Q3 2025 VeriSign Inc Earnings Call
Speaker #1: Please stand by . Good day everyone . Welcome to Verisign's third quarter 2020 Earnings Call . Today's conference is being recorded . Recording of this call is not permitted unless preauthorized .
Operator: Please stand by. Good day, everyone. Welcome to VeriSign Inc.'s third quarter 2025 earnings call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized. At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.
Speaker #1: At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer.
Speaker #1: Please go ahead, sir.
Speaker #2: Thank you . Operator . Welcome to Verisign's third quarter 2020 Earnings Call . Joining me are Jim Bidzos , Executive chairman , president and CEO , and John Callas , executive vice president and CFO .
David Atchley: Thank you, operator. Welcome to VeriSign Inc.'s third quarter 2025 earnings call. Joining me are Jim Bidzos, Executive Chairman, President and CEO, and John Calys, 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 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. 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 in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q. VeriSign Inc. does not update financial performance or guidance during the quarter unless it is done through a public disclosure.
Speaker #2: 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 find our earnings release at the end of this call .
Speaker #2: 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 risks and uncertainties that we discuss in detail in our documents filed with the SEC .
Speaker #2: Specifically, the most recent reports on Form 10-K and 10-Q. VeriSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure.
Speaker #2: The financial results in today's call and the matters we will be discussing today include GAAP results and two non-GAAP measures used by VeriSign.
David Atchley: The financial results in today's call and the matters we will be discussing today include GAAP results and two non-GAAP measures used by VeriSign Inc.: 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. Jim and John will now provide prepared remarks, and afterward, we will open the call for your questions. With that, I would like to turn the call over to Jim.
Speaker #2: Adjusted EBITDA and free cash flow GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found in the Investor Relations section of our website, available after this call.
Speaker #2: Jim and John will now provide prepared remarks, and afterward, we will open the call for your questions. With that, I would like to turn the call over to Jim.
Speaker #2: Thank you . David .
Jim Bidzos: Thank you, David. Good afternoon to everyone, and thank you for joining us. VeriSign Inc. delivered both growth in a domain name base and solid financial performance during the third quarter. We also continued our consistent return of value to shareholders through dividends and share repurchases. At the end of September, the domain name base for .com and .net totaled 171.9 million domain names, up 1.4% year over year. We had strength in the quarter with 10.6 million new registrations. Revenue was up 7.3% year over year, and EPS is up 9.7% year over year. During the quarter, we returned $72 million through dividends and $215 million through share repurchases for a total return to shareholders of $287 million. The positive domain name base trends we saw during the first half of the year continued during the third quarter. Net registrations added during the third quarter were 1.45 million names.
Speaker #3: Good afternoon to everyone, and thank you for joining us. Ursine delivered both growth in the domain name base and solid financial performance during the third quarter.
Speaker #3: We also continued our consistent return of value to shareholders through dividends and share repurchases. At the end of September, the domain name base for .com and .net totaled 171.9 million.
Speaker #3: Domain names are up 1.4% year over year. We had strength in the quarter with 10.6 million new registrations. Revenue was up 7.3% year over year, and EPS is up 9.7% year over year.
Speaker #3: During the quarter, we returned $72 million through dividends and $215 million through share repurchases, for a total return to shareholders of $287 million.
Speaker #3: The positive domain name-based trends we saw during the first half of the year continued during the third quarter. Net registrations added during the third quarter were 1.45 million names.
Speaker #3: This was made possible by the strong volume of new registrations already mentioned , and improvement in the year over year . Preliminary renewal rate .
Jim Bidzos: This was made possible by the strong volume of new registrations already mentioned and improvement in the year-over-year preliminary renewal rate. The renewal rate for the third quarter of 2025 is expected to be 75.3% compared to 72.2% a year ago. The domain name base grew sequentially in our three main regions, with the U.S. and EMEA being the strongest. We're seeing solid underlying demand for our domain names and continued registrar engagement with our programs, which together have enhanced the pace of growth in new registrations. Given these continued positive domain name base trends, we now expect the growth in the domain name base to be between 2.2% and 2.5% for 2025. Our financial and liquidity position remains stable, with $618 million in cash, cash equivalents, and marketable securities at the end of the quarter.
Speaker #3: The renewal rate for the of 2025 is expected to be 75.3% , compared to 72.2% a year ago . The domain name base grew sequentially in our three main regions , with the US and EMEA being the strongest .
Speaker #3: We're seeing solid underlying demand for our domain names and continued registrar engagement with our programs, which together have enhanced the pace of growth in new registrations.
Speaker #3: Given these continued positive domain name-based trends, we now expect the growth in the domain name base to be between 2.2% and 2.5% for 2025.
