Q4 2021 Verisign Inc Earnings Call
Good day, everyone and welcome to Verisign fourth quarter and full year 2021 earnings call. Today's conference is being recorded recording of this call is not permitted unless preauthorized at this time I would like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and corporate.
Speaker 1: and welcome to VeriSign's fourth quarter and full year 2021 earnings call. Today's conference is being recorded. Recording of this call is not permitted unless preauthorized. At this time, I would like to turn the conference over to Mr. David Adgley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.
Treasurer. Please go ahead Sir.
Thank you operator, welcome to <unk> fourth quarter and full year 2021 earnings call. Joining me are Jim <unk> Executive Chairman and CEO , Todd <unk>, President and COO, and George Kilgus Executive Vice President and CFO .
Speaker 2: Thank you, operator. Welcome to VeriSign fourth quarter and full year 2021 earnings call. Joining me are Jim Bizos, executive chairman and CEO , Todd Strube, president and COO, and George Kilgus, executive vice president and CFO . This call and presentation are being webcast from the investor relations website, which is available under about VeriSign on VeriSign.com. There you will also...
This call and presentation are being webcast from the Investor Relations website, which is available under about Verisign on Verisign Dot com.
There you will also find our earnings release at the end of this call. The presentation will be available on that site and within a few hours. The replay of the call will be posted.
Speaker 2: At the end of this call, the presentation will be available on that site and within a few hours the replay of the call will be posted.
Financial results in our earnings release are unaudited and our remarks include forward looking statements that are subject to the risks and uncertainties.
Speaker 2: Financial results in our earnings release are unaudited and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail on our documents filed with the SEC, specifically the most recent report on Form 10-K . BearSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure.
We discussed in detail on our documents filed with the SEC specifically the most recent report on Form 10-K .
<unk> does not update financial performance or guidance during the quarter unless it is done through a public disclosure.
The financial results in today's call and the matters, we will be discussing today include GAAP results and to non-GAAP measures used by Verisign.
Speaker 2: The financial results in today's call and the matters we will be discussing today include gap results and two non- GAAP measures used by Verisign, adjusted EBITDA and free cash.
Adjusted EBITDA and free cash flow GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found on the Investor Relations section of our website available after this call.
Speaker 2: Gap to non-gap reconciliation information is appended to the slide presentation which can be found on the investor relations section of our website available after this.
Jim and George will provide some prepared remarks and afterward, we will open the call for your questions with that I would like to turn the call over to Jeff.
Speaker 2: Jim and George will provide some prepared remarks, and afterward we will open a call for your questions. With that, I would like to turn it over to George.
Thank you David.
Speaker 3: Thank you, David. Good afternoon to everyone and thank you for joining us.
Afternoon to everyone and thank you for joining us.
I'm pleased to report another solid quarter and full year of operational and financial performance for Verisign.
Speaker 3: I'm pleased to report another solid quarter and full year of operational and financial performance for Verisign.
Throughout 2021, we delivered strong financial results, while continuing to strengthen our critical internet infrastructure.
Speaker 3: Throughout 2021, we delivered strong financial results while continuing to strengthen our critical Internet infrastructure.
We complied with the high operational standards required by our ICANN agreements and extended our record of Dot com and dot net DNS availability to over 24 years.
Speaker 3: We complied with the high operational standards required by our ICANN agreements and extended our record of.com and.net DNS availability to over 24 years.
I would like to thank our team for their dedicated efforts and expertise, which enabled us to realize these results.
Speaker 3: I would like to thank our team for their dedicated efforts and expertise, which enabled us to realize these results.
The critical infrastructure, we operate.
Speaker 3: The critical infrastructure we operate provides the domain name system navigation service which people around the world increasingly depend on for commerce, education, healthcare, and person to person connections.
The domain name system navigation service, which people around the world increasingly depend on for Commerce education health care and person to person connection.
For the full year 2021 we processed $44 6 million, new registrations and delivered revenue of $1 $328 million.
Speaker 3: For the full year 2021, we processed 44.6 million new registrations and delivered revenue of $1,328,000,000, while generating free cash flow of $754,000,000.
While generating free cash flow of $754 million during.
During the full year of 2021, we repurchased three 3 million shares for $700 million.
