VeriSign Reports First Quarter 2008 Results

May 9, 2008; 03:23 AM

MOUNTAIN VIEW, CA – May 8, 2008 – VeriSign, Inc. (Nasdaq: VRSN), the leading provider of Internet infrastructure for the networked world, today reported financial results for the first quarter ended March 31, 2008.

VeriSign reported revenue of $354 million for the first quarter of 2008. On a GAAP basis, VeriSign reported a net loss of $19 million and a net loss per share of $0.09. These GAAP results reflect a $25.5 million impairment on certain assets held for sale as well as a restructuring charge of $26.5 million for both continuing and discontinued operations.

VeriSign also reported segment revenue for Internet Infrastructure and Identity Services (3IS), or the “core businesses”: Naming, SSL, and IAS. The company reported revenue for the core businesses of $223 million, up 5% from Q4 and up 23% year over year.

On a non-GAAP basis (which excludes the items described below) for our core businesses, VeriSign reported net income of $44 million for the first quarter of 2008 and earnings per share of $0.21 per fully-diluted share. A table reconciling the GAAP to non-GAAP results reported above is appended to this release.

"Our first quarter non-GAAP results represent strong growth in our core businesses as well as better than expected performance from the businesses to be divested,” said Bill Roper, president and chief executive officer of VeriSign. “We are pleased that our strategy is beginning to show momentum and we will continue to invest in our core businesses.”

“This is a strong start to our fiscal year as we continue to focus on key operational priorities,” said Brian Robins, acting chief financial officer of VeriSign. “In addition to strong revenue growth this quarter in our core businesses, non-GAAP operating margin for core services was 30.3% and we repurchased approximately 14% of shares outstanding as of December 31, 2007 while maintaining a healthy balance sheet.”

Business and Corporate Highlights

• VeriSign Naming Services ended the quarter with approximately 84.4 million active domain names in the adjusted zone for .com and .net, representing a 5% increase over Q4 2007 and 22% increase year over year.

• During the quarter, VeriSign announced that as of October 1, 2008, the registry fee for .com domain names will increase from $6.42 to $6.86 and that the registry fee for .net domain names will increase from $3.85 to $4.23 per year.

• VeriSign continues the Project Titan initiative with the expansion of existing sites as well as the launch of five new regional Internet sites – two additional sites in the U.S., as well as sites in India, Hong Kong and Italy.

• VeriSign SSL Services ended the quarter with 1,024,000 SSL certificates in the installed base, up 4% from 987,000 in Q4 2007 and an increase of 16% from 886,000 certificates last year.
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During the first quarter of 2008, VeriSign announced that more than 100 credit unions have gone live on EV SSL. Other EV SSL customer wins include HSBC, FileYourTaxes.com and online editing house Scribendi.

• VeriSign’s IAS team launched the VIP Quick Start and VIP Test Drive for Developers programs to further the adoption of consumer Identity and Authentication Services.

• As of March 31, 2008, the company has sold over 1.8 million credentials for our VIP and one time password (OTP) programs.

• Kathleen Cote, formerly CEO of Worldport Communications Company, was appointed to the company’s Board of Directors on February 20, 2008. Ms. Cote serves on the Audit Committee.

•Brian G. Robins, senior vice president, was appointed acting chief financial officer on April 4, 2008.

Financial Highlights

• Non-core businesses, including $41 million from discontinued operations, delivered $172 million of revenue in the first quarter of 2008.

• During the quarter, the company repurchased over 31 million shares of common stock, retiring nearly 14% of the shares outstanding as of December 31, 2007.

• VeriSign ended the first quarter with Cash, Cash Equivalents, Restricted Cash and Short-term Investments of $532 million, a decrease of $893 million from the prior quarter as a result of Q1 share repurchases.

• Cash flow from operations for the quarter was $74 million.

• Capital expenditures were approximately $26 million for the first quarter.

• Deferred revenue on March 31, 2008 totaled $761 million, an increase of $23 million from the prior quarter.

Non-GAAP Items

Non-GAAP results exclude the following items which are included under GAAP: loss from discontinued operations, loss from non-core businesses, stock-based compensation, amortization of intangible assets, restructuring costs, non-recurring costs, and gains and losses on investments and derivatives. Non-GAAP financial information is also adjusted for a 30% tax rate which differs from the GAAP tax rate. A table reconciling the GAAP to non-GAAP net income is appended to this release.

Today’s Conference Call

VeriSign will host a live teleconference call today at 2:00 pm (PST) to review the quarter’s results. The call will be accessible by direct dial at (888) 676-VRSN (US) or (913) 312-1457 (international). A listen-only live web cast and accompanying slide presentation of the earnings conference call will also be available at http://investor.verisign.com. A replay of this call will be available at (888) 203-1112 or (719) 457-0820 (passcode: 5868343) beginning at 5:00 pm (PDT) on May 8 and will run through May 14. This press release and the financial information discussed on today's conference call are available on the Investor Relations section of the VeriSign website at http://investor.verisign.com.

About VeriSign VeriSign, Inc. (Nasdaq: VRSN) operates intelligent infrastructure services that enable and protect billions of interactions every day across the world’s voice, video and data networks. Additional news and information about the company is available at www.verisign.com.

Source: VeriSign