What changed in this filing

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Item 1. Business

2021-02-19 compared with 2020-02-14 · 166 added, 112 removed, 141 unchanged (66% of the section changed)

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The information available on, or accessible through, this website is not incorporated in this Form 10-K by reference.

Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, on the Investor Relations section of our website as soon as is reasonably practicable after filing such reports with the Securities and Exchange Commission (the “SEC”).

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, on the Investor Relations section of our website as soon as is reasonably practicable after filing such reports with the Securities and Exchange Commission (the “SEC”).

The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at https://www.sec.gov .

Pursuant to our agreements with the Internet Corporation for Assigned Names and Numbers (“ICANN”), we make available on our website (at https://www.Verisign.com/zone ) files containing all active domain names registered in the .

Pursuant to our agreements with the Internet Corporation for Assigned Names and Numbers (“ICANN”), we make available files containing all active domain names registered in the .

net registries.

At the same website address, we make available a summary of the active zone count registered in the .

Further, we also make available a summary of the active zone count registered in the .

com and .net registries and the number of .com and .net domain name registrations in the domain name base.

The zone counts and information on how to obtain access to the zone files can be found at https://www.Verisign.com/zone .

The domain name base is the active zone plus the number of domain names that are registered but not configured for use in the respective top-level domain zone file plus the number of domain names that are in a client or server hold status.

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It is possible that the information we post on social media could be deemed to be material information.

Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels listed below.

Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels and websites listed below.

This list may be updated from time to time on our investor relations website.

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https://blog.Verisign.com

The contents of these websites are not intended to be incorporated by reference into this Annual Report on Form 10-K or in any other report or document we file.

The contents of these websites are not intended to be incorporated by reference into this Form 10-K or in any other report or document we file.

We operate the authoritative directory of and/or the back-end systems for all .com, .net, .cc, .tv, .gov, .jobs, .edu and .name domain names, among others.

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We are also the exclusive registry of domain names within certain transliterations of .com and .net in a number of different native languages and scripts (“IDN gTLDs”).

As a registry, we maintain the master directory of all second-level domain names (e.g., johndoe.com and janedoe.net) in these gTLDs and IDN gTLDs.

As a registry, we maintain the master directory of all second-level domain names (e.g., example.com and example.net) in these gTLDs and IDN gTLDs.

Our global constellation of DNS servers provides internet protocol (“IP”) address information in response to queries, enabling the use of browsers, email systems, and other systems on the internet.

In addition, we own and maintain the shared registration system that allows ICANN-accredited registrars to enter new second-level domain names into central directories and to submit modifications, transfers, re-registrations, and deletions for existing second-level domain names (“Shared Registration System”).

In addition to our registry agreements with ICANN, we have agreements to operate the registry for the .tv and .cc country code top-level domains (“ccTLDs”) for Tuvalu and Cocos (Keeling) Islands, respectively, and to operate the back-end registry systems for the .gov , .jobs, and .edu sponsored TLDs, among others.

In addition to our registry agreements with ICANN, we have agreements to operate the registries for the .tv and .cc country code top-level domains (“ccTLDs”) for Tuvalu and Cocos (Keeling) Islands, respectively, and to operate the back-end registry systems for the .gov , .jobs, and .edu sponsored TLDs, among others.

These TLDs are also supported by our global constellation of DNS servers and Shared Registration System.

We also provide internationalized domain name (“IDN”) services that enable internet users to access websites in characters representing their local language.

Our gTLDs and ccTLDs can support standards-compliant registrations in over 100 different native languages and scripts.

We also perform the root zone maintainer function under an agreement with ICANN for the core of the internet’s DNS and operate two of the 13 root zone servers that contain authoritative data for the very top of the DNS hierarchy.

We also provide internationalized domain name (“IDN”) services that enable internet users to access domain names in characters representing their local language.

Our gTLDs and ccTLDs can support standards-compliant domain name registrations in over 100 different native languages and scripts.

Domain names can be registered for between one and 10 years.

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gov registry are based on the terms of Verisign’s agreement with the U.S.

General Services Administration.

The fees received from operating the .jobs registry infrastructure, and that of others for which Verisign provides such services, are based on the terms of Verisign’s agreements with those respective registry operators .

