VeriSign, Inc. (VRSN): Business Model Canvas [10-2024 Updated]
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VeriSign, Inc. (VRSN) Bundle
In the fast-evolving digital landscape, VeriSign, Inc. (VRSN) stands out as a pivotal player, primarily known for its domain registration and internet infrastructure services. This blog post delves into the Business Model Canvas of VeriSign, outlining its key partnerships, activities, resources, and revenue streams. Discover how this company maintains its competitive edge and drives growth in a market that is increasingly reliant on secure and reliable online presence.
VeriSign, Inc. (VRSN) - Business Model: Key Partnerships
Collaborations with ICANN for domain management
VeriSign collaborates with the Internet Corporation for Assigned Names and Numbers (ICANN) to manage the .com and .net domain name registries. Under the .com Registry Agreement, VeriSign is permitted to increase registration fees by up to 7% annually in the final four years of each six-year period, effective from October 26, 2018. As of September 1, 2024, the wholesale fee for new and renewal .com domain names increased from $9.59 to $10.26. Similarly, under the .net Registry Agreement, the fee rose from $9.92 to $10.91 effective February 1, 2024.
Partnerships with registrars for domain sales
VeriSign's primary revenue comes from domain name registrations through partnerships with various registrars. As of September 30, 2024, there were 169.6 million .com and .net domain registrations, a 2.5% decrease from the previous year. During the third quarter of 2024, VeriSign processed 9.3 million new registrations, down from 9.9 million during the same period in 2023. The renewal rate for .com and .net domains was 72.7% in Q2 2024, compared to 73.4% in Q2 2023.
| Registrar Region | Q3 2024 Revenue (in millions) | % Change from Q3 2023 |
|---|---|---|
| U.S. | $260.2 | 4% |
| EMEA | $62.8 | 9% |
| China | $19.7 | (10%) |
| Other Regions | $47.9 | 5% |
Alliances with technology providers for infrastructure support
VeriSign maintains strategic alliances with various technology providers to enhance its infrastructure and service offerings. These partnerships are critical for supporting the operational backbone of the Domain Name System (DNS) and ensuring the security and stability of internet operations. As of September 30, 2024, VeriSign reported operating income of $269.3 million for Q3, reflecting a 6% increase year-over-year. The company also generated cash flows from operating activities amounting to $671.1 million during the nine months ended September 30, 2024.
VeriSign, Inc. (VRSN) - Business Model: Key Activities
Managing .com and .net domain registries
As of September 30, 2024, VeriSign managed approximately 169.6 million .com and .net registrations, reflecting a 2.5% decrease from the previous year. During the third quarter of 2024, the company processed 9.3 million new domain registrations for .com and .net, down from 9.9 million in the same period of 2023. The renewal rate for .com and .net domains was approximately 72.7% for Q2 2024, compared to 73.4% in Q2 2023. This management of domain registries is critical as it directly influences the company's revenue and operational stability.
Providing DNS services and security
VeriSign plays a vital role in ensuring the security and stability of the Domain Name System (DNS) through its infrastructure, which includes operating two of the thirteen global root servers. The company’s DNS services are essential for reliable internet navigation. In 2024, VeriSign reported revenues of $390.6 million for the third quarter and $1,162.0 million for the nine months ended September 30, marking a 4% increase year-over-year. The company’s investment in DNS security and infrastructure is reflected in its operating income of $269.3 million for Q3 2024.
Conducting marketing and customer acquisition efforts
VeriSign's marketing efforts are crucial for driving domain name registrations and renewals. The company focuses on promoting its services through various channels to reach potential registrants. Despite facing competition from country code top-level domains (ccTLDs) and alternative online presence solutions like social media, VeriSign's revenue from U.S. customers was $260.2 million for Q3 2024, representing a 4% increase from the prior year. The company’s overall geographic revenue distribution shows that EMEA contributed $62.8 million and China $19.7 million, although the latter saw a 10% decline.
| Key Metrics | Q3 2024 | Q3 2023 | Change (%) |
|---|---|---|---|
| New Domain Registrations (millions) | 9.3 | 9.9 | -6.06% |
| .com and .net Registrations (millions) | 169.6 | 173.9 | -2.5% |
| Renewal Rate (%) | 72.7 | 73.4 | -0.95% |
| Operating Income (millions) | 269.3 | 254.3 | 5.95% |
| Total Revenues (millions) | 390.6 | 376.3 | 4.00% |
| U.S. Revenue (millions) | 260.2 | 250.8 | 4.00% |
VeriSign, Inc. (VRSN) - Business Model: Key Resources
Extensive database of registered domains
As of September 30, 2024, VeriSign, Inc. has a significant database comprising 169.6 million registered domain names under the .com and .net top-level domains. This figure reflects a 2.5% decrease from the previous year, marking a net decrease of 1.1 million registrations since June 30, 2024.