Speaker 3: During the full year of 2021, we repurchased 3.3 million shares for 700 million.
Effective today the board of directors has increased the amount authorized for share repurchase our verisign common stock by approximately $705 million to a total of 1 billion authorized and available under the share repurchase program, which has no expiration.
Speaker 3: Effective today, the Board of Directors has increased the amount authorized for share repurchase of Verisign common stock by approximately $705 million to a total of $1 billion authorized and available under the share repurchase program, which has no expiration.
Our financial and liquidity position remains stable with $1 2 billion in cash cash equivalents and marketable securities at the end of the quarter.
Speaker 3: Our financial and liquidity position remains stable with $1.2 billion in cash, cash equivalents, and marketable securities at the end of the quarter.
We continually evaluate the overall liquidity and investing needs of the business and consider the best uses for our cash including potential share repurchases.
Speaker 3: We continually evaluate the overall liquidity and investing needs of the business and consider the best uses for our cash, including potential share we purchase.
At the end of December the domain name base in Dot Com and Dot net totaled $173 4 million consisting of 160 million names for Dot Com and 13 4 million names for dot net with a year over year growth rate of 5%.
Speaker 3: At the end of December , the domain name base in.com and.net totaled 173.4 million consisting of 160 million names for.com and 13.4 million names for.net with a year-over-year growth rate of 5%.
Looking at fourth quarter operational results, we processed 10.6 million, new registrations and the domain name base increased by one point 37 million names.
Speaker 3: Looking at fourth quarter operational results, we process 10.6 million new registrations and the domain name base increased by 1.37 million names.
Although renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the fourth quarter of 2021 will be approximately 74, 8%.
Speaker 3: Although renewal rates are not fully measurable until 45 days after the end of the quarter, we believe that the renewal rate for the fourth quarter of 2021 will be approximately 74.8%.
This preliminary rate compares to 73, 5% achieved in the fourth quarter of 2020.
Speaker 3: This preliminary rate compares to 73.5% achieved in the fourth quarter of 2020 and 75% in the third quarter.
75% in the third quarter.
As we look to 2022 we expect the domain name base to grow at a rate of between 2.5 and four 5%.
Speaker 3: As we look to 2022, we expect the domain name base to grow at a rate of between 2.5 and 4.5%.
As announced in today's earnings release, we have given notice of a price increase of 58 cents to the annual wholesale price for Dot com domain names.
Speaker 3: As announced in today's earnings release, we have given notice of a price increase of 58 cents to the annual wholesale price for dot com domain names, which raises the price from $8.39 to $8.97 effective September 1, 2022.
There's the price from $8.39 to $8.97 effective September one 2022.
I should point out that anyone can register a dotcom domain at any time before September one for up to 10 years and lock in that price for the full term of up to 10 years.
Speaker 3: I should point out that anyone can register a dot com domain at any time before September 1st for up to 10 years and lock in that price for the full term of up to 10 years.
Turning to adopt web we.
Speaker 3: Turning to.web, we noticed last time that Affilius had filed an application for reconsideration of the May 2021 final decision.
We noted last time that affiliates had filed an application for reconsideration of the May 2021 final decision.
Which as a reminder, rejected their request to be awarded Dot web.
Speaker 3: which, as a reminder, rejected their request to be awarded.west.
Since we last spoke with you the significant development in December was that affiliates as application for reconsideration was also rejected and further affiliates was sanctioned for filing it because the arbitration panel found that it was quote frivolous.
Speaker 3: Since we last spoke with you, the significant development in December was that Aphelios' application for reconsideration was also rejected. And further, Aphelios was sanctioned for filing it because the arbitration panel found that it was, quote, frivolous.
Since then in mid January Ikea as board of Directors directed wanted it standing committees to review the panels final decision and provide the board with its findings.
Speaker 3: Since then, in mid-January, ICANN's Board of Directors directed one of its standing committees to review the panel's final decision and provide the Board with its findings.
What's a rejection of affiliates is application and the reaffirmation of the panels final decision. Those roadblocks are now out of the way and I can looks to be moving forward with making the decision on the delegation of software and we will be monitoring their process.
Speaker 3: With the rejection of affiliates of application and the reaffirmation of the panel's final decision, those roadblocks are now out of the way. And ICANN looks to be moving forward with making the decision on the delegation of.web and we will be monitoring their process.