Speaker #3: Our financial and liquidity position remains stable, with $618 million in cash, cash equivalents, and marketable securities at the end of the quarter.
Speaker #3: At the end of the quarter , 1.33 billion remained third quarter available under the current share repurchase program , which has no expiration as announced in today's earnings release .
Jim Bidzos: At the end of the quarter, $1.33 billion remained available under the current share repurchase program, which has no expiration. As announced in today's earnings release, VeriSign Inc.'s Board of Directors declared a cash dividend of $0.77 per share of VeriSign Inc.'s outstanding common stock to stockholders of record as of the close of business on November 18, 2025, payable on November 25, 2025. VeriSign Inc. intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by VeriSign Inc.'s Board of Directors. I'd like to turn the call over to John. I'll return when John has completed his financial report with some closing remarks.
Speaker #3: Verizon's board of directors declared a cash dividend of $0.77 per share of Verizon's outstanding common stock , to stockholders of record . As of the close of business on November 18th , 2025 , payable on November 25th , 2025 .
Speaker #3: VeriSign intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by Verizon's board of directors.
Speaker #3: And now I'd like to turn the call over to John. I'll return when John has completed his financial report, with some closing remarks.
Speaker #3: Thank you , Jim , and good afternoon , everyone , for the quarter ended September 30th , 2025 , the company generated revenue of 419 million , up 7.3% from the same quarter a year ago .
John Calys: Thank you, Jim, and good afternoon, everyone. With the quarter ended September 30, 2025, the company generated revenue of $419 million, up 7.3% from the same quarter a year ago. Operating expense in Q3 2025 totaled $135 million, which compares to $129 million last quarter and $121 million for the third quarter last year. The areas we saw increases include incentive compensation and legal costs. Net income in the third quarter totaled $213 million, compared to $207 million last quarter and $201 million in the third quarter last year. Third quarter diluted EPS was $2.27 compared to $2.21 last quarter and $2.07 for the same quarter of 2024. Operating cash flow for the third quarter 2025 was $308 million and free cash flow was $303 million, compared with $253 million and $248 million, respectively, in the quarter a year ago. I will now discuss our updated full-year 2025 guidance.
Speaker #3: Operating expenses in Q3 2025 totaled $135 million, which compares to $129 million last quarter and $121 million for the third quarter last year.
Speaker #3: The areas we saw increases include incentive compensation and legal costs. Net income in the third quarter totaled $213 million, compared to $207 million last quarter and $201 million in the third quarter last year.
Speaker #3: Third quarter diluted earnings per share was $2.27, compared to $2.21 last quarter and $2.07 for the same quarter of 2024.
Speaker #3: Operating cash flow for the third quarter of 2025 was 308 million , and free cash flow was 303 million , compared with 253 million and 248 million , respectively , in the quarter a year ago .
Speaker #3: I will now discuss our updated full year 2025 guidance. Revenue is expected to be between $1.652 billion and $1.657 billion. Operating income is now expected to be between $1.119 billion.
John Calys: Revenue is expected to be between $1,652 million and $1,657 million. Operating income is now expected to be between $1,119 million and $1,124 million. Interest expense and non-operating income net, which includes interest income estimates, is still expected to be an expense between $50 million and $60 million. Capital expenditures are still expected to be between $25 million and $35 million, and the GAAP effective tax rate is still expected to be between 21% and 24%. In summary, VeriSign Inc. continued to demonstrate sound financial discipline during the quarter. Now I'll turn the call back to Jim for his closing remarks.
Speaker #3: $1,124,000,000 in interest expense and non-operating income, net, which includes interest income estimates, is still expected to be an expense between $50 million and $60 million.
Speaker #3: Capital expenditures are still expected to be between $25,000.035 million, and the GAAP effective tax rate is still expected to be between 21% and 24%.
Speaker #3: In summary, VeriSign continued to demonstrate sound financial discipline during the quarter. Now, I will turn the call back to Jim for his closing remarks.
Speaker #3: Thank you, John. The improved domain name base trends that emerged at the end of 2024 continued through the first three quarters of 2025.
Jim Bidzos: Thank you, John. The improved domain name base trends that emerged at the end of 2024 continued through the first three quarters of 2025. We're seeing strength in demand for our domain names, which we believe are the results of the plans and expectations we laid out last year. Our adjustments to our channel programs, along with anticipated favorable cyclical shifts from ARPU to customer acquisition, are contributing to this. Of note is that these improved trends are seen across our main three regions, with strength in the U.S. picking up during the third quarter. Our 2025 programs have deepened our engagement with our channel, and we use their feedback to improve our 2026 programs, which we have rolled out to our registrars. We look forward to finishing out 2025 from a position of strength with these positive domain name base trends.
