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 Verisign Reports Fourth Quarter and Full Year 2016 Results
   Thursday, February 09, 2017 4:05:00 PM ET

VeriSign, Inc. (VRSN ), a global leader in domain names and internet security, today reported financial results for the fourth quarter and full year of 2016.

Fourth Quarter GAAP Financial Results

VeriSign, Inc. and subsidiaries ("Verisign") reported revenue of $286 million for the fourth quarter of 2016, up 5.0 percent from the same quarter in 2015. Verisign reported net income of $106 million and diluted earnings per share (diluted "EPS") of $0.84 for the fourth quarter of 2016, compared to net income of $102 million and diluted EPS of $0.76 for the same quarter in 2015. The operating margin was 59.0 percent for the fourth quarter of 2016 compared to 58.1 percent for the same quarter in 2015.

Fourth Quarter Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $115 million and diluted EPS of $0.92 for the fourth quarter of 2016, compared to net income of $105 million and diluted EPS of $0.79 for the same quarter in 2015. The non-GAAP operating margin was 63.9 percent for the fourth quarter of 2016 compared to 62.4 percent for the same quarter in 2015. A table reconciling the GAAP to the non-GAAP results (which excludes items described below) is appended to this release.

2016 GAAP Financial Results

For the year ended Dec. 31, 2016, Verisign reported revenue of $1.14 billion, up 7.8 percent from $1.06 billion in 2015. Verisign reported net income of $441 million and diluted EPS of $3.42 in 2016, compared to net income of $375 million and diluted EPS of $2.82 in 2015. The operating margin for 2016 was 60.1 percent compared to 57.2 percent in 2015.

2016 Non-GAAP Financial Results

Verisign reported, on a non-GAAP basis, net income of $465 million and diluted EPS of $3.61 for 2016, compared to net income of $405 million and diluted EPS of $3.05 for 2015. The non-GAAP operating margin for 2016 was 64.5 percent compared to 61.5 percent for 2015.

"2016 saw a number of significant achievements for Verisign, which included obtaining ICANN and Commerce Department approval for extending the .com agreement to 2024, the continuation of our unique role of publishing the global internet root zone through a new agreement with ICANN, and surpassing 19 years of uninterrupted availability of the Verisign DNS for .com and .net. Secure, reliable operation of these critical infrastructure services help support billions of internet users worldwide," said Jim Bidzos, Executive Chairman, President and Chief Executive Officer.

Financial Highlights

-- Verisign ended 2016 with cash, cash equivalents and marketable securities of $1.8 billion, a decrease of $118 million from year-end 2015.

-- Cash flow from operations was $195 million for the fourth quarter of 2016 and $668 million for the full year 2016 compared with $189 million for the same quarter in 2015 and $651 million for the full year 2015.

-- Deferred revenues on Dec. 31, 2016, totaled $976 million, an increase of $14 million from year-end 2015.

-- During the fourth quarter, Verisign repurchased 2.0 million shares of its common stock for $160 million. During the full year 2016, Verisign repurchased 7.8 million shares of its common stock for $637 million.

-- Effective Feb. 9, 2017, the Board of Directors approved an additional authorization for share repurchases of approximately $641 million of common stock, which brings the total amount to $1 billion authorized and available under Verisign’s share repurchase program, which has no expiration.

-- For purposes of calculating diluted EPS, the fourth quarter diluted share count included 20.6 million shares related to subordinated convertible debentures, compared with 21.4 million shares for the same quarter in 2015. These represent diluted shares and not shares that have been issued.

Business Highlights

-- Verisign ended the fourth quarter with 142.2 million .com and .net domain name registrations in the domain name base, a 1.7 percent increase from the end of the fourth quarter of 2015, and a net decrease of 1.9 million during the fourth quarter of 2016.

-- In the fourth quarter, Verisign processed 8.8 million new domain name registrations for .com and .net, as compared to 12.2 million for the same quarter in 2015.

-- The final .com and .net renewal rate for the third quarter of 2016 was 73.0 percent compared with 71.9 percent for the same quarter in 2015. Renewal rates are not fully measurable until 45 days after the end of the quarter.

