The operator introduces the Verisign Fourth Quarter and Full Year 2023 Earnings Call and hands over to David Atchley, Vice President of Investor Relations and Corporate Treasurer. David welcomes everyone and introduces the other speakers, Jim Bidzos, Todd Strubbe, and George Kilguss. The call and presentation are being webcast and the earnings release is available on the Investor Relations website. David reminds listeners that the financial results are unaudited and include forward-looking statements. He also mentions the non-GAAP measures used by Verisign and provides information on where to find GAAP to non-GAAP reconciliation. Jim Bidzos and George Kilguss will give prepared remarks before opening the call for questions.

In 2023, the company had a successful year with a 4.8% increase in revenue and 6.1% increase in operating income. They also decreased their shares outstanding by 3.7% and returned $883 million to shareholders through share repurchases. The domain base for .com and .net decreased by 0.6% due to a decline in new registrations, particularly from China. The renewal rate for 2023 is expected to be 73.9%, slightly lower than 2022's rate of 74.2%. The decrease in demand from China remains the main factor affecting domain name growth.

The China-based registrar demand has been weak due to various factors such as economic conditions, regulatory environment, and currency fluctuations. The domain name base grew by 1.2 million names in 2023, excluding China-based registrars. However, the negative impact of China is expected to continue in 2024, but it will have a less pronounced effect on the overall business. The company has announced a price increase for .com domain names effective September 1, 2024, but they believe it will remain competitive. For the year 2023, the company generated revenue of $1.493 billion and operating income of $1 billion. Operating expenses were $492 million, and the operating margin was 67%. Free cash flow was $808 million.

In the fourth quarter of 2023, the company saw an increase in revenue and operating income compared to the same quarter in 2022. Net income also increased, primarily due to income tax benefits. Operating and free cash flow were slightly lower than the previous year. For the full year 2024, the company expects revenue and operating income to continue to grow. The GAAP effective tax rate is expected to be between 21% and 24%. The company has maintained strong financial performance and looks forward to the future.

The paragraph discusses the impact of China on the business of the company, highlighting a decline in demand from registrars in China and growth from registrars outside of China. The company remains committed to its goals of responsible management and returning capital to shareholders, despite challenges in the Chinese market. The main focus of the company's results is on China, where a variety of factors, including economic climate, are affecting demand. It is difficult to predict the impact and duration of these challenges.

The regulatory environment for obtaining domain names is challenging and involves a lengthy process for identification and authentication. The impact of China on the market is difficult to predict, and the company is being cautious with guidance. China represents about 5% of the company's domain name base, and the negative impact should be less pronounced in the future. The company is forecasting a flat to slightly positive domain name base, but it is hard to determine the exact impact of China within that forecast.

George Kilguss and Jim Bidzos discuss the impact of China on their revenue and domain name base for 2023 and how it will continue to affect their guidance for 2024. There is no new update on .web, but Bidzos reiterates that the process and procedure delays will eventually come to an end and the Board has instructed for the application to be processed.

The speaker discusses the current status of the .web domain and expresses confidence in its success. They also mention the upcoming .com renewal and state that it is expected to go smoothly. They then address global trends in domain growth, noting a 1 million increase outside of China primarily from EMEA and other segments. The US saw a slight decrease, but it is noted that many US registrars have a global reach.

The weakness in the company's performance cannot solely be attributed to US registrants, as there was also slow growth in EMEA and other segments. The company has seen a focus on ARPU from US registrants, which may be a contributing factor. The company's expenses grew by 2.2% in 2023, but this was favorably impacted by a reduction in fees paid to the government of Tuvalu. Adjusting for this, expenses would have grown by 3.3%. The company expects a 4.6% expense growth rate in the coming year, similar to the previous year. They will continue to invest in line with their strategic framework and plan to responsibly return excess capital to shareholders.

The partnership between GoDaddy and Ethereum Name Service (ENS) is a positive development for the DNS and reinforces the value proposition of domain names. The DNS is a reliable and well-governed system that provides unique identifiers, and the partnership makes it easier to link domain names to ENS identifiers, which are often used for crypto currency wallets.

The paragraph discusses the benefits of linking a domain name to a blockchain space, including increased security and value. It also mentions the underlying cryptographic protection and reliability of the DNS, and how a unique and stable identifier can be used for various applications. This is seen as a positive development for internet users and is considered a new type of web application.

The speakers discussed the future of integrating alternative name spaces with the DNS and how this will benefit the global identifier system. They also mentioned the importance of the DNS in maintaining critical infrastructure and the under-appreciation of innovation in this space. The call has now concluded.

This summary was generated with AI and may contain some inaccuracies.