Speaker #3: We're seeing strength in demand for domain names, which we believe is the result of the plans and expectations we laid out last year.
Speaker #3: Our adjustments to our channel programs, along with anticipated favorable cyclical shifts from ARPU to customer acquisition, have yielded positive results. Of note is that these improved trends are seen across our main three regions, with strength in the US picking up during the third quarter. Our 2025 programs have deepened our engagement with our channel, and we use their feedback to improve our 2026 programs, which we have rolled out to our registrars.
Speaker #3: We look forward to finishing out 2025 from a position of strength with these positive domain name based trends , I would note that we also see increases in registration and resolution activity for which we believe increasing use of AI as the primary is a primary driver .
Jim Bidzos: I would note that we also see increases in registration and resolution activity, for which we believe increasing use of AI is a primary driver. Thanks for your attention today. This concludes our prepared remarks, and now we'll open a call for your questions. Operator, we're ready for the first question.
Speaker #3: Thank you for your attention today. This concludes our prepared remarks, and now we'll open the call for your questions. Operator, we're ready for the first question.
Speaker #1: Thank you . If you would like to signal with questions , please press star one on your touch tone telephone . If you are using a speakerphone , please make sure your mute function is turned off to allow your signal to reach our equipment .
Operator: Thank you. If you would like to signal with questions, please press *1 on your touch-tone telephone. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Once your question has been stated, please mute your line. The first question comes from Rob Oliver with Baird.
Speaker #1: Once your question has been stated, please mute your line. The first question comes from Rob Oliver with Baird.
Speaker #4: Great, good afternoon. A couple of questions from me, Jim. I guess first, I appreciate all the color on the domain base trends that you're seeing.
[Analyst 1]: Great. Good afternoon. A couple of questions from me. Jim, I guess first, I appreciate all the color on the domain name base trends that you're seeing. I guess going back to Q1 of last year, when you guys called out the changes you need to make in your marketing programs, we've seen a nice improvement in those domain name base trends from sort of the beginning of this year through now. You cited a few reasons, but I was wondering if you can give us a little bit more color, perhaps, on how much of it is macro, how much of it is stuff that you guys are controlling with your marketing programs. Any other color you can provide on particular gTLDs would be helpful. I had a couple of quick follow-ups.
Speaker #4: I guess going back to Q1 of last year, when you guys called out the changes you needed to make in your marketing programs, we've seen a nice improvement in those domain-based trends.
Speaker #4: You know , from sort of the beginning of this year through now . You cited a few reasons , but I was wondering if you can give us a little bit more color , perhaps , on how much of it is macro , how much of this stuff that you guys are controlling with your marketing programs , and other color you can provide on particular GEOs would be helpful .
Speaker #4: And then I had a couple of quick follow-ups.
Speaker #3: Okay, well, I think really the story is pretty much the one that I talked about in my remarks. It's just basically blocking and tackling, in a sense.
Jim Bidzos: I think really the story is pretty much the one that I talked about in my remarks. It's just basically blocking and tackling in a sense. We improved our programs and made them more adaptable for our channel. We got great engagement from our channel. We've been talking about a cyclical shift that we were hoping for and anticipating, and that came around. That added to the growth. The registrar engagement with our marketing programs is also helping us sharpen our 2026 programs. I think there's some more details we can share. John, do you want to?
Speaker #3: We we improved our programs and made them more adaptable for our channel . We got great engagement from our channel . We've been talking about a cyclical shift that we were hoping for and anticipating , and that came around .
Speaker #3: So, that added to the growth. The registrar engagement with our marketing programs is also helping us sharpen our 2026 programs. Just some more details we can share.
Speaker #3: John , do you want ? Sure . Thanks , Jim . You know , as Jim mentioned , we saw a good strength across all of our three main regions regions .
John Calys: Sure. Thanks, Jim. As Jim mentioned, we saw good strength across all of our three main regions. EMEA has been the most consistent region over the past few quarters, but what we saw in the third quarter was the U.S. improved very nicely and was strong during the quarter. The domain name base in Asia Pac, which includes China, did grow again, but it wasn't as strong as the growth we saw during the first half of 2025. Our programs seem to be contributing to the improving trend of demand for our domain names. We saw success with our marketing efforts during 2025. We've already rolled out our programs to registrars for 2026. As Jim mentioned, we continue to incorporate feedback from our registrars and have further refined our approach for 2026.
Speaker #3: Mia has been the most consistent region over the past few quarters, but what we saw in the third quarter was that the U.S. improved very nicely and was strong during the quarter.
Speaker #3: The domain base and Asia-Pacific, which includes China, did grow again, but it wasn't as strong as the growth we saw during the first half of 2025.
