VeriSign

VeriSign is the exclusive registry operator and wholesaler of the .com and .net top-level domains. The firm earns revenue by collecting an annual “tax” on every renewing and new .com and .net domain, with growth driven primarily by price increases.

The bottom line: We maintain our wide moat rating based on intangible assets for VeriSign and raise our fair value estimate to $285 per share from $270. We also maintain our Exemplary Capital Allocation Rating and Low Uncertainty Rating. Our wide moat rating will remain intact as long as VeriSign is able to renew its .com and .net registry agreements. Annual price hikes, particularly for .com, are likely to face some pushback, though the domains' massive scale should cushion returns in years without price increases. At an adjusted P/E of 30 times, shares appear fairly valued and credit the firm's government-sanctioned pricing power and healthy toll-bridge economics. Additional upside can stem from higher new registrations driven by AI-enabled digital buildouts and digitization in developing markets.

Coming up: We view new registrations as the primary near-term growth driver for VeriSign, driven by AI-driven demand, growing e-commerce, and VeriSign's own registrar marketing programs. Our 2026 estimates are in line with revenue guidance of $1.75 billion and GAAP operating margin of 68%.

Long view: We view pricing as the more important long-term growth lever. We model annual 7% price increases for .com throughout our explicit forecast, but do not model any for .net beyond the 10% increase scheduled to go into effect March 2027, given the uncertainty around their timing. After a limited registration period for current .com holders, general availability for .web is expected in late 2026 or early 2027. We are withholding .web forecasts until pricing is set, though we expect minimal early impact given slow ramps and weak renewal rates typical of new TLDs.

Our fair value estimate for VeriSign is $285 per share, implying a fiscal 2026 adjusted price/earnings ratio of 30 times and enterprise value/sales ratio of 15 times. We model a five-year compound annual revenue growth rate of approximately 8%, driven by mid- to low-single-digit growth in the domain base and higher pricing.

We expect the .com TLD to continue to make up the bulk of Verisign’s domain base and revenue. We expect mid- to low-single-digit growth in the .com domain base, reflecting 74%-75% renewal rates and modest new additions. Verisign’s current agreements with the DOC and ICANN allow a 7% price increase in the last four years of the six-year agreements set to expire in 2030. We expect VeriSign to implement a price increase each year through 2030, with the next increase scheduled to take effect at the end of 2026.

For the .net domain, a 10% increase is permissible in any year of the six-year agreement set to expire in 2029. VeriSign’s implementation of .net annual price increases has historically been much lower than .com, of which VeriSign has increased the price in nearly every year that it was allowed. We forecast one 10% increase effective early 2027, as announced by VeriSign, but do not forecast any other increases given the uncertainty around the timing. Additional VeriSign .net price increases could provide some upside to our valuation, but it would likely be minimal given the relatively small domain base over which the increase can compound.

On margins, we model operating margins to grow to about 70% in 2030 from 68% in 2025, driven primarily by pricing. We do expect the firm to benefit from operating leverage, though continued engineering and security spending will likely cap the upside. We model near-term capital expenditures to remain elevated given high server and data center infrastructure prices, though they should moderate to about 2% of sales toward the tail end of our forecast.

Our valuation assumes that VeriSign will be able to renew its registry and pricing agreements for both .com and .net following the expiration of the current agreement periods, given the presumed right of renewal embedded in them. Renewal of the firm's agreements critically depends on preventing, or quickly resolving, any material breaches in registry operations. Such a breach could weaken VeriSign's case for renewal and imply downside to our valuation, though we view this scenario as highly unlikely.

We assign VeriSign a wide moat rating based on intangible assets.

We believe VeriSign's intangible asset moat is two-pronged, driven by both regulatory guardrails and the strong recognition and popularity of the .com and .net domains. As the government-sanctioned monopoly operating the back-end infrastructure for .com and .net, VeriSign faces effectively zero competition in generating revenue from two of the most recognized domains in the world. While the agreements do impose restrictions on VeriSign's pricing, they should still allow VeriSign to earn returns above its cost of capital over the next several years.

The global domain base comprises hundreds of top-level domains, including .org, .design, .ai, and more. Each TLD is operated by a single registry, which manages the technical infrastructure and authoritative database of all domain names registered or available for registration under that TLD. The registry is also the sole authorized body that manages a TLD's wholesale pricing and distribution to domain registrars like GoDaddy, making each TLD a structural monopoly.

