What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-10-28 compared with 2021-07-22 · 102 added, 82 removed, 168 unchanged (52% of the section changed)

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This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties, including, among other things, statements regarding our expectations about (i) the impact from the effects of the COVID-19 pandemic, (ii) the growth in revenues for the remainder of 2021, (iii) Cost of revenues, Sales and marketing expenses, Research and development expenses, General and administrative expenses, quarterly Interest expense, and quarterly Non-operating (loss) income, net, for the remainder of 2021, (iv) our annual effective tax rate for 2021, and (v) the sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility.

These forward-looking statements are based on current expectations and assumptions and involve risks and uncertainties, including, among other things, statements regarding our expectations about (i) the impact from the effects of the COVID-19 pandemic, (ii) the growth in revenues for the remainder of 2021, (iii) Cost of revenues, Sales and marketing expenses, Research and development expenses, General and administrative expenses, quarterly Interest expense, and quarterly Non-operating income (loss), net, for the remainder of 2021, (iv) our annual effective tax rate for 2021, and (v) the sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility.

Forward-looking statements include, among others, those statements including the words “expects,” “anticipates,” “intends,” “believes” and similar language.

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net top-level domains (“TLDs”), which support the majority of global e-commerce.

As of June 30, 2021, we had 170.6 million .com and .net registrations in the domain name base.

As of September 30, 2021, we had 172.1 million .com and .net registrations in the domain name base.

The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users, which is partially driven by greater availability of internet access, as well as marketing activities carried out by us and our registrars.

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Business Highlights and Trends

• We recorded revenues of $329.4 million and $653.0 million during the three and six months ended June 30, 2021, an increase of 5% and 4%, respectively, compared to the same periods in 2020.

• We recorded operating income of $213.0 million and $423.4 million during the three and six months ended June 30, 2021, an increase of 3% compared to the same periods in 2020.

• As of June 30, 2021, we had 170.6 million .com and .net registrations in the domain name base, which represents a 5% increase from June 30, 2020, and a net increase of 2.6 million domain name registrations from March 31, 2021.

• During the three months ended June 30, 2021, we processed 11.7 million new domain name registrations for .com and .net compared to 11.1 million for the same period in 2020.

• We recorded revenues of $334.2 million and $987.3 million during the three and nine months ended September 30, 2021, an increase of 5% and 4%, respectively, compared to the same periods in 2020.

• We recorded operating income of $221.3 million and $644.7 million during the three and nine months ended September 30, 2021, an increase of 7% and 4%, respectively, compared to the same periods in 2020.

• As of September 30, 2021, we had 172.1 million .com and .net registrations in the domain name base, which represents a 5% increase from September 30, 2020, and a net increase of 1.5 million domain name registrations from June 30, 2021.

• During the three months ended September 30, 2021, we processed 10.7 million new domain name registrations for .com and .net compared to 10.9 million for the same period in 2020.

• The final .

net renewal rate for the first quarter of 2021 was 76.0% compared to 75.4% for the first quarter of 2020.

net renewal rate for the second quarter of 2021 was 75.4% compared to 72.8% for the second quarter of 2020.

Renewal rates are not fully measurable until 45 days after the end of the quarter.

• During the three months ended June 30, 2021, we repurchased 0.8 million shares of our common stock for an aggregate cost of $172.5 million.

As of June 30, 2021, there was approximately $737.5 million remaining available for future share repurchases under our share repurchase program.

• We generated cash flows from operating activities of $340.8 million during the six months ended June 30, 2021, compared to $395.4 million for the same period in 2020.

• On June 8, 2021, we issued $750.0 million of 2.700% Senior Notes due June 15, 2031.

On June 23, 2021, we used the net proceeds from the 2031 Notes, along with cash on hand, to redeem all of our $750.0 million aggregate principal amount of outstanding 4.625% Senior Notes due 2023.

• During the three months ended September 30, 2021, we repurchased 0.8 million shares of our common stock for an aggregate cost of $172.4 million.

As of September 30, 2021, there was approximately $565.1 million remaining available for future share repurchases under our share repurchase program.