Speaker #3: Our programs seem to be contributing to the improving trend of domain or of demand for our domain names . We saw success with our marketing efforts during 2025 .
Speaker #3: We've already rolled out our programs to registrars for 2026 . As Jim mentioned , we continue to incorporate feedback from our registrars and have further refined our approach for 2026 , as you would expect , we'll continue to invest in programs that have been working well , and the initial response from our registrars to the 2026 programs has been positive .
John Calys: As you would expect, we'll continue to invest in programs that have been working well, and the initial response from our registrars to the 2026 programs has been positive. Just as a reminder, the cost of our marketing programs is included in our updated guidance we provide today, and all of these programs are accretive. In addition to the strong volume in new registrations, the renewal rate has continued to improve, as evidenced by the preliminary renewal rate in the third quarter of 75.3%. That's up from 72.2% a year ago. Both the first-time and previously renewed rates have improved year over year. The overall renewal rate is impacted by the mix of first-time renewing names this year versus last. More specifically, last year we had fewer new registrations, which means fewer first-time renewals this year, which tends to improve the overall renewal rates.
Speaker #3: Just as a reminder, the cost of our marketing programs is included in our updated guidance we provide today. All of these programs are accretive.
Speaker #3: In addition to the strong volume in new registrations, the renewal rate has continued to improve, as evidenced by the preliminary renewal rate in the third quarter of 75.3%.
Speaker #3: That's up from 70.70 2.2 a year ago . Both the first time and previous renewed rates have improved year over year . And as a reminder , the overall renewal rate is impacted by the mix of first time renewing names this year versus last and more specifically , last year .
Speaker #3: We had fewer new registrations , which means fewer first time renewals . This year , which tends to improve the overall renewal rates .
Speaker #3: The midpoint of our improved NAB guidance for 2025 reflects a continuation of the trends seen in the first three quarters of the year, and we plan to provide you with 2026 guidance during our February call.
John Calys: The midpoint of our improved domain name base guidance for 2025 reflects a continuation of the trends seen in the first three quarters of the year, and we plan to provide you with 2026 guidance during our February call after we have a chance to see how domain name base trends finish out 2025 and start out in 2026. To sum it up, we're pleased with the improvements in both growth and renewal rates and that these better trends are seen across our main regions.
Speaker #3: After we have a chance to see how domain based trends finish out , 25 and and start out number 2026 . To sum it up , we're pleased with the improvements in both growth and renewal rates and that these better trends are seen across our main regions .
Speaker #4: It's really helpful . Okay . Thanks , John . Appreciate it . Jim , I want to ask specifically about changes that Google has made this year to their AdSense program .
[Analyst 1]: That's really helpful. Okay. Thanks, John. Appreciate it. Jim, I want to ask specifically about changes that Google has made this year to their AdSense program, and what, if any, impact you might be seeing or expect to see within your current domain name base from those changes.
Speaker #4: And what, if any, impact might you be seeing or expect to see within your current domain base from those changes?
Speaker #3: Okay , well , this so Google's AdSense has been around for a long time and the changes that they made are part of a long process that's not new .
Jim Bidzos: Okay. Google's AdSense has been around for a long time, and the changes that they made are part of a long process that's not new. Through the almost 15 years, they started in 2011. Fifteen years, Google's been making changes to their algorithm, and they've steadily eroded domain names that exist solely for ad monetization with AdSense. Changes this year to AdSense have continued a multi-year predictable strategy from Google to reduce their reliance of both advertisers and domain name registrants on that particular service. This isn't a new trend, and after a decade of these changes, we view our exposure as minimal. Don't confuse these domain names with names that have been purchased for resale.
Speaker #3: Through the almost 15 years since they started in 2011, Google has been making changes to their algorithm, and they've steadily eroded domain names that exist solely for ad monetization.
Speaker #3: With AdSense, changes this year to AdSense have continued a multi-year, predictable strategy from Google to reduce their reliance on both advertisers and domain name registrants on that particular service.
Speaker #3: So this isn't a new trend . And after a decade of these changes , we view our exposure as minimal . Don't confuse these domain names with names that have been purchased for resale .
Speaker #3: Some of these are parked because it doesn't cost anything to do so, but the intent of these domains and the value of these domain names is for resale and not impacted by changes to AdSense.
Jim Bidzos: Some of these are parked because it doesn't cost anything to do so, but the intent of these domains and the value of these domain names is for resale and not impacted by changes to AdSense.
Speaker #4: Okay .
[Analyst 1]: Okay.
Speaker #3: Hope that helps .
Speaker #4: All right . Thanks . Yeah . Yeah that helps okay . If I have time for one more , I'll just I'll , I'll I'll ask one more .
Jim Bidzos: Hope that helps.