As we have said before we continue to look forward to becoming the dark web registry, operator, and establishing yet alongside dot com and dot net as an additional option for businesses and individual end users worldwide.
Speaker 3: As we have said before, we continue to look forward to becoming the.web registry operator and establishing it alongside.com and.net as an additional option for businesses and individual end users worldwide. Now I'd like to turn the call over to George.
Now I'd like to turn the call over to George.
Thank you Jim and good afternoon, everyone.
For the year ended December 31st 2021.
Speaker 4: For the year ended December 31st, 2021, the company generated revenue of $1,328,000,000, up 4.9%, and delivered operating income of $867,000,000, up 5.2% from 2020.
The company generated revenue of $1 $328 million up four 9% and delivered operating income of $867 million up five 2% from 2020.
Operating expense totaled $461 million and was up four 5% from the prior year.
Speaker 4: Operating expense totaled $461 million and was up 4.5% from the prior year.
The full year 2021 operating margin was 65, 3% and free cash flow was $754 million.
Speaker 4: The full year 2021 operating margin was 65.3% and free cash flow was $754 million.
For the fourth quarter revenue came to $340 million up six 3% from the same quarter in 2020 with operating income of $222 million up eight 6% from $205 million in the same quarter a year ago.
Speaker 4: For the fourth quarter, revenue came to $340 million, up 6.3% from the same quarter in 2020, with operating income of $222 million, up 8.6%, from $205 million in the same quarter a year ago.
Operating expense totaled $118 million for the fourth quarter of 2021 compared to $113 million in the third quarter and $116 million in the fourth quarter of 2020.
Speaker 4: Operating expense totaled $118 million for the fourth quarter of 2021, compared to $113 million in the third quarter and $116 million in the fourth quarter of 2020.
The sequential increase was primarily a result of increased marketing spend in the quarter.
Speaker 4: The sequential increase was primarily a result of increased marketing spend in the quarter.
The operating margin in the quarter was 65, 3% compared to 66, 2% in the third quarter and 63, 9% for the same quarter of 2020.
Speaker 4: The operating margin in the quarter was 65.3% compared to 56.2% in the third quarter and 63.9% for the same quarter of 2020.
Net income totaled $330 million compared to $157 million, a year earlier, which produced diluted earnings per share of $2.97 in the fourth quarter of 2021 compared to $1.38 for the same quarter of 2020.
Speaker 4: Net income totaled $330 million compared to $157 million a year earlier, which produced diluted earnings per share of $2.97 in the fourth quarter of 2021 compared to $1.38 for the same quarter of 2020.
As noted in our earnings release today net income for the fourth quarter of 2021.
Speaker 4: As noted in our earning release today, net income for the fourth quarter of 2021 included the recognition of a deferred income tax benefit related to a restructuring of two of our international subsidiaries which involved the transfer of certain non-U.S. intellectual property between these subsidiaries.
Included the recognition of a deferred income tax benefit related to a restructuring of two of our international subsidiaries, which involve the transfer of certain non U S intellectual property between these subsidiaries.
The recognition of this deferred income tax benefit increased net income by $165 5 million and increased diluted earnings per share by $1.49 in the quarter.
Speaker 4: The recognition of this deferred income tax benefit increased net income by $165.5 million and increased diluted earnings per share by $1.49 in the quarter.
Net income for the fourth quarter of 2020 included the recognition of $12 4 million of previously unrecognized tax benefits.
Speaker 4: Net income for the fourth quarter of 2020 included the recognition of 12.4 million of previously unrecognized tax benefits.
Which increased diluted earnings per share by 11 11 sets.
Speaker 4: which increased diluted earnings per share by 11 cents.
As we noted in the fourth quarter of 2020 earnings release.
Speaker 4: as we noted in the fourth quarter of 2020 earnings release.
For 2022 we expect our GAAP effective tax rates to be between 21% and 24%.
Speaker 4: For 2022, we expect our gap effective tax rates to be between 21% and 24%.
Operating cash flow for the fourth quarter was $206 million and free cash flow was $193 million compared with $195 million and 189 million respectively for the fourth quarter of 2020.
Speaker 4: Operating cash flow for the fourth quarter was $206 million and free cash flow was $193 million, compared with $195 million and $189 million, respectively, for the fourth quarter of 2020.
