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Good day, everyone. Welcome to the VeriSign's Second Quarter 2026 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless preauthorized. At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.

Thank you, operator. Welcome to VeriSign's Second Quarter 2026 Earnings Call. Joining me are Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Executive Vice President and CFO. This call and presentation are being webcast from the Investor Relations website, which is available under About VeriSign on verisign.com. There, you will also find our earnings release. At the end of this call, the presentation will be available on that site, and within a few hours, the replay of the call will be posted.

Financial results in our earnings release are unaudited, and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q. VeriSign does not plan to update financial performance or guidance during the quarter.

The financial results in today's call and the matters we will be discussing today include GAAP results and free cash flow, a non-GAAP measure used by VeriSign. GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found on the Investor Relations section of our website available after this call. Jim and John will provide some prepared remarks, and afterward, we will open the call for your questions.

With that, I would like to turn the call over to Jim.

Thanks, David. Good afternoon to everyone, and thank you for joining us. Last week, we marked 29 years of delivering 100% availability for the .com and .net domain name resolution system, an unprecedented achievement that speaks to the robustness of the high assurance critical infrastructure we operate. Alongside that technical milestone, we're also pleased to report that VeriSign delivered strong results in the second quarter of 2026, both operationally and financially. The combined .com and .net domain name base is now at 179.1 million names, driven by a record 12.7 million new registrations during the second quarter with continued solid renewal rates.

On the financial side, revenue was up 6% year-over-year, and EPS increased 7.7% year-over-year. We have returned more than 100% of our free cash flow to our shareholders in the last 12 months, totaling $1.17 billion in share repurchases and dividends. Effective today, the Board of Directors has increased the amount authorized for share repurchases of VeriSign common stock by $884 million for a total of $1.5 billion available under the current share repurchase program, which has no expiration.

As announced in today's earnings release, VeriSign's Board of Directors approved a cash dividend of $0.81 per share of VeriSign's outstanding common stock to shareholders of record as of the close of business on August 19, 2026, payable on August 27, 2026. VeriSign intends to continue to pay cash dividend on a quarterly basis.

VeriSign's performance in the second quarter shows continued robust demand for domain names. During the quarter, the domain name base for .com and .net grew 3.05 million from the prior quarter end. New registrations for the second quarter were a record 12.7 million compared to 11.5 million last quarter and 10.4 million for the second quarter of last year. The renewal rate for the second quarter of 2026 is expected to be 75.2%, compared to 75.5% a year ago.

The U.S. and EMEA were the regions in which we saw the strongest growth during the second quarter. The factors driving the solid domain name base trends in the past several quarters accelerated during the second quarter. Registrars are focused on customer acquisition and are successfully engaged with our marketing programs. Additionally, AI tools are making content and website creation faster and easier. The strength in new registrations attest to the vital role of domain names in being discovered and establishing digital credibility.

With the trends we've observed in the first half of 2026 and our expectations for second half, we're increasing and narrowing our guidance for domain name base growth to be between 5.2% and 6% for 2026. As a reminder, you can monitor the progression of the domain name base on our website, which is updated daily.

The first quarter renewal rate is the highest rate we have seen in 20 years. The 12.7 million new registrations are the largest we have seen for any quarter in our history. The record metrics we have seen during the first half of 2026 and the solid outlook made for our upward revision for domain name base growth for 2026. We're very pleased with the strong business metrics, which are leading to strong financial metrics for the company.

Before having John review the financial metrics, I want to spend a minute talking about .web. Last night, we announced that .web had been delegated into the global Domain Name System's root zone with VeriSign as the registry operator. The delegation of .web follows the successful resolution of all previous disputes related to the generic top-level domain. With a worldwide channel of registrar partners and decades of experience leveraging channel relationships to market and distribute TLDs like .com and .net, VeriSign is poised to offer .web as an attractive new domain for TLD registrants across the globe. VeriSign plans to begin offering .web domains through its channel partners later this year, and we'll share further details about the planned launch in the coming months. As the launch is expected late this year, at this time, we don't expect meaningful revenue or expenses related to .web for 2026.

We understand there may be questions about the new products we discussed in our last earnings call. We didn't put our new product efforts on hold. There are and have been teams working without interruption on them, and they've been operating -- the products have been operational in test mode since early this year. We simply paused the rollout of the blogs as we focused on resolving and delegating .web. And with that complete, we can turn our attention back to introducing those products, and you'll see the blogs in the coming months.

I can say that the products are very security focused, that they benefit from our high assurance, high-performance infrastructure and that they also benefit from our long history in public key infrastructure and DNS security. They're designed to provide a high level of performance and reliability at global scale as our DNS resolution does. We believe today's increasing reliance on online services, especially those that are AI-related, with the evolving threat environment will demand greater and deeper deployment of security technology and practices, which will come with performance, security and scalability challenges. Our infrastructure will address those challenges and more.

Now I'd like to turn the call over to John. I'll return when John has completed his financial report with closing remarks. John?

Thank you, Jim, and good afternoon, everyone. For the quarter ended June 30, 2026, the company generated revenue of $435 million, up 6% from the same quarter a year ago. Operating expense in Q2 2026 totaled $138 million, which compared to $135 million last quarter and $121 million for the second quarter a year ago. Operating income totaled $296 million, up $16 million or 5.6% from the previous year. Operating income was up $3 million or 0.9% sequentially.

Net income for the second quarter totaled $217 million, compared to $215 million last quarter and $207 million for the same quarter a year ago. This resulted in diluted earnings per share of $2.38 for the second quarter this year compared to $2.34 last quarter and $2.21 for the second quarter last year. Operating cash flow for the second quarter of 2026 was $232 million, and free cash flow was $213 million, compared with $202 million and $109 million, respectively, in the year ago quarter.

Our financial and liquidity position remained stable with $1.034 billion in cash, cash equivalents and marketable securities at the end of the quarter. That amount included $546 million of net proceeds from the issuance of 5.1% Senior Notes maturing in 2031. On July 20, 2026, the company redeemed its $550 million of outstanding 4.75% Senior Notes due in 2027, thereby reducing our liquidity from quarter end.

I will now discuss our updated full year 2026 guidance, which, as Jim mentioned earlier, does not anticipate meaningful revenue or expense related to .web at this time. Revenue is now expected to be between $1.745 billion and $1.755 billion. Operating income is now expected to be between $1.185 billion and $1.195 billion. Interest expense and non-operating net is narrowed and expected to be an expense between $59 million and $65 million, reflecting the impacts related to the refinancing I mentioned earlier. Capital expenditures are still expected to be between $55 million and $65 million. The GAAP effective tax rate is still expected to be between 22% and 25%.

I will now turn the call back to Jim for his closing remarks.

Thanks, John. While we're very pleased that .web is now delegated, we'd like to focus on the very solid trends we're seeing in our business in 2026. We extended our record of 100% service availability to 29 years. We saw strength in all metrics, in particular, with new registrations and solid financial performance. We returned more than 100% of our free cash flow to the investing public. We've seen strong execution of our marketing programs, which are better suited to our evolving channel. These programs are a great investment as they contribute significantly to our long-term growth and profitability. Importantly, the first-time renewal rate has stayed in a tight range in the mid-40% range for several quarters. Names registered in the first half of last year are renewing at rates consistent with our longer-term first-time renewal rate. Our programs are carefully designed to produce these results.

Now as we look at the significant increase in new registrations, for example, up 14% year-over-year in the first quarter and up 21% year-over-year in the second quarter, we're encouraged that the factors that are driving the new registration strength, including our programs, have been producing quality names. This should translate to long-term profitable growth for this company. And as a reminder, once a name renews at least once, it becomes part of our previously renewed base. The previously renewed rate is in the mid-80% range.

Additionally, we're benefiting from some factors that include AI. AI has made finding a good domain name, building a website and getting online faster and easier. This includes leveraging AI-enabled tools we've made available to our registrar partners. Our record high domain name base and record high new registrations are contributing to the ever-increasing reliance on VeriSign's high assurance critical Internet infrastructure. We've seen a substantial increase in the number of DNS transactions to our servers. Operating a high assurance infrastructure remains our priority and is at the core of VeriSign. We also believe that our uptime record is a significant contributor to the growth of our domains, and that reliability will allow individuals and businesses to register .web domain names with confidence.

Thanks for your attention today. This concludes our prepared remarks, and now we'll open the call for your questions. Operator, we're ready for the first question.

[Operator Instructions] Our first question comes from Rob Oliver with Baird.

Great. I had a couple of questions. Jim, I'll just start with you. I appreciate some of the color you provided around the really strong domain trends. And I was wondering if you could just add a bit more. I know some of what's at work here is you guys have really sharpened your marketing programs and your efforts, and I think that's really showing in not just the registrations, but also in those first-time renewal rates in terms of the quality. You're also seeing these tailwinds around AI, around application development, the importance of the domain. And I was wondering if you could help contextualize, kind of, maybe breaking those apart, help us better understand of the strength you're seeing, how each is responsible for them? And then I had a couple of other questions.

Okay. Well, let me see if I can answer that briefly here. First of all, the components I can easily describe, I think one of them I mentioned earlier was our high assurance infrastructure, I think that contributes to people's confidence in online operations. AI is definitely enhancing demand for domain names. AI tools make it easier for content creators, for businesses to find domain names, create content, create, maintain content on their websites and businesses and content creators compete not only for attention online through AI-driven search, but the credibility and digital identity that a domain name encapsulates become even more critical. So those are all contributing trends and tailwinds.