• We generated cash flows from operating activities of $600.9 million during the nine months ended September 30, 2021, compared to $535.0 million for the same period in 2020.

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 .com and .net registries.

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We believe that the effects of the pandemic to date have led to an increase in the demand for domain names, particularly as businesses and entrepreneurs have been seeking to establish or expand their presence online in response to the pandemic.

Our revenues continued to grow during 2020 and the first half of 2021 primarily driven by an increase in the domain name base for the .

Our revenues continued to grow during 2020 and the nine months ended September 30, 2021 primarily driven by an increase in the domain name base for the .

however, the situation remains uncertain and hard to predict.

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The following table presents information regarding our results of operations as a percentage of revenues:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Interest expense (5.6) (7.1) (6.5) (7.2)

Non-operating (loss) income, net (0.7) 2.4 (0.2) 2.3

Non-operating income (loss), net — 0.3 (0.2) 1.6

Income before income taxes 60.6 58.2 58.6 60.0

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We also offer promotional incentive-based discount programs to registrars based upon market conditions and the business environment in which the registrars operate.

The annual fee for a .com domain name registration has been fixed at $7.85 since 2012.

On October 26, 2018, Verisign and the DOC amended the Cooperative Agreement.

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On March 27, 2020, Verisign and ICANN amended the .com Registry Agreement that, among other items, incorporates these changes agreed to with the DOC to the pricing terms.

On February 11, 2021, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .

com domain name registration from $7.85 to $8.39, effective September 1, 2021.

Effective September 1, 2021, we increased the annual registry-level wholesale fee for each new and renewal .

com domain name registration from $7.85 to $8.39.

We have the contractual right to increase the fees for .

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A comparison of revenues is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

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The following table compares the .com and .net domain name registrations in the domain name base:

June 30, 2021 % Change June 30, 2020

September 30, 2021 % Change September 30, 2020

.com and .net domain name registrations in the domain name base

172.1 million 5% 163.7 million

Revenues increased by $15.0 million and $26.1 million during the three and six months ended June 30, 2021, respectively, as compared to the same periods last year, primarily due to an increase in revenues from the operation of the registry for the .

Revenues increased by $16.4 million and $42.5 million during the three and nine months ended September 30, 2021, respectively, as compared to the same periods last year, primarily due to an increase in revenues from the operation of the registry for the .

com TLD driven by a 5% increase in the domain name base for .

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However, competitive pressure from ccTLDs, other gTLDs, services that offer alternatives for an online presence, such as social media, ongoing changes in internet practices and behaviors of consumers and business, as well as the motivation of existing domain name registrants managing their investment in domain names, and historical global economic uncertainty, has limited the rate of growth of the domain name base in recent years and may do so in the remainder of 2021 and beyond.

We expect revenues will continue to grow during the remainder of 2021 compared to the six months ended June 30, 2021, as a result of continued growth in the aggregate number of .

com domain names and the impact of the price increase for .com domain names which becomes effective September 1, 2021.

We expect quarterly revenues will continue to grow during the fourth quarter of 2021 compared to each of the first three quarters of 2021, as a result of continued growth in the aggregate number of .

com domain names and the impact of the price increase for .com domain names which became effective September 1, 2021.

Geographic revenues

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The following table presents a comparison of our geographic revenues:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

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Revenue growth for each region may also be impacted by registrars domiciled in one region, registering domain names in another region.

During the three and six months ended June 30, 2021, revenues increased in all regions except China.

Revenues from registrars based in China declined during the three and six months ended June 30, 2021 as a result of lower new registrations and renewal rates in the country.

During the three and nine months ended September 30, 2021, revenues increased in all regions except China.

Revenues from registrars based in China declined during the three and nine months ended September 30, 2021 as a result of lower new registrations and renewal rates in the country.

Cost of revenues

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A comparison of Cost of revenues is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

1 unchanged sentence

Cost of revenues $ 47,801 6% $ 45,024 $ 142,565 6% $ 134,205

Cost of revenues increased by $4.2 million during the three months ended June 30, 2021, compared to the same period last year, primarily due to a $1.6 million increase in registry fees payable to ICANN in connection with the operation of the registry for the .com TLD.