Starting with our first quarter financial statements, we will combine our sales and marketing and general and administrative operating expense lines into one SG&A line to better align with peer company reporting.
Speaker 4: Starting with our first quarter financial statements, we will combine our sales and marketing and general administrative operating expense lines into one SG&A line to better align with peer company reporting.
In addition.
Any significant fluctuations in sales and marketing we continue to be disclosed within our new SG&A section of our MD&A contained in our filings.
Speaker 4: In addition, any significant fluctuations in sales and marketing would continue to be disclosed within our new SG&A section of our MD&A contained in our filings. I'll now discuss our full year.
I'll now discuss our full year 2022 guidance.
Revenue is expected to be in the range of $1.420 billion to $1.440 billion.
Speaker 4: Revenue is expected to be in the range of $1,420,000,000 to $1,440,000,000.
This revenue range reflects the domain name base growth expectation of between two 5% and four 5% that Jim mentioned earlier as well as the impact of the Dot com price increase announced today.
Speaker 4: This revenue range reflects the domain name base growth expectation of between 2.5% and 4.5% that Jim mentioned earlier, as well as the impact of the dot com price increase announced today.
The operating margin is expected to be between 64, 5% and 65, 5%.
Speaker 4: The operating margin is expected to be between 64.5% and 65.5%.
Interest expense and non operating income net is expected to expect it to be an expense of between 70 million to $75 million.
Speaker 4: Interest expense and non-operating income net is expected to be an expense of between $70 million to $75 million.
Capital expenditures are expected to be between 40 million and $50 million.
Speaker 4: Capital expenditures are expected to be between $40 million and $50 million.
As mentioned the GAAP effective tax rate is expected to be between 21% and 24%.
Speaker 4: As mentioned, the gap effective tax rate is expected to be between 21% and 24%.
We expect the cash tax rate for 2022 to also be within the same guidance range.
Speaker 4: we expect the cash tax rate for 2022 to also be within the same guidance range.
In summary.
Verisign continued to demonstrate sound financial performance during the fourth quarter and for the full year 2021.
Speaker 4: Verisign continued to demonstrate sound financial performance during the fourth quarter and for the full year 2021 And we look forward to continuing our focused execution Now I'll turn the call back to Jim for his closing remarks.
And we look forward to continuing our focused execution.
Now I'll turn the call back to Jim for his closing remarks.
Thank you George.
Before we open the call for your questions I'd like to update you as I've done in previous quarters on some of our activities in the field of corporate citizenship under our <unk> cares program, which aims to make a positive and lasting impact on the global Internet community and the communities in which we live and work.
Speaker 3: Before we open the call for your questions, I'd like to update you, as I've done in previous quarters, on some of our activities in the field of corporate citizenship under our Verisign CARES program, which aims to make a positive and lasting impact on the global Internet community and the communities in which we live and work.
During the fourth quarter, we once again join forces with food banks in the areas, where we have a footprint to help alleviate seasonal and COVID-19 related food and security.
Speaker 3: During the fourth quarter, we once again joined forces with food banks in the areas where we have a footprint to help alleviate seasonal and COVID-related food insecurity. We also renewed for a further year our partnership with Virginia Ready, the launch partner of our initiative to help those whose employment has been adversely affected by the COVID-19 pandemic to access retraining and other assistance to find new jobs in the growing technology sector.
We also renewed for a further year, our partnership with Virginia already the launch partner of our initiative to help those whose employment has been adversely affected by the COVID-19 pandemic.
Access REIT training and other assistance to find new jobs in the growing technology sector.
And finally in Q4, we made a further contribution to the equal justice initiatives recognizing that there remains much to be done in the important area of racial and social justice.
Speaker 3: And finally, in Q4, we made a further contribution to the Equal Justice Initiative, recognizing that there remains much to be done in the important area of racial and social justice.
And now we'll open the call for your questions operator, we're ready for the first question.
Speaker 3: And now we'll open the call for your questions. Operator, we're ready for the first question.
Thank you and it is probably one of the questions that if youre using a speakerphone. Please make sure. Your mute function is off to allow your signal should reach our equipment.
Speaker 1: Thank you. And it is star one for questions. And if you're using a speakerphone, please make sure your mute function is off to allow your signal to reach our equipment. The rest of the written Convertible speakers until entrance Commerce Level.