Active registrar engagement with and strong execution of our marketing programs is definitely helping. I think -- last quarter, I called that if I didn't use the word convergence, I should have, I'll use it now, a synergistic convergence of some of the AI tailwinds and other tailwinds like the ongoing registrar focus now on customer acquisition, where we saw this sort of cyclical trend some time ago to ARPU. Now we're seeing things shift as we predicted they would. So there's a bit of good fortune here, but I think our marketing programs and their design are clearly a contributor, sort of taking those apart with any precision is really difficult. I'm not sure we could even give you that kind of detail. We just see them working synergistically.

I think we've also gotten much better at these marketing programs. I often talk about the evolving changing channel. Their business models are changing, and we've been able to adapt to that. Just like mentioned, with .web, we can adapt even further because we have fewer restrictions on that TLD. So all those factors together are contributing to the strength that you're seeing, it's primarily, as I mentioned, in the U.S. and EMEA. That's a positive for us because the quality and the renewal rates from these regions tend to be stronger.

So like I said, taking it all apart, parsing it out in detail, difficult, but I think we're seeing the growth. We recognize the tailwinds. We definitely know, we're very close to the channel. We understand the value and benefit and effectiveness of the marketing programs. And again, I'll say again that when you see 14% and 21% increase in units, respectively, in the last 2 quarters, and you see first-time renewal rates essentially within a narrow range with long-term strong renewal rates, that's going to yield profitable growth long term. So these are all very good for the business.

And one point to clarify here. We received questions about the current strength. Is it related to pull forward related to the November .com wholesale price increase. I can't say that that's not a factor. It could be a factor for some registrations. We just don't see it as anything coming close to a material factor in the current registration strength. So hopefully, that's helpful.

Okay. Great. Yes. No, that is helpful. And thanks on that last point. That was a question I was going to ask as well. I wanted to ask about .web also and congrats. I'm happy. I thought I'd be in my dotage by the time that deal finally closed. So congratulations on that.

I guess, I know you -- knowing you guys, you're not going to talk about pricing and things like that. But maybe try to ask the question in a different way. You guys have obviously the premier anchor asset in .com. You do have experience with other assets like .net. But conceptually, how should we think about the way in which you'll think about approaching .web, marketing .web? And how, if at all, will it be different from .com? And then I'll pass it on. I know we've got more people on the call.

Okay. Thanks. Well, .web is different from .com. .com is uniquely the only TLD in the entire DNS industry that's regulated by a cooperative agreement between VeriSign and the Department of Commerce, the NTIA. .web is a TLD like the other 1,000 -- 2,000, almost TLDs that ICANN oversees and regulates. And its operating parameters are actually quite different. We don't have many of the restrictions. So for example, like all these other TLDs, it's governed by a standard registry agreement. They are all operating from the same registry agreement, which is only with ICANN, as I mentioned, not with any other regulatory body. Obviously, there are other global regulations that affect all tech companies, but the administration and regulation of the domain name industry is by ICANN, and this agreement is no different than the others.

I'd say the most obvious difference with .web from .com and .net is that we have complete wholesale pricing flexibility that the only requirement is a 6-month notice. Other than that, we can price -- we have a complete pricing flexibility. But like .com, one thing that is in common with .com is that we are a wholesaler as a registry, and it will be registrars, of course, who set the retail pricing. So .web wholesale pricing is completely within our control, subject to that notice period to the registrars of 6 months. This includes the ability to sell premium names as well, which we cannot do in .com or .net.

And now that it's delegated in the root zone, the process, just to give you a sense of what to expect coming up, there is a 90-day required period of security testing. So that's the first thing we'll do. We're beginning that. Then there is a required minimum 30-day period in which only trademark holders may come and get their .web registration. So we'll certainly observe that. So that puts us 120 days out.

Then we have something optional called an LRP or a Limited Registration Period. This is where registries have the opportunity to set their own rules for who can come in before you go to general availability. And we intend to offer -- we intend to run an LRP, and the rules that we will use is we will give all of our holders of .com registrations the opportunity to come and get the same registration in .web before we open registrations for general availability. We're working out the details of how long that will run, but we do intend to do that.

So that puts general availability, we think it will be either late this year or very, very early next year. And that's pretty much everything about .web I can share right now. We'll obviously provide you further updates, but we're excited. I noticed that it's been quite a while since we've been in pursuit of .web, but it is a very different TLD, and I appreciate your question. Those are the ways that it's significantly different. And there's also flexibility in how we market to the channel. We do not have the same restrictions that we have now. We can be more flexible, more creative, more engaging individually with the channel. I think that's going to translate into an opportunity to even more effectively engage this diverse and evolving channel.

So all in all, the prospects are promising. It's exciting. It's something new and different for us. We've been looking forward to it.

And we'll go next to Ygal Arounian with Wedbush.

Maybe first, just with the guidance, the high end domain growth approaching 5%. And as I sort of look back to -- it's been quite a while since domains have grown 5% sustainably. I know we are now, but looking back to 2025 and the years before, but it's been a long time since we've been at that level. I know we're talking about some of the factors, particularly AI. Does it feel like we're structurally at a different type of growth rate driven by AI? And then within that, and you're talking about some of the AI factors that are driving the growth, how are you seeing agentic play out here? And is that -- do you think that's driving any incremental growth on the agentic AI piece specifically? And I'll have one follow-up.

Okay. Well, first of all, Ygal, welcome back. It's good to have you back following VeriSign again. We appreciate that.

Good. Well, let me try to answer this from a higher altitude, so to speak. I'm not sure I can specifically answer some of the things you seem to be asking towards the end there. But let's start with why are domain -- why is there a general increase and what's AI doing to it?

I think AI is definitely increasing demand for the obvious reason we mentioned, which is that it's easier and faster to build a domain name. But I think that sort of only saying that, I think, tells the only part of the story. The other part of the story is that AI is driving, obviously, more engagement. More is happening more quickly.

And I think what's happening is that the strength of the DNS is sort of shining through here. We've often said that alternate name spaces don't really have what the DNS has, which is this governance by ICANN that creates what is a secure, stable global identifier. It's secure because of all the security required by ICANN and then we do above and beyond as many other registries do as well. It's stable, certainly in our operations because we just completed a record 29 years of uninterrupted availability. And it's global because ICANN operates in 150-plus countries. And so these domain names are guaranteed to be unique and stable and secure up to a very high level due to this governance structure. I think that's underappreciated as a contributor to the rapid willingness and eagerness to adopt e-commerce and to get online. Here they are. They work. Now the DNS under the covers is very complex, and I think AI is obscuring some of the complexity and making it easier for people to get online.

I would say that might be the single biggest influence, if you wanted to look for external influences. As I said, we are making our own contribution. We've gotten smarter and more engaged with our channel. We understand what they're doing. They do have complex business models. They have evolved. Many have gone public. Some public ones have gone private. Some sell wholesale, some only sell retail. It's very diverse, and it keeps evolving.

So if it feels like the world is spinning faster, well, it does to me. And I think we're seeing those effects. And those effects and that stability and our willingness and ability to adapt to them, I think, is behind our growth. I can't speak for everything, but that's my sense of the best answer I can give to your question, if that's helpful.

Okay. Great. Very helpful. And then yes, good to see .web finally come through, and we can change how we write about it. The color you gave on the timing is really helpful. Just wondering, as we think about kind of how we build this into our models, are there upfront costs? You mentioned the marketing a little bit. Are there cost to build the registry or anything else that come ahead of revenue recognition? I just want to think through how that impacts your financials.

Well, I think as we finalize our launch plans and marketing plans, there'll be some marketing expenses as there is now with .com and .net. But in terms of any registry costs, no, we run multiple TLDs now. We have a number of TLDs that we operate. We've operated many over the years, not just .com and .net. So this is as natural as integration -- an integration as one could imagine. There's simply nothing new about the integration of .web and processing registrations, the manner in which the registrars engage and bring their registrations to our operations is identical to everything we're doing now. It's another TLD. There's just more flexibility in engagement and marketing with the channel, which is really a big plus for us. John, any comments?

Yes. I'd say from a marketing expense standpoint, given where we're at in the time frame that Jim laid out in his comments, there won't be a significant amount of marketing expense this year that we recognize. And the same is true for revenue. It's likely to be fairly late in the year. And because of our method of revenue recognition, you won't see a big bump even if you see some nice sales before the end of the year, you won't see revenue recognition happen right away. It will take some time to build.

And our next question comes from Jamesmichael Sherman-Lewis with Citi.

Two here, if I may. Number one, on the .web rollout, I'm curious how you're thinking about the go-to-market approach across marketing channels and specifically where you think the point of sale is most likely to occur? Could these be predominantly net new .web domain sale opportunities or potentially as an attach for a .com domain sale, or even upselling existing customers at renewal? I just want to better understand how you're thinking about possible approaches here.

Thanks. Well, first of all, I think certainly, it will -- there's a couple of different factors here that I think should result in what we think will be a favorable reception by the market and our channel for .web. First of all, it runs on our high assurance infrastructure, and I think that's often underappreciated. Secondly, I mentioned that we would be running a limited registration program. And that gives .com holders the opportunity to get their web. So if they want a companion web, they can have it. So that may be an opportunity, that maybe isn't a new website, but a companion website that some may have -- want for a variety of reasons.