[Analyst 1]: All right. Thanks. Yeah, that helps. If I have time for one more, I'll just ask one more. Just wondering if I can hear from you, Jim, just a broader sense of your view on how you see AI potentially impacting your business, how you see it impacting your business at all today, and how you think it might impact your business going forward. I know you guys have said that any technology that makes it easier to create and use domains is good for you guys. I think that's generally true, and we're seeing a lot of activity in that regard, but would love to hear your view from a high-level perspective on AI. Thanks a lot, guys.
Speaker #4: Just just just wondering if I can hear from you . Jim . Just broader sense of your view on how UCI potentially impacting your business , how you see an impact on your business at all today , and how you think it might , you know , impact your business going forward .
Speaker #4: I know you guys have said that, you know, any technology that makes it easier to create and use domains is good for you guys.
Speaker #4: I think that's generally true. And we're seeing, you know, a lot of activity in that regard. But we'd love to hear your view on it from a high level.
Speaker #4: Level perspective on AI . Thanks a lot guys .
Speaker #3: Thanks. Yeah, thanks for that question. AI is on everybody's mind these days, and it's no surprise we get a lot of questions about it.
Jim Bidzos: Thanks. Yeah. Thanks for that question. AI is on everybody's mind these days, and it's no surprise we get a lot of questions about it. Let me answer that in two parts. One, what impact we're seeing in our business, and separately, how we're using AI ourselves to manage our business. On the first part, it's early, but with the data we have this year, it's clear to us that AI is having a positive impact on registrations as well as on the utilization of our DNS resolution services. I might mention today, our infrastructure on average processes over 450 billion DNS transactions per day and growing. Just two years ago, that number was 200 billion per day. AI companies need data, and they're continuously scouring the internet to get it.
Speaker #3: So, let me answer that in two parts. One, what impact we're seeing in our business. And separately, how we're using AI ourselves to manage our business.
Speaker #3: So, on the first part, it's early, but with the data we have this year, it's clear to us that AI is having a positive impact on registrations as well as on the utilization of our DNS resolution services.
Speaker #3: And I might mention today our infrastructure, on average, processes over 450 billion DNS transactions per day and is growing. Just two years ago, that number was 200 billion per day.
Speaker #3: So, AI companies need data, and they're continuously scouring the internet to get it. Data is not static, and so AIs, like search engines, are constantly fetching fresh data from websites to augment their existing data.
Jim Bidzos: Data is not static, and AIs like search engines are constantly fetching fresh data from websites to augment their existing data. This is enabled by the DNS. There is no doubt in our minds that this trend will continue to grow in importance and will be additive to the existing drivers of DNS reliance. We think this applies even more to the Agentic web. Agentic AI can do more for you. You set an objective, and the AI can plan steps and execute required tasks. For example, the launch of Agentic browsers is making interaction with websites more user-friendly, even more powerful. It lets users summarize information across multiple open tabs from any websites, applications, and internet services. Again, this is enabled by the DNS. AI can be powerful for domain name suggestions, website provisioning, and content generation.
Speaker #3: This is enabled by the DNS. There's no doubt in our minds that this trend will continue, grow in importance, and will be additive to the existing drivers of DNS reliance.
Speaker #3: So we think this applies even more to the agentic web. Agentic AI can do more for you. You set an objective, and the AI can plan steps and execute the required tasks.
Speaker #3: So for example , the launch of Agentic browsers is making interaction with websites more user friendly . Even more powerful . It lets users summarize information across multiple open tabs from any websites , applications and internet services .
Speaker #3: Again , this is enabled by the DNS . Also , AI can be powerful for domain names , suggestions , website provisioning , and content generation .
Speaker #3: So, we've used and continue to use AI in our domain name suggestion platforms. For example, AI is enabling more sophisticated multi-keyword name suggestions based upon natural language across many languages.
Jim Bidzos: We've used and continue to use AI in our domain name suggestion platforms. For example, AI is enabling more sophisticated multi-keyword name suggestions based upon natural language across many languages. Of course, like most businesses, we look for ways AI can provide efficiencies and better protect our services. One last thing. Looking ahead, we believe domain names will remain critical in providing many important services. They can serve as digital trust anchors, providing trust and authenticity of a destination, critical for Agentic AI. Domain names provide globally unique, stable, human-readable identifiers for verifying digital content and can be especially valuable in combating misinformation and deep fakes, hypercritical for AI. As it relates to infrastructure for new protocols, because AI agents autonomously crawl the internet to complete complex tasks, we believe demand for persistent, resolvable identities and endpoints will continue. The traditional use of domain names isn't going away.
