What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-04-23 compared with 2025-10-23 · 63 added, 92 removed, 133 unchanged (54% of the section changed)

5 unchanged sentences

Our actual results may differ significantly from those projected in the forward-looking statements.

Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part II, Item 1A of the Quarterly Report on Form 10-Q for the period ended March 31, 2025.

Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled “Risk Factors” in Part I, Item 1A of the 2025 Form 10-K.

You should also carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in 2026.

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

As of September 30, 2025, we had 171.9 million .com and .net registrations in the domain name base.

As of March 31, 2026, we had 176.1 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.

The number of domain name registrations under our management may be negatively impacted by certain factors, including overall economic conditions, competition from country code top-level domains (“ccTLDs”), other gTLDs, services that offer alternatives for an online presence, such as social media and artificial intelligence, and ongoing changes in the internet practices and behaviors of consumers and businesses.

The number of domain name registrations under our management may be negatively impacted by certain factors, including overall economic conditions, competition from country code top-level domains (“ccTLDs”), other gTLDs, services that offer alternatives for an online presence, and ongoing changes in the internet practices and behaviors of consumers and businesses.

Factors such as the evolving practices and preferences of internet users, and how they navigate the internet, as well as the motivation of domain name registrants and how they will manage their investment in domain names, can negatively impact our business and the demand for new domain name registrations and renewals.

Business Highlights and Trends

• We recorded revenues of $419.1 million and $1,231.3 million during the three and nine months ended September 30, 2025, which represents an increase of 7% and 6%, respectively, compared to the same periods in 2024.

• We recorded operating income of $284.3 million and $836.2 million during the three and nine months ended September 30, 2025, which represents an increase of 6% and 5%, respectively, compared to the same periods in 2024.

• As of September 30, 2025, we had 171.9 million .com and .net registrations in the domain name base, which represents a 1.4% increase from September 30, 2024, and a net increase of 1.4 million domain name registrations from June 30, 2025.

• During the three months ended September 30, 2025, we processed 10.6 million new domain name registrations for .com and .net compared to 9.3 million for the same period in 2024.

• We recorded revenues of $428.9 million during the three months ended March 31, 2026, which represents an increase of 7% compared to the same period in 2025.

• We recorded operating income of $293.6 million during the three months ended March 31, 2026, which represents an increase of 8% compared to the same period in 2025.

• As of March 31, 2026, we had 176.1 million .com and .net registrations in the domain name base, which represents a 3.7% increase from March 31, 2025, and a net increase of 2.5 million domain name registrations from December 31, 2025.

• During the three months ended March 31, 2026, we processed 11.5 million new domain name registrations for .com and .net compared to 10.1 million for the same period in 2025.

• The final .

net renewal rate for the second quarter of 2025 was 75.5% compared to 72.7% for the second quarter of 2024.

net renewal rate for the fourth quarter of 2025 was 75.0% compared to 74.0% for the fourth quarter of 2024.

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

• We generated cash flows from operating activities of $801.5 million during the nine months ended September 30, 2025, compared to $671.1 million for the same period in 2024.

• During the three months ended September 30, 2025, we repurchased 0.8 million shares of common stock for an aggregate cost of $215.0 million.

As of September 30, 2025, there was $1.33 billion remaining for future share repurchases under the share repurchase program.

• On October 21, 2025, the Board of Directors declared a cash dividend of $0.77 per share of the Company’s outstanding common stock to stockholders of record as of the close of business on November 18, 2025, payable on November 25, 2025.

• We generated cash flows from operating activities of $272.4 million during the three months ended March 31, 2026, compared to $291.3 million for the same period in 2025.

• During the three months ended March 31, 2026, we repurchased 0.9 million shares of common stock for an aggregate cost of $214.4 million.

As of March 31, 2026, there was $862.8 million remaining for future share repurchases under the share repurchase program.

• On April 20, 2026, the Board of Directors declared a cash dividend of $0.81 per share of the Company’s outstanding common stock to stockholders of record as of the close of business on May 19, 2026, payable on May 27, 2026.

• On April 23, 2026, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .

com domain name registration from $10.26 to $10.97 effective November 1, 2026.

Pursuant to our agreements with ICANN, we make available files containing all active domain names registered in the .com and .net registries.

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 zone counts and information on how to obtain access to the zone files can be found at https://www.verisign.com/resources/zone-file .

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

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

2025 2024 2025 2024

Three Months Ended March 31,

Revenues 100.0 % 100.0 %

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com domain name registration from $9.59 to $10.26 effective September 1, 2024.