In addition to that, I think there are a lot of folks who might find it just more appealing. It's a very descriptive. It's a short TLD. This is why we got interested in it years ago at the very beginning. There are, by the way, well over 1,000 TLDs today that the market has to choose from. And many of them, by the way, compared to -- in that market, .com is a very low-priced TLD. We have nothing to say about .web pricing today. We're still working on that. But certainly, there are very few that are really short descriptive TLDs. And I think this is one of them, which is why it appealed to us.

So I think that will be inviting for folks. The name space will be available because at this moment, there are 0 registrations in .web. So for those reasons, I think there certainly will be a market. I think the channel, we're very good at engaging with them. They are the ones who do the sort of retail marketing. We try to support them in that. John mentioned that there might be very, very modest marketing expense here late in the year. I think maybe just getting the word out that there's a period in which, if you hold a .com, you may come and register your .web, that's reserved for you. We might do a little bit of messaging, but that would be an entirely nonmaterial expense, a very, very minimum expense for marketing.

So I think there's a market for existing holders. I mean there were literally hundreds and hundreds of new gTLDs brought to market over the last 12 years. And many of those are growing at rates much faster than .com. And so there's clearly a market for these TLDs and I think .web will be an attractive option for folks.

That's very helpful. And then just a quick follow-up on the renewals. I know you had some commentary in your prepared remarks about this. But as we look to the back half of the year and start lapping this higher mix of new registrations and go through the price hike, could you update us on your churn expectations?

What was the last word?

Update us on our...

Churn expectations.

Renewal rate. I know we've said in the past quarters, we expected a little bit of a tick down as the mix of first-time renewing names grows because of the strength of our new registrations here in the last, call it, 6 quarters or so. We still have some expectation there in the remainder of this year and then possibly into next year. But I think I would reiterate something Jim mentioned earlier, and that is we've gotten much better at marketing to our registrars, try to encourage the registrations that they chase to be of higher quality, and our programs are geared towards higher quality.

So there's some offset to that natural tendency. And as Jim mentioned in his comments, if you look at the renewal rate that we've had the last couple of quarters, it's been very consistent with our historical rate for first-time renewals. And we had very strong new registrations early in 2025. So I think our renewal rate is holding up fairly well given our programs and just the natural trends that the strength in our new registrations have.

And we'll go next to Alexei Gogolev with JPMorgan.

I guess, Jim, could we start with the discussion around some of your plans for new product rollouts? You talked about possible security services or any other solutions. Will those get the back seat now that you have .web to focus on? Or you still continue to roll those out in the near term?

I think the short answer to that is no. They will not. The first product that we're likely to roll out, it's just a different product. I would think of it this way. We have done -- we are a pioneering company in public key infrastructure. We started doing this in the '80s. This company was created from RSA, which invented the most popular form of public key cryptography digital signatures. VeriSign was formed to play a role in PKI in the very first browsers that came from Netscape in 1994. There are a lot of components, cryptographic security components that come with that service that we were performing that today are becoming more important.

In my comments, I alluded to the requirement to engage deeper with security in the AI world. You don't need to take my word for that. You can see that in the headlines of every newspaper just about every single day that there are concerns that security is going to be a challenge in AI. I'm sure we'll address it. But what we plan to do is offer security features that are sort of going to benefit from operating in our high assurance environment. I -- we believe -- I certainly believe that what we're going to see is that AI -- the security challenge with AI will be met by sharpening and hardening the tools and making full use of them in pursuit of compliance with something called the Zero Trust principles.

And that will put demands on these security functions, and I think our infrastructure is well aligned to provide them. And you won't have to wait too much longer to hear about that. But the teams that develop that -- and the teams that developed it have done their work in that. It operates on our infrastructure in a way very similar to the way we ingest and service domain names. And its performance, however, will benefit from our infrastructure immensely. More of it will be needed in an agentic AI world. And I think we're in a great position to offer at global scale, millisecond performance, along with the many hundreds of billions of DNS resolutions that we answer today with significant overcapacity designed that way, we think we can offer a valuable service.

Okay. And maybe another question for John. With regards to CapEx, you kept the guidance for the year unchanged. Obviously, we're seeing price pressure all around. Do you see any risk going forward? What sort of CapEx needs do you think VeriSign will have over the next couple of years?

Yes. So our CapEx guidance for this year certainly takes into consideration the price increases in the server memory chip kind of markets, and it has had a meaningful impact on our business. Our technology people are very good about adapting and making changes where they can to get more bang for the buck, so to speak. And we've done that. We've even pulled forward some spend that we would have expected next year to avoid price increases that we know are coming in the upcoming 6 months. So we've done some of that.

As far as what next year holds, we don't guide to 2027 at this point in time. But our expectation is prices in that marketplace are going to stay elevated and probably be more elevated. We're competing with a lot of data center capacity that's trying to be built right now.

I would just add that regardless of what the market price for the technology, the servers, et cetera, that we need to acquire in the operation of our mission, we will simply make that investment and acquire the equipment that we need without hesitation.

And we'll take our last question from Rob Oliver with Baird.

Great. Sorry, I just had one more. John, for you. I know you guys talked about the price increase you guys have coming up in November. Jim mentioned it earlier, alluding to the potential for kind of pull forward ahead. As you look out at that price increase, is there anything different or how you're thinking about the revenue flow-through from those price increases? Occasionally, we get questions on how, if at all, it differs. We think we've got it pretty well modeled, but just wanted to see if there's any difference or anything you can point to, which would be helpful.

Yes. Sure, Rob. It's important to remember that while our customers pay at the time of registration, our revenue recognition is done ratably over the life of the domain name subscription. So if they subscribe for 1 year, we recognize the revenue from that payment upfront over the next 12 months. And then when you think about the price increase that goes into effect on November 1, a domain name that renews on October 30, let's say, it's October 30, 2027, before we start to realize any price increase. And then it flows through revenue in the following year after that renewal.

So you could really think about the price increase as it relates to our existing base, takes 2 years to really flow through revenue completely. And in some cases, longer because we do have some names that are registered for longer than 1 year. It's a relatively small percentage. But think about it as it takes about a 2-year period. Our own modeling, if this helps you a little bit or helps others, is we would expect about 50% of November's 7% price increase on .com to be recognized in 2027 revenues, the rest of it would be 2028 and a little bit beyond for the longer-term subscription periods.

Okay. Really helpful. And then just while I've got you, John, just a follow-up to Ygal's question earlier, just on the .web, I think it was his, .web ramp costs. I think it was your predecessor who had said at one point that, hey, if we ended up getting .web years ago earlier in the year that there may be some additional costs. I just want to clarify what we heard from you is that those costs are factored into your guidance for this year and not something that as this period ramps, we will see incremental. Just wanted to clarify.

That's correct, Rob. Any costs that we might incur this year, as Jim mentioned, are probably not large, but they are factored into our guidance.

I'll turn the call back over to David Atchley for final comments.

Thank you, operator. Please call the Investor Relations department with any follow-up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.

And this does conclude our call today. Thank you for your participation. You may now disconnect.

Good day, everyone. Welcome to VeriSign's First Quarter 2026 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless preauthorized. At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.

Thank you, operator. Welcome to VeriSign's First Quarter 2026 Earnings Call. Joining me are Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Executive Vice President and CFO. This call and presentation are being webcast from the Investor Relations website, which is available under About VeriSign on verisign.com. There, you will also find our earnings release. At the end of this call, the presentation will be available on that site, and within a few hours, the replay of the call will be posted.

Financial results in our earnings release are unaudited, and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q. VeriSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure.

The financial results in today's call and the matters we will be discussing today include GAAP results and 2 non-GAAP measures used by VeriSign, adjusted EBITDA and free cash flow. GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found on the Investor Relations section of our website available after this call. Jim and John will provide some prepared remarks. And afterward, we will open the call for your questions.

With that, I would like to turn the call over to Jim.

Thank you, David. Good afternoon to everyone, and thank you for joining us. We're pleased to report that VeriSign delivered strong results in the first quarter of 2026, both operationally and financially. The combined .com and .net domain name base is now at a record 176.1 million names. New registrations are the largest we have seen since the first half of 2021, combined with very strong renewal rates.

On the financial side, revenue was up 6.6% year-over-year and EPS increased 11.4% year-over-year. After seeing to the needs of our operations, we returned over 100% of our free cash flow to the investing public in the last 12 months for a total of $1.13 billion through share repurchases and dividends. Our financial and liquidity position remained stable with $556 million in cash, cash equivalents and marketable securities at the end of the quarter.

Also at quarter end, there was $863 million remaining available under our current share repurchase program, which has no expiration. As announced in today's earnings release, VeriSign's Board of Directors approved a cash dividend of $0.81 per share of VeriSign's outstanding common stock to stockholders of record as of the close of business on May 19, 2026, payable on May 27, 2026. VeriSign intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by VeriSign's Board of Directors.

VeriSign's performance in the first quarter shows sustained demand for domain names. During the quarter, the domain name base for .com and .net grew 2.54 million from year-end 2025. New registrations for the first quarter were 11.5 million compared with 10.7 million last quarter and 10.1 million for the first quarter of last year. The renewal rate for the first quarter of 2026 is expected to be 76.3% compared to 75.5% a year ago. The positive domain name base trends of 2025 have continued to build strength to start 2026.

We saw growth across our 3 main regions, with most of the strength coming from the U.S. and EMEA. It is clear to us that end users are seeing value in domain names and the domain name system as evidenced by our strong domain name metrics and the increasing reliance on our infrastructure. We see ongoing registrar focus on customer acquisition and engagement with our marketing programs. Also, we see a positive impact from AI tools, which make content and website creation faster and easier.

