VeriSign, Inc. reports 33.1% Net Income growth in 2020 and almost no change in EBITDA Margin of 68.8%
02/11/2021 • About VeriSign, Inc. (
$VRSN) • By InTwits
VeriSign, Inc. reported 2020 financial results today. Overall the company's long term financial model is characterised by the following facts:
- VeriSign, Inc. has low CAPEX intensity: 5 year average CAPEX/Revenue was 3.3%. At the same time it's a lot of higher than industry average of 3.0%.
- CAPEX is quite volatile: $35m in 2020, $45m in 2019, $22m in 2018, $19m in 2017, $12m in 2016
- The company has highly profitable business model: ROIC is 221.3%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.6x while industry average is 2.0x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue increased on 2.7%. Revenue growth showed acceleration in 20Q4 - it increased 3.1% YoY. Despite revenue decline the EBITDA margin expanded. EBITDA Margin increased on 4.0 pp from 11.0% to 15.0% in 2020. EBITDA Margin followed a growing trend at 1.1 pp per annum in the last 5 years.
Gross Margin showed almost no change in 2020. Gross Margin stuck to a growing trend at 0.82 pp per annum in the last 5 years. SG&A as a % of Revenue showed almost no change in 2020. SG&A as a % of Revenue followed a declining trend at -0.85 pp per annum in the last 5 years.
Net Income margin surged on 14.7 pp from 49.7% to 64.4% in 2020. Net Income margin stuck to a growing trend at 6.2 pp per annum in 2016-2020.
Investments (CAPEX, working capital and M&A)
In 2020 VeriSign, Inc. had CAPEX/Revenue of 3.4%. CAPEX/Revenue decreased slightly on 0.82 pp from 4.2% in 2017 to 3.4% in 2020. It's average level of CAPEX/Revenue for the last three years was 3.2%.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.6x and Debt / EBITDA is 2.1x. Net Debt / EBITDA increased on 0.1x from 1.5x to 1.6x in 2020. Debt showed almost no change in 2020 while cash dropped on 21.1%.
VeriSign, Inc. has no short term refinancing risk: cash is higher than short term debt (6,558.7%).
Valuation and dividends
The company's trades at EV/EBITDA 27.7x and P/E 27.9x.
Management team
D James Bidzos is a the company's CEO. D James Bidzos has spent 11 years with the company. George E Kilguss III is a VeriSign, Inc.'s CFO. George E Kilguss III has spent 5 years at the company.
Financial and operational results
FY ended 12/31/2020
VeriSign, Inc. ($VRSN) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 1,142 | 1,165 | 1,215 | 1,232 | 1,265 | 2.7% |
| Gross Profit | 944 | 972 | 1,023 | 1,051 | 1,085 | 3.2% |
| SG&A | 198 | 212 | 198 | 184 | 186 | 0.9% |
| EBITDA | 745 | 758 | 816 | 852 | 871 | 2.1% |
| EBIT | 687 | 708 | 767 | | | |
| Interest expence | 116 | 136 | 115 | | | |
| Tax | 141 | 142 | 147 | | | |
