VeriSign Blows Away Forecasts
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At least one Internet company seems to be thriving under current market conditions. VeriSign Inc. Wednesday reported results for its fourth quarter that shattered Wall Street's expectations by topping earnings estimates by 10 cents per share.
Stratton Sclavos, president and chief executive of VeriSign, attributed the company's explosive growth -- which saw revenues increase 613 percent from fourth quarter 1999's $27.7 million to fourth quarter 2000 revenue of $197.4 million -- to diversification of its services.
"Our fourth quarter results cap an exciting year in which we transformed VeriSign from a security services company into the Internet's most trusted utility," Sclavos said. "We enter 2001 as a fully integrated organization offering a portfolio of critical services that all businesses need in order to establish, promote and protect their identity, transactions and communications over the Internet."
The company's pro forma net income for the quarter, excluding the amortization of goodwill and intangible assets and other acquisition-related charges, was $45.5 million, or 21 cents diluted earnings per share. Analysts had predicted 11 cents per share.
The forward momentum was driven by multiple sectors of VeriSign's business. Its core authentication services business, including digital certificate and managed public key infrastructure services, saw solid results with sales of more than 85,000 Web site certificates in the fourth quarter, a 135 percent increase over the same period last year and a 13 percent increase over third quarter 2000. The company said demand for its PKI services was continuing to grow as the fourth quarter came to an end, and it added more than 200 new customers by Dec. 31 bringing its total number of PKI customers, which it has been gathering since November 1997, to about 800.
In its Payment Services business, VeriSign reported more than 5,600 new customers for the quarter, an increase of 57 percent over the last quarter, attributing the growth to an attractive fee structure, superior service offering and a productive reseller channel.
Both its Global Registry Services and NSI Registrar added to the company's fourth quarter blitz. Global Registry Services -- which maintains the DNS infrastructure and the authoritative repository for all .com, .org and .net domain name registrations -- added 4.3 million new domain names in the quarter while processing the renewal, extension or transfer of 1.2 million more names during the quarter. It also opened the door for registrations in Chinese, Japanese and Korean characters in the quarter through its multilingual domain name testbed. VeriSign said the testbed has processed more than 800,000 domain name registrations since it opened on November 10th. Meanwhile, the NSI Registrar remained busy as well, registering about 1.9 million new and transferred domains in the .com, .org and .net TLDs. It also renewed and extended more than 650,000 registrations. It too, began registering domains in Chinese, Japanese and Korean characters and also began promoting .tv registrations.
Also during the quarter, 3Com and Toshiba tagged VeriSign's cable modem authentication services to secure their next-gen cable modems and the company was also selected by CableLabs to operate the "Root Certificate Authority," which establishes the hierarchy to use digital certificates to secure CableLabs conformant cable modems across the industry. VeriSign will generate, host and manage the Root CA. On the development front, VeriSign -- along with Microsoft and webMethods -- released the new XML key management specification (XKMS), which the company predicts will dramatically change the way in which digital credentials and signatures are adopted in the future.