VeriSign (VRSN) Q4 2010 Earnings Call January 27, 2011 4:30 pm ET Executives Mark McLaughlin - Chief Executive Officer, President and Director Brian Robins - Chief Financial Officer, Principal Accounting Officer and Executive Vice President Nancy Fazioli - Investor Relations Analysts 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. Todd Raker - Deutsche Bank AG Scott Kessler - S&P Equity Research Presentation Operator
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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. Read the rest of this transcript for free on seekingalpha.com