Non-GAAP Financial Measures and Adjusted EBITDA

Verisign provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles (GAAP). Along with this information, management typically discloses and discusses certain non-GAAP financial information in quarterly earnings releases, on investor conference calls and during investor conferences and related events. This non-GAAP financial information does not include the following types of financial measures that are included in GAAP: stock-based compensation, unrealized gain/loss on the contingent interest derivative on the subordinated convertible debentures, and non-cash interest expense. Non-GAAP net income is decreased by amounts accrued, if any, during the period for contingent interest payable resulting from upside or downside triggers related to the subordinated convertible debentures and is adjusted for an income tax rate of 26 percent which differs from the GAAP income tax rate.

On a quarterly basis, Verisign also provides Adjusted EBITDA. Adjusted EBITDA is a non-GAAP financial measure and is calculated in accordance with the terms of the indentures governing Verisign’s 4.625% senior notes due 2023 and 5.25% senior notes due 2025. Adjusted EBITDA refers to net income before interest, taxes, depreciation and amortization, stock-based compensation, unrealized gain / loss on the contingent interest derivative on the subordinated convertible debentures and unrealized gain / loss on hedging agreements.

Management believes that this non-GAAP financial data supplements the GAAP financial data by providing investors with additional information that allows them to have a clearer picture of Verisign’s operations and financial performance and the comparability of Verisign’s operating results from period to period. The presentation of this additional information is not meant to be considered in isolation nor as a substitute for results prepared in accordance with GAAP.

The tables appended to this release include a reconciliation of the non-GAAP financial information to the comparable financial information reported in accordance with GAAP for the given periods.

Today’s Conference Call

Verisign will host a live conference call today at 4:30 p.m. (EST) to review the fourth quarter and full year 2016 results. The call will be accessible by direct dial at (888) 676-VRSN (U.S.) or (913) 312-0944 (international), conference ID: Verisign. A listen-only live web cast of the conference call and accompanying slide presentation will also be available at https://investor.verisign.com. An audio archive of the call will be available at https://investor.verisign.com/events.cfm. This news release and the financial information discussed on today’s conference call are available at https://investor.verisign.com.

About Verisign

Verisign, a global leader in domain names and internet security, enables internet navigation for many of the world’s most recognized domain names and provides protection for websites and enterprises around the world. Verisign ensures the security, stability and resiliency of key internet infrastructure and services, including the .com and .net domains and two of the internet’s root servers, as well as performs the root zone maintainer function for the core of the internet’s Domain Name System (DNS). Verisign’s Security Services include intelligence-driven Distributed Denial of Service Protection, iDefense Security Intelligence and Managed DNS. To learn more about what it means to be Powered by Verisign, please visit Verisign.com.

VRSNF

Statements in this announcement other than historical data and information constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 as amended and Section 21E of the Securities Exchange Act of 1934 as amended. These statements involve risks and uncertainties that could cause our actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, whether the U.S. Department of Commerce will approve any exercise by us of our right to increase the price per .com domain name, under certain circumstances, the uncertainty of whether we will be able to demonstrate to the U.S. Department of Commerce that market conditions warrant removal of the pricing restrictions on .com domain names and the uncertainty of whether we will experience other negative changes to our pricing terms; the failure to renew key agreements on similar terms, or at all; new or existing governmental laws and regulations in the U.S. or other applicable foreign jurisdictions; system interruptions, security breaches, attacks on the internet by hackers, viruses, or intentional acts of vandalism; the uncertainty of the impact of changes to the multi-stakeholder model of internet governance; changes in internet practices and behavior and the adoption of substitute technologies; the success or failure of the evolution of our markets; the operational and other risks from the introduction of new gTLDs by ICANN and our provision of back-end registry services; the highly competitive business environment in which we operate; whether we can maintain strong relationships with registrars and their resellers to maintain their marketing focus on our products and services; challenging global economic conditions; economic, legal and political risk associated with our international operations; our ability to protect and enforce our rights to our intellectual property and ensure that we do not infringe on others’ intellectual property; the outcome of legal or other challenges resulting from our activities or the activities of registrars or registrants, or litigation generally; the impact of our new strategic initiatives, including our IDN gTLDs; whether we can retain and motivate our senior management and key employees; the impact of unfavorable tax rules and regulations; and our ability to continue to reinvest offshore our foreign earnings. More information about potential factors that could affect our business and financial results is included in our filings with the SEC, including in our Annual Report on Form 10-K for the year ended Dec. 31, 2015, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K. Verisign undertakes no obligation to update any of the forward-looking statements after the date of this announcement.