With the trends we've observed thus far in 2026 and our expectations for the next 3 quarters, we are increasing and narrowing our guidance for domain name base growth to be between 3.1% and 4.3% for 2026. As a reminder, you can monitor the progression of the domain name base on our website, which is updated daily. As announced in today's earnings release, we have given notice of a price increase of $0.71 to the annual wholesale price for .com domain names, which raises the wholesale price from $10.26 to $10.97 effective November 1, 2026.

Even after this increase, we believe com will remain highly competitive with other TLD choices. I would note that this is the first allowable price increase since the notice 2 years ago in February 2024 of a $0.67 increase. As a reminder, VeriSign is prohibited from selling .com registrations to retail buyers. We may only sell to accredited registrars and only at a capped regulated price. The new $10.97 price that will become effective November 1 is the maximum price that we can charge registrars. The registrars, however, are entirely price unrestricted and can sell .com registrations at any retail price they choose, and those prices often differ significantly from the price we are limited to.

Now I'd like to turn the call over to John. I will return when John has completed his financial report with closing remarks. John?

Thank you, Jim, and good afternoon, everyone. For the quarter ended March 31, 2026, the company generated revenue of $429 million, up 6.6% from the same quarter a year ago. Operating expense in Q1 2026 totaled $135 million, which compared to $140 million last quarter and $131 million for the first quarter a year ago. As noted last quarter, Q4 2025 results included an impairment charge. Operating income totaled $294 million, up $22 million or 8.3% from the previous year. Operating income was up $9 million or 3.1% on a sequential quarter basis.

Net income for the first quarter totaled $215 million compared to $206 million last quarter and $199 million for the same quarter a year ago. This resulted in diluted earnings per share of $2.34 for the first quarter this year compared to $2.23 last quarter and $2.10 for the first quarter of last year, representing increases of 4.9% and 11.4%, respectively. Operating cash flow for the first quarter of 2026 was $272 million. Free cash flow was $265 million compared with $291 million and $286 million, respectively, in the year ago quarter.

I will now discuss our updated full year guidance for 2026. Revenue is now expected to be between $1.730 billion and $1.745 billion. Operating income is now expected to be between $1.170 billion and $1.185 billion. Interest expense and nonoperating income net, which includes interest income estimates, is still expected to be an expense of between $57 million and $67 million. Capital expenditures are still expected to be between $55 million and $65 million, which includes some modest structural improvement projects at our HQ facility. The GAAP effective tax rate is still expected to be between 22% and 25%.

I will now turn the call back to Jim for his closing remarks.

Thank you, John. As I said, we're pleased to have delivered another solid quarter of operational and financial performance. We extended our record of 100% service availability. We saw strength in all metrics, new registrations, renewal rates and solid financial performance, including paying our fourth quarterly dividend and additional share repurchases to return over 100% of our free cash flow to the investing public. We've seen broad participation in our marketing programs, which are now better tailored to our diverse and evolving channel.

In short, we focused on what we can control and influence. We also benefited from some tailwinds that include AI, which, as I said, has made it easier to find a good domain name, build a website and get online. However, as we said many times before, it's the delivery of our services, which is our primary mission, that is VeriSign's priority. In addition to com and net DNS, our services include the DNS root zone publication and the operation of 2 of the 13 global Internet root servers.

Our employees are dedicated to support that mission and the vast majority of them are highly skilled technical specialists directly engaged in the design, development, operation, maintenance, support and protection of our unique purpose-built high assurance critical infrastructure. As we approach 29 years of uninterrupted availability for the com and net DNS resolution service we provide, I'd like to point out why we think of our services as high assurance. The unparalleled record of 100% availability spanning 4 decades is certainly one important aspect.

Performance and accuracy are equally important for many reasons, including for security. Our authoritative DNS answers are cryptographically protected and over 95% are processed in milliseconds globally for the 600 billion transactions per day on average that we see across our infrastructure. That's 7 million transactions per second every second of every day on average. Given the ever-increasing reliance on the global Internet, we believe high assurance, as we define it, will become increasingly important.

In the coming weeks, we'll share a series of blogs about how we view the future of high assurance infrastructure, the role it will play in enhancing online trust and introduce enhanced security components. Thanks for your attention today. This concludes our prepared remarks, and now we'll open the call for your questions. Operator, we're ready for the first question.

[Operator Instructions] We'll take our first question from Rob Oliver with Baird.

Great. Jim, first question, and I had a couple of questions. First one for me is around clearly, the marketing programs that you guys announced that you intended to pursue, I think it was back in Q1 of '24, are really starting to gain traction. You also called out tailwinds from AI. And I was wondering the extent to which you could help us understand as you look at the strength in domains, which I think you said we haven't seen now in many years, what sort of the contributing factor balances are there? Is it more AI? Is it more things you can control, marketing? How should we think about the mix of those contributions?

That's a good question, Rob. I guess the way we see it, it's difficult to really separate the 2. The reason is that I think they sort of collide in a good way with each other and sort of blend together. The registrars because of -- the tailwind from AI essentially makes it easier for the registrars to the service folks who can quickly find a domain and get online and build a website. That gets easier. I believe that engagement with our programs, which we know for a fact is a significant contributor, but to what extent is difficult because that demand and our programs sort of collide.

We put together programs that were responsive to what we heard from the channel. The channel is evolving and diversifying constantly. And as I've said before, we put together programs that were responsive to their diverse needs, and they're absolutely engaging with them. So there's greater drive from the tailwind engaging more carefully tailored programs. So to try to sort of separate those is really difficult. I wish I could give you a better answer, but they're both good news.

Okay. Great. No, that's helpful color. Second question for me is around your comment about that you've been pleased. I can't remember your exact language about renewal rates and what you've seen. And I just wanted to double down on that a little bit. We're, I think, around the kind of 2-year anniversary of when you guys called out these marketing programs. So I assume it's a little early to know if it was a 2-year cohort, but I guess specifically, would love to hear from you what you're hearing about the renewal cohorts around kind of post those marketing changes and how those are holding up relative to your kind of typical renewal rates on new domains.

Yes. Good question. John has been looking into that. John?

Yes. So certainly, our renewal rate at 76.3% was very strong. Our programs, as we've talked about in the past, do have elements of design to hopefully incentivize our customers, our registrars to sell and promote names to their customers that have a better renewal rate characteristic. So we do expect continued good solid renewal rates through 2026.

As we mentioned, I think, last quarter, the strength of new registrations in the second half of 2025 will present a little bit of a challenge this year because we'll have a higher proportion of first-time renewing names through the second half of 2026. I think our -- overall, our first-time renewals are still averaging in the mid-40% range. Our previously renewed names are in the mid-80% range, but have showed some improvement over the last year. So I think we're pleased with what our programs have delivered there and are seeing some improvement.

Okay. I appreciate all that detail. And then, I guess, last one for me, and then I'll hand it over to others. Jim, I don't know the extent to which you will comment since -- but just I wanted to ask about the upcoming round of ICANN TLD programs that is going to be coming up. I think -- the process, I think, maybe kicking off even here in April or imminently. And just any color you can provide on how we should be thinking about how you're thinking about that potential opportunity around the new TLD program?

Sure. So yes, ICANN is opening another round of applications for new gTLDs. The last one was in 2012. And you're right, this one opens up at the end of this month for submission of applications. ICANN is opening a window for a new round. We expect it to be a long process. The new generic TLDs are likely -- that come out of this process are likely not launched until 2028 as there are a lot of steps ICANN goes through after the application window. There's also a potential in this new round of applications with multiple applicants for the same TLD.

In this case, ICANN will run an auction process to sort out the winners of different contention sets. So there's a lot of process to go on. So we get asked a lot about VeriSign's participation, and we're taking the necessary technical steps to be ready should we choose to be an applicant at this round. And as a reminder, in the last round, the 2012 round, we obtained several new gTLDs, some of which we haven't yet launched. And also .web, which we're continuing to pursue was from the 2012 round. We're still evaluating our participation in this current round, the 2026 round, with the window of application slated to open on 30th of this month and not close until August 12. So we'll update you as appropriate as we get closer to the end of the application close in August.

And we'll move to our next question from Jamesmichael Sherman-Lewis with Citi.

First off, with the upcoming .com price hike, what are your expectations for the price elasticity or renewal trends for these newer domains following the hike? I understand wholesale domain prices are fairly nominal relative to the end customer costs, but any color there would be very helpful. And then also, how are you thinking about .net pricing?

Yes. So Jamesmichael, this is John. If I understood your question, you're asking us what our expectations are around renewals post price increase? And if I've got that right, it's very dependent on what our retail registrars do pricing-wise. If they do take price increases, that could have an effect on either new registrations or renewals. And we've seen a little bit of that in the past. But we're still pretty confident in the trends that we're seeing in renewals at this point in time. And we'll see what happens come, I guess, November 1 and thereafter.

And, I guess, I would just add the new price, the $10.97 per year price for .com works out to about $0.03 a day. So I think for most registrants who are engaged in online activities, it's a relatively modest amount.

Makes sense. And then any thoughts on .net pricing?

So well, we have available 10% annual price increases on .net. We don't guide to pricing, of course. We do take a lot of factors into consideration when we decide how to price the TLDs. We -- I can tell you -- so I can't tell you -- I can tell you a couple of things. Number one is, we have not, at this point today, announced a price increase for .net. We consider it to be a well-known, competitively priced TLD, and we invest in marketing programs for .net. And if we announce a price increase, we'll certainly give notice, but we have not at this point.