Speaker #3: And of course , like most businesses , we look for ways AI can provide efficiencies and better protect our services . And one last thing looking ahead , we believe domain names will remain critical in providing many important services they can serve as digital trust anchors , providing trust and authenticity of a destination critical for agentic AI domain names provide globally unique , stable , human readable identifiers for verifying digital content and can be especially valuable in combating misinformation and deep fakes .
Speaker #3: Hypercritical for AI and as it relates to infrastructure for new protocols, because AI agents autonomously crawl the internet to complete complex tasks, we believe demand for persistent, resolvable identities and endpoints will continue.
Speaker #3: But the traditional use of domain names isn't going away . Businesses require branding , discoverability , and credibility , so domain names and recognized and trusted .
Jim Bidzos: Businesses require branding, discoverability, and credibility. Domain names in recognized and trusted high-assurance TLDs like .com and .net hold strong value. Registrars in a DNS ecosystem are well positioned to layer new value-added services on this infrastructure. Again, all enabled by the DNS. From what we see today, the trends are very positive.
Speaker #3: High-assurance TLDs like .com and .net hold strong value. Registrars and the DNS ecosystem are well positioned to layer new value-added services on this infrastructure.
Speaker #3: Again, all enabled by the DNS. So, from what we see today, the trends are very positive.
Speaker #4: Super helpful. I really appreciate it. Thank you, guys.
[Analyst 1]: Okay, super helpful. Really appreciate it. Thank you, guys.
Speaker #1: And we'll take our last question from Igor Aronian with City.
Operator: We'll take our last question from Igal Aronian with Citi.
Speaker #5: Hey good afternoon guys . I guess I want to follow up on some of Rob's questions . First . Just on on the marketing programs and there's been a lot of questions on this lately from investors and maybe if you could help just kind of parse through the marketing programs what's worked in particular .
[Analyst 2]: Hey, good afternoon, guys. I guess I want to follow up on some of Rob's questions. I think first just on the marketing programs, there's been a lot of questions on this lately from investors. Maybe if you could help just kind of parse through the marketing programs, what's worked in particular, and if there's been a lot of discounting within that or if the cadence and pace of discounting has changed at all. Just note in your SG&A line, there was a sort of a notable step up there. I think you called out some legal expenses, but if you strip those out, that's sort of more normalized. If you stepped up a little bit in that spending, just kind of help think through that a little bit more.
Speaker #5: And , if there's been a lot of discounting within that , or if that the , the cadence and pace of discounting has changed at all , and just note in your in the SGA line , you know , there was a sort of a notable step up there .
Speaker #5: I think you called out some legal expenses, but if you strip those out, that sort of feels more normalized. If you stepped up a little bit in that spending and just kind of help think through that a little bit more.
Speaker #3: Yeah . You guys , this is John . You know , we do think our marketing programs have contributed to the growth we've seen in 2025 .
John Calys: Yeah, Igal, this is John. We do think our marketing programs have contributed to the growth we've seen in 2025. I would point out that from a cost standpoint, those programs are accounted for as a reduction in revenue. In the SG&A, there really isn't a significant change in marketing dollars in that line item. It really is the incentive comp and the legal cost that I mentioned during my prepared remarks. We've tried to shift our programs towards ones that yield higher quality and higher renewing names, and we think those are working, at least to date. We've made some adjustments to those programs for 2026. The initial response that we've gotten from registrars as we've begun to roll out those new offerings to them has been very positive, and we're pleased with that. We continuously review our programs, monitor their performance, and listen to feedback from registrars.
Speaker #3: I would point out that, from a cost standpoint, those programs are accounted for as a reduction in revenue. So, in the SG&A, there really isn’t a significant change in marketing dollars in that line item.
Speaker #3: So it really is the incentive comp and the legal costs that I mentioned during my prepared remarks . You know , that said , you know , we've seen , you know , we've tried to shift our programs towards ones that yield a higher quality and higher renewing , higher renewing names .
Speaker #3: And we think those are working at least to date . You know , we've made we've made some adjustments to those programs for 2026 .
Speaker #3: The initial response that we've gotten from registrars, as we've begun to roll out those new offerings to them, has been very positive.
Speaker #3: And so we're pleased with that. You know, we continuously review our programs, monitor their performance, and listen to feedback from registrars.
Speaker #3: And we will continue to invest in programs that we see are successful. You know, the last thing I would say is, don't think of our programs as something that's finite for 2025 or finite for 2026.
John Calys: We will continue to invest in programs that we see are successful. The last thing I would say is don't think of our programs as something that's finite for 2025 or finite for 2026. Think of these programs as an evolution of what we've run for several years. The main thing we've changed recently is we give more choices to be responsive to the changing markets. You can expect us to continue to learn, adapt, and where appropriate, implement changes to our programs going forward.
Speaker #3: Think of these programs as an evolution of what we've run for several years. The main thing we've changed recently is that we give more choices to be responsive to the changing market.
