Verisign Inc.

Company Overview

Business Model: Verisign, Inc. is a global provider of critical internet infrastructure and domain name registry services. The Company enables internet navigation by providing Root Zone Maintainer services, operating two of the thirteen global internet root servers, and offering registration services and authoritative resolution for the .com and .net top-level domains (TLDs). These services are foundational for global e-commerce, ensuring the security, stability, and resiliency of the Domain Name System (DNS). Revenues are primarily generated from fixed fees charged to registrars for initial registrations and renewals of .com and .net domain names, with terms ranging from one to ten years. Verisign also operates registries for .name and .cc, and provides back-end services for the .edu TLD.

Market Position: Verisign holds a leading position as the sole registry operator for the .com and .net gTLDs, which support the majority of global e-commerce. The Company's operations infrastructure processes hundreds of billions of transactions daily, supported by a global constellation of high-speed, distributed DNS servers and a redundant network. This infrastructure is purpose-built for rapid failover, load balancing, and continuous security monitoring, ensuring 100% DNS uptime for .com and .net for over 28 years. Verisign faces competition from other gTLD and ccTLD registries, as well as alternative online identity services like social media and e-commerce platforms.

Recent Strategic Developments:

• .com Registry Agreement Renewal: Renewed the .com Registry Agreement with Internet Corporation for Assigned Names and Numbers (ICANN) in November 2024, securing its role as the sole registry operator through November 30, 2030.
• Pricing Adjustments: Increased the annual registry-level wholesale fee for .com domain name registrations from $9.59 to $10.26 effective September 1, 2024, and for .net domain name registrations from $9.92 to $10.91 effective February 1, 2024.
• Shareholder Returns: Initiated a quarterly cash dividend in April 2025, totaling $2.31 per share ($215.2 million) in 2025. The Board of Directors approved a 5.2% increase in the quarterly cash dividend to $0.81 per share on February 3, 2026.
• Share Repurchase Authorization: Authorized an additional $913.1 million for common stock repurchases in July 2025, bringing the total available authorization to $1.50 billion.
• Debt Refinancing: Issued $500.0 million of 5.25% senior unsecured notes due June 2032 in March 2025, using the proceeds to repay $500.0 million of senior unsecured notes due April 2025.
• .web gTLD Acquisition Efforts: Continues efforts to acquire the contractual rights to the .web gTLD, with a deposit of $145.2 million recorded, pending resolution of arbitration proceedings and ICANN approval.

Geographic Footprint: Verisign's primary operational regions and revenue distribution are based on the domicile of its registrars:

• U.S.: $1,093.1 million (66.0% of total revenue)
• EMEA (Europe, Middle East and Africa): $279.4 million (16.9% of total revenue)
• APAC (Australia, China, Japan, Singapore, and other Asia Pacific countries): $184.6 million (11.1% of total revenue)
• Other (Canada, Latin American countries): $99.5 million (6.0% of total revenue)

Financial Performance

Revenue Analysis

Profitability Metrics (2025):

• Gross Margin: 88.1%
• Operating Margin: 67.7%
• Net Margin: 49.8%

Investment in Growth:

• R&D Expenditure: $103.6 million (6.3% of revenue)
• Capital Expenditures: $22.8 million
• Strategic Investments: $145.2 million deposit for the future assignment of contractual rights to the .web gTLD.

Business Segment Analysis

Verisign, Inc. has one reportable segment that includes all the operations of the business. Therefore, a detailed breakdown by segment is not applicable.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: $858.6 million (3.4 million shares) in 2025.
• Dividend Payments: $215.2 million ($2.31 per share) in 2025.
• Dividend Yield: Not explicitly stated, but based on 2025 dividends and year-end stock price, it would be approximately 0.95% ($2.31/$242.95).
• Future Capital Return Commitments: The Board of Directors declared a cash dividend of $0.81 per share payable February 27, 2026, and intends to continue quarterly dividends, subject to market conditions and Board approval. Approximately $1.08 billion remained available for future share repurchases as of December 31, 2025, under a program with no expiration date.