Under the .net Registry Agreement, we are permitted to increase the price of .net domain name registrations by up to 10% each year during the term of our agreement with ICANN, through June 30, 2029.

We increased the annual registry-level wholesale fee for each new and

renewal .net domain name registration from $9.92 to $10.91 effective February 1, 2024.

On April 23, 2026, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .

com domain name registration from $10.26 to $10.97 effective November 1, 2026.

Under the .net Registry Agreement, we are permitted to increase the price of .net

domain name registrations by up to 10% each year during the term of our agreement with ICANN, through June 30, 2029.

We increased the annual registry-level wholesale fee for each new and renewal .net domain name registration from $9.92 to $10.91 effective February 1, 2024.

All fees paid to us for .com and .net registrations are in U.S.

A comparison of revenues is presented below:

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

2025 % Change 2024 2025 % Change 2024

Three Months Ended March 31,

2026 % Change 2025

(Dollars in millions)

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

September 30, 2025 % Change September 30, 2024

March 31, 2026 % Change March 31, 2025

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

176.1 million 4% 169.8 million

Revenues increased during the three and nine months ended September 30, 2025, as compared to the same periods last year, primarily due to the .

net price increases and an increase in the domain name base as of September 30, 2025 compared to September 30, 2024.

Revenues increased during the three months ended March 31, 2026, as compared to the same period last year, primarily due to an increase in the domain name base as of March 31, 2026 compared to March 31, 2025 and the .com and .net price increases.

Demand for .com and .net domain names has been primarily driven by continued internet growth and marketing activities carried out by us and our registrars.

However, the demand for .

net domain names may be limited by competitive pressure from other TLDs and alternatives for an online presence, such as social media and artificial intelligence.

net domain names may be limited by competitive pressure from other TLDs and alternatives for an online presence.

Additionally, changes in internet practices, consumer behavior, and global economic conditions, as well as the motivation of existing domain name registrants managing their investment in domain names, such as for resale at increased prices or for revenue generation through website advertising, may impact demand for .

net domain names.

Our domain name base increased during the three and nine months ended September 30, 2025 compared to December 31, 2024, with higher new registrations and renewal rates, as business conditions improved following a period of decline during 2024 and as registrars focus more on customer acquisition and have continued to engage with our marketing programs.

Our domain name base increased during the three months ended March 31, 2026 compared to March 31, 2025, as the positive domain name base trends that began in 2025 continued into 2026 with higher new registrations and renewal rates.

Growth in the domain name base has been positively impacted by continued registrar focus on customer acquisition and engagement with our marketing programs, as well as the evolution of AI tools used in content and website creation.

Geographic revenues

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The following table presents a comparison of our geographic revenues:

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

2025 % Change 2024 2025 % Change 2024

Three Months Ended March 31,

2026 % Change 2025

(Dollars in millions)

1 unchanged sentence

EMEA 73.5 10% 67.0

47.0 8% 43.5 136.9 4% 132.2

Other 24.0 (3)% 24.8

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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.

While revenues increased in all regions during the three and nine months ended September 30, 2025, compared to the same periods in 2024, the majority of our revenue growth was generated from registrars based in the U.S.

Our revenue growth was generated from registrars based in the U.S., EMEA and APAC during the three months ended March 31, 2026, compared to the same period in 2025.

Cost of revenues

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A comparison of cost of revenues is presented below:

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

2025 % Change 2024 2025 % Change 2024

Three Months Ended March 31,

2026 % Change 2025

(Dollars in millions)

Cost of revenues $ 49.2 (1)% $ 49.4

Cost of revenues increased during the three months ended September 30, 2025, compared to the same period last year, due to a combination of individually insignificant factors.

Cost of revenues increased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to increases in compensation and benefits expenses and a combination of individually insignificant factors, partially offset by a decrease in depreciation expenses.

Compensation and benefits expenses increased by $4.4 million primarily due to annual salary increases, an increase in bonus expenses, an increase in average headcount, and a combination of other individually insignificant factors.

Depreciation expenses decreased by $3.0 million due to a decrease in capital expenditures in recent periods.

Cost of revenues remained consistent during the three months ended March 31, 2026, compared to the same period last year.

Research and development

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A comparison of research and development expenses is presented below:

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

2025 % Change 2024 2025 % Change 2024

Three Months Ended March 31,

2026 % Change 2025

(Dollars in millions)

Research and development $ 27.5 6% $ 26.0

Research and development expenses increased during the three months ended September 30, 2025, compared to the same period last year, due to a combination of individually insignificant factors.

Research and development expenses increased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to a $3.8 million increase in compensation and benefit expenses as a result of an increase in bonus expenses and annual salary increases.