Got it. Follow-up question here on your infrastructure build-out. In context of the over 600 billion transactions per day that VeriSign sees, AI agents that will end up scraping the web at an accelerated rate. Is your current infrastructure sufficient to handle this expanding Internet? Or are there incremental investments you might need to ensure that 100% uptime?

Sure. So there are many qualitative and quantitative improvements that we are constantly making and adjusting to our network. I think the best answer I can give you to your question is that we have multiple orders of magnitude in excess capacity as one component of our resiliency planning and execution.

We will take our last question from Alexei Gogolev with JPMorgan.

Jim, I appreciate the commentary at the very end of your prepared remarks about the new services. Can you maybe provide a bit more color what those new services will solve for your customers, maybe some additional insights on security, stability, mission that you're looking to achieve there?

Sure. I can give you -- maybe I can say a few more things about sort of the foundational reasons that I alluded to concerning additional security services in high assurance infrastructure like ours. Putting aside AI for a moment, which is, of course, a significant major development, well, maybe not quite putting it aside, simply making the observation that with Anthropic's Mythos, we've seen that AI is capable of revealing vulnerabilities in various systems. So security is continuing to be important.

I mean, in the many years that I ran the RSA conference, my observation in every keynote was that the security situation provided more job security for the audience than any industry I could think of. And here we are 35 years since that conference began, and it certainly turned out to be true. So I think high assurance infrastructure becomes important for a lot of reasons. AI is not only beneficial for all the reasons that it is, but it reveals vulnerabilities. So -- but just the increased reliance and use of the Internet, it's just such a deep part of all of our lives, so many different infrastructure now relying on it.

We think high assurance will be important. I mentioned the components. The components I talked about are our own 100% availability record, 100% [indiscernible], now for 28 going on 29 years, that's one. But also our performance that we can deliver accurate cryptographically protected answers to queries in milliseconds anywhere in the world at a rate of 600 billion per day on average and have multiple orders of magnitude capacity beyond it.

The accuracy part is important because -- and the performance part is important because these are windows of vulnerability, the delays in answering queries related to secure navigation are important. And so the -- we believe that there are additional security tools that would be synergistic with the type of high assurance infrastructure that we have. And I've alluded to services that we've been examining.

They do need to fit certain requirements. They need to fit well into our infrastructure. I think they're -- and work well within our channel. Nothing significantly changes in offering them other than they benefit from the properties of our infrastructure, and we think that some of them are worth considering us an offering as a service. And as I said, we'll have a series of blogs that roll this out starting as soon as next month. So you'll have more information then, but I think that's just probably what I'm comfortable saying right now.

Okay. Perfect. And I appreciate all the comments that you made around your own marketing activities. But can you comment on how registrar promotional intensity in Q1, for example, for GoDaddy, your biggest customer or for other registrars, how it compared with 4Q and how you think about promo-driven volume versus sustainable underlying demand?

So there's a lot of different ways that question could be answered. I'll give you one way and might John, if he has another to add to it. So I mentioned the evolving and diverse nature of our channel. This is all true. Some website builders have turned into registrars. Some have been acquired, some have merged, some have a different focus. All of them have different models. That's the evolving part that led us to take a careful look at our programs and make sure that we offer those that actually work for them. These different models bring about issues like different lead times to prepare marketing campaigns.

And so as we learned and adapted, it was driven more by what the diverse needs were and the need to find something that could work for a larger group rather than just one size fits all. We're also bound by some restrictions in how we market. We have to be careful to treat registrars equally fairly. So that's also a factor in that design. So it's really a function of trying to -- and by the way, our channel for .com and .net, I believe VeriSign's channel, we have sort of the broadest reach, I think, because of the popularity of com and net TLDs. So we service a very, very large number of registrars.

So we thought that, that was maybe the path that would lead to the most productive results in the short term. It's just simply addressing the needs of a very large and diverse and evolving channels. So we concentrated on listening to them, learning what they're doing, engage with them, return, assess, adapt, revise and present and then we get engagement. So it's less driven by what we think this program will do rather than what do they really need to go out and market our products, which are really great, reliable, trusted products.

That concludes today's question-and-answer session. I'll turn the conference back to David Atchley for final comments.

Thank you, operator. Please call the Investor Relations department with any follow-up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.

Good day, everyone. Welcome to VeriSign's Fourth Quarter and Full Year 2025 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized. At this time, I would like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.

Thank you, operator. Welcome to VeriSign's Fourth Quarter and Full Year 2025 Earnings Call. Joining me are Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Executive Vice President and CFO. This call and presentation are being webcast from the Investor Relations website, which is available under about VeriSign on verisign.com. There, you will also find our earnings release. At the end of this call, the presentation will be available on that site, and within a few hours, the replay of the call will be posted.

Financial results in our earnings release are unaudited, and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q.

VeriSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure. The financial results in today's call and the matter we will be discussing today include GAAP results and 2 non-GAAP measures used by VeriSign, adjusted EBITDA and free cash flow. GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found on the Investor Relations section of our website available after this call.

Jim and John will provide some prepared remarks. And afterward, we will open the call for your questions. With that, I would like to turn the call over to Jim.

Thank you, David. Good afternoon to everyone, and thank you for joining us. 2025 marked another solid year for VeriSign as we continue to deliver on our mission by extending our record of 100% service delivery for the .com and net DNS to an unparalleled 28 years even as utilization of our services increased significantly. New registrations during 2025 totaled 41.7 million names, the largest we have seen since 2021.

During the year, the domain name base grew by 4.5 million names or 2.6%, leading to a 2025 ending .com .net domain name base of 173.5 million names. Our revenue grew 6.4% year-over-year while EPS grew by 10.1%. In 2025, we returned $1.1 billion to shareholders through share repurchases and quarterly dividends, which were initiated in the second quarter of 2025. The positive domain name base trends we saw developing in late 2024 gained strength and continued throughout 2025.

And during the year, we saw sustained strength in new registrations, renewal rates and domain name base growth across our 3 main regions: the U.S., EMEA and APAC. It is clear to us that end users are seeing value in domain names and the domain name system as evidenced by our strong domain name metrics and the increasing utilization of our infrastructure. Net registrations added during the fourth quarter were 1.58 million names, driven by the strength of new registrations of 10.7 million, which is up from 9.5 million in Q4 of 2024, and and a preliminary Q4 renewal rate of 75% compared to 74% a year ago.

We continue to see solid demand for our domain names during the fourth quarter and ongoing registrar engagement with our programs. As we look to 2026, we're encouraged by the continued strength as we exited 2025 and register our feedback on our 2026 marketing efforts. For 2026, we expect a domain name base growth rate of between 1.5% and 3.5%. As a reminder, you can monitor the progression of the domain name base, which is updated daily on our website. Our financial and liquidity position remained stable with $581 million in cash, cash equivalents and marketable securities at the end of the quarter.

There was $1.08 billion remaining available at the end of the quarter under the current share repurchase program, which has no expiration. As announced in today's earnings release, VeriSign's Board of Directors declared a cash dividend of $0.81 per share of VeriSign's outstanding common stock to stockholders of record as of the close of business on February 19, 2026. Payable on February 27, 2026. This quarterly amount is an increase of 5.2%, which is consistent with the increase in net income we saw during 2025.

VeriSign intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by VeriSign's Board of Directors. Now I'd like to turn the call over to John. I'll return when John has completed his financial report with closing remarks.

Thank you, Jim, and good afternoon, everyone. For the year ended December 31, 2025, the company generated revenues of $1.66 billion, up 6.4% year-over-year. Operating income totaled $1.12 billion in 2025, up 5.9% from the previous year. Full year EPS was $8.81 and 2025 free cash flow was $1.07 billion. For the quarter ended December 31, 2025, the company generated revenue of $425 million, up 7.5% from the same quarter a year ago. Operating expense in Q4 2025 totaled $140 million which compares to $135 million last quarter and $132 million for the fourth quarter of 2024.

During the fourth quarter, we recorded an impairment charge on real estate we intend to sell, which accounted for a majority of the sequential quarter increase in operating expenses. Net income in the fourth quarter totaled $206 million compared to $213 million last quarter and $191 million in the fourth quarter of 2024. Fourth quarter diluted earnings per share was $2.23 compared to $2.27 last quarter and $2 for the same quarter of 2024. Net income reflects a higher income tax expense booked during the fourth quarter, primarily due to foreign base income taxes.

Operating cash flow for the fourth quarter of 2025 was $290 million and free cash flow was $285 million, compared with $232 million and $222 million, respectively, in the year ago quarter. The increase in our free cash flow is partly due to higher quarterly earnings, increased cash from working capital and lower cash tax payments. I will now discuss our full year 2026 guidance. Revenue is expected to be between $1.715 billion and $1.735 billion. Operating income is expected to be between $1.160 billion and $1.180 billion. The midpoint of our revenue range and operating income range reflecting expected operating margin more consistent with our long-term trend as compared with the level we saw during fourth quarter of 2025.

Interest expense and nonoperating income net which includes interest income estimates, is expected to be an expense of between $57 million and $67 million as our expectations for interest income are lower due to lower short-term rates and lower cash balances. Capital expenditures are expected to be between $55 million and $65 million, which is higher than our typical range primarily for 2 reasons. First, we have a larger amount of end-of-life equipment that we are replacing in 2026, along with planned capacity expansion both of which are facing significantly higher costs, largely attributable to intense AI industry-driven demand and supply constraints.