Balance Sheet Position (as of December 31, 2025):

• Cash and Equivalents: $307.9 million
• Total Debt: $1,788.2 million (Long-term senior notes)
• Net Cash Position: -$1,207.7 million (Cash and cash equivalents + Marketable securities - Total Debt)
• Credit Rating: Not disclosed in the filing.
• Debt Maturity Profile: $550.0 million of 4.75% senior unsecured notes due July 2027; $750.0 million of 2.70% senior unsecured notes due June 2031; $500.0 million of 5.25% senior unsecured notes due June 2032.

Cash Flow Generation (2025):

• Operating Cash Flow: $1,091.1 million
• Free Cash Flow: $1,068.3 million (Operating Cash Flow of $1,091.1 million - Capital Expenditures of $22.8 million)
• Cash Conversion Metrics: Not explicitly detailed in the filing.

Operational Excellence

Production & Service Model: Verisign operates critical internet infrastructure, providing Root Zone Maintainer services, operating two global internet root servers, and offering registration and authoritative resolution for .com and .net TLDs. The Company's services ensure secure, stable, and resilient internet access. This includes operating the Shared Registration System for registrars to manage domain names and a global constellation of DNS servers for IP address information. The infrastructure is designed for continuous operation, rapid failover, global and local load balancing, and threshold monitoring.

Supply Chain Architecture: Key Suppliers & Partners:

• Internet Service Providers: Maintain high-speed, redundant connections to numerous ISPs and hundreds of network interconnection relationships globally.
• Third-Party Security Organizations: Contracted for periodic penetration tests and security risk assessments.
• Managed Detection and Response (MDR) Service: Subscribes to an industry-leading MDR service for 24/7/365 security monitoring.
• Regional Internet Registries (RIRs): Involved in the Resource Public Key Infrastructure (RPKI) system for addressing internet routing system vulnerabilities.

Facility Network:

• Manufacturing: Not applicable; services-based.
• Research & Development: Not explicitly detailed, but R&D efforts are focused on enhancing DNS registration/resolution infrastructure and security.
• Distribution: Secure data centers in Dulles, Virginia; Ashburn, Virginia; and New Castle, Delaware, along with over 200 other points of presence globally.

Operational Metrics (2025):

• .com and .net Registrations in Domain Name Base: 173.5 million (+2.6% YoY from December 31, 2024).
• New .com and .net Domain Name Registrations: 41.7 million (compared to 37.4 million in 2024).
• .com and .net Renewal Rate (Q3 2025): 75.4% (compared to 72.2% for Q3 2024).
• Transactions Processed: Hundreds of billions daily.
• DNS Uptime: Over 28 years of 100% DNS uptime for .com and .net.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels:

• Direct Sales: Registrars are Verisign's direct customers, who in turn serve individual registrants.
• Channel Partners: Registrars and their resellers engage in marketing efforts to increase demand and renewal rates for domain names. Verisign provides tools for registrars and end-users.
• Digital Platforms: Verisign's website provides resources and information, including zone counts and access to zone files.

Customer Portfolio: Enterprise Customers:

• Tier 1 Clients: The Company's largest customer accounted for approximately 31% of revenues in 2025.
• Customer Concentration: The Company does not believe the loss of its largest customer would have a material adverse effect, as end-users would likely transfer to other existing customers.

Geographic Revenue Distribution (2025):

• U.S.: 66.0% of total revenue
• EMEA: 16.9% of total revenue
• APAC: 11.1% of total revenue
• Other: 6.0% of total revenue
• Growth Markets: Verisign seeks to serve new, developing, and emerging economies in international locations to grow its business.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The DNS is governed under a multi-stakeholder model involving civil society, the private sector (including ICANN), governments (including the U.S. government), academia, and international organizations. The industry is characterized by evolving technologies, increasing cyberthreats, and collaborative relationships among competitors. Demand for domain names is driven by online advertising, e-commerce, and the number of internet users, but can be impacted by alternative online identities (social media, apps), new technologies like AI, and alternative namespaces (e.g., blockchain namespaces).

Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• CentralNic: Competitive overlap in gTLD and ccTLD registries.
• China Internet Network: Competitive overlap in gTLD and ccTLD registries.
• DENIC eG: Competitive overlap in gTLD and ccTLD registries.
• GoDaddy: Competitive overlap in gTLD and ccTLD registries.
• Google: Competitive overlap in gTLD and ccTLD registries.
• Identity Digital: Competitive overlap in gTLD and ccTLD registries.
• Information Center (CNNIC): Competitive overlap in gTLD and ccTLD registries.
• Nominet: Competitive overlap in gTLD and ccTLD registries.
• Public Interest Registry (PIR): Competitive overlap in gTLD and ccTLD registries.
• Radix: Competitive overlap in gTLD and ccTLD registries.
• .xyz: Competitive overlap in gTLD and ccTLD registries.

Emerging Competitive Threats:

• Social Media Platforms: Facebook, Instagram, TikTok, offering alternative online identities.
• E-commerce Platforms: Amazon, Etsy, Taobao, where businesses transact without needing traditional domain names.
• Web and Mobile Applications: Allow end-users to locate and access content without traditional domain name navigation.
• Alternative Namespaces: Blockchain namespaces and other identifiers outside the single authoritative DNS root zone.
• Artificial Intelligence (AI): New technologies and applications that could transform online presence and reduce demand for traditional domain names.

Competitive Response Strategy: Verisign continuously enhances its infrastructure and capabilities to support system load and defend against cyberthreats, adapts to evolving internet protocols, and invests in R&D. The Company also undertakes strategic initiatives, such as efforts to acquire the .web gTLD, to maintain its competitive advantage.

Risk Assessment Framework

Strategic & Market Risks

Market Dynamics:

• Economic Conditions: Inflation, interest rates, currency fluctuations, trade barriers, war, civil unrest, and other political/economic developments can negatively impact demand for services.
• AI-driven Hardware Demand: Rapid increase in demand for compute and network hardware (servers, chips, memory) from AI companies is increasing costs for Verisign.
• Technology Disruption: Evolution of online presence technologies (social media, AI, mobile devices, apps, search engines) and adoption of substitute technologies can negatively impact demand for domain names.
• Customer Concentration: Changes in business models of registrars and registrants (e.g., for resale or advertising revenue) or regulations limiting resale can decrease demand/renewal rates.
• Wholesale Price Increases: Exercising the right to increase .com and .net domain name prices could lead to a decrease in demand and/or renewal rates.

Operational & Execution Risks

Cybersecurity Vulnerabilities:

• Cyber-attacks: High rate of sophisticated attacks (advanced persistent threats, zero-day exploits, ransomware, social engineering) targeting critical internet infrastructure, increasing costs and potential liability. AI-based tools are making attacks more sophisticated and faster to launch.
• DDoS Attacks: Networks are subject to growing and sophisticated DDoS attacks, which could disrupt services, increase response times, and impact service level agreements.
• System Defects: Undetected defects or errors in complex systems or services could lead to outages, data compromise, reputational harm, and legal claims.
• Third-Party Vulnerabilities: Reliance on externally-developed technology, systems, and services (hardware, software, SaaS providers, RIRs) introduces risks from security vulnerabilities in vendor systems. Infrastructure & System Failures:
• System Interruptions: Vulnerability of systems and operations to damage or interruption from power loss, war, telecommunications failures, natural disasters, vandalism, terrorist attacks, human error, or state suppression of internet operations.
• Data Center Vulnerabilities: Concentration of computing infrastructure and customer information in data centers in the same geographic region makes them vulnerable to damage or interruption.
• Global Routing System Vulnerabilities: Dependence on Border Gateway Protocol (BGP) and increasing adoption of Resource Public Key Infrastructure (RPKI) expose services to risks from "route hijacks," "route leaks," and RIR operational/security control issues, potentially leading to service degradation or loss of reachability.
• Root Server Operations: Errors in root zone publication or operational issues impacting root zone data timeliness could lead to material claims against Verisign.

