Three Years the Base Fell and Revenue Didn'tWide moat

VeriSign (VRSN) — moat facet

Units fell 2.5% over three years and revenue rose 17.3% — pricing power stated as arithmetic rather than asserted.

Between the end of 2021 and the end of 2024, VeriSign lost customers and grew revenue by a sixth.

Units down, revenue up: 2021 to 2024Domain name base173.4M to 169.0M (-2.5%)Revenue$1,327.6M to $1,557.4M (+17.3%)Consecutive quarters of declineSix.com wholesale fee$9.59 to $10.26A business that can lose 2.5% of its customers and grow revenue by a sixth.
Pricing power stated as arithmetic rather than asserted.

The domain name base went from 173.4 million to 169.0 million — down 2.5%, including six consecutive quarters of decline.1 Revenue went from $1,327.6 million to $1,557.4 million, up 17.3%.2 The gap is price, and price alone.

It is worth being precise about why the units fell, because two of the three causes were nothing to do with VeriSign's product. Chinese demand collapsed on a weaker currency, tighter regulation and a poor economy — VeriSign's separately-disclosed China revenue fell 14% in 2023 alone, from $106.0 million to $91.6 million, after which the company folded the line into APAC.3 U.S. registrars shifted strategy toward revenue per customer rather than customer count, which meant fewer dollar-first-year promotions and therefore fewer registrations that were never going to renew anyway. And very cheap new gTLDs took the genuinely price-sensitive marginal name.4

The third cause is the only one that should worry anybody, and it is the subject of this company's second root threat. The first two are cyclical, and the recovery to 179.1 million confirms it.5

What the episode proves is narrow and important: VeriSign's revenue is not a function of demand for domain names. It is a function of the installed base, which decays slowly, multiplied by a price set in a contract. Demand determines the second derivative.

Moat trajectory: Holding steady

The demonstration is complete and does not need repeating: units fell, revenue rose. What the episode proved about the moat has not changed since, and the base has recovered, which means the test is no longer running.

The number that tests this moat
Reported
Revenue growth while the base was shrinking
+17.3% on units down 2.5%, 2021 to 2024

The domain name base fell from 173.4 million at the end of 2021 to 169.0 million at the end of 2024, including six consecutive quarters of decline. Revenue over the same period rose from $1,327.6 million to $1,557.4 million. That gap is the clearest available measurement of pricing power in this company. Watch for it to repeat: it is the test that matters when demand is bad.

