VRSN · Nasdaq · Services-Computer Programming Services
$307.58 · $28.9B market value · fiscal year to 31 Dec 2025
5 of 8
Buffett tests pass
Margin of safety -64%
Bear
$111.20
Base
$187.62
Bull
$295.30
Price $307.58
The price is above even the bull case.
Verisign runs the registries for the .com and .net domain names, which the filing says support the majority of global e-commerce. Registrars sell the names to customers and pay Verisign an annual fee for each registration. Revenue was $1.7B, the operating margin averaged 65% over 15 years, and there were 0 loss years. Our tests rate the earnings record and owner earnings as strong, with normalised owner earnings of $837.9M. The share price of $307.58 is above our base-case value of $187.62, and even our bull case of $295.30 sits below that price.
Predictability: Medium
Verisign runs the registries for .com and .net, which the filing says support the majority of global e-commerce. It does not sell domain names to end users. Registrars sell names to customers and pay Verisign an annual fee per registration, and ICANN limits how much that fee can rise. Revenue was $1.7B and net margin averaged 50% over the period.
Inside the circle? The past record is steady: operating margin varied by 2.7% across 15 years, with 0 loss years. Almost all revenue, however, depends on one contract for .com and one for .net, and on demand that the filing says could weaken from social media, e-commerce platforms and AI. We could be wrong if these pressures arrive faster than the history suggests, so a ten-year estimate rests on assumptions about regulation and demand.
“Substantially all of our revenues are derived from our operation of the . com gTLD under our Cooperative Agreement with the DOC”
Durability
Narrow
Pricing power
Some
Moat type
Regulation, Intangibles
Verisign's main protection is a set of contracts rather than a brand or a cost edge. The filing says that prices for .com and .net may be raised only within limits set by ICANN, and that the .com agreement runs to 2030 with a presumptive right of renewal. Within those limits the company has raised fees, and the filing ties revenue growth partly to those increases. Operating margin has stayed near 65% with little variation across 15 years, which fits a protected position, but the excerpts give no gross margin and no return on equity or invested capital, so we cannot cross-check the moat against returns on capital. We rate the durability as narrow because the protection lasts only as long as the contracts and the demand for domain names do.
Threats to the moat
Capital allocation
Questionable
Candour
Candid
Management returns most spare cash to owners through share buybacks, and the share count has changed by -3.5% a year on average. The filing says buybacks fell in 2025, and it warns that they may fall again. Dividends are small, with an average payout of 2.6%, and the quarterly dividend only started in 2025. Reinvestment needs are light, since capital spending has averaged 0.8× depreciation. The weak point is price: Buffett's test is that repurchases make sense only below intrinsic value, and at $307.58 our base case of $187.62 sits below the market price.
5 pass · 1 mixed · 2 fail · 2 can't tell
At $307.58, the price is above the base-case value of $187.62 (the bear case is $111.20), so there is no margin of safety (-64%). The standard lens asks for 25%.
Why this testThe owner-earnings yield is 2.9% against a 10-year Treasury yield of 5.2%.
Why this testDiscounted owner earnings
Bear
$111.20
Base
$187.62
Bull
$295.30
Price $307.58
The price is above even the bull case.
| Scenario | Starting owner earnings | Growth (yrs 1–5) | Terminal | Discount | Value / share |
|---|---|---|---|---|---|
| bear | $837.9M | 0.5% | 1.5% | 9.7% | $111.20 |
| base | $837.9M | 4.5% | 2.5% | 8.2% | $187.62 |
| bull | $837.9M | 7.5% | 3.0% | 7.2% | $295.30 |
Sensitivity
| Discount ↓ / Growth → | 0.4% | 2.5% | 4.5% | 6.5% | 8.5% |
|---|---|---|---|---|---|
| 6.2% | $227 | $256 | $289 | $325 |
The business is excellent, but the price already assumes it stays that way. At the current share price the base-case value per share is below the market price, so a buyer today has no margin of safety, which Buffett's method requires. Almost all revenue comes from one .com registry agreement and one .net agreement, and the filing says the .com price may be raised only within limits set by ICANN. Demand could also weaken from social media, e-commerce platforms and AI, as the risk factors say. Owner earnings yield sits well below the 10-year Treasury yield, so the cash return must come from growth that the excerpts do not guarantee. The balance sheet shows negative book value, so return on equity cannot be measured from this data.