Operations Infrastructure

Our operations infrastructure consists of three secure data centers in Dulles, Virginia;

Our operations infrastructure consists of secure data centers in Dulles, Virginia;

Ashburn, Virginia;

New Castle, Delaware;

and Fribourg, Switzerland as well as more than 100 resolution sites around the world.

Our domain name servers provide the associated authoritative name servers and IP addresses for every .com and .net domain name on the internet and a large number of other TLD queries, processing more than 192 billion queries daily.

These secure data centers operate 24 hours a day, supporting our business units and services.

The performance and scale of our infrastructure are critical for our business, and give us the platform to maintain our leadership position.

and Fribourg, Switzerland as well as more than 100 other sites around the world.

Our domain name servers refer requestors to the associated authoritative name servers for second level domains under our TLDs, thus enabling DNS resolution for every .com and .net domain name on the internet and for domain names under a large number of other TLDs.

Our servers process more than 215 billion queries daily.

Our operations infrastructure operates 24 hours a day, supporting our services.

The performance and availability of our infrastructure are critical for our business.

Key features of our operations infrastructure include:

• Distributed Servers:

We operate a large number of high-speed servers globally to support localized capacity and availability demands.

In conjunction with our proprietary software, processes and procedures, this platform offers rapid failover, global and local load balancing, and threshold monitoring on critical servers.

We operate a large number of high-speed servers globally to support localized capacity and performance demands.

In conjunction with our proprietary software, processes and procedures, this global constellation of servers offers rapid failover, global and local load balancing, and threshold monitoring on critical servers.

• Networking:

We deploy and maintain a redundant and diverse global network, maintain high-speed, redundant connections to numerous internet service providers, and maintain peering relationships globally to ensure that our critical services are readily accessible to customers at all times.

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Corporate networks are in their own physical silo.

Thus, the corporate networks to which

personnel directly connect are separated from the silos that house production services;

Thus, the corporate networks to which personnel directly connect are separated from the silos that house production services;

administration of production gear from corporate systems must go through an internal, fortified intermediary;

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Call Centers and Help Desk:

We provide customer support services through phone-based call centers, email help desks and web-based self-help systems.

Our Virginia call center is staffed with trained customer support agents 24 hours a day, every day of the year.

We provide customer support services over the phone, by email and through web-based self-help systems.

Our support teams are staffed with trained technical customer support agents.

Support is available for customers 24 hours a day, every day of the year.

Throughout the COVID-19 pandemic, our support teams have continued servicing our customers while working remotely.

Operations Support and Monitoring:

Through our network operations center, we have an extensive monitoring capability that enables us to track the status and performance of our critical database systems and our global resolution systems.

Our network operations center is staffed 24 hours a day, every day of the year.

Our network operations center monitors our systems 24 hours a day, every day of the year and has continued to be staffed by employees working remotely during the COVID-19 pandemic.

Disaster Recovery Plans:

We have disaster recovery and business continuity capabilities that are designed to deal with the loss of entire data centers and other facilities.

We maintain dual mirrored data centers that allow rapid failover with no data loss and no loss of function or capacity, as well as off-continent tertiary facilities.

We maintain data centers with mirrored services that allow failover with no data loss and no loss of function or capacity, as well as a tertiary facility in Switzerland.

Our critical data services (including domain name registration and global resolution) use advanced storage systems that provide data protection through techniques such as synchronous mirroring and remote replication.

We periodically operate services at an alternate data center during maintenance windows to ensure the availability of our data centers for disaster recovery.

Marketing, Sales and Distribution

We seek to expand our business through focused marketing campaigns and programs that target growth in the .com and .net domain name base, both domestically and in foreign markets.

We offer promotional marketing programs for our registrars based upon market conditions and the business environment in which the registrars operate.

We provide tools to be used by both registrars and end users to enable them to find relevant domain names.

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Under certain circumstances, we may also acquire or license technology from third parties.

The markets for our services are dynamic, characterized by rapid technological developments, frequent new product introductions, and evolving industry standards.

The constantly changing nature of these markets and their rapid evolution will require us to continually improve the performance, features, and reliability of our services, particularly in response to competitive offerings, and to introduce both new and enhanced services as quickly as possible and prior to our competitors.