Financial & Regulatory Risks

Market & Financial Risks:

• Demand Volatility: Demand for domain names is sensitive to overall economic conditions, internet user behavior, and competitive pressures.
• Foreign Exchange: Exposure to foreign currency fluctuations, though mitigated by a risk management program.
• Credit & Liquidity: Not explicitly detailed as a risk, but general financial market risks apply. Regulatory & Compliance Risks:
• ICANN Policies: Obligation to implement Consensus Policies and Temporary Policies from ICANN, which could be unfavorable, impose costs, or affect competitive position.
• Technical Standards: Requirements to comply with Internet Engineering Task Force (IETF) technical standards, which could impose costs or affect competitive position.
• Pricing Provision Challenges: Past and future challenges to .com Registry Agreement pricing provisions could materially impact the business.
• Government Regulation: New or modified laws/regulations in the U.S. and internationally (e.g., China's MIIT licenses, data security/privacy regulations like GDPR and NIS 2, OFAC sanctions) could increase costs, impose restrictions, or create liabilities.
• Legal Proceedings: Involvement in claims, lawsuits, audits, and investigations (e.g., .web gTLD arbitration, DNS abuse mitigation efforts) can result in significant monetary damages, injunctive relief, and diversion of management attention.

Geopolitical & External Risks

Geopolitical Exposure:

• International Operations: Exposure to economic, legal, regulatory, and political risks in international locations, including difficulties in staffing, adapting services, and potential conflicting tax consequences.
• U.S.-China Tensions: Political tensions and government actions between the U.S. and China could impact Verisign's ability to operate in China.
• Weakening of Internet Governance: Substantially weakening or replacing the multi-stakeholder model of internet governance could materially harm the business.

Innovation & Technology Leadership

Research & Development Focus: Core Technology Areas:

• DNS Registration and Resolution Infrastructure: Timely development of new and enhanced capabilities.
• Security, Stability, and Resiliency: New and enhanced ways to ensure the security, stability, and resiliency of services in an increasing cyberthreat environment.
• Internet Protocols and Standards: Adaptation to evolving internet protocols and standards.
• Artificial Intelligence (AI): Investment in R&D that benefits the DNS and internet community, including investigating and incubating new concepts related to AI. Innovation Pipeline: Actively investigates and incubates new concepts and evaluates new business ideas. Most future enhancements and new services are expected from internal development efforts in collaboration with suppliers, vendors, customers, and the technology community.

Intellectual Property Portfolio:

• Patent Strategy: Issued numerous patents in the U.S. and abroad covering a wide range of technologies; continues to file patent applications. Patents may be subject to challenges or licensing requirements (e.g., "standard essential patents").
• Licensing Programs: Not explicitly detailed as a revenue generation or strategic partnership focus.
• IP Litigation: May resort to litigation to enforce and protect IP rights, trade secrets, or determine validity/scope of others' rights. Core Assets: Proprietary software, methodologies (patented or patent-pending), technical expertise, and know-how used in registry services. Owns the proprietary Shared Registration System and the ATLAS distributed lookup system.

Technology Partnerships: Collaborates with suppliers, other vendors, customers, and the technology community for development efforts. Strategic alliances and research collaborations are mentioned as potential avenues for innovation.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Strategic talent reviews and succession planning occur regularly, with leadership actively involved in identifying and developing top talent and potential successors.

Board Composition: The Board has delegated primary oversight of cybersecurity risks and the cybersecurity program to the Cybersecurity Committee. The Audit Committee also reviews material cybersecurity risks as part of the Company’s enterprise risk management (ERM) program. The Cybersecurity Committee operates under a written charter and calendar, reviewed annually.

Human Capital Strategy

Workforce Composition (as of December 31, 2025):

• Total Employees: 928 (926 full-time)
• Geographic Distribution: 859 employees (approx. 93%) in the U.S.; 69 employees (approx. 7%) outside the U.S.
• Skill Mix: Not explicitly detailed, but emphasizes highly technical roles requiring expertise in DNS operations and cybersecurity.
• Female Workforce: Approximately 30% of global workforce.
• Ethnically & Racially Diverse: Approximately 46% of U.S. employees.

Talent Management: Acquisition & Retention:

• Hiring Strategy: Focused on competitive labor market with comprehensive sourcing strategies to attract top talent.
• Retention Metrics: Relatively low employee turnover compared to competitive benchmarks and historical trends. Average employee tenure is approximately 11 years.
• Employee Value Proposition: Provides competitive and equitable compensation and a broad, comprehensive set of benefits. Diversity & Development:
• Diversity Metrics: Actively monitors and presents progress on diversity to executive management and the Compensation Committee.
• Development Programs: Focuses on leadership capability development and opportunities to enhance technical and soft skills through on-the-job experiences, instructor-led training, and on-demand learning. All employees complete annual ethics, compliance, and monthly data security trainings.
• Culture & Engagement: Strives to create an environment of belonging, empowerment, and high engagement, reflected in strong commitment to mission and values. Routinely conducts employee surveys (93% participation in November 2025, indicating high engagement). Supports a hybrid work posture.

