What changed in this filing

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Item 1. Financial Statements

2023-04-27 compared with 2022-10-27 · 49 added, 85 removed, 208 unchanged (39% of the section changed)

3 unchanged sentences

(In millions, except par value)

September 30,

2023 December 31,

29 unchanged sentences

Issued shares:

354.5 at September 30, 2022 and 354.2 at December 31, 2021;

354.7 at March 31, 2023 and 354.5 at December 31, 2022;

Outstanding shares:

106.3 at September 30, 2022 and 110.5 at December 31, 2021

104.3 at March 31, 2023 and 105.3 at December 31, 2022

12,434.2 12,644.5

7 unchanged sentences

(In millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Revenues $ 364.4 $ 346.9

6 unchanged sentences

Interest expense ( 18.8 ) ( 18.8 )

Non-operating income (loss), net 4.9 0.1 6.8 ( 1.5 )

Non-operating income, net 11.3 0.3

Income before income taxes 233.8 206.3

1 unchanged sentence

Net income 178.7 157.5

Other comprehensive income 0.2 0.1 0.1 —

Other comprehensive loss — ( 0.2 )

Comprehensive income $ 178.7 $ 157.3

9 unchanged sentences

(In millions)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Total stockholders’ deficit, beginning of period $ ( 1,562.2 ) $ ( 1,260.5 )

4 unchanged sentences

Issuance of common stock under stock plans 8.0 8.2

Excise tax on repurchase of common stock ( 1.9 ) —

Balance, end of period 12,434.2 13,438.2

5 unchanged sentences

Beginning balance ( 2.7 ) ( 2.8 )

Other comprehensive income 0.2 0.1 0.1 —

Other comprehensive loss — ( 0.2 )

Balance, end of period ( 2.7 ) ( 3.0 )

4 unchanged sentences

(In millions)

Nine Months Ended September 30,

Three Months Ended March 31,

Cash flows from operating activities:

14 unchanged sentences

Purchases of property and equipment ( 5.7 ) ( 6.6 )

Net cash provided by (used in) investing activities 546.0 ( 215.1 )

Net cash provided by investing activities 409.8 524.5

Cash flows from financing activities:

1 unchanged sentence

Proceeds from employee stock purchase plan 8.0 8.2

Repayment of borrowings — ( 750.0 )

Proceeds from senior note issuance, net of issuance costs — 741.1

Net cash used in financing activities ( 222.5 ) ( 196.4 )

Effect of exchange rate changes on cash, cash equivalents, and restricted cash ( 0.2 ) ( 0.1 )

Net increase (decrease) in cash, cash equivalents, and restricted cash 337.1 ( 148.1 )

Net increase in cash, cash equivalents, and restricted cash 446.1 535.1

Cash, cash equivalents, and restricted cash at beginning of period 379.0 228.8

13 unchanged sentences

These unaudited Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and related notes contained in Verisign’s Annual Report on Form 10-K for the year ended December 31, 2022 (the “2022 Form 10-K”) filed with the SEC on February 17, 2023.

Reclassifications

Certain reclassifications have been made to prior period amounts to conform to current period presentation.

Such reclassifications have no effect on net income as previously reported.

Financial Instruments

1 unchanged sentence

The following table summarizes the Company’s cash, cash equivalents, and marketable securities and the fair value categorization of the financial instruments measured at fair value on a recurring basis:

September 30, December 31,

March 31, December 31,

(In millions)

11 unchanged sentences

The gross and net unrealized gains and losses included in the fair value of the debt securities were not significant for the periods presented.

All of the debt securities held as of September 30, 2022 are scheduled to mature in less than one year.

All of the debt securities held as of March 31, 2023 are scheduled to mature in less than one year.

Fair Value Measurements

6 unchanged sentences

The Company’s other financial instruments include cash, accounts receivable, restricted cash, and accounts payable.

As of September 30, 2022, the carrying value of these financial instruments approximated their fair value.

The aggregate fair value of the Company’s senior notes is $ 1.62 billion and $ 1.88 billion as of September 30, 2022 and December 31, 2021, respectively.

As of March 31, 2023, the carrying value of these financial instruments approximated their fair value.

The aggregate fair value of the Company’s senior notes is $ 1.69 billion and $ 1.65 billion as of March 31, 2023 and December 31, 2022, respectively.

