The pandemic has played a role, but the future is uncertain.
Verisign (NASDAQ: VRSN) reports earnings this Thursday, and there will be something unusual to report for the company: a decline in the base of registered .com and .net domain names.
For years, the company has reported a modest but growing trend in domain registrations, quarter over quarter (see chart). It added over a million domains in the first quarter of this year.
But it looks like the number turned negative in the second quarter.
Verisign ended the first quarter with 174.7 million .com and .net domains under management. According to zone data on its website, it ended the second quarter with between 174.2 and 174.3 million domains. It has fallen to 174.1 million so far.
.com and .net both lost registrations during the quarter. The .Com went from 161.3 million to 161.0 million. .Net fell from 13.4 million to 13.2 million according to Verisign data.
So is it the .com pic? Has the world’s appetite for domains ending in .com been sated?
This is an interesting question with many nuances.
Verisign saw it coming. It experienced a reversal and lowered its annual forecast after the first quarter. (It no longer provides quarterly advice for the Domain Base.)
I suspect the main reason for the drop is training demand. During the pandemic, many companies that would have finally “come online” in 2022, 2023, or 2024 suddenly rushed to do so. We have seen an increase in registrations and the domain base has grown at a rapid rate, especially in Q2 2020 and Q2 2021:
Now, this company that registered a domain a few years earlier than it would have, doesn’t need to register a new domain this year.
And many of these new registrations during the pandemic must also be renewed. 39.5 million .com/.net domains were due for renewal or expiry in the second quarter, compared to 36.6 million the previous year. As the graph above shows, the second quarter was very strong for new registrations during the pandemic.
Keep in mind that first-year registrations typically renew at lower rates than mature domains.
The optimistic view is therefore that it is only a return of the pandemic. Just as Zoom saw huge growth as everyone worked from home, Verisign benefited from new domain registrations.
There is another take, of course. It’s the .com peak, people are replacing different domains, and the domain base has become so large that it will be impossible to grow in the future.
People were saying that 20 years ago, and look where we are now.
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