(C)2017 VeriSign, Inc. All rights reserved. VERISIGN, the VERISIGN logo, and other trademarks, service marks, and designs are registered or unregistered trademarks of VeriSign, Inc. and its subsidiaries in the United States and in foreign countries. All other trademarks are property of their respective owners.

                                                                                                                                                       
                                                                                                                                       VERISIGN, INC.
                                                                                                                                 CONSOLIDATED BALANCE SHEETS
                                                                                                                              (In thousands, except par value)
                                                                                                                                         (Unaudited)
 
 
                                                                                                                                                       December 31,                                                                                       December 31,
                                                                                                                                                           2016                                                                                               2015
                                                                                                                                 ------------------------------------------------------                                             ------------------------------------------------------
                                        ASSETS
--------------------------------------------------------------------------------------
Current assets:
     Cash and cash equivalents                                                                                                                      $        231,945                                                                                   $        228,659
     Marketable securities                                                                                                                                 1,565,962                                                                                          1,686,771
     Accounts receivable, net                                                                                                                                 13,051                                                                                             12,638
     Other current assets                                                                                                                  31,384                                                       39,856  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total current assets                                                                                                          1,842,342                                                    1,967,924  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Property and equipment, net                                                                                                                                  266,125                                                                                            295,570
Goodwill                                                                                                                                                      52,527                                                                                             52,527
Deferred tax assets                                                                                                                                            9,385                                                                                             17,361
Deposits to acquire intangible assets                                                                                                                        145,000                                                                                              2,000
Other long-term assets                                                                                                                     19,193                                                       22,355  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total long-term assets                                                                                                          492,230                                                      389,813  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total assets                                                                                                                              $      2,334,572                                                                $      2,357,737  
                                                                                                                                 ==================== ============== ====================                                           ==================== ============== ====================
           LIABILITIES AND STOCKHOLDERS’ DEFICIT
--------------------------------------------------------------------------------------
Current liabilities:
     Accounts payable and accrued liabilities                                                                                                       $        203,920                                                                                   $        188,171
     Deferred revenues                                                                                                                                       688,265                                                                                            680,483
     Subordinated convertible debentures, including contingent interest                                                                   629,764                                                      634,326  
     derivative
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total current liabilities                                                                                                     1,521,949                                                    1,502,980  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Long-term deferred revenues                                                                                                                                  287,424                                                                                            280,859
Senior notes                                                                                                                                               1,237,189                                                                                          1,235,354
Deferred tax liabilities                                                                                                                                     371,433                                                                                            294,194
Other long-term tax liabilities                                                                                                           117,172                                                      114,797  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total long-term liabilities                                                                                                   2,013,218                                                    1,925,204  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total liabilities                                                                                                             3,535,167                                                    3,428,184  
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Commitments and contingencies
Stockholders’ deficit:
     Preferred stock--par value $.001 per share; Authorized shares: 5,000;                                                                --                                                                                     --
     Issued and outstanding shares: none
     Common stock--par value $.001 per share; Authorized shares:                                                                                     324                                                                                                323
     1,000,000; Issued shares: 324,118 at December 31, 2016 and 322,990
     at December 31, 2015; Outstanding shares: 103,091 at December 31,
     2016 and 110,072 at December 31, 2015
     Additional paid-in capital                                                                                                                           16,987,488                                                                                         17,558,822
     Accumulated deficit                                                                                                                                 (18,184,954 )                                                                                      (18,625,599 )
     Accumulated other comprehensive loss                                                                                                  (3,453 )                                                                        (3,993 )
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total stockholders’ deficit                                                                       (1,200,595 )                                                                    (1,070,447 )
                                                                                                                                 -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
          Total liabilities and stockholders’ deficit                                                                    $      2,334,572                                                                $      2,357,737  
                                                                                                                                 ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                                         
                                                                                                                                                                                                                                                             