Technical infrastructure for DNS management
VeriSign operates critical infrastructure that supports the Domain Name System (DNS), which is vital for internet navigation. The company maintains two of the thirteen global internet root servers and provides Root Zone Maintainer Services, ensuring the security and stability of the DNS. This infrastructure is a key asset, enabling the company to deliver reliable domain name registration services.
Skilled workforce in technology and customer support
VeriSign employs a skilled workforce dedicated to technology and customer support. This team is essential for managing the operational systems and providing support services to registrars and end-users. The company's investment in human resources is reflected in its financial reports, with $71.8 million allocated to research and development and $152.8 million for selling, general, and administrative expenses for the nine months ended September 30, 2024.
| Resource Type | Details | Statistics |
|---|---|---|
| Domain Registrations | Active domains under management | 169.6 million as of Q3 2024 |
| Technical Infrastructure | Global root servers and DNS management | 2 of 13 global root servers |
| Workforce | Technology and customer support teams | $71.8 million (R&D), $152.8 million (SG&A) for 2024 |
VeriSign, Inc. (VRSN) - Business Model: Value Propositions
Reliable and secure domain registration services
VeriSign, Inc. offers a robust and reliable platform for domain registration, primarily focusing on the .com and .net domains. As of September 30, 2024, the company managed approximately 169.6 million registrations in its domain name base, a decrease of 2.5% from the previous year. The demand for domain names is influenced by factors such as internet growth and marketing efforts. However, competitive pressures and economic conditions have posed challenges in maintaining growth.
Strong brand recognition in domain management
VeriSign is widely recognized as a leader in the domain management space, benefiting from its long-standing reputation and trust among customers. The company reported revenues of $390.6 million for the three months ended September 30, 2024, reflecting a 4% increase compared to the same period in 2023. This strong performance is attributed to its established brand, which is synonymous with reliability in domain registration and management services.
Continuous innovation in internet infrastructure
VeriSign emphasizes continuous innovation, particularly in internet infrastructure. The company has permission to increase the price of .com domain registrations by up to 7% annually through 2024, with recent price adjustments bringing the wholesale fee to $10.26. The company also invests in research and development, with expenditures of $71.8 million for the nine months ended September 30, 2024, an increase from the previous year.
| Metric | Value | Change |
|---|---|---|
| Domain registrations | 169.6 million | -2.5% |
| Revenues (Q3 2024) | $390.6 million | +4% |
| Wholesale fee for .com domains (2024) | $10.26 | +7% |
| Research and development expenses (9M 2024) | $71.8 million | +6% |
VeriSign, Inc. (VRSN) - Business Model: Customer Relationships
Direct engagement with registrars as primary customers
VeriSign primarily engages with registrars as its main customer base. As of September 30, 2024, VeriSign had approximately 169.6 million .com and .net domain registrations in its domain name base, which reflects a 2.5% decrease from the previous year. The company processed 9.3 million new domain registrations for .com and .net during the third quarter of 2024, compared to 9.9 million for the same period in 2023. This direct engagement includes establishing partnerships with registrars, which in turn serve individual customers, known as registrants. The registrants contract directly with registrars for domain name registrations and management services.
Customer support for domain registration and management
VeriSign provides robust customer support for domain registration and management. The final renewal rate for .com and .net domains was 72.7% for Q2 2024, a slight decline from 73.4% in Q2 2023. The company generates significant cash flows from operating activities, amounting to $671.1 million during the nine months ended September 30, 2024, which reflects an increase compared to $649.6 million in the same period in 2023. This revenue is primarily driven by customer interactions and support services related to domain management.