And we'll go to Sterling Auty of JP Morgan.
Yeah, Thanks, Hi, guys. So.
Speaker 5: Yeah, thanks. Hi, guys. So, now that you've taken the second price increase, I know it's kind of a what-have-you-done-for-me-lately question, but how should we think about the final two price increases that you still have left? And probably just as important, what happens after the six-year period of this contract?
Now that you've taken the second price increase I know, it's kind of a what have you done for me lately question, but how should we think about the final two price increases that you still have left and probably just as important what happens after the six year period of this contract.
Okay. Thanks for that question Sterling.
For those of you on the call who may not be familiar with the structure.
Speaker 3: For those of you on the call who may not be familiar with the structure referred to in the question, let me just briefly cover that if I might.
Referred to in the question, let me just briefly cover that if I might.
So every a six year period, we are allowed for price increases in the back four years that we are in the first six year period, which began in October of 2018.
Speaker 3: So every six year period, we are allowed four price increases in the back four years that we are in the first six year period, which began in October of 2018.
And we are now.
Speaker 3: And we are now at the point where we have today announced, effective September 1st of this year, the second of the four allowable prices.
In the at the point, where we have today announced effective September one of this year.
Second up before allowable price increases and so in.
Speaker 3: And so, in this period, we don't guide the pricing. So, today's announcement is, of course, for an increase in com-domain registrations that begin September 1st, 2022. Beyond that announcement, we don't guide the future pricing or discuss the factors that go into those decisions. I will say this.
In this period, we don't guide to pricing. So today's announcement is a course for an increase in in Com domain registrations that begins September one 'twenty 2022 beyond that announcement, we don't guide to future pricing or discuss the factors that.
That go into those decisions.
I will say this.
The this is the second wholesale price increase Africom since January of 2012. So if you look back over the last 10 years.
Speaker 3: This is the second wholesale price increase for comms since January of 2012. So if you look back over the last 10 years, that translates into a cost increase of only 1.3%
That translates into a cost increase of only one 3% CAGR.
Speaker 3: Kagger over the last 10 and a half years actually.
Over the last 10 a.
10, and a half years actually and so I just wanted to point that out for the second part of your question.
Speaker 3: And so I just wanted to point that out for the second part of your question. So basically in 2020
So basically in.
2020.
Eight years from 2018, and I'm sorry, six years from 2018 to 2024, we will start a second six year period. This is a a six year period, that's part of our cooperative agreement with the commerce departments with which automatically renews every six years and as you may or may not know or recall the.
Speaker 3: Eight years from 2018, sorry, six years from 2018 to 2024, we will start a second six-year period. This is a six-year period that's part of our cooperative agreement with the Commerce Department, which automatically renews every six years.
Speaker 3: And as you may or may not know or recall, the first two years do not allow for price increase.
First two years do not allow for price increases so in fact.
Speaker 3: So in fact, without guiding to what we'll do in the future, if you assume that we take, if we took all of the four price increases, meaning the remaining two in this six year period.
Without guiding to what we'll do in the future. If you assume that we take if we took all of the four price increases, meaning the remaining two and this six year period.
As far out as until at least October of 2026, the price of a dotcom registration cannot exceed $10.26 and we.
Speaker 3: as far out as till at least October of 2026.
Speaker 3: the price of a dot com registration cannot exceed $10.26. And we believe Tom is and continues to be positioned competitive.
We believe com is and continues to be positioned competitively, so without guiding where in a six year period.
Speaker 3: So without guiding, we're in a six-year period in which we've taken the first two of four
Which we've taken in the first two of four and then we'll start.
Speaker 3: and then we'll start a second six-year period. And since the increases are only in the back four years, none can come in the first two.
Second a six year period and since the increases are only in the back four years, none could come in the first two so just to reiterate com is up.
Speaker 3: So just to reiterate, COMM is a...
Currently there are they the current price increase that we've taken.
Speaker 3: Currently, the current price increase that we've taken allows for two more. If we were to take those two more and exit the six-year period at $10.26, that price couldn't change until at least October of 2026.
Allows for two more if we were to take those two more and don't exit the six year period at $10.26 that price couldn't change until at least October of 2026.