Source: VeriSign Form 10-K, FY2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
Price Cannot Outrun a Shrinking Base Forever
The escalator averages 4.7% a year. A base falling faster than that ends the trick, and there is no third lever.
References
  1. ReportedThe domain name base was 173.4 million at the end of 2021 and 172.7 million at the end of 2023, before falling to 169.0 million at the end of 2024.
    VeriSign, Inc., Form 10-K for the fiscal year ended 31 December 2023 (SEC, CIK 1014473). The .com and .net domain name base was 172.7 million at 31 December 2023 (−1%) against 173.8 million in 2022 and 173.4 million in 2021. Geographic revenues on the then-current basis: U.S. $994.7M (+6%), EMEA $228.2M (+1%), China $91.6M (−14%) against $106.0M in 2022 and $101.7M in 2021, other $178.6M (+15%); total revenues $1,493.1M against $1,424.9M in 2022 and $1,327.6M in 2021. — FY2023 · publ. 2024-02-15 · source ↗
  2. ReportedRevenue rose from $1,327.6M in 2021 to $1,557.4M in 2024, an increase of 17.3%.
    VeriSign, Inc., Form 10-K FY2025 — Item 7, Management's Discussion and Analysis. Revenues $1,656.6M (+6%) against $1,557.4M in 2024 (+4%) and $1,493.1M in 2023; operating income $1,121.0M (+6%). Costs as a percentage of revenues: cost of revenues 11.8% (12.3%, 13.2%), research and development 6.3% (6.2%, 6.1%), selling, general and administrative 14.2% (13.6%, 13.7%), total costs and expenses 32.3% (32.1%, 33.0%), operating income 67.7% (67.9%, 67.0%), interest expense (4.6)%, net income 49.8% (50.4%, 54.8%). The .com and .net domain name base was 173.5 million at 31 December 2025 (+3%) against 169.0 million in 2024 (−2%) and 172.7 million in 2023. VeriSign processed 41.7 million new .com and .net registrations in 2025 against 37.4 million in 2024; the final third-quarter 2025 renewal rate was 75.4% against 72.2%. The registry-level wholesale fee rose from $9.59 to $10.26 for .com effective 1 September 2024 and from $9.92 to $10.91 for .net effective 1 February 2024. Geographic revenues: U.S. $1,093.1M (+6%), EMEA $279.4M (+12%), APAC $184.6M (+5%), other $99.5M (+3%). VeriSign repurchased 3.4 million shares for $858.6M in 2025, with $1.08 billion remaining under a programme authorised to $1.50 billion effective 24 July 2025. — FY2025 · publ. 2026-02-05 · source ↗
  3. ReportedVeriSign's separately disclosed China revenue fell 14% in 2023, from $106.0M to $91.6M, before the line was folded into APAC.
    VeriSign, Inc., Form 10-K for the fiscal year ended 31 December 2023 (SEC, CIK 1014473). The .com and .net domain name base was 172.7 million at 31 December 2023 (−1%) against 173.8 million in 2022 and 173.4 million in 2021. Geographic revenues on the then-current basis: U.S. $994.7M (+6%), EMEA $228.2M (+1%), China $91.6M (−14%) against $106.0M in 2022 and $101.7M in 2021, other $178.6M (+15%); total revenues $1,493.1M against $1,424.9M in 2022 and $1,327.6M in 2021. — FY2023 · publ. 2024-02-15 · source ↗
  4. ReportedU.S. registrars prioritised revenue per customer over customer acquisition, and very low-cost new gTLDs took share from .com and .net.
    Domain Name Wire — price increases boost revenue at Verisign as domain registrations continue to slide. The .com and .net base fell for a sixth consecutive quarter to 169.6 million at the end of the third quarter of 2024, down 2.5% year over year, with U.S. registrars prioritising revenue per customer over customer acquisition and very low-cost new gTLDs taking share; the third-quarter 2024 renewal rate was approximately 72.3%. — Q3 2024 · publ. 2024-10-25 · source ↗
  5. ReportedThe base recovered to 179.1 million at 30 June 2026, up 5.1% year over year.
    VeriSign, Inc., Reports Second Quarter 2026 Results — Form 8-K Exhibit 99.1, 23 July 2026. Revenue $435 million, up 6.0% year over year; operating income $296 million against $281 million; net income $217 million and diluted EPS $2.38 against $207 million and $2.21. Cash, cash equivalents and marketable securities $1.03 billion, up $454 million from year-end 2025; deferred revenues $1.45 billion at 30 June 2026, up $64 million from year-end. Cash flow from operations $232 million. On 26 June 2026 VeriSign issued $550 million of 5.10% Senior Notes due 2031 and on 20 July 2026 used the proceeds with cash on hand to redeem $550 million of 4.75% Senior Notes due 2027. 0.7 million shares repurchased for $197 million; an additional $884 million authorised effective 23 July 2026 bringing the total authorisation to $1.50 billion; a quarterly dividend of $0.81 per share declared on 20 July 2026. The domain name base ended at 179.1 million .com and .net registrations, a 5.1% increase year over year and a net increase of 3.05 million in the quarter; a record 12.7 million new registrations were processed against 10.4 million; the final first-quarter 2026 renewal rate was 76.3% against 75.5%. CEO Jim Bidzos: the record of 100% availability for the .com and .net domain name resolution system was extended to 29 years, and more than 100% of free cash flow was returned to the investing public through dividends and share repurchases. The .web top-level domain has been delegated into the DNS root zone with VeriSign as the designated registry operator. — Q2 2026 · publ. 2026-07-23 · source ↗
Sources
Generated September 23, 2026