Valuation leaves no margin of safety
Could break the thesislikelyAt the current price the base-case value is below what the market pays, so any error in growth or discount rate would be a permanent loss under Buffett's method. The bear case sits far lower still.
Concentration in two registry agreements
Could break the thesisremoteThe filing says substantially all revenue comes from the .com and .net registries. A loss or adverse change to either agreement would hit almost the whole business.
Limits on pricing power
MaterialpossibleThe .com price can rise by up to 7 percent only in certain years, and the filing says the DOC must approve some changes. Consensus Policy price increases may not be sought, so the main pricing lever is restricted.
Buffett's test of consistent earning power is met. The filing excerpts show revenue rising across the period, and our tests found no loss years. Buffett's test of pricing power is less clear. The filing says that .com and .net prices are limited by agreements with ICANN: our prices may be increased only according to those restrictions. Under Buffett's test of a durable advantage, the protection rests on contracts that run to a fixed date, not on a brand or a cost edge that we can measure from these excerpts. The capital tests look favourable: capital spending has averaged 0.8× depreciation, and the $1 retained test is passed. On capital allocation, buybacks are the main use of spare cash, and Buffett's rule is that repurchases make sense only below intrinsic value. At $307.58, our base case of $187.62 suggests the buybacks are being made above our estimate of value. Buffett's margin of safety test fails at a margin of -64% in the base case. The rates test also fails: the owner earnings yield of 2.9% sits well below the 10-year Treasury yield of 5.2%, so the cash return has to come from growth. Our tests could not measure return on equity or return on capital, because the excerpts do not give enough balance sheet detail.
Any change to the .com or .net pricing terms, or a request to remove the pricing limits
The filing says revenue growth has depended on price increases, and that prices may be raised only within limits set by ICANN and the Department of Commerce.
Renewal of the .com Registry Agreement, due by 30 November 2030
The filing says the agreement carries a presumptive right of renewal but that ICANN could refuse renewal in certain circumstances. Almost all revenue depends on it.
Share repurchases and the amount left under the programme
The filing says repurchases fell in 2025 and may fall again. Watch whether buybacks continue at prices above our base-case value.
The domain name base and the renewal rate
The filing ties demand to online advertising and e-commerce, and it warns that social media, e-commerce platforms and AI could reduce demand.
Borrowing and book value
Book value is -$2.2B and interest coverage is 15×. Watch for new borrowing that would change the balance sheet and the cover for interest payments.
Questions the filings couldn't answer
How this was made
Verisign Inc · financial data to 31 Dec 2025 from SEC XBRL filings, narrative from the 10-K filed 5 Feb 2026. Method [email protected], prompts [email protected]. Judgement by anthropic/claude-haiku-5.5. 25 filing quotes verified. Data completeness 84%. Analysed 20 Oct 2026.
General research. It isn't personal advice. Numbers are computed in code from filings; the model writes no figures. It can still be wrong.
Replicly is a research and education tool. It is not financial advice and does not recommend that you buy or sell any investment. Analyses apply Buffett-inspired principles to public data and can be wrong. Warren Buffett and Berkshire Hathaway are not affiliated with and do not endorse Replicly. Capital is at risk.
Risk factors · filing
“Changes in revenues are driven largely by changes in the number of new domain name registrations and the renewal rate for existing registrations”
Management's discussion · filing
“Revenues increased in 2025 compared to 2024, primarily due to the . com and . net price increases and an increase in the domain name base.”
Management's discussion · filing
“Demand for domain names could be negatively impacted to the extent end-users establish their online identities using social media”
Business · filing
“recent advances in AI-based tools have made, and will continue to make, cyber-attacks more sophisticated, harder to defend, and easier and faster to launch.”
Risk factors · filing
“The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users”
Management's discussion · filing
“Unlike other gTLDs, the prices we charge for .com , .net and .name domain name registrations are subject to restrictions in our agreements with ICANN and our prices may be increased only according to those restrictions.”
Business · filing
“In November 2024, we renewed the . com Registry Agreement with ICANN, pursuant to which we will remain the sole registry operator for the . com registry through November 30, 2030.”
Management's discussion · filing
“Cash received from customers increased primarily due to the . com and . net price increases and higher . com domain name registrations and renewals.”
Management's discussion · filing
“However, the demand for . com and . net domain names may be limited by competitive pressure from other TLDs and alternatives for an online presence.”