So that was a long answer I hopefully that's helpful.
Yes. It is helpful. I appreciate that and then within the context of the initial guide you're giving here for 'twenty two for the domain name growth to the tune of half the four and a half per se.
Speaker 5: Yeah, it is helpful. I appreciate that.
Speaker 5: And then within the context of the initial guide you're giving here for 22 for the domain name growth of the two and a half to four and a half percent,
I think there's a lot of us that have watched the data year to date and granted we're just at the very beginning but any comments you'd give do you feel like that the base is off to a slower than normal start for the year and is there a timing of renewals or other things that investors should be thinking about and how that factored into your guide.
Speaker 5: You know, I think there's a lot of us that have watched the data year to date. And granted, we're just in the very beginning. But any comments you give? Do you feel like the the base is off to a slower than normal start for the year? And is there timing of renewals or other things that investors should be thinking about and how that factored into your guide?
Sure Jordan, Yes, sure sure. Thanks, Jim Yeah Sterling. This is George So I would just remind you and others on the call that we do have some seasonality as it relates to certain holidays and how they fall in the calendar. This year in Q1 for example, the Chinese new year was about two weeks earlier started on February <unk>.
Speaker 4: Sure, thanks, Jim. Yes, this is George. So I would just remind you and others on the call that we do have some seasonality as it relates to certain holidays and how they fall on the calendar. This year in Q1, for example, the Chinese New Year is about two weeks earlier, started on February 1st. Last year it was February 12th.
First last year. It was February 12th and we tend to see a new registrations from our Chinese registrar has slowed down a few weeks before the actual holiday and then recover once the holidays over.
Speaker 4: And we tend to see new registrations from our Chinese registrars slow down a few weeks before the actual holiday and then recover once the holiday is over. So that could be playing into some of the data that you see on our website. But overall, as you mentioned, we do expect continued growth in the domain name base. We have got it to 2.5 to 4.5 percent. And if you recall, that was a similar growth rate that we got it to last year at this time as well.
So that could be playing into some of the data that you see on our website, but overall as you mentioned, we do expect continued growth in the domain name base.
We have guided to two and a half to four 5% and if you recall that was a similar a similar growth rate that we guided to.
Last year at this time as well.
Makes sense and then very last one on Dot web if all goes well with ICANN Board.
Speaker 5: Makes sense. And then very last one on, on dot web, if all goes well with, I can board, you know, is it your anticipation that you would be in the market selling dot web domains in 22.
Is it your anticipation that you would be in the market selling dot web domains in 'twenty two.
Yeah.
Speaker 3: Yeah, well, so first of all, the process that I mentioned that was directed by ICANN's board
Well, so first of all the process.
That I mentioned that that was directed by ICANN Board.
That is a process that's been held up for many years during litigation, which the up the panel has now.
Speaker 3: That is a process that's been held up for many years during litigation, which the panel has now.
Basically shut down for the second time in directed I can't do move with its process. So we're pleased to see ICANN doing it.
Speaker 3: basically shut down for the second time and directed ICANN to move with this process. So, we're pleased to see ICANN doing it. That is ICANN's process, so I can't speak quite for the duration that that will take. Obviously, we hope it's as brief as it can be, but that is an ICANN process.
That is ICANN process, so I can't speak quite for the the duration that that will take obviously, we hope it's it's as brief as it can be but that is an ICANN process and secondly, I think you are aware there are some standard processes of shows associated with the launch of any T. L D.
Speaker 3: And secondly, I think you're aware there are some standard processes associated with the launch of any TLD. There's a period where some security issues are observed and addressed.
There is a period, where some security issues are are observed and addressed there's a period where trademark holders are given the REIT to make their registrations first so putting all that together, it's really hard to speculate.
Speaker 3: There's a period where trademark holders are given the right to make their registrations first. So, putting all that together, it's really hard to speculate in a way that allows me to answer your question. I will say that.
In a way that allows me to answer your question I will say that.
We have not budgeted in 2022 any launch or marketing costs.
Speaker 3: We have not budgeted in 2022 any launch or marketing costs.
Oriented revenue for Dot web, we'd certainly like to be in the market. If we could but I think given given all of those variables that it. It isn't helpful for me to speculate as to whether it is exactly when or or even what timeframe as you asked.