Research and development expenses increased slightly during the three months ended March 31, 2026, compared to the same period last year, due to a combination of individually insignificant factors.

Selling, general and administrative

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A comparison of selling, general and administrative expenses is presented below:

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

2025 % Change 2024 2025 % Change 2024

Three Months Ended March 31,

2026 % Change 2025

(Dollars in millions)

Selling, general and administrative $ 58.6 5% $ 55.7

Selling, general and administrative expenses increased during the three months ended September 30, 2025, compared to the same period last year, primarily due to increases in compensation and benefits expenses, legal expenses, and a combination of individually insignificant factors.

Compensation and benefits expenses increased by $4.0 million primarily due to an increase in average headcount, an increase in bonus expenses, annual salary increases, and a combination of other individually insignificant factors.

Legal expenses increased by $2.8 million due to an increase in litigation expenses.

Selling, general and administrative expenses increased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to increases in compensation and benefit expenses, stock-based compensation expenses, and equipment and software expenses, partially offset by an increase in overhead expenses allocated to other cost types.

Compensation and benefits expenses increased by $8.7 million primarily due to an increase in average headcount, an increase in bonus expenses, higher expenses for certain employee health-insurance related benefits, and annual salary increases.

Stock-based compensation expenses increased by $5.6 million primarily due to an increase in the total projected achievement levels on certain performance-based RSU grants and an increase in the total value of RSUs granted in 2025.

Equipment and software expenses increased by $3.3 million primarily due to increases in expenses related to network security and other software services.

Overhead expenses allocated to other cost types increased by $2.6 million due to an increase in total allocable expenses.

Selling, general and administrative expenses increased during the three months ended March 31, 2026, compared to the same period last year, primarily due to an increase in compensation and benefits expenses, including stock-based compensation expenses.

Compensation and benefits expenses, including stock-based compensation expenses, increased by $2.8 million, primarily due to annual salary increases and an increase in the total projected achievement levels on certain performance-based RSU grants.

Interest expense

Interest expense increased slightly during the nine months ended September 30, 2025, compared to the same period last year, primarily due to the period of overlap between the issuance of the 2032 Notes and repayment of the 2025 Notes.

Interest expense decreased slightly during the three months ended March 31, 2026, compared to the same period last year, primarily due to the period of overlap between the issuance of $500.0 million of 5.25% senior unsecured notes due June 2032 (“2032 Notes”) and repayment of $500.0 million aggregate principal amount of outstanding senior unsecured notes due April 2025 (“2025 Notes”) in March 2025.

Non-operating income, net

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

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

2025 2024 2025 2024

(In millions)

Interest income

$ 6.7 $ 8.7 $ 20.6 $ 30.4

(0.4) 1.8 (1.3) 5.5

Total non-operating income, net

$ 6.3 $ 10.5 $ 19.3 $ 35.9

Interest income is earned primarily from our surplus cash balances and marketable securities.

The decrease in interest income during the three and nine months ended September 30, 2025, compared to the same periods last year, primarily reflects the lower amounts invested in debt securities in the current periods and slightly lower interest rates on our investments in debt securities.

Other, net, reflects net gains and losses from our foreign currency exposure and related hedges.

Non-operating income decreased during the three months ended March 31, 2026, compared to the same period last year, primarily due to a decrease in interest income as a result of lower amounts invested in debt securities in the current period compared to the prior period and a decrease in interest rates on the Company’s investments in debt securities.

Income tax expense

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

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

2025 2024 2025 2024

Three Months Ended March 31,

(Dollars in millions)

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

House Resolution 1, commonly referred to as the One Big Beautiful Bill Act, was enacted into law on July 4, 2025 (the “Act”).

The tax regulations included in the Act did not have a material impact on our effective tax rate for the periods presented, and we do not expect the Act to have a material impact on our effective tax rate for 2025.

We are currently evaluating the impact that the tax regulations may have on our financial statements in future years.

Liquidity and Capital Resources

The following table presents our principal sources of liquidity:

September 30, December 31,

March 31, December 31,

(In millions)

6 unchanged sentences

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

As of September 30, 2025, all of our debt securities have contractual maturities of less than one year.

As of March 31, 2026, 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.

Effective July 24, 2025, the Board of Directors authorized the repurchase of common stock in the amount of $913.1 million, in addition to the $586.9 million that remained available for repurchases under the prior share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program.

During the three months ended September 30, 2025, we repurchased 0.8 million shares of common stock for an aggregate cost of $215.0 million.

As of September 30, 2025, there was $1.33 billion remaining available for future share repurchases under the share repurchase program.

