Surprising nobody, Verisign to raise .com prices again

Verisign has announced its second consecutive annual price increase for .com domain names.

The wholesale registry fee for .com names will rise from $8.39 to $8.97 on September 1 this year, an extra $0.58 for every new or renewing domain, of which there are currently over 160 million.

Verisign announced the move, which was expected, as it announced a 2021 profit of $785 million and a 65.3% operating margin.

CEO Jim Bidzos, speaking to analysts, played down the impact of the increases on .com registrants, pointing out that .com prices were frozen under the Obama administration and have only gone up once before, last year, since 2012.

“This is the second wholesale price increase for COM since January of 2012,” he said. “So, if you look back over the last 10 years, that translates into a cost increase of only 1.3% CAGR over the last ten and a half years actually.”

The current .com contract, signed off by the Trump administration and ICANN, allows for two more 7% annual price increases, excluding the just-announced one, but Bidzos would not say whether Verisign plans to exercise those options.

If it does (and it almost certainly will) it would raise the price to $10.26, where it would stay until at least October 2026, he said.

“We believe .com continues to be positioned competitively,” he said.

It’s still basically free money for Verisign, which saw strong fourth-quarter and full-year 2021 results.

The company yesterday reported revenue of $1.33 billion for 2021, up 4.9%, with net income of $785 million, down from $815 million. The operating margin was 65.3%, compared to 65.2%.

For the fourth quarter, revenue was up 6.3% to $340 million, with net income of $330 million compared to $157 million. Operating margin was 65.3%, compared to 63.9%.

For 2022, the company is guiding for revenue of between $1.42 billion and $1.44 billion, based on the price increases and predicted unit growth of between 2.5% and 4.5%. The operating margin is expected to be between 64.5% and 65.5%.

Bidzos also addressed the controversial .web gTLD, which it won at auction but has been unable to launch due to legal action pursued by rival bidder Afilias/Altanovo.

An Independent Review Process panel recently threw a decision about .web back at ICANN, which is now considering Afilias’ allegations of wrongdoing at the board level.

“ICANN looks to be moving forward with making the decision on the delegation of .web, and we will be monitoring their process,” Bidzos said. He said that Verisign has not budgeted for any revenue or costs from .web in 2022.

That’s probably wise. Afilias recently told us that it has not stopped fighting against Verisign’s .web win.

Verisign sells a million more domains than it did last year

Verisign has posted third-quarter financial results that were strong in spite of, or possibly due to, the economic impact of the coronovirus pandemic.

The company sold 10.9 million new .com and .net domains in the quarter to September 30, a million more than the same period last year.

This led to a net sequential increase in total .com/.net registrations of 1.65 million. It ended the quarter with 163.7 million names under management.

This strong performance led Verisign to increase its guidance for the full year. It now says domain growth will be between 3.5% and 4% compared to 2019.

That represents an increase from 2.75% at the low end of the range the company predicted three months ago and a lowered expectation of 2% in April.

CEO Jim Bidzos told analysts that there’s still some coronavirus-related uncertainty, along with the usual Q4 seasonable weakness, baked into the guidance, despite two consecutive quarters of decent growth.

Renewal rates, which were their lowest for years in Q2, recovered slightly, up from 72.8% to 73.5%.

For Q3, Verisign reported net income of $171 million, compared to $154 million a year ago, on revenue that was up 3.1% at $318 million. The bottom line was aided by $24 million in tax benefits.

Bidzos repeated the company’s commitment to not raise .com prices until March, while confirmed that its fee will definitely go up at some point over the next 12 months.

.com renewals lowest in years, but Verisign sees lockdown bump anyway

.com and .net saw decent growth in the lockdown-dominated second quarter, despite Verisign reporting the lowest renewal rate since 2017.

The company last night reported that it sold more new domains in Q2 than it did in the same period last year — 11.1 million versus 10.3 million a year ago.

It added a net 1.41 million names across both TLDs in the quarter, compared to growth of 1.34 in Q2 2019.

CEO Jim Bidzos did not directly credit coronavirus for the bump, but he told analysts that the growth was driven primarily by small businesses in North America getting online. The US went into lockdown in the last week of March.

Verisign has now upped its guidance for the year. It now expects growth in domains of between 2.75% and 4%. That’s higher than the guidance it was giving out at the start of the year, pre-coronavirus.

The company had lowered this guidance to between 2% and 3.75% in April due to coronavirus uncertainties, which with hindsight clearly seems overly cautious.

On the flipside, Verisign’s estimated renewal rate for the quarter was down to only 72.8%, down from 74.2% a year ago, the worst it’s been since Q1 2017, when renewals were suffering through the tail-end of a massive Chinese junk drop.

But Bidzos said that the low rate was “primarily related to the lower overall first-time renewal rate”, suggesting that it might be more due to registrar promotions or heightened speculation a year ago than any coronavirus-related drag factor.

For Q2, Verisign reported revenue up 2.6% year over year at $314 million, with net income up from $148 million to $152 million.

The company also announced yesterday that it is freezing its prices across all of its TLDs until March 31, 2021.

You’ll recall that it gets the right to increase prices 7% starting on October 26 this year, under its new deal with ICANN and the US government, and Verisign confirmed yesterday that there will definitely be a price increase next year.

Because there’s a six-month notice period requirement in the contract, news of the timing of this increase could come as soon as September this year.

Domain growth flat in Q2

Growth in the volume of registered domain names was exactly the same in the second quarter as it was in the first.
That’s according to the latest Domain Name Industry Brief, published by Verisign late last week.
Q2 closed with 331.9 million registered names, up 1.3 million or 0.4% sequentially. The Q1 DNIB published three months ago also showed net growth of 1.3 million names.
That’s an increase of 6.7 million names, 2.1%, over the second quarter 2016, which compares unfavorably to the first quarter’s annual growth of 11.8 million names.
A slight majority of the 1.3 million bump seems to have come from .com and .net, which together grew from 143.6 million to 144.3 million names, roughly a 700,000 name or 0.4% sequential increase.
ccTLDs fared a little better, going to to 144.2 million names from 143.1 million in Q1. That’s a 1.1 million increase.
New gTLDs took the edge off the overall industry growth, shrinking from 25.4 million names in Q1 to 24.3 million in Q2.
That’s largely due to the expiration of millions of speculative .xyz registrations that were given away for free or nearly free in 2016.
As anticipated, .xyz fell off the top 10 list of all TLDs to be replaced by 17-year-old .info, which added an impressive 300,000 names to wind up in the #9 spot ahead of flat Netherlands ccTLD .nl.