Salary and employee benefits expenses also increased slightly due to an increase in average headcount.

Cost of revenues increased by $5.6 million during the six months ended June 30, 2021, compared to the same period last year, primarily due to a $2.8 million increase in registry fees payable to ICANN in connection with the operation of the registry for the .com TLD.

Salary and employee benefits expenses also increased slightly as the functional realignment of some headcount to research and development in the first quarter of 2020 was offset by other headcount increases throughout the rest of 2020 and the first half of 2021.

We expect Cost of revenues as a percentage of revenues to remain consistent during the remainder of 2021 compared to the six months ended June 30, 2021.

Cost of revenues increased by $2.8 million during the three months ended September 30, 2021, compared to the same period last year, due to a combination of individually insignificant factors.

Cost of revenues increased by $8.4 million during the nine months ended September 30, 2021, compared to the same period last year, primarily due to a $4.4 million increase in registry fees payable to ICANN in connection with the operation of the registry for the .com TLD.

Allocated overhead expenses also increased by $1.9 million due to an increase in total allocable expenses.

We expect Cost of revenues as a percentage of revenues to remain consistent during the remainder of 2021 compared to the nine months ended September 30, 2021.

Sales and marketing

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A comparison of Sales and marketing expenses is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

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Sales and marketing $ 9,410 12% $ 8,389 $ 28,115 18% $ 23,883

Sales and marketing expenses increased by $1.3 million and $3.2 million during the three and six months ended June 30, 2021, respectively, compared to the same periods last year, due to a combination of individually insignificant factors.

We expect Sales and marketing expenses as a percentage of revenues to remain consistent during the remainder of 2021, compared to the six months ended June 30, 2021.

Sales and marketing expenses increased by $1.0 million during the three months ended September 30, 2021, compared to the same period last year, due to a combination of individually insignificant factors.

Sales and marketing expenses increased by $4.2 million during the nine months ended September 30, 2021, compared to the same period last year, primarily due to an increase in salary and employee benefits expenses, including stock-based compensation, and a combination of individually insignificant factors.

Salary and employee benefits expenses, including stock-based compensation, increased by $2.5 million due to an increase in average headcount and higher expenses for salaries and certain employee related benefits.

We expect Sales and marketing expenses as a percentage of revenues to increase slightly during the remainder of 2021, compared to the nine months ended September 30, 2021.

Research and development

1 unchanged sentence

A comparison of Research and development expenses is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

1 unchanged sentence

Research and development $ 19,566 (1)% $ 19,708 $ 59,685 8% $ 55,268

Research and development expenses increased by $1.6 million during the three months ended June 30, 2021, compared to the same period last year, due to a combination of individually insignificant factors.

Research and development expenses increased by $4.6 million during the six months ended June 30, 2021, compared to the same period last year, primarily due to a $2.5 million increase in salary and employee benefits expenses, resulting from the functional realignment of some headcount from cost of revenues during the first quarter of 2020.

We expect Research and development expenses as a percentage of revenues to remain consistent during the remainder of 2021 compared to the six months ended June 30, 2021.

Research and development expenses remained consistent during the three months ended September 30, 2021, compared to the same period last year.

Research and development expenses increased by $4.4 million during the nine months ended September 30, 2021, compared to the same period last year, primarily due to an increase in salary and employee benefits expenses, including stock-based compensation, and a combination of individually insignificant factors.

Salary and employee benefits expenses, including stock-based compensation, increased by $2.5 million due to a slight increase in average headcount and higher expenses for salaries and certain employee related benefits.

We expect Research and development expenses as a percentage of revenues to remain consistent during the remainder of 2021 compared to the nine months ended September 30, 2021.

General and administrative

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A comparison of General and administrative expenses is presented below:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 % Change 2020 2021 % Change 2020

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General and administrative $ 36,160 (5)% $ 38,109 $ 112,212 —% $ 111,719

General and administrative expenses increased by $1.7 million during the three months ended June 30, 2021, compared to the same period last year, due to a $2.8 million increase in salary and employee benefits expenses, partially offset by other individually insignificant factors.