                                                                                                                                                                                                                              VERISIGN, INC.
                                                                                                                                                                                                              CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                                                                                                                                                                                                   (In thousands, except per share data)
                                                                                                                                                                                                                                (Unaudited)
 
 
                                                                                                                                                                                 Three Months Ended December 31,                                                                                                                                                                      Year Ended December 31,
                                                                                                                  ------------------------------------------------------------------------------------------------------------------------------------------------------------                                          --------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                            2016                                                                                               2015                                                                                             2016                                                                                          2015
                                                                                                                  ---------------------------------------------------------                                          ---------------------------------------------------------                                          ----------------------------------------------------                                          ----------------------------------------------------
Revenues                                                                                                                             $        286,271                                                                $        272,625                                                                $ 1,142,167                                                                $ 1,059,366  
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Costs and expenses:
     Cost of revenues                                                                                                                          49,100                                                                                             48,996                                                                                       198,242                                                                                       192,788
     Sales and marketing                                                                                                                       21,819                                                                                             22,507                                                                                        80,250                                                                                        90,184
     Research and development                                                                                                                  13,745                                                                                             15,200                                                                                        59,100                                                                                        63,718
     General and administrative                                                                                             32,845                                                       27,640                                                 118,003                                                 106,730  
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
          Total costs and expenses                                                                                         117,509                                                      114,343                                                 455,595                                                 453,420  
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Operating income                                                                                                                              168,762                                                                                            158,282                                                                                       686,572                                                                                       605,946
Interest expense                                                                                                                              (28,982 )                                                                                          (28,567 )                                                                                    (115,564 )                                                                                    (107,631 )
Non-operating income (loss), net                                                                                             2,073                                                       (4,336 )                                                                   10,165                                                 (10,665 )
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Income before income taxes                                                                                                                    141,853                                                                                            125,379                                                                                       581,173                                                                                       487,650
Income tax expense                                                                                                         (36,301 )                                                                       (23,849 )                                                                 (140,528 )                                                                 (112,414 )
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Net income                                                                                                                 105,552                                                      101,530                                                 440,645                                                 375,236  
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
     Realized foreign currency translation adjustments, included in net                                                                --                                                                                     --                                                                                            85                                                                                          (291 )
     income
     Unrealized (loss) gain on investments                                                                                                       (768 )                                                                                           (1,318 )                                                                                         533                                                                                          (519 )
     Realized gain on investments, included in net income                                                           --                                                          (86 )                                                                      (78 )                                                                     (185 )
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Other comprehensive (loss) income                                                                                             (768 )                                                                        (1,404 )                                                                      540                                                    (995 )
                                                                                                                  -------------------- -------------- --------------------                                           -------------------- -------------- --------------------                                           -------------------- --------- --------------------                                           -------------------- --------- --------------------
Comprehensive income                                                                                                                 $        104,784                                                                $        100,126                                                                $   441,185                                                                $   374,241  
                                                                                                                  ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                      
Earnings per share:
     Basic                                                                                                                           $           1.01                                                                $           0.92                                                                $      4.12                                                                $      3.29  
                                                                                                                  ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
     Diluted                                                                                                                         $           0.84                                                                $           0.76                                                                $      3.42                                                                $      2.82  
                                                                                                                  ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
Shares used to compute earnings per share
     Basic                                                                                                                 104,080                                                      110,952                                                 107,001                                                 114,155  
                                                                                                                  ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
     Diluted                                                                                                               125,454                                                      133,385                                                 128,833                                                 133,031  
                                                                                                                  ==================== ============== ====================                                           ==================== ============== ====================                                           ==================== ========= ====================                                           ==================== ========= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                      
                                                                                                                                             
                                                                                                                                  VERISIGN, INC.
                                                                                                                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                                                                                                  (In thousands)
                                                                                                                                    (Unaudited)
 