The fair values of these debt instruments are based on available market information from public data sources and are classified as Level 2.

Selected Balance Sheet Items

Other Current Assets

Other current assets consist of the following:

September 30, December 31,

(In millions)

Prepaid expenses $ 30.2 $ 24.8

Prepaid registry fees 24.7 24.2

Taxes receivable 7.7 7.7

Accounts receivable, net 5.2 5.3

Other 0.5 0.9

Total other current assets $ 68.3 $ 62.9

Other Long-Term Assets

Other long-term assets consist of the following:

September 30, December 31,

(In millions)

Long-term prepaid registry fees $ 9.5 $ 8.7

Operating lease right-of-use asset 8.5 8.4

Long-term prepaid expenses 7.3 11.0

Restricted cash 5.3 5.3

Other 2.1 2.3

Total other long-term assets $ 32.7 $ 35.7

The current and long-term prepaid registry fees in the tables above relate to the fees the Company pays to Internet Corporation for Assigned Names and Numbers (“ICANN”) for each annual increment of .

com domain name registrations and renewals which are deferred and amortized over the domain name registration term.

The amount of prepaid registry fees as of September 30, 2022 reflects amortization of $ 9.9 million and $ 29.6 million during the three and nine months ended September 30, 2022 which was recorded in Cost of Revenues.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

September 30, December 31,

March 31, December 31,

(In millions)

1 unchanged sentence

Customer deposits 71.9 72.0

Accrued employee compensation 47.9 58.5

Taxes payable 71.8 37.4

Accrued employee compensation 36.7 59.0

Interest payable 24.6 19.5

3 unchanged sentences

Total accounts payable and accrued liabilities $ 239.2 $ 226.5

The balance of Customer deposits varies from period to period due to the timing of payments from certain large customers.

Taxes payable reflects amounts accrued for the income tax provision and payments made during the period.

This balance fluctuates from period to period due to the timing of income tax payments in the Company’s major tax jurisdictions.

Accrued employee compensation primarily consists of liabilities for employee leave, salaries, payroll taxes, employee contributions to the employee stock purchase plan, and incentive compensation.

Accrued employee incentive compensation as of December 31, 2021 was paid during the nine months ended September 30, 2022.

Customer incentives payable includes amounts related to rebates payable to registrars.

These amounts may vary from period to period due to the timing of payments and the amount of rebates earned.

Long-term Tax and Other Liabilities

Long-term tax and other liabilities consist of the following:

September 30, December 31,

(In millions)

Long-term tax liabilities $ 62.9 $ 76.1

Long-term operating lease liabilities 2.0 2.5

Long-term tax and other liabilities $ 64.9 $ 78.6

Long-term tax liabilities as of September 30, 2022 reflects a $ 14.5 million reclassification from long-term to current of the next installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.

Stockholders’ Deficit

Effective February 10, 2022, the Company’s Board of Directors authorized the repurchase of its common stock in the amount of $ 705.4 million, in addition to the $ 294.6 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.00 billion under the program.

Accrued employee incentive compensation as of December 31, 2022 was paid during the three months ended March 31, 2023.

Interest payable varies at each period-end based on the payment due dates for each Senior Note issuance.

Share Repurchases

Effective October 27, 2022, our Board of Directors authorized the repurchase of our common stock in the amount of $ 803.0 million in addition to the $ 197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.00 billion under the program.

The program has no expiration date.

Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions.

During the three and nine months ended September 30, 2022, the Company repurchased 1.5 million shares and 4.4 million shares of its common stock, respectively, at an average stock price of $ 180.59 and $ 186.46 , respectively.

The aggregate cost of the repurchases in the three and nine months ended September 30, 2022 was $ 275.5 million and $ 820.4 million, respectively.

As of September 30, 2022, there was $ 267.6 million remaining available for future share repurchases under the share repurchase program.

Effective October 27, 2022, the Company’s Board of Directors authorized the repurchase of its common stock in the amount of $ 803.0 million, in addition to the $ 197.0 million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $ 1.00 billion under the program.

During the nine months ended September 30, 2022, the Company placed less than 0.1 million shares, at an average stock price of $ 203.57 , and for an aggregate cost of $ 13.6 million, into treasury stock for purposes related to tax withholding upon vesting of Restricted Stock Units (“RSUs”).