The increase in salary and employee benefits expenses was primarily due to an increase in average headcount and higher expenses for certain employee health insurance related benefits.

General and administrative expenses increased by $2.4 million during the six months ended June 30, 2021, compared to the same period last year, due to increases in salary and employee benefits expenses, stock-based compensation expenses, and equipment and software expenses, partially offset by an increase in overhead expenses allocated to other cost types and decreases in legal expenses and charitable contributions.

General and administrative expenses decreased by $1.9 million during the three months ended September 30, 2021, compared to the same period last year, primarily due to a $2.1 million decrease in external legal costs on various projects.

General and administrative expenses increased by $0.5 million during the nine months ended September 30, 2021, compared to the same period last year, due to increases in salary and employee benefits expenses, equipment and software expenses, and stock-based compensation expenses, partially offset by an increase in overhead expenses allocated to other cost types and decreases in legal expenses and charitable contributions.

Salary and employee benefits expenses increased by $4.6 million due to an increase in average headcount and higher expenses for certain employee health insurance related benefits.

Equipment and software expenses increased by $4.3 million due to expenses related to network security and other software services.

Stock-based compensation expenses increased by $3.3 million due to higher achievement levels on certain performance-based RSU grants and increases in the total value of RSUs granted in 2021.

Overhead expenses allocated to other cost types increased by $3.7 million due to an increase in the total allocable expenses.

Equipment and software expenses increased by $2.9 million due to expenses related to network security and other software services.

Legal expenses decreased by $4.5 million due to a decrease in external legal costs on various projects.

Charitable contributions decreased by $2.4 million due to contributions we made in the first half of 2020 to help with immediate COVID-related hardship and to support social justice efforts, compared to ongoing contributions in the first half of 2021.

We expect General and administrative expenses as a percentage of revenues to remain consistent during the remainder of 2021 compared to the six months ended June 30, 2021.

Charitable contributions decreased by $2.0 million due to contributions we made during the nine months ended September 30, 2020 to help with immediate COVID-related hardship and to support social justice efforts, compared to ongoing contributions during the nine months ended September 30, 2021.

We expect General and administrative expenses as a percentage of revenues to remain consistent during the remainder of 2021 compared to the nine months ended September 30, 2021.

Interest expense

Interest expense remained consistent in the three and six months ended June 30, 2021 as compared to the same period last year.

We expect quarterly Interest expense to decrease during the remainder of 2021 compared to the six months ended June 30, 2021 due to the lower interest rate on our 2031 Notes compared to the 2023 Notes which were redeemed in June 2021.

Non-operating (loss) income, net

The following table presents the components of Non-operating income, net:

Three Months Ended June 30, Six Months Ended June 30,

Interest expense decreased by $3.7 million and $3.2 million in the three and nine months ended September 30, 2021, respectively, compared to the same periods last year due to the lower interest rate on our 2031 Notes compared to the 2023 Notes which were redeemed in June 2021.

We expect Interest expense in the fourth quarter of 2021 to be consistent with the third quarter of 2021.

Non-operating income (loss), net

The following table presents the components of Non-operating income (loss), net:

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

(In thousands)

Loss on extinguishment of debt $ (2,149) $ — $ (2,149) $ —

Interest income $ 111 $ 805 $ 438 $ 7,500

Loss on extinguishment of debt — — (2,149) —

Gain on sale of business — (9) — 5,602

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Other, net 53 (21) 278 60

Total non-operating (loss) income, net $ (2,041) $ 7,403 $ (1,597) $ 14,487

The redemption of the 2023 Notes resulted in a loss on debt extinguishment of $2.1 million related to the unamortized debt issuance costs on the notes.

Interest income decreased in the three and six months ended June 30, 2021 due to a decline in interest rates on our investments in debt securities.

Total non-operating income (loss), net $ 164 $ 775 $ (1,433) $ 15,262

Interest income decreased in the three and nine months ended September 30, 2021 due to a decline in interest rates on our investments in debt securities.

The redemption of the 2023 Notes resulted in a loss on debt extinguishment of $2.1 million related to the unamortized debt issuance costs on the notes during the second quarter of 2021.

