Trust Seal service, launched in February 2010, can increase the size of the company's addressable market by providing non-transactional Web sites an opportunity to be VeriSign approved and trusted.
VeriSign estimates that the addressable market of non-transactional sites is 10 times greater than the addressable market for its SSL certificates used by transactional (e-commerce, banking) sites.
We estimate that VeriSign's online SSL certificates business currently constitutes about 16% of our
and that the company's move into non-transactional certification will help VeriSign offset the slowing growth from its SSL certification business.
As a result, there could be additional upside to
, if VeriSign's Trust Seal service were to gain traction.
Key Difference: SSL vs. Trust Seal
Secure Sockets Layer, or SSL, is a security protocol on the Internet that is used for exchanging sensitive information between a Web site and the user communicating with it. Sensitive information like credit card numbers and passwords are encrypted by VeriSign's SSL certificates for the secured data transmission between the user and the Web site. Internet banking and e-commerce Web sites are the typical customers buying SSL certificate licenses from VeriSign.
While SSL certificates secure transactional sites, non-transactional sites also require security from malware, although no data encryption is required by them. Trust Seal focuses on security requirements for non-transactional Web sites.
Benefits of Trust Seal Service
VeriSign's Trust Seal service offers customers two key benefits:
1. Potential for Higher Traffic and Conversion to Registered Users
Validation from VeriSign helps mitigate security risks and improve consumer confidence in the Web site. According to a report from TheFind, an Internet shopping search engine, Internet shoppers who see the VeriSign seal displayed alongside the names of merchandise retailers click-through to the sites of those VeriSign-authenticated retailers 18.5% more often than they do to the sites of retailers without the VeriSign seal.
TheFind's data suggest that Trust Seal service on non-transactional sites can also help those sites to convert casual visitors into registered users. The Trust Seal may increase the likelihood that visitors will share the personal information required to be a registered user.
2. Reduce Likelihood of Blacklisting from Search Engines
Authentication helps to establish that the Web site represents an actual business, and is not a scam or a phishing site. It also reduces the likelihood that the site would be blacklisted by search engines.
Trust Seal Is a New Avenue for Growth
We estimate that VeriSign's share within the existing online SSL security certificate market has been declining, as a result of greater competition from low-cost SSL certificates offered by providers such as GoDaddy.com and Comodo. We forecast that
will decline from around 66% in 2009 to around 59% by the end of Trefis' forecast period.
Trust Seal Market Is 10 Times Larger
According to VeriSign's management, the potential addressable market of non-transactional sites is 10 time greater than the market for transactional sites. You can modify the forecast above to see how the Trefis price estimate for VeriSign's stock would more than double if the combined (Trust Seal and SSL) addressable market were 11 times greater than our current SSL market forecast.
However, this implies that VeriSign's market share for Trust Seal and its revenue per Trust Seal certificate are comparable to the share and revenue per certificate estimates of the current SSL business.
We believe that the addressable market may not be as large as management estimate, since the Trust Seal service is not yet as important for Web sites as SSL certification. By modifying the forecast above, you can see how there would still be about a 10% upside to our estimate for VeriSign's stock if the combined SSL and Trust Seal market were only twice as big as our current SSL market forecast.
You can see
is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the U.S.