 
                                                                                                                                                                                          Year Ended December 31,
                                                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                 2016                                                                                               2015
                                                                                                                       ---------------------------------------------------------                                          ---------------------------------------------------------
Cash flows from operating activities:
     Net income                                                                                                                           $        440,645                                                                                   $        375,236
     Adjustments to reconcile net income to net cash provided by
     operating activities:
          Depreciation of property and equipment                                                                                                    58,167                                                                                             61,491
          Stock-based compensation                                                                                                                  50,044                                                                                             46,075
          Excess tax benefit associated with stock-based compensation                                                                              (25,058 )                                                                                          (18,464 )
          Unrealized (gain) loss on contingent interest derivative on                                                                               (2,402 )                                                                                           14,130
          Subordinated Convertible Debentures
          Payment of contingent interest                                                                                                           (13,385 )                                                                                          (10,759 )
          Amortization of debt discount and issuance costs                                                                                          13,411                                                                                             12,292
          Other, net                                                                                                                                (3,787 )                                                                                           (1,781 )
          Changes in operating assets and liabilities
               Accounts receivable                                                                                                                    (871 )                                                                                              661
               Prepaid expenses and other assets                                                                                                     8,980                                                                                             (1,728 )
               Accounts payable and accrued liabilities                                                                                             40,244                                                                                             21,013
               Deferred revenues                                                                                                                    14,347                                                                                             70,988
               Net deferred income taxes and other long-term tax liabilities                                                     87,614                                                       82,328  
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash provided by operating activities                                                                   667,949                                                      651,482  
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Cash flows from investing activities:
     Proceeds from maturities and sales of marketable securities and                                                                             3,817,899                                                                                          2,767,027
     investments
     Purchases of marketable securities                                                                                                         (3,691,057 )                                                                                       (3,219,329 )
     Purchases of property and equipment                                                                                                           (26,574 )                                                                                          (40,656 )
     Deposits to acquire intangible assets                                                                                                        (143,000 )                                                                                   --
     Other investing activities                                                                                                   2,333                                                       (3,941 )
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash used in investing activities                                                                       (40,399 )                                                                      (496,899 )
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Cash flows from financing activities:
     Proceeds from issuance of common stock from option exercises and                                                                               13,670                                                                                             14,690
     employee stock purchase plans
     Repurchases of common stock                                                                                                                  (662,491 )                                                                                         (643,169 )
     Proceeds from senior notes, net of issuance costs                                                                                      --                                                                                            492,237
     Excess tax benefit associated with stock-based compensation                                                                 25,058                                                       18,464  
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
                    Net cash used in financing activities                                                                      (623,763 )                                                                      (117,778 )
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Effect of exchange rate changes on cash and cash equivalents                                                                       (501 )                                                                           246  
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Net increase in cash and cash equivalents                                                                                                            3,286                                                                                             37,051
Cash and cash equivalents at beginning of period                                                                                228,659                                                      191,608  
                                                                                                                       -------------------- -------------- --------------------                                           -------------------- -------------- --------------------
Cash and cash equivalents at end of period                                                                                                $        231,945                                                                $        228,659  
                                                                                                                       ==================== ============== ====================                                           ==================== ============== ====================
Supplemental cash flow disclosures:
     Cash paid for interest                                                                                                               $        115,544                                                                $         99,473  
                                                                                                                       ==================== ============== ====================                                           ==================== ============== ====================
     Cash paid for income taxes, net of refunds received                                                                                  $         14,303                                                                $         39,723  
                                                                                                                       ==================== ============== ====================                                           ==================== ============== ====================
                                                                                                                                                                                                                                                               
 
                                                                                                                                                                                                                                    VERISIGN, INC.
                                                                                                                                                                                                                     RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
                                                                                                                                                                                                                         (In thousands, except per share data)
                                                                                                                                                                                                                                     (Unaudited)
 