The gain on sale of business in 2020 represents the excess of the contingent consideration received related to the divested security services business compared to the estimated receivable.

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The transition services agreement ended in February 2020.

We do not expect Non-operating (loss) income, net to be significant during the remainder of 2021.

We do not expect Non-operating income (loss), net to be significant during the remainder of 2021.

Income tax expense (benefit)

The following table presents Income tax expense (benefit) and the effective tax rate:

Three Months Ended June 30, Six Months Ended June 30,

Three Months Ended

September 30, Nine Months Ended

September 30,

2021 2020 2021 2020

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Effective tax rate 23 % 8 % 21 % (16) %

When compared to the statutory federal rate of 21%, the effective tax rates above reflect a lower effective tax rate on foreign income and excess tax benefits related to stock-based compensation, which are offset by state income taxes.

The effective tax rate for the six months ended June 30, 2020 also reflected the remeasurement of unrecognized tax benefits discussed below.

During the three months ended March 31, 2020, we remeasured previously unrecognized income tax benefits relating to the worthless stock deduction taken in 2013.

The remeasurement, which resulted in the recognition of a $167.8 million benefit in the first quarter of 2020, was based on IRS written confirmation indicating no examination adjustment would be proposed.

Notwithstanding this written confirmation, our U.S.

federal income tax returns remain under examination by the IRS for 2010 through 2014.

taxes on foreign earnings, net of foreign tax credits.

The effective tax rate for the three and nine months ended September 30, 2020 also reflected the remeasurement of unrecognized tax benefits discussed below.

We remeasured certain previously unrecognized income tax benefits, which resulted in the recognition of $24.0 million and $191.8 million of income tax benefits in the three and nine months ended September 30, 2020, respectively.

The most significant portion of these tax benefits related to the worthless stock deduction taken in 2013, which resulted in the recognition of a $167.8 million benefit in the first quarter of 2020.

These remeasurements were based on written confirmations from the IRS, received in the first and third quarters of 2020, indicating no examination adjustments would be proposed related to the worthless stock deduction or certain other matters reviewed as part of the audit of our federal income tax returns for 2010 through 2014.

Notwithstanding these written confirmations, our U.S.

federal income tax returns for those years remain under examination by the IRS.

We expect our annual effective tax rate for 2021 to be between 20% and 23%.

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The following table presents our principal sources of liquidity:

June 30, December 31,

September 30, December 31,

(In thousands)

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Treasury bills purchased with original maturities of three months or less.

As of June 30, 2021, all of our debt securities have contractual maturities of less than one year.

As of September 30, 2021, all of our debt securities have contractual maturities of less than one year.

Our cash and cash equivalents are readily accessible.

For additional information on our investment portfolio, see Note 2, “Financial Instruments,” of our Notes to Condensed Consolidated Financial Statements in Part I, Item I of this Quarterly Report on Form 10-Q.

During the three months ended June 30, 2021, we repurchased 0.8 million shares of our common stock for an aggregate cost of $172.5 million.

As of June 30, 2021, there was approximately $737.5 million remaining available for future share repurchases under the share repurchase program which has no expiration date.

On June 8, 2021, the Company issued $750.0 million of 2.700% senior unsecured notes due June 15, 2031.

On June 23, 2021, the Company used the net proceeds from the 2031 Notes, along with cash on hand, to redeem all of its $750.0 million aggregate principal amount of outstanding 4.625% senior notes due 2023.

As of June 30, 2021, we also had $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027 and $500.0 million principal amount outstanding of 5.25% senior unsecured notes due 2025.

As of June 30, 2021, there were no borrowings outstanding under our $200.0 million credit facility that will expire in 2024.

During the three months ended September 30, 2021, we repurchased 0.8 million shares of our common stock for an aggregate cost of $172.4 million.

As of September 30, 2021, there was approximately $565.1 million remaining available for future share repurchases under the share repurchase program which has no expiration date.

On June 8, 2021, we issued $750.0 million of 2.700% senior unsecured notes due June 15, 2031.

On June 23, 2021, we used the net proceeds from the 2031 Notes, along with cash on hand, to redeem all of our $750.0 million aggregate principal amount of outstanding 4.625% senior notes due 2023.

