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Verisign predicts more gloom as registrars shun .com growth

Kevin Murphy, July 26, 2024, 09:19:58 (UTC), Domain Registries

Verisign has yet again massively downgraded its expectations for .com growth, after it lost almost two million domains in the second quarter.

The company said it had 170.6 million .com and .net domains at the end of June, down 1.8 million compared to Q1 and a 2.2% decrease compared to a year earlier.

CEO Jim Bidzos said Verisign now expects the domain name base for the full year to be between -2% and -3%. That compares to a range of between +0.25% and -1.75% predicted in April and +1% to -1% predicted in February.

The Q2 renewal rate is expected to be 72.6% compared to 73.4% a year ago and 74.1% in Q1.

Bidzos said he does not expect the base to return to positive growth until the second half of 2025.

Bidzos, talking to analysts, acknowledged that Verisign’s wholesale .com price increases “may have had an impact” but put the blame for the growth shortfall squarely on what he called the “unregulated retail channel” in the US.

American registrars have been cranking up their prices in order to prioritize average revenue per user over volume, he said, meaning retail prices for .com have gone up “more than twice” Verisign’s own price hikes, leading to fewer sales as a result.

“Our research shows that the benefit from our capped wholesale prices is not always passed on to consumers,” he said.

He faced a barrage of questions from analysts about recent calls for the US government to sever its ties with Verisign over .com and put the TLD out for competitive rebidding, but reiterated the company’s position that if the government cuts it off, it still gets to run .com under its contract with ICANN.

Despite the volume woes, Verisign continues to be a high-margin cash-generating machine.

The company reported Q2 net income of $199 million, up from $186 million a year ago, on revenue up 4.1% at $387 million. Operating income was up to $266 million from $249 million and operating cash flow up to $160 million from $145 million.

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Comments (5)

  1. Richard Funden says:
    July 28, 2024 at 9:53 am

    So he has no issues with raising his own prices, but if registrars do the same, it’s a problem?

    Got it!

    He does understand that the larger part of the retail price of a .com domain ends up in his coffers, while registrars do the majority of the work to market the TLD and support the registrants, right?

    Reply
    • Rubens Kuhl says:
      July 28, 2024 at 7:52 pm

      If you add registration plus hosting package, registrars get a bigger share of the yearly cost to keep an online presence. This is why registrars heavily market and support registrants. If registrars only sold the domain with no added services, they would mark-up domains higher and invest less in marketing.

      Reply
      • Richard Funden says:
        August 6, 2024 at 12:38 pm

        ‘If you add registration plus hosting package…”, because hosting is free, right?

        Reply
        • Rubens Kuhl says:
          August 6, 2024 at 4:56 pm

          Nothing is free, but they are both components of the TCO of having an online presence. Registrars and resellers sell both to registrants, and make a business decision of which part they will charge more or less, both contributing to the margin. Sometimes they prefer selling a domain at loss and charging more in the hosting, sometimes the opposite.

          Reply
  2. Rubens Kuhl says:
    August 14, 2024 at 1:33 pm

    More from Verisign in this topic:
    https://blog.verisign.com/domain-names/myths-vs-facts-about-dot-com/

    Reply

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