Educational resources for registrants on domain usage
VeriSign invests in educational resources for registrants to enhance their understanding of domain usage and management. The company actively promotes online advertising and e-commerce to drive demand for domain names. To support this, VeriSign provides various online resources and training for registrars and registrants, which helps to increase customer engagement and retention.
| Metrics | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| New domain registrations (millions) | 9.3 | 9.9 | -6.1% |
| Domain registrations in base (millions) | 169.6 | 173.9 | -2.5% |
| Renewal rate (%) | 72.7 | 73.4 | -0.7% |
| Cash flows from operating activities (millions) | $671.1 | $649.6 | +3.8% |
VeriSign, Inc. (VRSN) - Business Model: Channels
Online platform for domain registration
VeriSign operates a robust online platform for domain registration, primarily focusing on the .com and .net domains. As of September 30, 2024, VeriSign reported a total of 169.6 million .com and .net registrations in its domain name base, a 2.5% decrease from the previous year. The company processed 9.3 million new domain name registrations during the third quarter of 2024, compared to 9.9 million for the same period in 2023. The pricing structure for .com and .net domains has increased, with the wholesale fee for .com registrations rising from $9.59 to $10.26 effective September 1, 2024, and for .net registrations from $9.92 to $10.91 effective February 1, 2024.
Partnerships with third-party registrars
VeriSign's business model heavily relies on partnerships with third-party registrars, which serve as intermediaries between VeriSign and end customers. These registrars are responsible for marketing, selling, and supporting domain registrations. The company generates revenue primarily through fees charged to these registrars for each domain registered. The annual registry-level wholesale fee is a critical component of this revenue model, impacting the overall financial performance of the company. For the nine months ended September 30, 2024, VeriSign reported total revenues of $1,162.0 million, a 4% increase compared to the prior year.
Marketing through digital advertising and industry events
VeriSign invests in digital advertising and participates in industry events to enhance its visibility and drive demand for its domain registration services. The demand for domain names is largely driven by continued internet growth and marketing activities carried out by both VeriSign and its registrars. The company reported cash flows from operating activities of $671.1 million for the nine months ended September 30, 2024, reflecting effective management of its marketing strategies.
| Channel Type | Description | Statistics |
|---|---|---|
| Online Platform | Domain registration services for .com and .net |
Total Registrations: 169.6 million New Registrations (Q3 2024): 9.3 million Price Increase for .com: $10.26 (effective Sept 2024) |
| Partnerships | Collaboration with third-party registrars | Revenue from Registrars: Part of $1,162.0 million total revenue (Q3 2024) |
| Marketing | Digital advertising and industry events | Cash Flows from Operations: $671.1 million (9 months ended Sept 2024) |
VeriSign, Inc. (VRSN) - Business Model: Customer Segments
Businesses seeking online presence through domains
VeriSign primarily serves businesses that aim to establish an online presence through domain registrations. As of September 30, 2024, there were approximately 169.6 million .com and .net domain registrations, reflecting a 2.5% decrease from the previous year. The demand for domain names is driven by the growth of e-commerce and online advertising, with the company processing 9.3 million new registrations in the third quarter of 2024, down from 9.9 million in the same quarter of 2023. The average wholesale fee for a .com registration increased from $9.59 to $10.26 in September 2024, while the .net fee rose from $9.92 to $10.91.
Individual users registering personal domains
Individual users also contribute significantly to VeriSign's customer segments. These users often register personal domains for various reasons, including personal branding and online portfolios. The competitive landscape includes not only traditional domain registrations but also alternative online presence solutions such as social media platforms. Despite the challenges, the core value proposition of domain names remains strong, appealing to individuals who desire a unique online identity.
Enterprises requiring secure internet infrastructure
VeriSign's services extend to enterprises that require secure internet infrastructure. The company provides critical internet infrastructure services, including operating two of the thirteen global internet root servers and maintaining the Domain Name System (DNS). In 2024, VeriSign's revenues were reported at $390.6 million for the third quarter, an increase of 4% compared to the previous year. The total cash flows from operating activities for the nine months ended September 30, 2024, were $671.1 million, reflecting the importance of secure and reliable internet services for large organizations.
| Customer Segment | Description | Key Metrics |
|---|---|---|
| Businesses | Seeking online presence through domains | 169.6 million .com and .net registrations |
| Individuals | Registering personal domains | Core value proposition remains strong despite competition |
| Enterprises | Requiring secure internet infrastructure | $390.6 million revenues in Q3 2024 |
VeriSign, Inc. (VRSN) - Business Model: Cost Structure
Operating costs for domain management and infrastructure
VeriSign's cost of revenues for the three months ended September 30, 2024, was $46.8 million, reflecting a 4% decrease from $48.6 million in the same period in 2023. For the nine months ended September 30, 2024, the cost of revenues totaled $143.0 million, down from $148.8 million year-over-year, also a decrease of 4%.