Speaker 3: or any revenue for dot web. We'd certainly like to be in the market if we could, but I think given all of those variables, it isn't helpful for me to speculate as to whether it's exactly when or even what timeframe as you asked, web will come to market. We hope it does soon and we certainly intend to.
Web will come to market, we hope it does soon and we certainly intend to to bring it to market and be successful with it but beyond that I don't think I can speculate.
Speaker 3: to bring it to market and be successful with it. But beyond that, I don't think I can speculate. Makes sense. Thank you guys, I appreciate it.
Makes sense. Thank you guys I appreciate it.
Sure.
And we'll take our last question from Rob Oliver of Baird.
Great. Thanks, guys good afternoon.
Speaker 6: great thanks guys good afternoon uh... sterling up a lot of good questions office follow-up on his uh... so uh... just off our without that since jim that's where you left off uh... you keep your attention to prepare remarks that you're to be monitoring the process that i cannot support understand what but but the people are actually doing that how you monitor that it uh... it and and and then you know i i i feel you to keep rattling about further legal actions that i'm just wondering you know what would be a perspective what exactly that is like what what what what happened you think they have left a bit of a stretch this out for so long uh... and then i had a a a follow-up for george is well
You asked a lot of good questions I'll just follow up on his so just I'll start with downward since Jim that's where you left off.
You you did mention in your prepared remarks that you're going to be monitoring the process and I can't I just wanted to understand what what's the vehicle for actually doing that how you monitor that.
And then.
Affiliates, the saber rattling about further legal actions and I'm just wondering.
Your perspective, what exactly that is.
What would you say.
They've been able to stretch this out for so long.
And then I had a.
Follow up for George as well thanks.
Okay Wildcat speak for affiliates I can only tell you that the result of their last application.
Speaker 3: Okay, while I can't speak for affiliates, I can only tell you that the result of their last application was
Was.
Sanctions and and a use.
Speaker 3: sanctions and and and a use of the word frivolous in in the panel's answer to their application.
Use of the word frivolous and in the panels.
Answer to their application and reiterating their earlier finding with just a direct ICANN to proceed in terms of how we monitor that.
Speaker 3: in reiterating their earlier finding, which is to direct ICANN to proceed. In terms of how we monitor that, most of these actions, when ICANN's board takes these actions, that information is publicized, and so you can follow some of that on.
Most of these actions that when I can bore takes these actions that information is publicized and so you can follow some of that on an ICANN website. For example, the world. The results that I mentioned the direction that I cant gave to one of their standing committees.
Speaker 3: on ICANN's website, for example, the results that I mentioned, the direction that ICANN gave to one of their standing committees.
Was in fact, it publicly available information so what we'll be monitoring you can certainly monitor yourself on <unk> website as the board proceeds so.
I think beyond that again, I can't really speak for affiliates they yes.
Speaker 3: I think beyond that, again, I can't really speak for Aphelios.
He blogged about this you can you can find our blogs and you can see our position we've been firm from the beginning that we we believe that our affiliates as a claims in demands or without merit. Thus far the panel has reaffirmed what we expected what happens at ICANN would be directed to proceed with its process and determined.
Speaker 3: that we've blogged about this. You can find our blogs and you can see our position. We've been firm from the beginning that we believe that Affilius's claims and demands were without merit. Thus far the panel has reaffirmed.
Speaker 3: what we expected would happen that ICANN would be directed to proceed with its process and determine the delegation of.web. That's where we are now. What Affilius will do next, if anything, is up to them. But at this point, ICANN has taken some action and we're on.
The delegation of that web that's where we are now what affiliates will do next if anything is up to them, but at this point ICANN has taken some action and we're monitoring that.
Got it Okay. That's helpful. Jim. Thank you and then George just a couple.
Speaker 6: Got it. Okay. That's helpful, Jim. Thank you. And then, George, just a couple of quick ones for you. Just on the operating margin guide for 22, assuming, and I think you guys have in the past never included things in guide that weren't, you know, set. So assuming that guide does not include .web, you know, and assuming you got .web, there would be some expenses associated with that. I'm not asking you to speculate on exactly what those expenses would be, as Jim already said that you guys won't. But instead, could we understand that the initial operating margin guide may then have to be adjusted at some point if you guys were to then get .web and proceed with some of the expenses around ramping .web?