| Net Income | 441 | 457 | 582 | 612 | 815 | 33.1% |
| Stock Based Compensation | 50 | 53 | 53 | | | |
Balance Sheet
|
|---|
| Cash | 232 | 466 | 357 | 508 | 401 | -21.1% |
| Accounts Receivable | 13 | | | | | |
| Short Term Debt | 630 | 628 | 0 | 5 | 6 | 32.1% |
| Long Term Debt | 1,237 | 1,783 | 1,785 | 1,792 | 1,795 | 0.2% |
Cash flow
|
|---|
| Capex | 27 | 49 | 37 | 40 | 43 | 7.6% |
Ratios
|
|---|
| Revenue growth | 7.8% | 2.0% | 4.3% | 1.4% | 2.7% | |
| EBITDA growth | 11.6% | 1.7% | 7.7% | 4.5% | 2.1% | |
|
|---|
| Gross Margin | 82.6% | 83.4% | 84.2% | 85.3% | 85.8% | 0.4% |
| EBITDA Margin | 65.2% | 65.0% | 67.1% | 69.2% | 68.8% | -0.4% |
| EBIT Margin | 60.1% | 60.7% | 63.2% | | |
| SG&A, % of revenue | 17.4% | 18.2% | 16.3% | 15.0% | 14.7% | -0.3% |
| SBC, % of revenue | 4.4% | 4.5% | 4.3% | | |
| Net Income Margin | 38.6% | 39.2% | 47.9% | 49.7% | 64.4% | 14.7% |
| CAPEX, % of revenue | 2.3% | 4.2% | 3.0% | 3.3% | 3.4% | 0.2% |
|
|---|
| ROIC | 65.2% | 54.3% | 81.9% | 228.3% | 221.3% | -7.0% |
| Net Debt/EBITDA | 2.2x | 2.6x | 1.8x | 1.5x | 1.6x | 0.1x |
| Interest coverage ratio (ICR) | 5.9x | 5.2x | 6.7x | | |
| Interest expence / Average debt | 6.2% | 6.4% | 5.5% | | | |
People
|
|---|
| Insider ownership | 1.3% | 1.3% | 1.3% | | | |
| Employees | 990 | 952 | 900 | | | |
| Revenue/Employee, th. $ | 1,154 | 1,224 | 1,350 | | | |
VeriSign, Inc. ($VRSN) key quoterly financial indicators
| mln. $ | 20Q1 | 20Q2 | 20Q3 | 20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 313 | 314 | 318 | 320 | | 2.0% | 2.6% | 3.1% | 3.1% |
| EBITDA | 217 | 218 | 218 | 216 | | 2.7% | 2.5% | 0.6% | 2.8% |
| Net Income | 334 | 152 | 171 | 157 | | 105.6% | 3.4% | 11.1% | 6.1% |
Balance Sheet
|
|---|
| Cash | 499 | 307 | 146 | 401 | | -36.0% | -59.2% | 33.3% | -21.1% |
| Short Term Debt | 0 | 0 | 0 | 6 | | -100.0% | -100.0% | -100.0% | 32.1% |
| Long Term Debt | 1,792 | 1,794 | 1,794 | 1,795 | | 0.1% | 0.1% | 0.1% | 0.2% |
Ratios
|
|---|
| Gross Margin | 85.4% | 86.1% | 85.8% | 85.6% | | 0.3% | 0.5% | 0.2% | 0.6% |
| EBITDA Margin | 69.6% | 69.5% | 68.7% | 67.6% | | 0.5% | -0.1% | -1.7% | -0.2% |
| Net Income Margin | 106.9% | 48.5% | 53.8% | 49.1% | | 53.9% | 0.3% | 3.9% | 1.4% |
Peers in Internet Services & Infrastructure
Below we provide VeriSign, Inc. benchmarking against other companies in Internet Services & Infrastructure industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| MongoDB, Inc. ($MDB) | - | 55.3% | 63.8% | 60.8% | 57.9% |
| Twilio Inc. ($TWLO) | - | 43.9% | 62.9% | 74.5% | 55.3% |
| Okta, Inc. ($OKTA) | - | 86.6% | 60.0% | 55.6% | 46.8% |
| Wix.com Ltd. ($WIX) | - | 46.7% | 41.8% | 26.1% | 29.9% |
| Limelight Networks, Inc. ($LLNW) | - | 9.6% | 6.1% | 2.5% | 14.7% |