We face competition in the domain name registry space from other gTLD and ccTLD registries that are competing for the business of entities and individuals that are seeking to obtain a domain name registration, establish an online presence, as well as other uses of domain names, such as branded email.

In addition to the gTLDs and ccTLDs we operate or for which we provide back-end registry services, there are over 1,200 other operational gTLD registries, over 250 Latin script ccTLD registries, more than 50 IDN ccTLD registries, and over 90 IDN gTLD registries.

Under our agreements with ICANN, we are subject to certain restrictions in the operation of .com , .net and .name on pricing, bundling, marketing, methods of distribution, the introduction of new registry services, and use of registrars, that do not apply to ccTLDs and other gTLDs and therefore may create a competitive disadvantage.

To the extent end-users navigate using search engines or social media, or transact on e-commerce platforms, as opposed to direct navigation, we face competition from search engines such as Google, Bing, Yahoo!, and Baidu, social media networks such

as Facebook and WeChat, e-commerce platforms such as Amazon, eBay and Taobao, and microblogging tools such as Twitter.

In addition, we face competition from these social media businesses and e-commerce platforms if they are used by businesses and individuals to establish an online presence rather than through the use of a domain name.

Furthermore, to the extent end-users increase the use of web and mobile applications to locate and access content, we face competition from providers of such web and mobile applications.

The markets for our services are dynamic, characterized by ongoing technological developments, shifting channel dynamics, frequent new product introductions, and evolving industry standards.

The constantly changing nature of these markets and the continued evolution of security threats will require us to continually improve the performance, features, and reliability of our services, and to introduce both new and enhanced products and services.

In addition to the gTLDs and ccTLDs we operate or for which we provide back-end registry services, there are over 1,200 other operational gTLD registries, over 250 ASCII ccTLD registries, more than 50 IDN ccTLD registries, and over 90 IDN gTLD registries.

Under our agreements with ICANN, we are subject to certain restrictions in the operation of .com , .net and .name on pricing, bundling, marketing, methods of distribution, introduction of new registry services, and use of registrars, that do not apply to ccTLDs and other gTLDs and therefore may create a competitive disadvantage.

Among our competitors operating gTLD and ccTLD registries are China Internet Network Information Center (CNNIC), DENIC, Nominet, Public Interest Registry (PIR), Donuts, GoDaddy, and Radix.

To the extent end-users navigate using search engines or social media, as opposed to direct navigation via domain names, or transact on e-commerce platforms, we face competition from search engines such as Google, Bing, Yahoo!, and Baidu, social media networks such as Facebook and WeChat, e-commerce platforms such as Amazon, eBay and Taobao, and microblogging tools such as Twitter.

In addition, we face competition from these social media and e-commerce platforms if they are used by businesses and individuals to establish an online presence rather than through the use of a domain name.

Furthermore, to the extent end-users increase the use of mobile applications to locate and access content, we face competition from providers of such web and mobile applications.

New technologies and the expansion of existing technologies may increase competitive pressure.

In addition, our markets are characterized by announcements of collaborative relationships involving our competitors.

The existence or announcement of any such relationships could adversely affect our ability to attract and retain customers.

In addition, our industry is characterized by collaborative relationships involving, and consolidation of, our competitors.

Our ability to participate and benefit from such collaborative arrangements or consolidations may be limited and such collaborative arrangements and consolidations could harm our competitive position and adversely impact our business.

We compete with numerous companies that offer outsourced domain name registration, resolution and other DNS services to registries that require a reliable and scalable infrastructure.

Among our competitors are Afilias plc, CentralNic Ltd., and Neustar, Inc.

Among our competitors are Donuts, CentralNic Ltd., and GoDaddy.

Industry Regulation

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government, academia, non-governmental organizations, and international organizations.

ICANN plays a central coordination role in the multi-stakeholder system.

ICANN plays a central coordination role in this bottom-up multi-stakeholder system.

ICANN is mandated through its bylaws to uphold a private sector-led multi-stakeholder approach to internet governance for the public benefit.

The multi-stakeholder process has and will continue to create policies, programs, and standards that directly or indirectly impact or affect our business.

