The Internet is on the verge of its biggest change in years, with the pending adopting of perhaps hundreds of new Generic Top Level Domains (gTLDs). Those new gTLDs will not necessarily be a threat to VeriSign, the company that manages the .com and .net registries among others, in fact VeriSign is well positioned to profit from the gTLD expansion as well.
VeriSign reported its first quarter fiscal 2012 earnings late Thursday, showing strong demand for the domain name business. Revenue for the first quarter was reported at $206 million for a 13 percent year-over-year gain. Net Income came in at $68 million or $0.42 per share, in contrast to the $41 million or $0.24 per share reported for the first quarter of 2011.
Part of VeriSign’s strong showing came from the growing use of .com and net domain names. At the end of the first quarter, VeriSign had 116.7 million .com and .net domain names, for an 8.1 percent year over year gain.
VeriSign could soon be managing a lot more domains. ICANN is currently in the application process for the gTLD program, which will expand the number of available domain names. VeriSign CEO James Bidzos said during the company’s earnings call that VeriSign applied directly for 14 new gTLDs. That doesn’t mean 14 entirely different new gTLDs, as VeriSign is seeking to protect its existing .com and .net registries.
According to Bidzos, 12 of the 14 gTLD applications are transliterations of .com and .net. Applying for those new transliterated gTLDs is not without cost. VeriSign’s CFO noted that the 14 gTLD applications added $2.4 million in operating expenses to the company’s bottom line for the quarter.
Going beyond its own ownership of new gTLDs, VeriSign is also positioned to help other applicants in their bids. Bidzos noted that applicants for approximately 220 new gTLDs selected VeriSign to provide back-end registry services.
The process by which new gTLDs are being approved is still a fluid one. Bidzos explained that sometime in early May, there should be some public disclosure about the different domain names that were applied for. At that point, any conflicts where there are multiple bidders for the same name would be resolved through an ICANN process.
While VeriSign is pursuing new domain names, it’s also in the process of renewing its existing agreement with ICANN and the U.S. Department of Commerce.
“On March 27, ICANN posted for public comment on their website the renewal terms for the .com Registry Agreement negotiated between VeriSign and ICANN,” Bidzos said. “The terms are substantially the same as the terms contained in the existing .com Registry Agreement, except for new provisions regarding indemnification and audit rights, aligning it with the other 5 largest gTLD registry agreements, including the .net agreement.”
“The .com agreement expires on November 30, so that’s the timeline to complete this process, and our plan is to follow the timeline and work through it,” Bidzos said.