| |
|---|
| Median (9 companies) | 20.7% | 13.7% | 19.2% | 21.2% | 14.7% |
|---|
| VeriSign, Inc. ($VRSN) | - | 2.0% | 4.3% | 1.4% | 2.7% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Okta, Inc. ($OKTA) | 58.1% | 65.1% | 68.5% | 71.6% | 72.8% |
| MongoDB, Inc. ($MDB) | 68.0% | 70.5% | 74.2% | 72.4% | 70.3% |
| Crexendo Inc ($CXDO) | 60.2% | 67.9% | 67.9% | 69.9% | 69.8% |
| Wix.com Ltd. ($WIX) | 84.4% | 83.7% | 79.0% | 74.1% | 68.1% |
| GoDaddy Inc. ($GDDY) | 64.4% | 65.3% | 66.4% | 65.6% | 65.1% |
| |
|---|
| Median (9 companies) | 59.2% | 61.7% | 64.9% | 65.9% | 65.1% |
|---|
| VeriSign, Inc. ($VRSN) | 82.6% | 83.4% | 84.2% | 85.3% | 85.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 33.9% | 27.6% | 29.4% | 39.5% | 41.0% |
| GoDaddy Inc. ($GDDY) | 11.4% | 12.2% | 14.4% | 15.6% | 15.8% |
| Crexendo Inc ($CXDO) | -28.7% | -6.2% | -1.0% | 10.6% | 7.8% |
| Brightcove Inc. ($BCOV) | -0.8% | -8.0% | -3.8% | -2.6% | 5.5% |
| Limelight Networks, Inc. ($LLNW) | -30.9% | 6.7% | 7.0% | 3.8% | 5.2% |
| |
|---|
| Median (9 companies) | -5.1% | -7.1% | 14.4% | -2.6% | 5.2% |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 65.0% | 67.1% | 69.2% | 68.8% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 13.5% | 16.7% | 14.9% | 19.4% | 22.9% |
| Limelight Networks, Inc. ($LLNW) | 5.7% | 11.2% | 8.2% | 17.3% | 10.9% |
| Crexendo Inc ($CXDO) | 0.0% | 0.0% | 0.1% | 0.5% | 4.5% |
| Okta, Inc. ($OKTA) | 4.8% | 3.9% | 2.6% | 5.0% | 2.6% |
| GoDaddy Inc. ($GDDY) | 2.9% | 3.7% | 3.3% | 2.9% | 2.0% |
| |
|---|
| Median (9 companies) | 4.0% | 3.8% | 3.3% | 2.9% | 2.0% |
|---|
| VeriSign, Inc. ($VRSN) | 2.3% | 4.2% | 3.0% | 3.3% | 3.4% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Akamai Technologies, Inc. ($AKAM) | 11.9% | 7.9% | 8.2% | 10.8% | 10.9% |
| GoDaddy Inc. ($GDDY) | 2.9% | 2.7% | 4.6% | 6.0% | 8.1% |
| Crexendo Inc ($CXDO) | -114.0% | -44.3% | -10.5% | 35.4% | 7.3% |
| Brightcove Inc. ($BCOV) | -11.3% | -26.9% | -19.0% | -24.8% | -5.2% |
| Limelight Networks, Inc. ($LLNW) | -42.9% | -5.7% | -3.1% | -8.6% | -5.8% |
| |
|---|
| Median (9 companies) | -18.5% | -14.6% | 1.0% | -12.4% | -5.8% |
|---|
| VeriSign, Inc. ($VRSN) | 65.2% | 54.3% | 81.9% | 228.3% | 221.3% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Limelight Networks, Inc. ($LLNW) | - | -1.7x | -1.8x | -0.4x | 5.7x |
| GoDaddy Inc. ($GDDY) | 2.3x | 6.8x | 3.9x | 3.4x | 4.9x |
| Akamai Technologies, Inc. ($AKAM) | 0.4x | 0.5x | 0.7x | 2.0x | 1.8x |
| Brightcove Inc. ($BCOV) | - | - | - | - | -2.6x |
| Crexendo Inc ($CXDO) | - | - | - | -2.6x | -12.2x |
| |
|---|
| Median (5 companies) | 1.3x | 6.5x | 1.0x | 0.8x | 1.8x |
|---|
| VeriSign, Inc. ($VRSN) | 2.2x | 2.6x | 1.8x | 1.5x | 1.6x |