Additionally, we are planning a few capital improvement projects to our corporate headquarters. The GAAP effective tax rate is expected to be between 22% and 25% and as we are seeing a slight increase in forward taxes.

In summary, VeriSign continued to demonstrate sound financial discipline during the fourth quarter and throughout 2025, and as you can see from our guidance, we expect continued solid financial performance during 2026. I will now turn the call back to Jim for his closing remarks.

Thank you, John. We're pleased with the progress we made during 2025 and look forward to delivering on our mission during 2026. I've said over the years that while we divested what we considered non-core businesses, we would continue seeking and evaluating ways to offer enhanced functionality or security services that are consistent with our mission. We've continued this evaluation, and we now believe we have strong candidates for new services that can help reduce known and unknown vulnerabilities and contribute significantly to information trust.

These potential new services are strongly aligned with our core mission, leverage our long history of pioneering DNS and security technology and can be offered to new or existing customers throughout our channel. We'll share more in the coming months.

Thanks for your attention today. This concludes our prepared remarks, and now we'll open the call for your questions. Operator, we're ready for the first question.

[Operator Instructions] We will take our first question from Rob Oliver with Baird.

Jim, on the last quarterly call, you talked at some length about your view on AI and its impact on the domain base and that it actually was driving some benefit. Clearly, there's a lot of concern in the market around the open web and AI's impact on the web structure. So can you talk a little bit about -- give us an update on what you're seeing there? How much you think an uptick in activity on AI is contributing to some of this domain resurgence and what you're seeing among the domain base? And then I had a couple of follow-ups.

Okay. So the impact of AI on our business, it's certainly having some impact, but it's 1 of several components that we've talked about before. We've talked about the utility of a donate name and its value. We've talked about the domain name as a digital trust anchor. We've talked about the reliability of our services, 28 years of uninterrupted service and uptime availability, all significant contributors. Internet use is growing. Traffic is expanding. We believe with confidence that a good portion of that is due to and AI is benefiting us, as we've said, in several different ways.

I mean, 1 interesting way is that the registrars are putting AI to work and developing tools that users find easier to build a website and also to select a good domain name. But we're also seeing that building LLMs are -- we've all read about how they're basically scraping the Internet and collecting data. We see that in the increase in our in our queries. That's an indication that there's increased activity in traffic. No doubt a portion that we -- difficult to measure with precision, but no doubt that a portion of that is AI. And that just means a greater dependence on the DNS. AIs are going to have to, especially a genetic AIs, obviously, conducting multiple tasks for people are going to have to navigate.

They're going to have to refresh data, collect current data. They're going to be using the DNS to do that. So increased dependence on it, increase value and utility of domain names. The established governance structure that exists for the DNS, a secured, trusted anchor that's supported across most of the world's countries in a well-governed system by ICAN, I think, is just proving its value as the load on this infrastructure growth. And AI is undoubtedly a huge part of that. And I think it's probably safe to say that it's going to continue to grow or well into the foreseeable future.

Great. Really helpful. And then I wanted to pivot to the marketing programs. you called out going back to '24, when you guys made the call that you were going to pursue some new strategic marketing programs. Those have definitely had an impact and are playing up really nicely. I was wondering if you could just address where in particular you're seeing that impact? Is it across the board? Is it more nontraditional channels? And then are there any tweaks you guys are making to the marketing programs coming into '26.

Sure. Let me first say this. I think we can sort of break this into 2 pieces. One is the registrar channel, of course, to engage with these programs and actually make the sales. First, I'll say that over the years, that channel has evolved. Their business models have evolved. There have been some that have gone public, some that have gone private, some that have changed management, some that have changed business strategies. And so it took us a little while, but in 2024, we began to adjust and develop programs that met their needs far better.

We're kind of a slow, careful, deliberate company. Our priority is our infrastructure operation. But give us credit, we did catch up. And I think 1 of the most significant changes that we made was simply giving this evolving, changing channel, the flexibility to choose from a basket of programs that we began to provide. That allowed them to engage in the ones that are most effective for them. We also included some aspects of the program that sort of incentivized shall we say, registrations in the categories that tend to have stronger renewal rates. And so I think all of that is paying off.

Great. Really helpful. And then last quick one for me. I couldn't resist since you threw out the teaser end there, Jim. You mentioned how you think AI is going to drive sort of increased dependence on that sort of trusted secure anchor DNS system that you guys play a critical role in. You mentioned some new services. I know we're going to get more information in the future, but just in the interest of trying to mitigate any surprises on any conference calls nowadays. Any color around that would be helpful, like being better around long enough to remember when you guys sold Virgin Security Solutions. And I'd just be curious for any more color you can provide around what those additional services might be.

Okay. Rob, thanks for all those questions. I guess what I can say is this. Yes, we did divest kind of ending in 2015, a number of services that proved to be more distraction for us than real benefit and maybe even sort of complicated matters in our core mission. We focused exclusively on our core missions starting in 2015. However, I've said consistently, maybe not every earnings call, not every year, but sporadically throughout the last 10 years that we don't stop looking for ways to enhance things. And let me start by saying that we are constantly doing R&D.

We are constantly improving our own infrastructure. We are supporting ITF standards. We are working to to bring innovations and new technologies. A lot of them are made available at no cost if they in our sort of stewardship were all as stewards of common net, 2 of the 13 routes that we run, managing the root zone in all of these areas, we see ourselves as having stewardship responsibilities.

And so we're always looking to enhance security and stability. That's literally what we're about. If we find things that may be of interest to a broader community, either in a stewardship role or as a commercial product, they'd have to meet a number of different tests. It would -- we're not going to become a sales organization. We're staying in our wheelhouse. And I think given the increased dependence on the Internet, given the increased usage, given given further dependence on the Internet itself and all of the infrastructure that it sits on, including ours.

If there are small enhancements that we've made that we think could add value and benefit folks either in functionality or particularly in security and stability. At some level, some of those as it appear as if they may have value to folks through our channel. And that's what I was alluding to. So we'll have more to say about that in a few months.

We will take our next question from James Michael Sherman Lewis with Citi.

Two, if I may, First, on the 2026 domain guidance. Can you unpack your assumptions, either macro or operational that could drive domain growth to the lower or the high end of the guide, the high end implies continued acceleration in domain growth.

Yes. So our guidance really reflects what we've seen trend-wise over the last year. We've been encouraged by the trends. I think each of our major regions showed growth during the year. and we monitor those trends. We also meet and talk regularly with our channel to see what trends they're seeing and to hear what their plans are. So we think our range encompasses the most likely outcome and our best estimate at the time. And as the year progresses, we'll continue to update on that.

Helpful. Any expectations then for maybe the icon auction? In contecom domain growth acceleration we've seen, but also some emerging TLDs that have begun to scale faster. Just any insights into your approach there would be helpful.

Okay. I'm sorry, I missed -- I didn't quite catch the last part of that. The first part was about the upcoming ICANN auction, you said?

Yes.

Okay. You mean their next round of new generic top-level domains. There may be auctions where they may have contention for domain names, but it isn't an open auction. It's an application process. I think that's what you're referring to, right, the 1 that opens in April.

Yes, absolutely.

Okay. Yes. So they're opening a round of new gTLDs like we did roughly 15 years -- 14, 15 years ago. And we -- are you asking us what our participation would be? Or did you want some general comments on how we view I can ground. I apologize, some of your question broke up just a little bit.

Yes. poles are breaking up. Curious how you're thinking about new TLDs and your portfolio here?

Well, we're studying -- I can hasn't opened around yet, but we are studying it. We are looking for any opportunities that may present themselves. I think we would be an interested party if there were something specific that would contribute to our strategic role as a critical infrastructure provider, I think of it that way. We do, of course, have common net, and there is web as well from the last round that we have an interest in, but nothing more really to say about that. Now other than a round opens up in April, there is a -- there is a process that could include auctions depending on contention. Then there's a lot of process behind that to launch a new gTLD. But yes, we're familiar with it. We're studying it, and we don't have anything to say with respect to how we may view our own applications at this point.

Perfect.

All of them will be visible shortly after the round opens. There will be a period -- there would be a period in time in which everyone's applications will be public and visible.

And we will take our last question from Alexei Gogolev with JPMorgan.

Hello, everyone. Maybe first question, either Jim or John, could you double-click a bit more on the guidance. Obviously, I appreciate the range that you provided -- would it be possible to give a bit more granularity in your assumptions? How much the main growth are you assuming for dot-com and what sort of directional trend that you're assuming for net.

Yes. Typically, we don't guide to common net specifically. We guide to the DMB base of that is the combination of those 2 I think over the recent years, not that has had a little bit of a decrease in its size. We've obviously implemented programs, some of which target net and hopefully will have a positive impact on our other programs. As Jim mentioned, our some of them, some of them are focused on specific use cases that we believe will drive better retention rates. So we're pleased with what we saw last year. We've made some adjustments this year to those.

So we do think we have good momentum coming out of 2025 and starting the year right now. I think we've talked in the past that while our renewal rates have improved, year during 2025. We have mentioned that we will have a higher mix of first-time renewal rates during 2026. So that will -- that potentially will pull down our overall renewal rate. But while I say that, during 2025, both our first-time renewal rates and previous renewal rates have improved. So several positive trends throughout 2025, that seemed to gain steam as the year progressed. And obviously, we're doing the types of things that we think are important to continue that momentum and continue to build on it.