In addition, country-level regulations, such as those implemented by China, impose additional costs on our business, can affect the growth or renewal rates of domain name registrations, and may also affect our ability to do business.

For example, under its internet domain name regulations, China’s Ministry of Industry and Information Technology awarded licenses for the continued operation of the .

net TLDs in China.

These licenses must be renewed in 2022.

Domestically and abroad, legislative and regulatory bodies continue to enhance and modify data privacy protections, which impact our collection and delivery of personal data as we provide our domain name registry services and could affect our costs of operation.

As the exclusive registry of domain names within the .com and .net gTLDs, we have entered into certain agreements with ICANN and, in the case of .

com , the DOC under a Cooperative Agreement.

.com Registry Agreement

The extension of the .com Registry Agreement effective on October 20, 2016 provides that we will continue to be the sole registry operator for domain names in the .com gTLD through November 30, 2024.

As part of the extension of the .com Registry Agreement, the Company and ICANN agreed to cooperate and negotiate in good faith to amend the terms of the .com Registry Agreement:

(i) by October 20, 2018, to preserve and enhance the security and stability of the internet or the .com TLD, and (ii) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

On January 3, 2020, the Company and ICANN announced that they reached a proposed agreement to amend the .com Registry Agreement (“Proposed .com Amendment”) and to enter into a new proposed framework for working together on initiatives related to the security, stability and resiliency of the DNS in the form of a binding Letter of Intent (“Proposed LOI”).

Together, these agreements satisfy the requirements described above as part of the .com Registry Agreement extension.

In conjunction with the public announcement, ICANN published the Proposed .com Amendment and Proposed LOI for public comment until February 14, 2020.

Following the close of the comment period and review of the public comments, ICANN will prepare and publish a summary and analysis report.

Thereafter, ICANN and Verisign will determine whether to ente r into the Proposed .com Amendment and Proposed LOI.

The Proposed .com Amendment, among other items, incorporates the applicable terms of Amendment 35 to the Cooperative Agreement.

Specifically, the Proposed .

com Amendment would allow Verisign to increase the Maximum Price (as defined in the .com Registry Agreement) of a .com domain name registration by up to 7% in each of the final four years of each six-year period.

The first such six-year period began on October 26, 2018.

The Proposed .

com Amendment also clarifies that the restrictions on the.

com Registry Agreement relating to vertical integration apply solely to the .

The Proposed .com Amendment also clarifies that Verisign’s ability to increase prices by 7% over the previous year due to new ICANN specifications or polices adopted by ICANN pursuant to the procedures set forth in its bylaws and due process (“Consensus Policies”) or documented extraordinary expense may occur only in years where Verisign does not otherwise take the price increases described above.

In addition, it sets forth additional obligations, including updated technical and reporting requirements that are similar to requirements in ICANN’s new gTLD base agreement.

The Proposed LOI formalizes a framework by which ICANN and the Company will work together to support additional enhancements to the security and stability of the DNS.

The Proposed LOI provides that the Company will, make payments annually to ICANN totaling $20 million over five years, beginning on January 1, 2021, to support ICANN’s initiatives to preserve and enhance the security, stability and resiliency of the DNS, including root server system governance, mitigation of DNS security threats, promotion and/or facilitation of DNSSEC deployment, the mitigation of name collisions and research into the operation of the DNS.

A material term of the Proposed LOI is a signed confirmation by an ICANN offer confirming that ICANN incurred costs in the amount of Verisign’s support payment during each period.

The .com Registry Agreement includes a number of obligations, including, on a quarterly basis, that we pay $0.25 to ICANN for each annual term of a domain name registered or renewed during such quarter.

In addition, we are required to comply with and implement temporary specifications or policies (“Temporary Policies”) and Consensus Policies, as well as other provisions relating to registry operations.

The .com and .net Registry Agreements with ICANN contain a “presumptive” right of renewal upon the expiration of their current terms.

ICANN could terminate or refuse to renew our .

com and/or .net Registry Agreements if, upon proper notice, (i) we fail to cure a fundamental and material breach of certain specified obligations, and (ii) we fail to timely comply with a final decision of an arbitrator or court.

