Internet infrastructure company VeriSign (NASDAQ: VRSN) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 7.3% year on year to $419.1 million. Its GAAP profit of $2.27 per share was 1.3% above analysts’ consensus estimates.

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StockStory’s Take

VeriSign’s third quarter was marked by continued growth in its core domain name business and positive market reaction, with revenue and earnings per share both surpassing Wall Street’s expectations. Management attributed this performance to the success of revamped marketing programs and stronger registrar engagement, particularly in the U.S. and EMEA regions. CEO Jim Bidzos emphasized improvements in both new domain registrations and renewal rates, stating the company’s adjustments to its channel programs produced “enhanced pace of growth in new registrations.” The team also called out a 1.4% year-over-year increase in the domain name base, driven by higher volumes and improved renewal activity.

Looking ahead, management believes that AI-related trends and evolving marketing strategies will play a significant role in sustaining demand for domain names. CEO Jim Bidzos pointed to the increasing use of AI both as a driver of new domain registrations and in the usage of VeriSign’s DNS resolution services, noting, “AI is having a positive impact on registrations as well as on the utilization of our DNS resolution services.” The company intends to further refine its marketing programs for 2026 in response to registrar feedback, while monitoring macroeconomic conditions and potential regulatory changes related to new top-level domains.

Key Insights from Management’s Remarks

Management cited improved engagement with registrars, effective marketing programs, and industry trends—such as increased AI activity—as key contributors to third quarter performance.

• Registrar program enhancements: Expanded and more adaptable marketing programs strengthened relationships with registrars, helping drive both new domain registrations and higher renewal activity, especially in the U.S. and EMEA regions.
• Renewal rate improvement: The preliminary renewal rate for the quarter rose to 75.3%, an increase from 72.2% a year earlier. Management attributed this to a greater proportion of high-quality, renewing domains and fewer first-time renewals, reflecting a shift in customer mix.
• AI-driven demand: Management noted that the growing adoption of AI—both for domain name generation and for powering internet services—has led to increased DNS activity, with daily DNS transactions more than doubling over two years. AI agents are increasingly reliant on VeriSign’s infrastructure to access online data.
• Minimal impact from Google AdSense changes: CEO Jim Bidzos explained that ongoing changes to Google’s AdSense program have had little effect on VeriSign’s business, as the company’s exposure to domains primarily used for ad monetization is now minimal after years of industry shifts.
• Refined marketing for 2026: Feedback from registrars is being used to further evolve marketing programs for next year, with management emphasizing a focus on acquiring higher quality, higher renewal domains and tailoring incentives to changing market conditions.

Drivers of Future Performance

VeriSign’s outlook is shaped by the interplay of AI-driven internet activity, continued marketing program evolution, and upcoming regulatory milestones in the domain industry.

• AI as a growth catalyst: Management believes the ongoing proliferation of AI applications is boosting demand for domain names and DNS services, as AI agents require persistent and reliable internet identifiers. CEO Jim Bidzos said this trend is “additive to the existing drivers of DNS reliance.”
• Dynamic marketing strategies: The company plans to further invest in flexible, data-driven marketing programs for registrars in 2026, aiming to maintain high renewal rates and quality registrations. Early feedback from registrars on these adjustments has been positive, but management will monitor performance and make further changes as needed.
• Regulatory and industry developments: The timeline for potentially operating the .web top-level domain remains uncertain, with a key legal hearing scheduled for November 2025. Additionally, a new round of top-level domain allocations by ICANN is expected to begin in 2026, with possible market impact as new extensions are launched by 2027.

Catalysts in Upcoming Quarters

Looking forward, our analysts will be watching (1) whether marketing program refinements continue to yield higher renewal rates and quality domain registrations; (2) the pace and impact of AI-driven demand on DNS transaction volumes; and (3) legal and regulatory developments related to new top-level domains, particularly the outcome of the .web hearing and ICANN’s 2026 allocation process. Shifts in macroeconomic conditions and competition from alternative internet identity solutions will also be important to monitor.

VeriSign currently trades at $242.15, down from $250.43 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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