally, before turning the call over to John, let me address our management changes. As you know, since August 1 of this year, I have assumed the responsibility of full-time CEO of the company. As you saw in our press release, there is no change to my status and the company will not be conducting a search for a new CEO. However, we will be conducting a CFO search. Until we complete that search, John Calys is in that interim role. He's been at VeriSign for nearly a year now and has been a successful Financial Operating Executive in other public companies as well.
Thanks for your attention, and now I'll turn the call over to John.
Thanks, Jim, and good afternoon, everyone. This was another solid quarter for us, as Jim explained. Let me recap our performance this quarter on our key operating metrics, which are revenue, deferred revenue, non-GAAP operating margin, non-GAAP EPS growth and free cash flow. Then I will discuss progress towards our annual guidance for 2011.