VeriSign is the authoritative registry operator of the .com and .net domains. The two TLDs together account for nearly half of the more than 400 million global domain base, making VeriSign the largest TLD registry operator in the world. The firm is also the authoritative registry for the .name and .cc TLDs, though we estimate that these registries make up an immaterial portion of the firm's financials. VeriSign collects annual fees from renewing domains and remits a small percentage to the Internet Corporation for Assigned Names and Numbers (ICANN), which manages the global domain name system and its operational constituents to help keep the internet secure, stable, and operable.

We believe VeriSign benefits from brand-based intangible assets tied to the .com and .net TLDs. Both .com and .net are high-intent TLDs, meaning they are often the first domain extensions people think of when registering new websites or querying the web. Even as competing domains like .xyz and .store have risen, the recognition and reliability of .com domains in particular continue to surpass those of others. A prospective registrant is more likely than not to prefer an available .com domain name over other options, even though there is no functional benefit to picking one domain name over another. VeriSign directly benefits as more individuals and organizations seek to establish online presences, enabling the firm to enjoy toll-bridge-like revenue streams and high-margin economics.

The brand and recognition associated with the .com and .net TLDs don't drive Verisign's intangible-asset moat in isolation. The prevalence and commercial significance of .com has made it a matter of regulatory interest to the US government. VeriSign's rights and restrictions as the sole registry operator of .com and .net are outlined in agreements with ICANN, with .com subject to an additional Cooperative Agreement with the US Department of Commerce. While Verisign's contractually permitted pricing power is not unusual in isolation, the firm has been able to exercise price increases in nearly every eligible year while renewals and domain additions have continued to grow. Registry agreements with ICANN structurally instantiate an operator as the sole supplier for a domain, which insulates the firm from the demand elasticity and corresponding margin compression that a price increase would otherwise cause for the registrar. As a result, while domain registrars compete over customer acquisition and invest aggressively in marketing and product innovation, VeriSign has continued to grow.

Importantly, these agreements also contain a presumptive right of renewal, which gives VeriSign the right to renew as long as it stays in good standing and the DOC continues to view renewal as serving the public interest and the stability of the DNS. Despite rival registries and public commenters repeatedly petitioning against Verisign's pricing power and control over a key public utility, Verisign's claim has been and will likely remain unshakeable. Although .com and .net domains can theoretically be put up for bid again by ICANN and the DOC, moving the entire registry infrastructure to a new operator would risk significant technological disruption across the globe, spanning everything from banking and government infrastructure to social media and e-commerce. Additionally, VeriSign has an unblemished thirty-year track record of DNS uptime for both .com and .net, cementing its case as the best-positioned operator to continue running critical infrastructure. The firm also plays an important role in the maintenance and resilience of the DNS, as it operates two of the world's thirteen internet root servers. While this infrastructural role does not directly contribute to the firm's revenue or growth, it is part of the technical foundation that underpins Verisign's position as the reliable and irreplaceable custodian, and it likely serves as a key lever in agreement negotiations.

Our wide moat rating also partly rests on the assumption that humans continue to browse the open web and search for domain addresses. Online marketplaces and social media offer alternative ways to establish an online presence, particularly for small businesses and organizations. For instance, instead of using email marketing, a business owner can advertise their products on Instagram. However, most businesses like to layer their online presence and marketing across multiple platforms, and they view websites as essential for attracting new customers and boosting credibility. The rise of an agentic open web also introduces additional uncertainty around the definition of an “online presence” for website owners and their visitors, though our sense is that this situation has yet to play out.

High-intent, recognizable TLDs like .com and .net are well positioned to benefit from new registrations driven by AI-enabled website and technical infrastructure buildouts.

VeriSign’s stellar record of 100% DNS uptime and its role as a Root Zone Maintainer make it a key custodian of the global internet infrastructure and strengthen its case for renewing .com and .net agreements.

Digitization and developing internet infrastructure in international markets should support new domain registrations for both .com and .net.

Social media platforms and online marketplaces like Amazon and Etsy could result in lower demand for domains as small business owners increasingly consolidate their online presence to preexisting platforms.

Even in the years VeriSign’s agreements allow it to raise prices for .com and .net, political and public pressure could pressure the firm into not raising prices.

VeriSign's business hinges on renewing its agreements and maintaining pricing power on .com and .net. Legal and political scrutiny could lead to unfavorable changes at renewal, which could harm valuation.