How will ICANN’s decision to allow the increase in domain registration fees affect VeriSign’s revenue?
VeriSign (NASDAQ: VRSN) is a key player in the Internet domain registration services industry. The company employs more than 1,000 people worldwide and competes with GoDaddy, Cylance, Comodo and DigiCert, among others. The company enjoys a solid competitive advantage over its competitors, which has enabled it to VeriSign revenues increase steadily over the years despite its previously limited ability to improve its pricing structure. With ICANN – the organization responsible for coordinating Internet-related proceedings – endorsing VeriSign’s ability to increase its domain registration fees by 4-7% over the next several years, this should have a visible impact on the latter’s income in the future, as we highlight below.
Our interactive dashboard – How does VeriSign make money? – provides key details and our future outlook for the company’s revenue.
Revenue expected to improve, but growth in domain registrations will remain subdued
Fees will be a key driver of revenue growth over the next five years. Enrollments will continue to grow to levels the company has already seen. As the company does not intend to enter faster growing markets, we do not expect a significant recovery in domain registrations by 2020.
Data on how VeriSign’s domain registrations and average revenue per registration have evolved over the years is available in our interactive dashboard.
Can Competitors Affect Revenue?
- VeriSign’s competitors such as GoDaddy and Comodo offer similar hosting and security services, but are not likely to affect VeriSign’s revenue even if it increases its fees.
- This is because no company provides exactly the same services as Verisign, giving it a very high level of competitive advantage, which is unlikely to be affected anytime soon.
Emerging Markets Remain Key to VeriSign’s Long-Term Success
- VeriSign has established itself in key emerging markets such as China, India and Vietnam, but continues to see slow adoption of its services in these markets.
- Many have argued that its growth remains weak in these markets largely due to its unwillingness to market itself aggressively.
- Therefore, as long as there are opportunities, Verisign management may need to find ways to improve its growth if it is to maintain market confidence.
- Renewing VeriSign’s services and growing emerging markets remain central to the company’s fortunes.
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