Customers Pay a Year in AdvanceWide moat

VeriSign (VRSN) — moat facet

$1.45 billion of deferred revenue funds a business whose entire asset base is smaller than the float it holds.

The float is the least discussed thing about VeriSign, and Buffett readers should recognise it immediately.

Deferred revenue ($M)$1,304.2MEnd 2024$1,384.5MEnd 2025$1,448.9M30 Jun 2026Money collected for registrations not yet delivered — more than the entire asset base.
Customers finance the business, a year at a time.

A .com registration is paid in advance — one to ten years at a time — and VeriSign recognises the revenue rateably as the year elapses. What sits in between is deferred revenue: $1,035.1 million current and $349.4 million long-term at the end of 2025, $1.45 billion by mid-2026.1 That is money collected for a service not yet performed, held interest-free, and replaced continuously as new registrations arrive.

It is not insurance float, because there is no underwriting risk — the obligation is to keep a database entry resolving, which costs almost nothing. But the structural effect is the same: customers finance the business. Total assets are $1,325.9 million, which is less than the deferred revenue balance, and that single comparison explains why the balance sheet looks the way it does.2

The balance also grew $80.2 million in 2025 and a further $64 million in the first half of 2026, which is a useful leading indicator: deferred revenue rises when registrations and price both rise, and it does so before the revenue line shows it.3

The caveat is that a float only works while the pool is stable or growing. A sustained decline in the base would drain it, and the cash flow statement would feel it a year before the income statement did.

Moat trajectory: Widening

Deferred revenue grew $80.2 million in 2025 and a further $64 million in the first half of 2026, because both the base and the price are rising. The float funding this business is getting larger.

The number that tests this moat
Reported
Deferred revenue
$1.45 billion — more than total assets

Registrants pay for the year ahead, or up to ten years ahead, so the money arrives before any of the service is delivered. The balance grew $80.2 million in 2025 and a further $64 million in the first half of 2026. It is also the best leading indicator this company publishes: it turns roughly a year before the income statement does, in both directions.

Source: VeriSign Q2 2026 results, 23 July 2026 ↗
⚠ Threats to the moat
⚠ THREAT 01
Float Drains Faster Than It Fills
Deferred revenue turns a year before the income statement does, which makes it the only leading indicator this company publishes.
References
  1. ReportedDeferred revenues were $1,035.1M current and $349.4M long-term at 31 December 2025, and $1.45 billion at 30 June 2026.
    VeriSign, Inc., Form 10-K FY2025 — Item 8, consolidated financial statements and notes. Net income $825.7M (2024 $785.7M, 2023 $817.6M); diluted EPS $8.81 ($8.00, $7.90) on 93.8 million diluted shares (98.2, 103.5); income before income taxes $1,068.5M; income tax expense $242.8M. Balance sheet at 31 December 2025: cash and cash equivalents $307.9M, marketable securities $272.6M, property and equipment net $213.7M, goodwill $52.5M, deferred tax assets $233.2M, deposits to acquire intangible assets $145.2M, total assets $1,325.9M; accounts payable and accrued liabilities $298.0M, deferred revenues $1,035.1M current and $349.4M long-term, long-term senior notes $1,788.2M, total current liabilities $1,333.1M — a total stockholders' deficit with an accumulated deficit above $11.3 billion. Net cash provided by operating activities $1,091.1M; the deferred revenues balance increased $80.2M in 2025 ($58.1M in 2024, $27.0M in 2023) and $934.7M of revenue recognised in 2025 had been in the opening deferred balance. Major customers note: the largest customer accounted for approximately 31% of revenues in 2025 and approximately 32% in 2024 and 2023, and the Company does not believe the loss of this customer would have a material adverse effect because end-users would transfer to its other existing customers. Dividends of $0.77 per share were declared in each of the three quarters from the second quarter of 2025, totalling $2.31 per share and $215.2M, accounted for as a reduction of additional paid-in capital; a dividend of $0.81 per share was declared on 3 February 2026. — FY2025 · publ. 2026-02-05 · source ↗
  2. ReportedTotal assets were $1,325.9M at 31 December 2025, less than the total deferred revenue balance.
    VeriSign, Inc., Form 10-K FY2025 — Item 8, consolidated financial statements and notes. Net income $825.7M (2024 $785.7M, 2023 $817.6M); diluted EPS $8.81 ($8.00, $7.90) on 93.8 million diluted shares (98.2, 103.5); income before income taxes $1,068.5M; income tax expense $242.8M. Balance sheet at 31 December 2025: cash and cash equivalents $307.9M, marketable securities $272.6M, property and equipment net $213.7M, goodwill $52.5M, deferred tax assets $233.2M, deposits to acquire intangible assets $145.2M, total assets $1,325.9M; accounts payable and accrued liabilities $298.0M, deferred revenues $1,035.1M current and $349.4M long-term, long-term senior notes $1,788.2M, total current liabilities $1,333.1M — a total stockholders' deficit with an accumulated deficit above $11.3 billion. Net cash provided by operating activities $1,091.1M; the deferred revenues balance increased $80.2M in 2025 ($58.1M in 2024, $27.0M in 2023) and $934.7M of revenue recognised in 2025 had been in the opening deferred balance. Major customers note: the largest customer accounted for approximately 31% of revenues in 2025 and approximately 32% in 2024 and 2023, and the Company does not believe the loss of this customer would have a material adverse effect because end-users would transfer to its other existing customers. Dividends of $0.77 per share were declared in each of the three quarters from the second quarter of 2025, totalling $2.31 per share and $215.2M, accounted for as a reduction of additional paid-in capital; a dividend of $0.81 per share was declared on 3 February 2026. — FY2025 · publ. 2026-02-05 · source ↗
  3. ReportedThe deferred revenues balance increased $80.2M in 2025, and by a further $64 million in the first half of 2026.
    VeriSign, Inc., Form 10-K FY2025 — Item 8, consolidated financial statements and notes. Net income $825.7M (2024 $785.7M, 2023 $817.6M); diluted EPS $8.81 ($8.00, $7.90) on 93.8 million diluted shares (98.2, 103.5); income before income taxes $1,068.5M; income tax expense $242.8M. Balance sheet at 31 December 2025: cash and cash equivalents $307.9M, marketable securities $272.6M, property and equipment net $213.7M, goodwill $52.5M, deferred tax assets $233.2M, deposits to acquire intangible assets $145.2M, total assets $1,325.9M; accounts payable and accrued liabilities $298.0M, deferred revenues $1,035.1M current and $349.4M long-term, long-term senior notes $1,788.2M, total current liabilities $1,333.1M — a total stockholders' deficit with an accumulated deficit above $11.3 billion. Net cash provided by operating activities $1,091.1M; the deferred revenues balance increased $80.2M in 2025 ($58.1M in 2024, $27.0M in 2023) and $934.7M of revenue recognised in 2025 had been in the opening deferred balance. Major customers note: the largest customer accounted for approximately 31% of revenues in 2025 and approximately 32% in 2024 and 2023, and the Company does not believe the loss of this customer would have a material adverse effect because end-users would transfer to its other existing customers. Dividends of $0.77 per share were declared in each of the three quarters from the second quarter of 2025, totalling $2.31 per share and $215.2M, accounted for as a reduction of additional paid-in capital; a dividend of $0.81 per share was declared on 3 February 2026. — FY2025 · publ. 2026-02-05 · source ↗
Sources
Generated September 23, 2026