Quick one's for you just.
On the operating margin guide for 'twenty.
'twenty two.
Assuming on it and I think you guys have.
In the past never included things and guide that warrant.
So assuming that guide does not include Dot web.
And assuming you got Todd where there would be some expenses associated with that I'm not asking you to speculate on exactly what those expenses would be as Jim already said that you guys won't but instead.
Could we understand that the initial operating margin guide.
Maybe that would have to be adjusted at some point. If we were you guys were too.
And if we get that web and proceed with some of your expenses around ramping dot web.
Yeah, Rob, but to the extent that a when not what comes to us and clearly we are we've got a plan and a launch in place will clearly provide updated guidance.
Speaker 4: Yeah, Rob, to the extent that when DotWeb comes to us and clearly we've got our plan and our launch in place, we'll clearly provide updated guidance to the extent that those expenses and our revenue are going to impact the current year.
To the extent that those expenses annual revenue are going to impact the current year.
Got it Okay helpful. And then just lastly, just you mentioned some of the vagaries around global.
Speaker 6: Got it, OK, helpful. And then just lastly, you mentioned some of the vagaries around global domain trends and Chinese New Year, of course, and just was wondering about any sort of geographic color and again, a follow-up on Sterling's question, just about what you're seeing here early in the year. And I know renewal rates have been higher because of some of the activities that you guys have seen in US and EMEA and how that is trending and how that looks to you here as well.
Demand trends in Chinese new year of course, and just was wondering about any sort of geographic color and again a follow up on <unk> question, just about kind of what you're seeing here early in the year and I know renewal rates.
Has been higher because of some of the activity that you guys have seen in the U S and EMEA and how that is trending and how that looks to you here as well. Thanks.
Yeah sure Rob So as we mentioned in our prepared remarks, so we had a solid year of growth in the domain name base. It was up 5% year over year and in 'twenty and 2021 we.
Speaker 4: Yeah, sure, Rob. So, as we mentioned in our prepared remarks, we had a solid year of growth in the domain name base. It was up 5% year over year. And in 2021, we saw big gains in the base, primarily from our U.S., EMEA, and our Asia Pacific registrars.
We saw gains in the base, primarily from our U S EMEA and our Asia Pacific Registrars are when you look at new units or gross adds as Jim mentioned, we generated $44 6 million in 2021 that was up about 2 million units year over year and that increase is similar to the $2 million.
Speaker 4: When you look at new units or gross VADs, Jim mentioned we generated 44.6 million in 2021. That was up about two million units year over year. And that increase is similar to the two million new unit increase that we experienced in 2019 and the two million unit increase we also experienced in 2020. So we've had pretty good consistent demand growth over the last few years.
Increase that we experienced in 2019 and the 2 million unit increase we also experienced in 2020, so we've had pretty good consistent.
Demand growth over the last few years from a new unit perspective, we saw gains in 2021 from registrars in EMEA Asia Pacific and China, and we'll provide more color as we come out of here in 2021 as to the trends that we're seeing are in the regions at that time.
Speaker 4: From a new unit perspective, we saw gains in 2021 from registrars in EMEA, Asia Pacific, and China.
Speaker 4: and we'll provide more color as we come out of here in 2021 as to the trends that we're seeing in the regions at that time.
Great.
Speaker 6: Great. We're going to get a Super Bowl ad. I mean, we're going to be watching. That's what I'm going to be watching for the .com ad, right? You know, hopefully we get one of those this year. Thank you, guys.
Super Bowl that I mean, we're gonna be watch and Thats, what im gonna be watching for the dot combat REIT.
Hopefully we get one of those this year. Thank you guys.
Thank you Rob.
And so that concludes the question and answer session I will now turn the call back over to David Atchley for any final comments.
Speaker 1: And so that concludes the question-and-answer session. I will now turn the call back over to David Ashley for any final comments.
Thank you operator, please call the Investor Relations Department with any follow up questions from this call. Thank you for your participation. This concludes our call have a good evening.
Speaker 2: Thank you operator. Please call the investor relations department with any follow up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.
Again that does conclude today's call. Thank you for your participation you may now disconnect.
Speaker 1: Again, that does conclude today's call. Thank you for your participation. You may now disconnect.
No.
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Right.
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