 
                                                                                                                                                                                                                                                  Three Months Ended December 31,
                                                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                  2016                                                                                                                                                           2015
                                                                                                                       -----------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Operating Income                                                Net Income                                                                                     Operating Income                                                Net Income
                                                                                                                       ---------------------------------------------------------------                                          --------------------------------------------------                                          ---------------------------------------------------------------                                          --------------------------------------------------
GAAP as reported                                                                                                                          $              168,762                                                                                   $ 105,552                                                                                   $              158,282                                                                                   $ 101,530
     Adjustments:
          Stock-based compensation                                                                                                                        14,299                                                                                      14,299                                                                                                   11,724                                                                                      11,724
          Unrealized loss on contingent interest derivative on the                                                                                                                                                                                         9                                                                                                                                                                                                5,072
          subordinated convertible debentures
          Non-cash interest expense                                                                                                                                                                                                                    3,440                                                                                                                                                                                                3,091
          Contingent interest payable on subordinated convertible debentures                                                                                                                                                                          (3,859 )                                                                                                                                                                                             (3,272 )
     Tax adjustment                                                                                                                                                       (4,192 )                                                                                                                (13,070 )
                                                                                                                       -------------------- -------------------- --------------------                                           -------------------- ------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- ------- --------------------
Non-GAAP                                                                                                                                  $              183,061                                                                $ 115,249                                                                $              170,006                                                                $ 105,075  
                                                                                                                       ==================== ==================== ====================                                           ==================== ======= ====================                                           ==================== ==================== ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
Revenues                                                                                                                                  $              286,271                                                                                                                                                                               $              272,625
Non-GAAP operating margin                                                                                                                63.9 %                                                                                                                                                                            62.4 %
                                                                                                                       ==================== ==================== ====================                                                                                                                                       ==================== ==================== ====================
Diluted shares                                                                                                                                                                                                                                       125,454                                                                                                                                                                                              133,385
Diluted EPS, non-GAAP                                                                                                                                                                                                                              $    0.92                                                                                                                                                                         $    0.79  
                                                                                                                                                                                                                                ==================== ======= ====================                                                                                                                                                    ==================== ======= ====================
                                                                                                                        
                                                                                                                        
                                                                                                                                                                                                                                                                                            Year Ended December 31,
                                                                                                                       ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                  2016                                                                                                                                                                                                 2015
                                                                                                                       -----------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                              Operating Income                                                                                      Net Income                                                                                     Operating Income                                                                                      Net Income
                                                                                                                       ---------------------------------------------------------------                                          --------------------------------------------------                                          ---------------------------------------------------------------                                          --------------------------------------------------
GAAP as reported                                                                                                                          $              686,572                                                                                   $ 440,645                                                                                   $              605,946                                                                                   $ 375,236
     Adjustments:
          Stock-based compensation                                                                                                                        50,044                                                                                      50,044                                                                                                   46,075                                                                                      46,075
          Unrealized (gain) loss on contingent interest derivative on the                                                                                                                                                                             (2,402 )                                                                                                                                                                                             14,130
          subordinated convertible debentures
          Non-cash interest expense                                                                                                                                                                                                                   13,411                                                                                                                                                                                               11,746
          Contingent interest payable on subordinated convertible debentures                                                                                                                                                                         (14,265 )                                                                                                                                                                                            (11,749 )
     Tax adjustment                                                                                                                                                      (22,742 )                                                                                                                (30,028 )
                                                                                                                       -------------------- -------------------- --------------------                                           -------------------- ------- --------------------                                           -------------------- -------------------- --------------------                                           -------------------- ------- --------------------
Non-GAAP                                                                                                                                  $              736,616                                                                $ 464,691                                                                $              652,021                                                                $ 405,410  
                                                                                                                       ==================== ==================== ====================                                           ==================== ======= ====================                                           ==================== ==================== ====================                                           ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
Revenues                                                                                                                                  $            1,142,167                                                                                                                                                                               $            1,059,366
Non-GAAP operating margin                                                                                                                64.5 %                                                                                                                                                                            61.5 %
                                                                                                                       ==================== ==================== ====================                                                                                                                                       ==================== ==================== ====================
Diluted shares                                                                                                                                                                                                                                       128,833                                                                                                                                                                                              133,031
Diluted EPS, non-GAAP                                                                                                                                                                                                                              $    3.61                                                                                                                                                                         $    3.05  
                                                                                                                                                                                                                                ==================== ======= ====================                                                                                                                                                    ==================== ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
                                                                 
