| Valuation method | Value, $ | Upside, % |
|---|---|---|
| Artificial intelligence (AI) | 119.59 | -58 |
| Intrinsic value (DCF) | 0.00 | -100 |
| Graham-Dodd Method | 28.39 | -90 |
| Graham Formula | 98.83 | -65 |
VeriSign, Inc. (NASDAQ: VRSN) is a global leader in domain name registry services and internet infrastructure, ensuring the security, stability, and resilience of the internet. The company operates as the exclusive registry for .com and .net domains, two of the most widely recognized top-level domains (TLDs) worldwide, supporting global e-commerce and digital communication. VeriSign also provides back-end registry services for other domains like .cc, .gov, .edu, and .name, while maintaining critical internet infrastructure, including two of the 13 root servers essential for DNS resolution. Headquartered in Reston, Virginia, VeriSign plays a pivotal role in internet navigation, cybersecurity, and digital trust. With a market cap exceeding $26 billion, the company benefits from a recurring revenue model driven by domain registrations and renewals, making it a cornerstone of the internet ecosystem. Its regulatory agreements with ICANN and the U.S. Department of Commerce further solidify its dominant position in the domain name industry.
VeriSign presents a compelling investment case due to its monopolistic position in the .com and .net domain registry markets, generating stable, high-margin recurring revenue. The company’s strong cash flow generation ($902.6M operating cash flow in FY 2023) supports consistent dividends ($3.08/share) and debt reduction, despite its leveraged balance sheet ($1.8B total debt). However, risks include regulatory scrutiny over domain pricing, limited growth opportunities beyond core operations, and potential disruption from alternative internet naming systems (e.g., blockchain-based domains). With a beta of 0.80, VRSN is relatively defensive but trades at a premium valuation (P/E ~33x), reflecting its predictable cash flows. Investors should weigh its infrastructure moat against long-term technological and regulatory uncertainties.
VeriSign’s competitive advantage stems from its exclusive contracts to operate the .com and .net registries, which account for ~158M and ~13.5M domains, respectively, as of 2023. This duopoly, backed by ICANN and U.S. government agreements, creates high barriers to entry and pricing power (e.g., .com price increases capped at 7% annually). The company’s infrastructure expertise—including root server management and DNS security—further differentiates it from generic registry providers. However, VeriSign faces indirect competition from new gTLD operators (e.g., Donuts, Identity Digital) and country-code TLDs (ccTLDs like .de or .uk), which offer alternative branding options. Unlike broader cybersecurity or cloud infrastructure peers, VeriSign’s focus on DNS services limits diversification but ensures operational efficiency (60%+ EBITDA margins). Its main vulnerability is regulatory risk: any challenge to its .com/.net contracts or price caps could disrupt profitability. Competitors lack VeriSign’s scale in legacy TLDs but are more agile in marketing niche domains.