VeriSign, Inc.

Good day, everyone. Welcome to VeriSign's fourth quarter and full year 2020 earnings call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized. At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.

Thank you, Operator. Welcome to VeriSign's fourth quarter and full year 2020 earnings call. Joining me are Jim Bidzos, Executive Chairman and CEO, Todd Strube, President and COO, and George Kilgus, Executive Vice President and CFO. This call and presentation are being webcast from the Investor Relations website, which is available under About VeriSign on VeriSign.com. There you will also find our earnings release. At the end of this call, the presentation will be available on that site, and within a few hours, the replay of the call will be posted. Financial results in our earnings release are unaudited, and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Forms 10-K and 10-Q. VeriSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure. The financial results in today's call and the matters we will be discussing today include GAAP results and two non-GAAP measures used by VeriSign, adjusted EBITDA and free cash flow. Gap to non-gap reconciliation information is appended to the slide presentation, which can be found on the investor relations section of our website, available after this call. Jim and George will provide some prepared remarks, and afterward, we will open the call for your questions. With that, I would like to turn the call over to Jim.

Thanks, David, and good afternoon, everyone. This past year has presented challenges and uncertainties for all of us. It's also been a year when our mission has never been more relevant. Like many of you, we spend the majority of the year with most of our teams working remotely. During this time, we continue to maintain, invest in, and evolve our infrastructure, which enables us to reliably and accurately provide the critical DNS navigation service people around the world rely on more than ever. For commerce, education, healthcare, and person-to-person connection, while complying with the high operational standards as required by our ICANN agreements. Thanks to the dedication of our team and the resilience of the specialized network they operate and maintain, we extended our record of BMS availability to over 23 years during 2020, and we will continue our focus as it appears we will be working remotely well into 2021. Turning to our results, I'm pleased to report another consistent quarter that concludes a solid year of operational excellence for the company. As I mentioned, in 2020, we marked more than 23 years of uninterrupted availability of the VeriSign DNS for .com and .net. We also processed 42.4 million new registrations, delivered revenue of $1,265,000,000, and generated free cash flow of $687 million. During the full year 2020, we repurchased 3.7 million shares for $735 million. Effective today, the Board of Directors has increased the amount of air sign common stock authorized for share repurchase by approximately $747 million to a total of $1 billion authorized and available under the share repurchase program, which has no expiration. Our financial and liquidity position remains stable with $1.17 billion in cash equivalents and marketable securities at the end of the quarter. We continually evaluate the overall liquidity and investing needs of the business and consider the best uses for our cash, including potential share repurchases. At the end of December, the domain name base in .com and .net totaled 165.2 million, consisting of 151.8 million names for .com and 13.4 million names for .net, with a year-over-year gross rate of 4%. During the fourth quarter, we processed 10.5 million new registrations, and the domain name base increased by 1.46 million names. Although renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the fourth quarter of 2020 will be approximately 73.5%. This preliminary rate compares to 73.8% achieved in the fourth quarter of 2019 and 73.7% last quarter. Looking to 2021, we expect the domain name base growth rate of between 2.5% and 4.5%. As announced in today's earnings release, we have given notice of a price increase of 54 cents for the annual wholesale price for .com domain names, which raises the price from $7.85 to $8.39, effective September 1st, 2021. This represents the first wholesale price increase of .com domain names since 2012 and is in alignment with a limited and regulated pricing flexibility permitted under our registry agreement. This announcement is consistent with our statements over the last several months that we expected to effectuate an increase in the wholesale price of COM domain names before October 25th, 2021. We believe this position is COM competitively in the marketplace.