The cost of revenues primarily includes:
- Salaries and employee benefits for personnel managing operational systems
- Depreciation expenses
- Operational costs associated with service delivery
- Fees paid to ICANN
- Customer support and training costs
- Telecommunications expenses
- Allocations of indirect costs such as corporate overhead
Depreciation expenses decreased by $5.7 million due to lower capital expenditures and telecommunication expenses decreased by $3.3 million primarily due to savings on colocation agreements.
Research and development for service improvement
Research and development (R&D) expenses for VeriSign during the three months ended September 30, 2024, were $23.2 million, an increase of 7% from $21.7 million in the same period in 2023. For the nine months ended September 30, 2024, R&D expenses reached $71.8 million, up 6% from $68.1 million.
The breakdown of R&D expenses includes:
- Salaries and personnel-related expenses for R&D staff
- Consulting fees
- Facilities costs
- Computer and communications equipment expenses
- Support services used in technology development
- Allocations of indirect costs, including corporate overhead
Marketing and sales expenses
VeriSign's selling, general and administrative expenses for the three months ended September 30, 2024, totaled $51.3 million, a slight decrease from $51.7 million in the same period in 2023. For the nine months ended September 30, 2024, these expenses were $152.8 million, compared to $151.5 million for the same period in 2023.
Key components of marketing and sales expenses include:
- Salaries and personnel-related expenses for executive, administrative, legal, finance, IT, human resources, and sales staff
- Travel and related expenses
- Costs associated with trade shows and marketing programs
- Consulting and professional service fees
- Tax and license fees
- Costs of facilities and management information systems
| Cost Category | Q3 2024 (in millions) | Q3 2023 (in millions) | 9M 2024 (in millions) | 9M 2023 (in millions) |
|---|---|---|---|---|
| Cost of Revenues | 46.8 | 48.6 | 143.0 | 148.8 |
| Research and Development | 23.2 | 21.7 | 71.8 | 68.1 |
| Selling, General and Administrative | 51.3 | 51.7 | 152.8 | 151.5 |
VeriSign, Inc. (VRSN) - Business Model: Revenue Streams
Fees from Domain Registrations and Renewals
VeriSign generates a substantial portion of its revenue from fees associated with domain registrations and renewals. As of September 30, 2024, the company reported a total revenue of $390.6 million for the third quarter, with an annual revenue of $1,162.0 million for the first nine months of 2024, reflecting a 4% increase compared to the same periods in 2023.
The number of .com and .net domain registrations in the company's base stood at 169.6 million, down 2.5% from the previous year. The renewal rate for .com and .net domains was reported at 72.7% for Q2 2024.
VeriSign has the authority to adjust pricing under its agreements with ICANN, which allows for increases of up to 7% for .com domains and 10% for .net domains annually. On September 1, 2024, the price for .com registrations increased from $9.59 to $10.26, and for .net registrations from $9.92 to $10.91.
Revenue from Premium Domain Sales
In addition to standard registration fees, VeriSign also earns revenue from premium domain sales. While specific figures for premium sales are not detailed in the latest reports, it is known that demand for premium domains can significantly impact overall revenue, particularly as online businesses seek memorable and high-value web addresses. The overall market for premium domains remains competitive, with prices reflecting the perceived value and market demand.
Service Fees for DNS and Security Services
VeriSign also derives revenue from its DNS and security services. The company provides critical infrastructure services that underpin the stability and security of the internet. For the nine months ended September 30, 2024, cash flows from operating activities amounted to $671.1 million, indicating strong operational performance.
As part of its service offerings, VeriSign operates two of the thirteen global internet root servers and provides DNS services that enhance website performance and security. The company’s expertise in managing domain name systems is crucial to its revenue structure, although specific revenue figures from these services are not separately disclosed.
| Revenue Stream | Q3 2024 Revenue (in millions) | Annual Revenue 2024 (in millions) | Growth Rate (%) |
|---|---|---|---|
| Domain Registrations and Renewals | $390.6 | $1,162.0 | 4 |
| Premium Domain Sales | N/A | N/A | N/A |
| DNS and Security Services | N/A | $671.1 (cash flows from operations) | N/A |
The revenue model of VeriSign is heavily dependent on its domain registration and renewal fees, pricing strategies, and the provision of essential internet infrastructure services. The adjustments in pricing authorized by ICANN directly influence revenue, while the demand for premium domains and security services adds to the company’s financial stability.
Article updated on 8 Nov 2024
Resources:
- VeriSign, Inc. (VRSN) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of VeriSign, Inc. (VRSN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View VeriSign, Inc. (VRSN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.