Management's discussion · filing
“In the past, certain of our competitors have consolidated or vertically integrated.”
Business · filing
“These regulations are impacting the demand for domain name registrations in China.”
Risk factors · filing
“We can provide no assurances that we will exercise such right to increase the annual fee.”
Risk factors · filing
“We repurchased 3.4 million shares of our common stock for an aggregate cost of $858.6 million in 2025.”
Management's discussion · filing
“Net cash used in financing activities decreased in 2025 compared to 2024 primarily due to proceeds received from the issuance of our 2032 Notes and a decrease in share repurchases”
Management's discussion · filing
“we may reduce the level of our stock repurchases in the future if and as we use our available cash for other purposes.”
Management's discussion · filing
“We intend to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by the Board of Directors.”
Management's discussion · filing
“Our domain name base increased during 2025 compared to 2024, with higher new registrations and renewal rates, as business conditions improved following a period of decline during 2024”
Management's discussion · filing
“we had no outstanding borrowings and $200.0 million in borrowing capacity under our credit facility which matures in 2028.”
Management's discussion · filing
“We do not carry insurance or designated financial reserves for such interruptions.”
Risk factors · filing
Debt isn't reported in the filings, so payback can't be measured. Operating income covers interest 15×, which suggests debt is modest.
Why this testEquity isn't reported consistently enough to measure returns on it.
Why this testOperating income or invested capital is missing from the filings.
Why this testNo loss years across 15 years of filings, with operating margin varying by 2.7% around its average.
Why this testNormalised owner earnings are $837.9M, and free cash flow has averaged 116% of reported profit.
Why this testCapital spending has averaged 0.8× depreciation; estimated maintenance capex was $0.0 last year.
Why this testEach dollar retained over the period has been matched by 3.1× of market value created ($6.1B retained in total).
Why this testThe diluted share count has changed by -3.5% a year. Shrinking means buybacks are returning value; growing means owners are being diluted.
Why this testRevenue growth (CAGR)
4.2%
Operating margin (avg)
65%
Return on equity (avg)
n/a
ROIC (avg)
n/a
Cash conversion
116%
Debt payback
n/a
Share count change (CAGR)
-3.5%
Owner earnings yield
2.9%
| $366 |
| 7.1% | $180 | $203 | $227 | $255 | $286 |
|---|
| 8.2% | $150 | $168 | $188 | $210 | $234 |
|---|
| 9.2% | $129 | $143 | $160 | $178 | $198 |
|---|
| 10.2% | $113 | $126 | $139 | $155 | $172 |
|---|
Green: at least 25% above the price. Amber: above it. Red: below it. n/a means the discount rate is at or below growth, where the model has no finite answer. The corners combine the most extreme assumptions, so treat them as bounds.
Discount rate: 10-year Treasury (5.2%) plus a 3% hurdle. End-of-day prices from free public sources, may be delayed or missing.
Demand erosion from new channels
MaterialpossibleThe filing names social media, e-commerce platforms and AI as factors that could reduce demand for domain names. Renewal rates and new registrations drive revenue, so a slowdown would show up quickly in the numbers.
Regulatory and governance challenges
MaterialpossibleChinese licensing rules are already affecting demand in China, and the filing describes challenges to the pricing provisions and proposals to weaken multi-stakeholder governance. The filing says these could materially harm the business.
Buybacks depend on cash and price
MinorpossibleThe filing says repurchases fell in 2025 and may be reduced further. If buybacks slow while the price is high, the share count reduction that supports per-share growth would also slow.
What would change the view
“Substantially all of our revenues are derived from our operation of the . com gTLD under our Cooperative Agreement with the DOC and our . com Registry Agreement as well as our operation of the . net gTLD under our .net Registry Agreement.”
Risk factors · filing
“Under the terms of the .com Registry Agreement, we may increase the annual fee of each .com domain name registration or renewal by up to 7% over the previous year in each of the final four years of each six-year period.”
Risk factors · filing
“These regulations are impacting the demand for domain name registrations in China.”
Risk factors · filing
“In recent years, our stock repurchase program has more than offset the dilutive effect of RSU grants to employees; however, we may reduce the level of our stock repurchases in the future”
Management's discussion · filing
“recent advances in AI-based tools have made, and will continue to make, cyber-attacks more sophisticated, harder to defend, and easier and faster to launch.”
Risk factors · filing