Yes. And Alexei, I would say, we do treat the zone as a combination of common net, but the daily report that we get, I'm sure you're aware, does show you what has happened in each of those, and you can track that as it progresses.

That's helpful. Thank you, Jim and John. And maybe just a follow up on that. So it just seems like the midpoint of the guidance being a little bit conservative considering the trend that we're seeing for .com at the moment. And I was just wondering if your assumptions, at least at the midpoint of the guide are implying that the growth will taper off in the second half of the year. Is that the logic?

We exited, what a 2.6% growth for 2025 over '24, midpoint of $2.5 million. I feel like I'd be splitting Harris to explain that 0.1%. But certainly, if you look at the trend of our new registrations during 2025, they might be a little bit more back second half loaded, which like I said, will impact our first-time renewal rates. But we tend not to guide to quarterly numbers.

The other factor, Alexei, obviously, I know you're aware of this, I just want to point it out for some who may be new and just to remind everyone as well, that we don't sell directly. We sell through a channel, and it's a very, very diverse channel. There are many, many registrars with different business models. They are engaged in different programs. There's been quite a bit of change in the channel. There's been some M&A activity. So I kind of feel as if we're being -- given those factors, I think we're being pretty precise given all the things that we don't control in that particular channel. So we try to tighten that range up as much as we can. And John, as John said, 10%, if we can be that close, I'm going to feel like we we pretty much hit the bull's eye.

I hear you, Jim. And a final question, maybe if you could comment on your intention to raise prices for dot-com. Have you made the decision you move to raise prices this year? And when do you think you may announce that?.

So we don't guide to pricing. But again, for those new or unfamiliar. We do have the ability to raise prices in every 6-year period in the back 4 years, 7% each of those back 4 years. It requires 6 months' notice. The first available price increase will come at the end of October of 2026. And therefore, if we choose to execute some level of price increase, the first opportunity to take advantage of that would be an announcement made in April. But we don't guide to it, but April isn't that far away. So you won't have to wait long to see what we're doing, but I can't answer your question directly because it's our policy not to guide to price increases.

This does conclude today's question-and-answer session. I would now like to turn the call back to David Atchley for final comments.

Thank you, operator. Please call the Investor Relations department with any follow-up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.

This does conclude today's call. Thank you for your participation. You may now disconnect.

Good day, everyone. Welcome to VeriSign's Third Quarter 2025 Earnings Call. Today's conference is being recorded. Recording of this call is not permitted unless preauthorized.

At this time, I'd like to turn the conference over to Mr. David Atchley, Vice President of Investor Relations and Corporate Treasurer. Please go ahead, sir.

Thank you, operator. Welcome to VeriSign's Third Quarter 2025 Earnings Call. Joining me are Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Executive Vice President and CFO. This call and presentation are being webcast from the Investor Relations website, which is available under about VeriSign on verisign.com. There, you will also find our earnings release. At the end of this call, the presentation will be available on that site, and within a few hours, the replay of the call will be posted.

Financial results in our earnings release are unaudited, and our remarks include forward-looking statements that are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC, specifically the most recent reports on Form 10-K and 10-Q. VeriSign does not update financial performance or guidance during the quarter unless it is done through a public disclosure. The financial results in today's call and the matters we will be discussing today include GAAP results and 2 non-GAAP measures used by VeriSign, adjusted EBITDA and free cash flow. GAAP to non-GAAP reconciliation information is appended to the slide presentation, which can be found on the Investor Relations section of our website available after this call.

Jim and John will now provide prepared remarks. And afterward, we will open the call for your questions. With that, I would like to turn the call over to Jim.

Thank you, David. Good afternoon to everyone, and thank you for joining us. VeriSign delivered both growth in a domain name base and solid financial performance during the third quarter. We also continued our consistent return of value to shareholders through dividends and share repurchases. At the end of September, the domain name base for .com and .net totaled 171.9 million domain names, up 1.4% year-over-year. We had strengthened the quarter with 10.6 million new registrations. Revenue was up 7.3% year-over-year and EPS is up 9.7% year-over-year.

During the quarter, we returned $72 million through dividends and $215 million through share repurchases for a total return to shareholders of $287 million.

The positive domain name base trends we saw during the first half of the year continued during the third quarter. Net registrations added during the third quarter were 1.5 million names. This was made possible by the strong volume of new registrations already mentioned and improvement in the year-over-year preliminary renewal rate. The renewal rate for the third quarter of 2025 is expected to be 75.3% compared to 72.2% a year ago.

The domain name base grew sequentially in our 3 main regions with the U.S. and EMEA being the strongest. We're seeing solid underlying demand for our domain names and continued registrar engagement with our programs which together have enhanced the pace of growth in new registrations. Given these continued positive domain name base trends, we now expect the growth in the domain name base to be between 2.2% and 2.5% for 2025.

Our financial and liquidity position remained stable with $618 million in cash, cash equivalents and marketable securities at the end of the quarter. At the end of the quarter, $1.33 billion remained available under the current share repurchase program, which has no expiration.

As announced in today's earnings release, VeriSign's Board of Directors declared a cash dividend of $0.77 per share of VeriSign's outstanding common stock to stockholders of record as of the close of business on November 18, 2025, payable on November 25, 2025. VeriSign intends to continue to pay a cash dividend on a quarterly basis, subject to market conditions and approval by VeriSign's Board of Directors.

And now I'd like to turn the call over to John. I'll return when John has completed his financial report with some closing remarks.

Thank you, Jim, and good afternoon, everyone. For the quarter ended September 30, 2025, the company generated revenue of $419 million, up 7.3% from the same quarter a year ago.

Operating expense in Q3 2025 totaled $135 million, which compares to $129 million last quarter and $121 million for the third quarter last year. The areas we saw increases include incentive compensation and legal costs. Net income in the third quarter totaled $213 million compared to $207 million last quarter and $201 million in the third quarter last year. Third quarter diluted earnings per share was $2.27 compared to $2.21 last quarter and $2.07 for the same quarter of 2024.

Operating cash flow for the third quarter 2025 was $308 million and free cash flow was $303 million, compared with $253 million and $248 million, respectively, in the quarter a year ago.

I will now discuss our updated full year 2025 guidance. Revenue is expected to be between $1.652 billion and $1.657 billion. Operating income is now expected to be between $1.119 billion and $1.124 billion. Interest expense and nonoperating income net, which includes interest income estimates, is still expected to be an expense between $50 million and $60 million.

Capital expenditures are still expected to be between $25 million and $35 million and the GAAP effective tax rate is still expected to be between 21% and 24%.

In summary, VeriSign continued to demonstrate sound financial discipline during the quarter. Now I will turn the call back to Jim for his closing remarks.

Thank you, John. The improved domain name base trends that emerged at the end of 2024 continued through the first 3 quarters of 2025. We're seeing strength in demand for our domain names, which we believe are the results of the plans and expectations we laid out last year. Our adjustments to our channel programs, along with anticipated favorable cyclical shifts from ARPU to customer acquisition.

Of note is that these improved trends are seen across our main 3 regions with strength in the U.S. picking up during the third quarter. Our 2025 programs have deepened our engagement with our channel and we use their feedback to improve our 2026 programs, which we have rolled out to our registrars.

We look forward to finishing out 2025 from a position of strength with these positive domain name base trends. I would note that we also see increases in registration and resolution activity for which we believe increasing use of AI is the -- is a primary driver.

Thanks for your attention today. This concludes our prepared remarks, and now we'll open the call for your questions. Operator, we're ready for the first question.

[Operator Instructions] And the first question comes from Rob Oliver with Baird.

A couple of questions from me. Jim, I guess, first, I appreciate all the color on the domain base trends that you're seeing. I guess, going back to Q1 of last year, when you guys called out the changes you need to make in your marketing programs. We've seen a nice improvement in those domain-based trends from sort of beginning of this year through now.

You cited a few reasons, but I was wondering if you can give us a little bit more color perhaps on how much of it is macro, how much of it is stuff that you guys are controlling with your marketing programs? Any other color you can provide in particular geos would be helpful. And then I had a couple of quick follow-ups.

Okay. Well, I think really, the story is pretty much the one that I talked about in my remarks. It's just basically blocking and tackling in a sense. We improved our programs and made them more adaptable for our channel. We got great engagement from our channel. We've been talking about a cyclical shift that we were hoping for and anticipating and that came around. So that added to the growth. The registrar engagement with our marketing programs is also helping us sharpen our 2026 programs. I guess some more details we can share. John, do you want to?

Sure. Thanks, Jim. As Jim mentioned, we saw good strength across all of our 3 main regions. EMEA has been the most consistent region over the past few quarters. But what we saw in third quarter was the U.S. improved very nicely and was strong during the quarter. The domain base in Asia Pac, which includes China, did grow again, but it wasn't as strong as the growth we saw during the first half of 2025.

Our programs seem to be contributing to the improving trend of domain -- of demand for our domain names. We saw a success with our marketing efforts during 2025. We've already rolled out our programs to registrars for 2026.

As Jim mentioned, we continue to incorporate feedback from our registrars and have further refined our approach for 2026. As you would expect, we'll continue to invest in programs that have been working well, and the initial response from our registrars to the 2026 programs has been positive.

Just as a reminder, the cost of our marketing programs is included in our updated guidance we provide today, and all of these programs are accretive. In addition to the strong volume in new registrations, the renewal rate has continued to improve as evidenced by the preliminary renewal rate in third quarter of 75.3%, that's up from 72.2% a year ago, both the first time and previously renewed rates have improved year-over-year.