In April 2025, we initiated a quarterly cash dividend.

In the nine months ended September 30, 2025, we paid dividends of $144.1 million.

On October 21, 2025, our Board of Directors declared a cash dividend of $0.77 per share of the Company’s outstanding common stock to stockholders of record as of the close of business on November 18, 2025, payable on November 25, 2025.

Effective July 24, 2025, the Board of Directors authorized the repurchase of common stock in the amount of $913.1 million, in addition to the $586.9 million that remained available for repurchases under the share repurchase authorization, for a total repurchase authorization of up to $1.50 billion under the program.

During the three months ended March 31, 2026, we repurchased 0.9 million shares of common stock for an aggregate cost of $214.4 million.

As of March 31, 2026, there was $862.8 million remaining available for future share repurchases under the share repurchase program.

In the three months ended March 31, 2026, we paid dividends of $74.2 million.

On April 20, 2026, the Board of Directors declared a cash dividend of $0.81 per share of the Company’s outstanding common stock to stockholders of record as of the close of business on May 19, 2026, payable on May 27, 2026.

We intend to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by the Board of Directors.

On March 11, 2025, we issued $500.0 million of the 2032 Notes.

On March 31, 2025, we used the net proceeds from the 2032 Notes, along with cash on hand, to fund the repayment of all of our $500.0 million aggregate principal amount of outstanding 2025 Notes.

As of September 30, 2025, we also had $750.0 million principal amount outstanding of 2.70% senior unsecured notes due 2031 and $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027.

As of September 30, 2025, we had no outstanding borrowings and $200.0 million in borrowing capacity under our credit facility which matures in 2028.

As of March 31, 2026, we had $500.0 million principal amount outstanding of the 2032 Notes, $750.0 million principal amount outstanding of 2.70% senior unsecured notes due 2031, and $550.0 million principal amount outstanding of 4.75% senior unsecured notes due 2027.

As of March 31, 2026, we had no outstanding borrowings and $200.0 million in borrowing capacity under our credit facility which matures in 2028.

We believe existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our ability to arrange for additional financing should be sufficient to meet our working capital, capital expenditure requirements, fund our quarterly dividend, and to service our debt for the next 12 months and beyond.

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Our cash requirements have not changed materially since the 2025 Form 10-K.

In summary, our cash flows for the nine months ended September 30, 2025 and 2024 were as follows:

Nine Months Ended September 30,

In summary, our cash flows for the three months ended March 31, 2026 and 2025 were as follows:

Three Months Ended March 31,

(In millions)

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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 increased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to an increase in cash received from customers, decreases in cash paid for income taxes and cash paid to employees and vendors, partially offset by an increase in cash paid for interest.

Cash received from customers increased primarily due to the .

net price increases and higher .

com domain name registrations and renewals.

Cash paid for income taxes decreased primarily due to the enactment of the Act which restored the immediate deduction of research and experimentation expenses for U.S.

federal income taxes.

Cash paid to employees and vendors decreased primarily due to the timing of payments.

Cash paid for interest increased due to the payment of interest on our 2032 Notes in June 2025.

Net cash provided by operating activities decreased during the three months ended March 31, 2026, compared to the same period last year, primarily due to increases in cash paid to employees and vendors and cash paid for income taxes, and a decrease in cash received from customers, partially offset by a decrease in cash paid for interest.

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

Cash paid for income taxes increased primarily due to comparatively higher federal, state and non-US income tax payments.

Cash received from customers decreased primarily due to timing of payments from certain large customers.

Cash paid for interest decreased due to the payment of interest accrued on the 2025 Notes in March 2025, prior to their maturity date of April 1, 2025.

Cash flows from investing activities

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

Net cash provided by investing activities decreased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to a decrease in proceeds from maturities and sales of marketable securities, net of purchases of marketable securities.

Net cash provided by investing activities decreased during the three months ended March 31, 2026, compared to the same period last year, primarily due to a decrease in proceeds from maturities and sales of marketable securities, net of purchases of marketable securities.

Cash flows from financing activities

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

Net cash used in financing activities decreased during the nine months ended September 30, 2025, compared to the same period last year, primarily due to proceeds received from the issuance of our 2032 Notes and a decrease in share repurchases, partially offset by the repayment of our 2025 Notes, dividend payments to shareholders, and payment of excise tax on share repurchases.

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

Net cash used in financing activities increased during the three months ended March 31, 2026, compared to the same period last year, primarily due to dividend payments to shareholders, partially offset by a decrease in share repurchases and the net impact of the redemption of our 2025 Notes and the issuance of our 2032 Notes in March 2025.

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