See “Risk Factors - Risks arising from our agreements governing our business could limit our ability to maintain or grow our business” in Part I, Item 1A of this Annual Report on Form 10-K for further information.

Our .com and .net Registry Agreements contain obligations to provide access to our systems, restrictions on our ability to market and bundle our products and services, and restrictions on our ability to control our registrar channel or own a registrar.

The .com and .

net Registry Agreements also provide a procedure for Verisign to propose, and ICANN to review and approve, certain changes to registry services and requests by Verisign to offer additional registry services.

net Registry Agreements contain service level agreements for the availability of our DNS resolution services, our shared registration system, and our Whois services.

Cooperative Agreement

Verisign and the DOC entered into Amendment 35 of the Cooperative Agreement on October 26, 2018, which, among other items, extends the term of the Cooperative Agreement until November 30, 2024.

The Cooperative Agreement will automatically renew on the same terms for successive six-year terms unless the DOC provides written notice of non-renewal 120 days prior to the end of the then-current term.

Under Amendment 35, standard renewals of the .

com Registry Agreement with ICANN will not require further DOC approval, although removal of, or any changes to the pricing section (other than as approved in Amendment 35), changes to the vertical integration provisions (other than the clarification approved in Amendment 35), changes to the security, stability and resiliency posture as reflected in the functional or performance specifications (including the SLAs), the conditions for renewal or termination, or to the Whois service (except as mandated by ICANN through Temporary or Consensus Policies), as set forth in the Amendment 35, would require further DOC approval.

As was the case with prior amendments, the DOC’s approval of Amendment 35 was not intended to confer federal antitrust immunity on Verisign with respect to the .

ICANN’s multi-stakeholder policy development processes have created and will continue to create policies, programs, and standards that directly or indirectly impact our business.

Certain policies can be adopted as Consensus or Temporary Policies, which we are obligated to follow under our agreements with ICANN.

For example, in response to the General Data Protection Regulation, ICANN issued a Temporary Policy modifying public access to information from the Whois services delivered by registrars and registries.

We are also subject to country-level laws and regulations in the United States and in foreign countries.

In China, we are required to maintain licenses for .

net TLDs under regulations issued by the Ministry of Industry and Information Technology.

The licenses for the .

net TLDs must be renewed in 2022.

Additionally, in many jurisdictions in which we operate, including California, the European Union, the United Kingdom, China and elsewhere, strict new data security and data privacy regulations have been or are being adopted.

Because we do not possess extensive personal information, we have not yet experienced significant impacts from these regulations.

However, compliance costs and other business impacts could become significant as regulatory enforcement increases, as courts interpret these regulations, and as new laws and regulations continue to be adopted.

Other regulations, or changes to regulations, may also impact our business operations including changes to the Digital Services Act or Network and Information Security Directive, in the European Union, or the Communications Decency Act, in the United States.

.com Top-Level Domain

Our operation of the .

com TLD is subject to the terms of a registry agreement with ICANN (as amended, the “.

com Registry Agreement”).

Under Amendment 35 to the Cooperative Agreement, the Maximum Price (as defined in the .com Registry Agreement) of a .com domain name may be increased without further DOC approval by up to 7% in each of the final four years of each six-year period.

The current term of the .com Registry Agreement is six years and must be renewed or extended by November 30, 2024.

The .com Registry Agreement contains a “presumptive” right of renewal;

although, ICANN could terminate or refuse to renew.

See “Risk Factors - Any loss or modification of our right to operate the .

net gTLDs could have a material adverse impact on our business and result in loss of revenues.” in Part I, Item 1A of this Form 10-K for further information.

Other significant terms within the .

com Registry Agreement include performance specifications and service level agreements for the availability of our DNS resolution services, our shared registration system, and our Whois services.

com Registry Agreement contains marketing limitations, including limitations on our ability to bundle products and the manner in which we provide marketing support to ICANN-accredited registrars.

We are also required under the .

com Registry Agreement to provide ICANN-accredited registrars with access to our systems to register or take other actions related to domain names.

In order to introduce new Registry Services or make material changes to existing Registry Services, we must follow prescribed procedures which permit ICANN to review and approve such services.