Since inception, the Company has repurchased 248.1 million shares of its common stock for an aggregate cost of $ 12.54 billion, which is presented as a reduction of Additional paid-in capital.

As of March 31, 2023 there was approximately $ 638.8 million remaining available for repurchases under the program.

The Company’s share repurchases are as following.

Amounts may not add up due to rounding:

Three Months Ended March 31, 2023

Shares Total Costs Average Price

(In millions, except average price amounts)

Total repurchases under the repurchase plans 1.1 $ 220.0 $ 205.60

Total repurchases for tax withholdings 0.1 10.5 $ 210.01

Total repurchases 1.1 $ 230.5 $ 205.80

Since inception, the Company has repurchased 250.4 million shares of its common stock for an aggregate cost of $ 12.98 billion, which is recorded as a reduction of Additional paid-in capital.

The Inflation Reduction Act of 2022, which was enacted into law on August 16, 2022, imposed a nondeductible 1% excise tax on the net value of certain stock repurchases made after December 31, 2022.

In the first quarter of 2023, the Company reflected the applicable excise tax in treasury stock as part of the cost basis of the stock repurchased and recorded a corresponding liability for the excise taxes payable in Accounts payable and accrued liabilities on our Condensed Consolidated Balance Sheet as of March 31, 2023.

The share repurchase and authorization amounts disclosed in this Form 10-Q exclude the excise tax.

Calculation of Earnings per Share

The following table presents the computation of weighted-average shares used in the calculation of basic and diluted earnings per share:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

7 unchanged sentences

Europe, the Middle East and Africa (“EMEA”);

and certain other countries, including Canada, Australia, and Japan.

and certain other countries, including Canada, Japan, and Singapore.

The following table presents our revenues disaggregated by geography, based on the billing addresses of our customers:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

10 unchanged sentences

As payments for domain name registrations and renewals are due in advance of our performance, we record these amounts as deferred revenues.

The increase in the deferred revenues balance for the nine months ended September 30, 2022 was primarily driven by amounts billed in the nine months ended September 30, 2022 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $ 719.6 million of revenues recognized that were included in the deferred revenues balance at the beginning of the period.

The higher deferred revenue balance as of September 30, 2022 also reflects an increase in the volume of early renewal transactions that occurred before the .com price increase became effective on September 1, 2022.

The balance of deferred revenues as of September 30, 2022 represents our aggregate remaining performance obligations.

The increase in the deferred revenues balance for the three months ended March 31, 2023 was primarily driven by amounts billed in the three months ended March 31, 2023 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $ 324.5 million of revenues recognized that were included in the deferred revenues balance at the beginning of the period.

The balance of deferred revenues as of March 31, 2023 represents our aggregate remaining performance obligations.

Amounts included in current deferred revenues are all expected to be recognized in revenues within 12 months, except for a portion of deferred revenues that relates to domain name renewals that are deleted in the 45-day grace period following the transaction.

3 unchanged sentences

The following table presents the classification of stock-based compensation:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

6 unchanged sentences

The following table presents the nature of the Company’s total stock-based compensation:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(In millions)

1 unchanged sentence

Performance-based RSUs 2.1 3.2

ESPP 1.1 1.1 3.2 3.2

Total stock-based compensation $ 14.1 $ 14.5

Non-operating Income, Net

Non-operating income, net, primarily consists of interest income from the Company’s surplus cash balances and marketable securities.

Interest income was $ 10.7 million and $ 0.3 million during the three months ended March 31, 2023 and 2022, respectively.

The increase in interest income in the first quarter of 2023 reflects higher interest rates on the Company’s investments in debt securities.

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

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

(Dollars in millions)

2 unchanged sentences

The effective tax rate for each of the periods in the table above differed from the statutory federal rate of 21 %, due to state income taxes and U.S.

taxes on foreign earnings, net of foreign tax credits, offset by a lower foreign effective tax rate.

The effective tax rate in the three and nine months ended September 30, 2022 reflects an increased foreign effective tax rate primarily as a result of the transfer of intellectual property between certain non-U.S.

subsidiaries that took place in the fourth quarter of 2021.

taxes on foreign earnings, net of foreign tax credits, partially offset by a lower foreign effective tax rate.

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 1. Financial Statements