Verisign Inc. (VRSN) is a global provider of domain name registry services and also provides internet infrastructure services (mainly root server operation). Verisign has been very successful to due a government induced monopoly that allows the company to collect revenue on .com, .net, and many other domain registrations. Basically, if you bought or renewed your .com or .net domain recently, that fee went to Verisign.
The company’s market position allows it to secure a near 50% profit margin. The net income, or total profit, is then used by Verisign to buyback its own shares on the open market. Share buybacks have averaged $834.20 million per year over the last 5 years. In 2023, through 2 quarters, the company has already bought back $453.4 million worth of shares and the company appears on track to hit the $900 million mark by the end of the year.
The strong market position, profit margin, and buying pressure through share buybacks makes this company a decent performer in the market. Verisign is currently a member of the S&P 500 and 12.4% of the company is owned by Warren Buffett’s Berkshire Hathaway, making it a top 15 stock holding at the conglomerate. Looking forward, Verisign will seek to find new growth opportunities for its business (as growth has been tough). Recently the company has been doubling down on internet infrastructure services which appears to be a good bet to diversify away from the consistent domain registry services.