The .com Registry Agreement requires that on a quarterly basis we pay $0.25 to ICANN for each annual term of a domain name registered or renewed during such quarter.

Amendment 3 to the .

com Registry Agreement permits an increase to the Maximum Price (as defined in the .com Registry Agreement) 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 October 26, 2018.

The changes to the Maximum Price under Amendment 35 are not effective until such price increases are incorporated in the .com Registry Agreement with ICANN through the Proposed .com Amendment.

Further, we are entitled to increase the Maximum Price of a .com domain name due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS as described in the .com Registry Agreement (and as may be further clarified in the Proposed .com Amendment), provided that we may not exercise such right unless the DOC provides prior written approval that the exercise of such right will serve the public interest, such approval not to be unreasonably withheld.

Amendment 3 also clarified that the restrictions in the .com Registry Agreement relating to vertical integration apply solely to the .com TLD and also clarified that our ability to increase prices by 7% over the previous year due to new ICANN Consensus Policies or documented extraordinary expense may occur only in years where we do not otherwise take the price increases described above.

Our operation of the .

com TLD is also subject to the terms of a Cooperative Agreement with the DOC.

The Cooperative Agreement has undergone various amendments with the most recent, Amendment 35, on October 26, 2018.

Amendment 35 extended the term of the Cooperative Agreement until November 30, 2024, which will automatically renew on the same terms

for successive six-year terms unless the DOC provides written notice of non-renewal 120 days prior to the end of the then-current term.

Amendment 35 includes the DOC’s consent to the modification of the pricing terms in the .

com Registry Agreement (as described above).

Further, we are entitled to increase the Maximum Price of a .com domain name due to the imposition of any new Consensus Policy or documented extraordinary expense resulting from an attack or threat of attack on the Security or Stability of the DNS as described in the .com Registry Agreement, provided that we may not exercise such right unless the DOC provides prior written approval that the exercise of such right will serve the public interest, such approval not to be unreasonably withheld.

The Cooperative Agreement further provides that we shall be entitled at any time during the term of the .com Registry Agreement to seek to remove the pricing restrictions contained in the .com Registry Agreement if we demonstrate to the DOC that market conditions no longer warrant pricing restrictions in the .com Registry Agreement, as determined by the DOC.

Also, under Amendment 35, we clarified that the restrictions in the .com Registry Agreement relating to vertical integration apply solely to the .

DOC approval of changes to or the renewal of the .

com Registry Agreement was limited by Amendment 35 to only the following circumstances:

(1) changes to the pricing provisions (other than as approved in Amendment 35), (2) changes to the vertical integration provisions (other than the clarification approved in Amendment 35), (3) changes to the security, stability and resiliency posture as reflected in the functional or performance specifications (including the service level agreements), (4) changes to the conditions for renewal or termination of the .com Registry Agreement, or (5) changes to the Whois service (except as mandated by ICANN through Temporary or Consensus Policies).

As was the case with prior amendments, Amendment 35 is not intended to confer federal antitrust immunity on the Company with respect to the .

com Registry Agreement.

Finally, Amendment 35 clarified that the restrictions in the .com Registry Agreement relating to vertical integration apply solely to the .

com TLD, we are not permitted to acquire, directly or indirectly, control of, or a greater than 15% ownership interest in, any ICANN-accredited registrar that sells .

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com TLD in a content-neutral manner and to work within ICANN processes to promote the development of content-neutral policies for the operation of the DNS.

.net Registry Agreement

We entered into a renewal of our .

net Registry Agreement with ICANN that was effective on July 1, 2017.

The .net Registry Agreement provides that we will continue to be the sole registry operator for domain names in the .net TLD through June 30, 2023.

Root Zone Maintainer Service Agreement

In the fourth quarter of 2016, we entered into a new agreement with ICANN, the Root Zone Maintainer Service Agreement (“RZMA”) under which we perform the Root Zone Maintainer functions on behalf of ICANN.

.net Top-Level Domain

Our operation of the .

net TLD is subject to the terms of a registry agreement with ICANN (as amended, the “ .net Registry Agreement”).

The current term of this agreement is six years and must be renewed or extended by July 1, 2023.

