VeriSign, Inc.

Good day, everyone. Welcome to the VeriSign's third quarter 2021 earnings call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized. Thank you. 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 third quarter 2021 earnings call. Joining me are Jim Bidzos, Executive Chairman and CEO, Scott 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 report on Form 10-K. Bearsign does not update financial performance or guidance during the quarter unless it is done through 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. GAAP to non-GAAP 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. I'm pleased to report another solid quarter of operational and financial performance for VeriSign. During the quarter, we continued to deliver strong financial results while maintaining, investing in, and evolving our critical internet infrastructure and complying with the high operational standards required by our ICANN agreements. Our critical infrastructure enables us to reliably and accurately provide the domain name system navigation service which people around the world depend on for commerce, education, healthcare, and person-to-person connection. During the third quarter, we processed 10.7 million new registrations, and the domain name base increased by 1.48 million names. At the end of September, the domain name base in .com and .net totaled 172.1 million, consisting of 158.6 million names for .com and 13.5 million names for .net, with a year-over-year growth rate of 5.1%. Although renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the third quarter of 2021 will be approximately 75%. This preliminary rate compares to 73.7% achieved in the third quarter of 2020 and 75.4% last quarter. For the full year 2021, we now expect a domain name base growth rate of between 4.7 and 5.5%. This narrow range reflects the current pace of new additions to the base and our outlook for the remainder of the year. Our financial and liquidity position remains stable with $1.2 billion in cash, cash equivalents, and marketable securities at the end of the quarter. Share repurchases during the third quarter totaled $172 million for 785,000 shares. At quarter end, $565 million remained available and authorized under the current share repurchase program, which has no expiration. We continually evaluate the overall liquidity and investing needs of the business and consider the best uses for our cash, including potential share repurchases. As it relates to .web, and as we stated last quarter, after the final IRP decision was issued in May, Affilius filed in June an application requesting that the IRP panel interpret and amend its final decision. The briefing on this application was completed in September, and the panel has now taken the matter under advisement without oral argument, which means we're just waiting for the IRP panel to respond. VeriSign believes Affilius' application is without merit, and we continue to expect the panel to rule on it in the fourth quarter of 2021. As we have said before, we continue to look forward to becoming the .web registry operator and establishing it as an additional option for businesses and individual end users worldwide.