                                                                                                                    VERISIGN, INC.
                                                                                                      RECONCILIATION OF NON-GAAP ADJUSTED EBITDA
                                                                                                                    (In thousands)
                                                                                                                      (Unaudited)
                                                                                                                              
The following table reconciles GAAP net income to non-GAAP
Adjusted EBITDA for the periods shown below (in thousands):
                                                                                                                              
                                                                                                                                                                      Three Months Ended
                                                                                                                                                                         December 31,
                                                                                                        --------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                               2016                                                  2015
                                                                                                        --------------------------------------------------                                          --------------------------------------------------
Net Income                                                                                                                 $ 105,552                                                                                   $ 101,530
     Interest expense                                                                                                         28,982                                                                                      28,567
     Income tax expense                                                                                                       36,301                                                                                      23,849
     Depreciation and amortization                                                                                            14,053                                                                                      14,937
     Stock-based compensation                                                                                                 14,299                                                                                      11,724
     Unrealized loss on contingent interest derivative on the                                                                      9                                                                                       5,072
     subordinated convertible debentures
     Unrealized (gain) loss on hedging agreements                                                            (115 )                                                                     84  
                                                                                                        -------------------- ------- --------------------                                           -------------------- ------- --------------------
Non-GAAP Adjusted EBITDA                                                                                                   $ 199,081                                                                $ 185,763  
                                                                                                        ==================== ======= ====================                                           ==================== ======= ====================
                                                                                                                              
                                                                                                                              
                                                                                                                                                                          Year Ended
                                                                                                                                                                       December 31, 2016
                                                                                                        --------------------------------------------------------------------------------------------------------------------------------------
Net Income                                                                                                                 $                                                                                             440,645
     Interest expense                                                                                                                                                                                 115,564
     Income tax expense                                                                                                                                                                               140,528
     Depreciation and amortization                                                                                                                                                                     58,167
     Stock-based compensation                                                                                                                                                                          50,044
     Unrealized gain on contingent interest derivative on the                                                                                                                                          (2,402 )
     subordinated convertible debentures
     Unrealized gain on hedging agreements                                                                                                                                                                (89 )
                                                                                                        -------------------- ----------------------------------------------------------------------------------------------      --------------------
Non-GAAP Adjusted EBITDA                                                                                                   $                                                                                             802,457  
                                                                                                        ==================== ==============================================================================================      ====================
                                                                                                                                                                                                                                  
 
                                                                                                                                                               VERISIGN, INC.
                                                                                                                                                   STOCK-BASED COMPENSATION CLASSIFICATION
                                                                                                                                                               (In thousands)
                                                                                                                                                                 (Unaudited)
 
The following table presents the classification of stock-based
compensation:
 
                                                                                   Three Months Ended                                                                                               Year Ended
                                                                                                                            December 31,                                                                                                                                       December 31,
                                                                                 --------------------------------------------------------------------------------------------                                                ----------------------------------------------------------------------------------------------------------
                                                                                             2016                            2015                                                                  2016                                   2015
                                                                                 ----------------------------                                          ----------------------------                                          ----------------------------                                          ------------------------------------------
     Cost of revenues                                                                               $  1,886                                                              $  1,807                                                              $  7,253                                                              $                7,009
     Sales and marketing                                                                               1,518                                                                 1,963                                                                 5,738                                                            6,763
     Research and development                                                                          1,773                                                                 1,598                                                                 6,739                                                                               6,488
     General and administrative                                                     9,122                                              6,356                                             30,314                                                           25,815
                                                                                 -------------------- ------                                           -------------------- ------                                           -------------------- ------                                           -------------------- --------------------
Total stock-based compensation expense                                                              $ 14,299                                                              $ 11,724                                                              $ 50,044                                                              $               46,075
                                                                                 ==================== ======                                           ==================== ======                                           ==================== ======                                           ==================== ====================
                                                                                                                                                                                                                                                                                                                         

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170209005993r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170209005993/en/

SOURCE: VeriSign, Inc.

VeriSign, Inc. 
Investor Relations: 
David Atchley, 703-948-4643 
datchley@verisign.com 
or 
Media Relations: 
Deana Alvy, 703-948-4179 
dalvy@verisign.com


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