The terms of the .

net Registry Agreement are substantially similar to the terms of the .

com Registry Agreement, except that we are entitled to raise the annual price for new and renewal .

net domain name registrations by 10% each year.

Root Operations

We operate two of the world’s thirteen root servers.

Along with the ICANN community, we are involved in discussions to establish criteria for operations of the root server system including the root servers that we operate.

We also publish the root zone file, as the Root Zone Maintainer, under the Root Zone Maintainer Service Agreement (“RZMA”) with ICANN.

The RZMA will expire on October 19, 2024, with an automatic renewal, unless earlier terminated.

The descriptions of the .com Registry Agreement, the Cooperative Agreement, and the .net Registry Agreement are qualified in their entirety by the text of the complete agreements that are incorporated by reference as exhibits in this Form 10-K.

The descriptions of the .com Registry Agreement, the Cooperative Agreement, and the .net Registry Agreement are qualified in their entirety by reference to the text of the complete agreements that are incorporated by reference as exhibits in this Form 10-K.

Human Capital Management

We recognize the importance of talent and culture in driving an environment that fosters high performance.

Our employee value proposition and collaborative working environment allows us to attract a strong talent base to meet the current and future demands of our business.

We are committed to attracting, developing, and retaining the best talent, and we routinely monitor and present our progress in these areas to executive management and the Compensation Committee of our Board of Directors through a variety of workforce metrics (e.g.

workforce demographics, hiring, turnover, and promotion rates, including diversity characteristics for each of these metrics).

As of December 31, 2020, we had 909 employees, of which 907 were full-time.

839 employees (representing approximately 92% of our total workforce) were based in the U.S., and 70 employees (representing approximately 8% of our total workforce) were based outside the U.S.

As of December 31, 2020, approximately 29% of our global workforce was female, and approximately 43% of our U.S.

employees were ethnically and racially diverse.

No U.S.-based employees are represented under collective bargaining agreements.

Based on periodic monitoring, we believe that our employee turnover rate is low compared to competitive benchmarks and historical trends.

We attribute our strong retention rates to our passion and focus on the Company’s mission, values, continual development of talent, and provision of competitive and equitable reward programs.

We regularly review our workforce policies, procedures, and training programs, as well as our overall workforce demographics, in an effort to create a work environment that is diverse, equitable, inclusive, and free from discrimination.

Key human capital areas that we focus on in managing our business include Employee Engagement and Retention, Compensation and Employee Benefits, Talent Development, and Talent Acquisition.

• Employee Engagement and Retention:

We use employee feedback to monitor morale and engagement.

During 2020, we conducted two surveys to better understand our employees’ well-being during the COVID-19 pandemic and to more effectively guide our response.

Over 86% of the employee population participated in these surveys.

The results indicated high satisfaction rates with our response to the pandemic, as well as our communications during the pandemic.

In addition, the survey results indicated that our employees remain highly engaged.

In a separate Ethics and Compliance survey, which 90% of our employees completed, the results indicated that our employees believe we live our values and have a culture that is inclusive and ethical.

We are a diverse organization, and we believe that drives stronger performance, better decision making, and a culture where differences are valued.

We continue to focus on the hiring, retention, and advancement of women and underrepresented populations.

Moreover, when we hire talent, they tend to stay.

The average tenure of our employees is approximately 8 years and we maintain comparatively low employee turnover rates.

• Compensation and Employee Benefits:

To align with our philosophy of providing compelling total rewards, we have practices in place to deliver fair and equitable compensation for employees based on their contribution and performance.

We benchmark for market practices and regularly review our compensation and benefits against the market to confirm they remain competitive.

We also offer a comprehensive set of benefits.

• Talent Development:

We are committed to the continued development of our people.

Strategic talent reviews and succession planning occur on a regular basis.

Our management training is designed to increase capability in the areas of communication, engagement, coaching, conflict management and business skills, and to foster an ethical, supportive work environment free from bias and harassment.

We sponsor continuous skill development for all employees through our online learning and development platform.

In addition, we host a series of in-person and on-demand learning sessions designed to build our team’s skills and knowledge required for the future.

• Talent Acquisition:

We are focused on the increasingly competitive labor market, and we are working diligently to attract the best talent from a diverse range of sources.