Speaker #3: So you can expect us to continue to learn , adapt , and where appropriate , you know , implement changes to our programs going forward .
Speaker #5: Okay . So another follow up on the Google AdSense issue . Just I think there's a lot of opaqueness in this industry and many things that investors don't understand .
[Analyst 2]: Okay. Another follow-up on the Google AdSense issue. I think that there's a lot of opaqueness in this industry and many things that investors don't understand. Jim, you mentioned a lot of parked domains are there for kind of resale. A lot of parked domains are there for defensive purposes. Is there any way to sort of break out what you think the split is on advertising, monetized, or aftermarket monetized, defensive? I think there were a number of players in the, or a couple of key players, public players in the market that saw some impacts from this in particular, which might be where some of this fear has been spreading from. It does feel like it's impacting somewhere if you could just comment on that and your thoughts on that. Thanks.
Speaker #5: You know , Jim , you mentioned a lot of park domains . Are are there for , you know , kind of resale .
Speaker #5: A lot of domain-parking domains are there for defensive purposes. Is there any way to sort of break out what you think the split is on?
Speaker #5: You know , advertising monetized aftermarket , monetized , defensive . And I think there were a number of players in the or a couple of players , key players , public players in the market that saw some impact from this .
Speaker #5: In particular, this might be where some of this has been spreading from. So, it does feel like it's impacting somewhere. If you could just comment on that and your thoughts on that.
Speaker #5: Thanks .
Speaker #3: Sure. When you say it's impacting somewhere, meaning not in our zone, you're not talking about that.
Jim Bidzos: Sure. When you say it's impacting somewhere, meaning not in our zone, you're not talking about that?
Speaker #5: No . Well .
[Analyst 2]: No.
Speaker #3: I want to make sure I understand the question .
Jim Bidzos: I want to make sure I understand the question.
[Analyst 2]: I'm talking about some public players that have seen an impact to ad revenue from this change on advertising on parked domains.
Speaker #5: I'm talking, I'm talking about like some public players that have seen an impact to their revenue from this change on advertising, on parked domains.
Speaker #3: Well , if that's if that's your revenue model to make to to to earn revenue from monetizing traffic in park domains through AdSense .
Jim Bidzos: If that's your revenue model, to make to earn revenue from monetizing traffic in park domains through AdSense, yes, you've been on a downhill slide for 15 years. It was 2011, I think. Many of those listening may remember this. Google introduced a change to their search algorithm called Panda, and then they did some more. There was Penguin and I think some others that started with P. I remember during earnings calls, we'd go through each one and what impact it would have. That's what I meant when I said that that particular business has been eroding for 15 years. What I meant about the other side of the business or the other side of those domains is that the domains that are purchased for resale can be easily parked.
Speaker #3: Yes . You've been on a downhill slide for 15 years . There was a 2011 I think many of many of those listening may remember this .
Speaker #3: Google introduced a change to their search algorithm called Panda , and then they did some more . There was Penguin and I think some others that started with P , and I remember during earnings calls we'd go through each one .
Speaker #3: And what impact it would have . And that's what I meant when I said that , that particular business has been eroding for 15 years .
Speaker #3: What I , what I meant about the other side of the business or the other side of those domains , is that the domains that are purchased for resale can be easily parked .
Speaker #3: In fact, I actually found that a registrar had parked a domain that I owned, which I wasn't doing anything with because I, I guess I didn't check the box that said, 'Don't park my domain.'
Jim Bidzos: In fact, I actually found that a registrar had parked a domain that I owned that I wasn't doing anything with because I guess I didn't check the box that said, "Don't park my domain." They can pick up a small amount of revenue, or at least they could. This happened about nine years ago. I think those domains are purchased for resale. You can see those for sale. On registrars, almost every major registrar now has an aftermarket available for premium com domains. Those are different, but some of those could be parked, is the point I was making. I don't have a segment breakout in detail. We do some analysis, but we don't disclose that.
Speaker #3: So they can they can pick up a small amount of revenue , or at least they could . This happened about nine years ago .
Speaker #3: So I think , those domains are purchased for resale . They're , you know , those are you can see those for sale in registrars .
Speaker #3: Almost every major registrar now has an aftermarket available for premium .com domains. Those are different, but you may note that some of those could be parked, as the point I was making.
Speaker #3: So, I don't have a segment breakout in detail. We do some analysis, but we don't disclose that.
Speaker #5: Okay. And then finally, just shifting to something different: just an update on if there is any on the web, timeline, or expectations.