And as a reminder, the overall renewal rate is impacted by the mix of first-time renewing names this year versus last. And more specifically, last year, we had fewer new registrations which means fewer first-time renewals this year, which tends to improve the overall renewal rates.

The midpoint of our improved DNB guidance for 2025 reflects a continuation of the trends seen in the first 3 quarters of the year, and we plan to provide you with 2026 guidance during our February call after we have a chance to see how domain-based trends finish out '25 and start out 2026. To sum it up, we're pleased with the improvements in both growth and renewal rates and that these better trends are seen across our main regions.

That's really helpful. Okay, thanks John, appreciate it. Jim, I want to ask specifically about changes that Google has made this year to their AdSense program and what, if any, impact you might be seeing or expect to see within your current domain base from those changes?

Okay. Well, this -- so Google's AdSense has been around for a long time and the changes that they made are part of a long process that's not new. Through the almost 15 years, they started in 2011, 15 years, Google has been making changes to their algorithm, and they've steadily eroded domain names that exist solely for ad monetization with AdSense. So changes this year to AdSense have continued a multiyear predictable strategy from Google to reduce their reliance of both advertisers and domain name registrants on that particular service.

So this isn't a new trend. And after a decade of these changes, we view our exposure as minimal. Don't confuse these domain names with names that have been purchased for resale. Some of these are parked because it doesn't cost anything to do so, but the intent of these domains and the value of these domain names is for resale are not impacted by changes to AdSense.

Yes. Yes, that helps. Okay. If I have time for one more, I'll just -- I'll ask one more. Just wondering if I can hear from you, Jim, just a broader sense of your view on how you see AI potentially impacting your business, how you see it impacting your business at all today and how you think it might impact your business going forward?

I know you guys have said that any technology that makes it easier to create and use domains is good for you guys. I think that's generally true, and we're seeing a lot of activity in that regard. But would love to hear your view on -- from a high-level perspective on AI.

Thanks -- yes. Thanks for that question. AI is on everybody's mind these days, and it's no surprise, we get a lot of questions about it. So let me answer that in 2 parts. One, what impact we're seeing in our business and separately how we're using ourselves to manage our business.

So on the first part, it's early, but with the data we have this year, it's clear to us that AI is having a positive impact on registrations as well as on the utilization of our DNS resolution services. I might mention today, our infrastructure on average, processes over 450 billion DNS transactions per day and growing. Just 2 years ago, that number was $200 billion per day.

So AI companies need data, and they're continuously scouring the Internet to get it. Data is not static. And so AIs like search engines are constantly fetching fresh data from websites to augment their existing data. This is enabled by the DNS. There's no doubt in our minds that this trend will continue growing importance and will be additive to the existing drivers of DNS Reliance. So we think this applies even more to the agentic web. Agentic AI can do more for you, you set an objective, and the AI can plan steps and execute required tasks.

So for example, the launch of Agentic browsers is making interaction with websites more user-friendly, even more powerful. It lets users summarize information across multiple open tabs, from any websites, applications and Internet services. Again, this is enabled by the DNS.

Also, AI can be powerful for domain name suggestions, website provisioning and content generation. So we've used and continue to use AI in our domain name suggestion platforms. For example, AI is enabling more sophisticated multi keyword name suggestions based upon natural language across many languages.

And of course, like most businesses, we look for ways AI can provide efficiencies and better protect our services. And one last thing. Looking ahead, we believe domain names will remain critical in providing many important services. They can serve as digital trust anchors, providing trust and authenticity of a destination, critical for Agentic AI. Domain names provide globally unique, stable, human-readable identifiers for verifying digital content and can be especially valuable in combating misinformation and deepfakes hypercritical for AI.

As it relates to infrastructure for new protocols because AI agents autonomously crawl the Internet to complete complex tasks, we believe demand for persistent, resolvable identities and endpoints will continue. But the traditional use of domain names isn't going away. Businesses require branding, discoverability and credibility.

So domain names and recognized and trusted high assurance TLDs like .com and net hold strong value. Registrars in the DNS ecosystem are well positioned to layer new value-added services on this infrastructure, again, all enabled by the DNS. So from what we see today, the trends are very positive.

And we'll take our last question from Ygal Arounian with Citi.

I guess I want to follow up on some of Rob's questions. Maybe first, just on the marketing programs. And there's been a lot of questions on this lately from investors. And maybe if you could help just kind of parse through marketing programs, what's worked in particular. And if there's been a lot of discounting within that? Or is that just the cadence and pace of discounting has changed at all?

And just note in your -- in the SG&A line, there was a sort of a notable step up there. I think you called out some legal expenses. But if you strip those out, that sort of more normalized, you step up a little bit in that spending? Maybe just kind of help us think through that a little bit more.

Yes, Ygal. This is John. We do think our marketing programs have contributed to the growth we've seen in 2025. I would point out that from a cost standpoint, those programs are accounted for as a reduction in revenue. So in the SG&A, there really isn't a significant change in marketing dollars in that line item. So it really is the incentive comp and the legal costs that I mentioned during my prepared remarks.

That said, we've seen -- we've tried to shift our programs towards ones that yield higher quality and higher renewing names. And we think those are working at least to date. We've made some adjustments to those programs for 2026. The initial response that we've gotten from registrars as we begin to roll out those new offerings to them has been very positive. And so we're pleased with that.

We continuously review our programs, monitor their performance and listen to feedback for registrars, and we will continue to invest in programs that we see are successful. The last thing I would say is don't think of our programs of something that's finite for 2025 or finite for 2026. Think of these programs as an evolution of what we've run for several years.

And the main thing we've changed recently as we give more choices to be responsive to the changing market. So you can expect us to continue to learn, adapt and where appropriate, implement changes to our programs going forward.

Okay. And so another follow-up on the Google AdSense issue. Just -- I think there's a lot of opaqueness in this industry and maybe things that investors don't understand. Jim, you mentioned a lot of park domains are deferred kind of resale, a lot of the park domains are there for defensive purposes. Like is there any way to sort of break out what you think the split is on advertising monetized or aftermarket monetized defensive?

And I think there were a number of players in the -- or a couple of players, key players, public players in the market that saw some impact from this in particular, which might be where some of this fear has been spreading from. So it does feel like it's impacting somewhere. If you could just comment on that and your thoughts on that.

Sure. When you say it's impacting somewhere, meaning not in our zone, you're not talking about that. I want to make sure I understand the question.

I'm talking about like some public players that have seen an impact to add revenue from this change on advertising on park domains.

Well, if that's your revenue model to make -- to earn revenue from monetizing traffic in parked domains through AdSense, yes, you've been on a downhill slide for 15 years. It was a 2011, I think many of those listening may remember this, Google introduced a change to their search algorithm called Panda, and then they did some more. There was Penguin and I think some others that started with P. And I remember during earnings calls, we'd go through each one and what impact it would have. And that's what I meant when I said that, that particular business has been eroding for 15 years.

What I meant about the other side of the business or the other side of those domains is that the domains that are purchased for resale can be easily parked. In fact, I actually found that a registrar had parked a domain that I owned that I wasn't doing anything with, because I guess I didn't check the box that said don't park my domain. So they can pick up a small amount of revenue or at least they could. This happened about 9 years ago.

So I think those domains are purchased for resale. They are -- those are -- you can see those for sale. And on registrars, almost every major registrar now has an aftermarket available for premium com domains. Those are different, but you may -- some of those could be part is the point I was making. So I don't have a segment breakout in detail. We do some analysis, but we don't disclose that.

Okay. And then finally, just shifting to different. Just an update on -- if there is any on .web time line or expectations and maybe in particular, like if sort of loophole on this process continuing open over again, might change? And then maybe with -- at the same time, just if you could talk about any update on how you think about the new -- I guess it's not really an auction model anymore, but with new TLDs and how that might play out later next year and into 2027?

Okay. So first of all .web, there's nothing substantive that's new since we talked last quarter. The -- but what is true is that what I reported then, which is that the final hearing is still scheduled for mid-November 2025. So I think there's anybody new on the call, just to reiterate, we intend to become the registry operator for .web. We hope to bring it as soon as we can to our customers. We believe Altanovo, who in this legal proceedings believe their use of ICANNs processes to keep that from happening as an abusive process and is being pursued in bad faith to keep web off the market. So we only have weeks now until at least that process begins, and we'll certainly keep you informed when we can about anything that comes out of that. I'm sorry, you had kind of a second part of that?

Yes, just on the upcoming domain auctions and -- on that process yes, for later next year and into, I think, 2027?

ICANN 2026 round of new gTLDs you're referring to. Yes. Yes, that's -- I believe that's on target to open the round in the second quarter, I believe, is ICANNs goal to do that. Unlike the 2013 round, there will not be auctions. There will be a different process that they use, but they haven't started rolling all that out yet. I think like a lot of companies, we are looking at any opportunities there. If there's something that we're interested in, we have our teams studying that, nothing to report yet.

But yes, that round, if everything runs on schedule, I'm not sure exactly what the timing for the process is after the opening of the round and the submission of applications and there's a lot of process that goes with these. So I can't tell you exactly when. But yes, I think, 2027, you'll probably -- is probably the earliest that they'll actually be deployed because of the process. But it starts Q2 2026 according to ICANN.

And that does conclude the question-and-answer session. I'll now turn the conference back over to Mr. David Atchley.

Thank you, operator. Please call the Investor Relations department with any follow-up questions from this call. Thank you for your participation. This concludes our call. Have a good evening.

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day.