VeriSign inches up following Q2 results, but domain challenges continue: Baird
VeriSign (NASDAQ:VRSN) edged up 3.5% by afternoon trading Friday after posting Q2 2024 results that beat estimates, but also revealed continuing domain challenges.
“Total domain growth continues to be soft, resulting in FY24 domain growth being lowered to (3.0%) to (2.0%) from (1.75%) to +0.25%,” said Baird analysts Rob Oliver and Patrick Schulz, in a note Friday.
The renewal rate for the quarter was 72.6% compared to 73.4% one year ago. Net new names also decreased by 1.8M sequentially, marking five straight quarters of declines.
“China weakness continues (as expected) and US registrar weakness continues (slightly worse, weaker renewal rates),” Oliver said. “The company remains optimistic new marketing plans can jump-start US domain growth in 2025. While valuation remains near the low end of the historical range, we reiterate our Neutral rating and wait for signs of improving domain trends.”
The new registrar marketing programs are expected to return the company to a new domain.
“We have rolled out new registrar marketing programs over the past several weeks to support our registrars and our goal of returning to domain name base growth in the second half of 2025,” said VeriSign CEO Jim Bidzos, during the earnings call.
Analysts remain positive on VeriSign. It has a Strong Buy rating from Seeking Alpha analysts and a Buy rating from Wall Street analysts. However, it has a Hold rating from Seeking Alpha’s Quant system, which routinely beats the market.
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