As of September 30, 2021, we also had $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027 and $500.0 million principal amount outstanding of 5.25% senior unsecured notes due 2025.

As of September 30, 2021, there were no borrowings outstanding under our $200.0 million credit facility that will expire in 2024.

We believe existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our borrowing capacity under the unsecured revolving credit facility should be sufficient to meet our working capital, capital expenditure requirements, and to service our debt for at least the next 12 months.

We regularly assess our cash management approach and activities in view of our current and potential future needs.

In summary, our cash flows for the six months ended June 30, 2021 and 2020 were as follows:

Six Months Ended June 30,

In summary, our cash flows for the nine months ended September 30, 2021 and 2020 were as follows:

Nine Months Ended

September 30,

(In thousands)

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Our primary uses of cash from operating activities are for personnel-related expenditures, and other general operating expenses, as well as payments related to taxes, interest and facilities.

Net cash provided by operating activities decreased during the six months ended June 30, 2021, compared to the same period last year, primarily due to increases in cash paid for income taxes, cash paid to employees and vendors, cash paid for interest, and decreases in cash received from interest on investments and from transition services, partially offset by an increase in cash received from customers.

Cash paid for income taxes increased primarily because we had deferred the U.S.

federal tax payments due in the first half of 2020 to the third quarter of 2020 as allowed by IRS guidance, and we also paid comparatively higher state and foreign taxes.

Cash paid to employees and vendors increased primarily due to the timing of payments and an

increase in operating expenses.

Net cash provided by operating activities increased during the nine months ended September 30, 2021, compared to the same period last year, primarily due to an increase in cash received from customers, partially offset by increases in cash paid to employees and vendors, cash paid for income taxes, cash paid for interest, and decreases in cash received from interest on investments and from transition services.

Cash received from customers increased primarily due to higher domain name registrations and renewals and the impact of the .

com price increase which became effective September 1, 2021.

The increased volume of renewal transactions was due in part to early renewal transactions before the .

com price increase became effective.

Cash paid to employees and vendors increased primarily due to the timing of payments and an increase in operating expenses.

Cash paid for income taxes increased primarily due to comparatively higher federal, state, and foreign taxes.

Cash paid for interest increased as the result of the payment of interest on our 2023 Notes through the date of redemption.

Cash received from interest on investments decreased due to a decline in interest rates.

Cash received from transition services decreased due to the expiration of the transition services agreement related to our divested security services business in February 2020.

Cash received from customers increased primarily due to higher domain name registrations and renewals.

Cash received from transition services d ecreased due to the expiration of the transition services agreement related to our divested security services business in February 2020.

Cash flows from investing activities

The changes in cash flows from investing activities primarily relate to purchases, maturities and sales of marketable securities, purchases of property and equipment and the sale of businesses.

Net cash used in investing activities decreased during the six months ended June 30, 2021, compared to the same period last year, primarily due to a decrease in purchases of marketable securities, net of proceeds from maturities and sales of marketable securities, partially offset by payments received during 2020 related to our divested security services business and an increase in purchases of property and equipment.

Net cash used in investing activities decreased during the nine months ended September 30, 2021, compared to the same period last year, primarily due to a decrease in purchases of marketable securities, net of proceeds from maturities and sales of marketable securities, partially offset by payments received during 2020 related to our divested security services business and an increase in purchases of property and equipment.

Cash flows from financing activities

The changes in cash flows from financing activities primarily relate to share repurchases, proceeds from and repayment of borrowings, and our employee stock purchase plan.

Net cash used in financing activities decreased during the six months ended June 30, 2021, compared to the same period last year, primarily due to proceeds received from the issuance of the 2031 Notes and a decrease in share repurchases, partially offset by the redemption of our 2023 Notes.

Net cash used in financing activities decreased during the nine months ended September 30, 2021, compared to the same period last year, primarily due to proceeds received from the issuance of the 2031 Notes and a decrease in share repurchases, partially offset by the redemption of our 2023 Notes.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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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-Q

Item 2. Management’s Discussion and Analysis