Over the last several years we have refreshed our employment branding and developed targeted recruitment strategies for specialized skill sets.

In 2020, we hired 111 new employees.

During the COVID-19 pandemic, the safety and well-being of our employees has remained a key focus.

Beginning in March 2020, we transitioned approximately 95% of our employees to a work-from-home status.

To protect the health of our employees who work on site, we have implemented rigorous cleaning and safety protocols for our facilities.

We adjusted employee leave and other policies with the intention of ensuring that our workforce had the flexibility it needed to manage personal challenges arising from the pandemic.

We enhanced mental health resources available to our employees, and unique individual requirements are supported to the greatest degree possible.

In addition, we have taken steps to ensure that our employees have the equipment and resources that they require to work remotely.

Finally, to reinforce our connection with our employees, we have significantly increased leadership updates and management outreach.

The health and well-being of our workforce remain a priority.

The following table shows a comparison of our consolidated employee headcount, by function:

As of December 31,

2020 2019 2018

Employee headcount by function:

Cost of revenues 235 259 281

Sales and marketing 68 71 84

Research and development 260 214 219

General and administrative 346 328 316

Total 909 872 900

Intellectual Property

4 unchanged sentences

and abroad, covering a wide range of our technologies.

Additionally, we continue to file numerous patent applications with respect to certain of our technologies in the U.S.

Patent and Trademark Office and internationally.

Additionally, we continue to file patent applications with respect to certain of our technologies in the U.S.

Patent and Trademark Office and

internationally.

Patents may not be awarded with respect to these applications and even if such patents are awarded, such patents may not provide sufficient protection of our technologies.

We continue to focus on growing our patent portfolio and consider opportunities for its strategic use.

We continue to consider opportunities for strategic growth and use of our patent portfolio.

We have obtained trademark registrations for the VERISIGN mark and VERISIGN logo in the U.S.

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Our principal intellectual property consists of, and our success is dependent upon, proprietary software used in our business and certain methodologies (many of which are patented or for which patent applications are pending) and technical expertise and proprietary know-how we use in both the design and implementation of our current and future registry services.

We own our proprietary Shared Registration System through which registrars submit second-level domain name registrations for each of the registries we operate, as well as the ATLAS distributed lookup system which processes billions of queries per day.

Some of the software and protocols used in our business are in the public domain or are otherwise available to our competitors, and some are based on open standards set by organizations such as the Internet Engineering Task Force.

To the extent any of our patents are considered “standard essential patents,” we may be required to license such patents to our competitors on reasonable and non-discriminatory terms or otherwise be limited in our ability to assert such patents.

The following table shows a comparison of our consolidated employee headcount, by function:

As of December 31,

Employee headcount by function:

Cost of revenues

Sales and marketing

Research and development

General and administrative

We have never had a work stoppage, and no U.S.-based employees are represented under collective bargaining agreements.

Our ability to achieve our financial and operational objectives depends in large part upon our continued ability to attract, integrate, train, retain, and motivate highly qualified sales, technical and managerial personnel, and upon the continued service of our senior management and key sales and technical personnel.

Competition for qualified personnel in our industry and in some of our geographical locations is intense, particularly for software development personnel.

Information About Our Executive Officers

The following table sets forth information regarding our executive officers as of February 19, 2021:

Executive Chairman and Chief Executive Officer

President and Chief Operating Officer

Executive Vice President, Chief Financial Officer

Executive Vice President, General Counsel and Secretary

Name Age Position

James Bidzos 65 Executive Chairman and Chief Executive Officer

Strubbe 57 President and Chief Operating Officer

Kilguss, III 60 Executive Vice President, Chief Financial Officer

Indelicarto 57 Executive Vice President, General Counsel and Secretary

James Bidzos has served as Executive Chairman since August 2009 and Chief Executive Officer since August 2011.

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From December 2003 to December 2007, he served as the Chief Financial Officer of Towerstream Corporation, a company that delivers high speed wireless internet access to businesses.

From 1997 to 2000, he served as the Chief Financial Officer of Stratos Global Corporation, a mobile satellite services company.

Kilguss holds an M.B.A.

12 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business