[Analyst 2]: Okay. Finally, just shifting to something different, just an update on if there is any on the .web timeline or expectations and maybe in particular, like if sort of a loophole on this process continuing over and over again might change. At the same time, just if you could talk about any update on how you think about the new, I guess it's not really an auction model anymore, but with new gTLDs and how that might play out later next year and into 2027. Thanks.
Speaker #5: And maybe in particular like if sort of a loophole on on this process continuing over and over again , might , you know , might change and then maybe with at the same time , just if you could talk about any update on how you think about the new , I guess it's not really an auction model anymore , but with a new TLDs and how that might play out later next year and into 2027 .
Speaker #5: Thanks .
Speaker #3: Okay , so first of all , dot web , there's nothing substantive that's new since we talked last quarter , the but the what is true is that what I reported then which is that the the final hearing is still scheduled for mid November 2025 .
Jim Bidzos: Okay. First of all, .web, there's nothing substantive that's new since we talked last quarter. What is true is that what I reported then, which is that the final hearing is still scheduled for mid-November 2025. I think if there's anybody new on the call, just to reiterate, you know we intend to become the registry operator for .web. We hope to bring it as soon as we can to our customers. We believe Alta Novo, who in this legal proceeding believes their use of ICANN's processes to keep that from happening is an abusive process and is being pursued in bad faith to keep .web off the market. We only have weeks now until at least that process begins. We'll certainly keep you informed when we can about anything that comes out of that. I'm sorry, you had kind of a second part of that?
Speaker #3: So I think there's anybody new on the call. Just to reiterate, you know, we intend to become the registry operator for .web.
Speaker #3: We hope to bring it to our customers as soon as we can. We believe that Alternova, in these legal proceedings, is using ICANN's processes to keep that from happening as an abuse of process. This is being pursued in bad faith to keep the web off the market.
Speaker #3: So, we only have weeks now until at least that process begins, and we'll certainly keep you informed when we can about anything that comes out of that.
Speaker #3: I'm sorry you had kind of a second part of that.
Speaker #5: Yeah, just regarding the coming domain auctions and.
[Analyst 2]: Yeah, just on the upcoming domain auctions.
Speaker #3: Oh yeah, yeah, the.
Jim Bidzos: Yeah, the ad spend.
Speaker #5: On that process, yeah. For later next year, and yeah, I think.
[Analyst 2]: On that process, yeah, for later next year and into.
Jim Bidzos: Yeah.
Speaker #3: I can .
[Analyst 2]: I think they've started.
Speaker #5: Add 27 .
Jim Bidzos: ICANN's ad.
[Analyst 2]: 2027.
Speaker #3: I can 2026 round of new gTLDs . You're referring to . Yeah . Yeah that's I believe that's on target to open the round in the second quarter .
Jim Bidzos: ICANN's 2026 round of new gTLDs you're referring to. Yeah.
[Analyst 2]: Correct.
Jim Bidzos: Yeah. I believe that's on target to open the round in the second quarter. I believe it's ICANN's goal to do that. Unlike the 2013 round, there will not be auctions. There'll be a different process that they use, but they haven't started rolling all that out yet. I think, like a lot of companies, you know we are looking at any opportunities there. If there's something that we're interested in, we have our team studying that. Nothing to report yet. That round, if everything runs on schedule, I'm not sure exactly what the timing for the process is after the opening of the round and the submission of applications. There's a lot of process that goes with these. I can't tell you exactly when, but yeah, I think 2027 is probably the earliest that they'll actually be deployed because of the process. It starts Q2 2026 according to ICANN.
Speaker #3: I believe it is ICANN's goal to do that. Unlike the 2013 round, there will not be auctions. There will be a different process that they use, but they haven't started rolling all that out yet.
Speaker #3: I think like a lot of companies , you know , we we are looking at any opportunities there . If there's something that we're interested in , we have we have our teams studying that nothing , nothing to report yet .
Speaker #3: But yeah , that that round , if everything runs on schedule , I'm not sure exactly what the what the timing for the process is .
Speaker #3: After the opening of the round and the submission of applications, there's a lot of process that goes with these. So I can't tell you exactly when.
Speaker #3: But yeah , I think 2027 , you'll probably is probably the earliest that they'll actually be deployed because of the process . But it starts Q2 2026 , according to ICAN .
Speaker #5: Okay . Thank you .
[Analyst 2]: Okay, thank you.
Speaker #3: You're welcome .
Jim Bidzos: You're welcome.
Speaker #1: And that does conclude the question and answer session. I'll now turn the conference back over to Mr. David Atchley.
Operator: That does conclude the question-answer session. I'll now turn the conference back over to Mr. David Atchley.
Speaker #2: Thank you . Operator . Please call the Investor Relations department with any follow up questions from this call . Thank you for your participation .
David Atchley: 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: This concludes our call. Have a good evening.
Operator: Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.