Environmental & Social Impact

This section is omitted as no material information was explicitly stated in the provided 10-K filing.

Business Cyclicality & Seasonality

Demand Patterns:

• Seasonal Trends: Not explicitly detailed in the filing.
• Economic Sensitivity: Demand for .com and .net domain names is impacted by overall economic conditions, including inflation, interest rates, currency fluctuations, trade barriers, war, and civil unrest. Demand can also be negatively impacted by competition from other TLDs, alternative online presence services, and changes in internet practices and consumer behaviors.
• Industry Cycles: Demand is largely driven by continued growth in online advertising, e-commerce, and the number of internet users.

Planning & Forecasting: The Company's management considers factors such as evolving internet practices, consumer behavior, and registrant motivations when assessing demand for new domain name registrations and renewals.

Regulatory Environment & Compliance

Regulatory Framework: Industry-Specific Regulations:

• ICANN Agreements: Operates .com, .net, and .name gTLDs under registry agreements with ICANN, which impose performance specifications, service level agreements, marketing limitations, and non-discriminatory access requirements for registrars.
• U.S. Department of Commerce (DOC) Cooperative Agreement: Operates the .com gTLD under a Cooperative Agreement with the DOC, requiring content-neutral operation and DOC approval for certain changes (e.g., pricing, vertical integration, security, renewal/termination conditions, Whois service).
• China Regulations: Required to maintain licenses for .com, .net, and .cc under regulations issued by the Ministry of Industry and Information Technology (MIIT) in China, which have impacted demand and impose additional costs and risks.
• Data Privacy Regulations: Subject to strict data security and data privacy regulations in jurisdictions like California, the European Union (GDPR, NIS 2), and the United Kingdom. New obligations to obtain and maintain personal registrant information for .com and .net gTLDs could impose significant compliance costs and legal risks. Trade & Export Controls:
• Export Restrictions: U.S. government has imposed restrictions on certain Chinese companies and technologies, and the Chinese government has announced actions that could impact non-Chinese companies in China.
• Sanctions Compliance: Compliance with economic and trade sanctions programs administered by the Office of Foreign Assets Control (OFAC).

Legal Proceedings:

• .web gTLD Arbitration: Involved in ongoing arbitration proceedings (Independent Review Process or IRP) with Afilias Domains No. 3 Limited (now Altanovo Domains Limited) regarding the .web gTLD auction. Verisign believes Afilias' claims are without merit and intended to delay delegation.
• General Litigation: Involved in various investigations, claims, and lawsuits arising in the normal course of business, including those related to mitigating security threats and DNS abuse.

Tax Strategy & Considerations

Tax Profile (2025):

• Effective Tax Rate: 22.7% (compared to 23.1% in 2024 and 16.3% in 2023).
• Geographic Tax Planning: Subject to income taxes in the U.S. (federal and state) and numerous international jurisdictions (e.g., Switzerland). Significant judgment is required in determining worldwide provision for income taxes.
• Tax Reform Impact: The One Big Beautiful Bill Act, enacted July 4, 2025, restored the immediate deduction of research and development expenditures for U.S. federal income tax purposes, decreasing current federal expense and increasing deferred federal expense in 2025. The OECD Pillar 2 minimum tax adopted by Switzerland increased foreign current expense in 2024.

Insurance & Risk Transfer

Risk Management Framework:

• Insurance Coverage: Maintains a cybersecurity insurance program. However, the Company does not maintain specific reserves for security breaches, cyber-attacks, and DDoS attacks, and insurance coverage may be inadequate to cover all claims or liabilities.
• Risk Transfer Mechanisms: Employs a foreign currency risk management program using forward or option contracts to mitigate foreign exchange risks associated with monetary assets and liabilities denominated in foreign currencies. The Company does not enter into foreign currency transactions for trading or speculative purposes.