威瑞信 (VRSN) 2011 Q3 法說會逐字稿

Good day, and welcome to the third-quarter 2011 earnings call. Today's call is being recorded.

At this time, I'd like to turn the conference over to David Ashley. Please go ahead, sir.

Thank you, Operator. Good afternoon, everyone, and thank you for joining us for VeriSign's third-quarter 2011 earnings conference call. I'm David Ashley, Corporate Treasurer and Director of Investor Relations. I'm here today with Jim Bidzos, Executive Chairman, President and CEO; and John Calys, Vice President, Interim CFO, and Controller.

Please note that this call and accompanying slide presentation are being webcast from the Investor Relations section of our Corporate website, www.verisigninc.com. Please refer to that website from important information, including the Q3 2011 earnings press release. A replay of this call will be available on the website within a few hours. Today's slide presentation will also be available for download after the call.

Financial results in today's press release are unaudited, and the matters we will be discussing today include forward-looking statements, and as such are subject to the risks and uncertainties that we discuss in detail in our documents filed with the SEC -- specifically, the most recent Report on Forms 10-K and 10-Q, and any applicable amendments, which identify important risk factors that could cause actual results to differ materially from those contained in the forward-looking statements.

We would like to remind you that in light of Regulation FD, VeriSign retains its longstanding policy to not comment on financial performance or guidance during the quarter, unless it is done through a public disclosure. The financial results in today's press release and the matters we will be discussing today include non-GAAP measures used by VeriSign. GAAP to non-GAAP reconciliation information is appended to our press release and slide presentation as applicable, each of which can be found on the Investor Relations section of our website.

In a moment, Jim and John will provide some prepared remarks. And afterward, we will open up the call for your questions. Unauthorized recordings of this conference call are not permitted.

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

Thanks, David, and good afternoon, everyone. The third quarter was another solid quarter for VeriSign in our naming business with [names] of registered names in dot-com and dot-net totaled approximately 112 million at the end of September. In our NIA business, we again saw strong bookings growth. Also our strong balance sheet allowed us to repurchase $235 million in shares in the third quarter, leaving us with approximately $831 million under the current share repurchase repurchase program authorization.

I'll comment now on third-quarter operating highlights. As I mentioned previously in our naming business, the base of registered names in dot-com and net totaled approximately 112 million at the end of September. This represents an 8% increase year-over-year in the base, and an approximate 2% increase quarter-over-quarter. In the third quarter, we added 1.994 million net names to the Domain Name Base, and we processed 7.9 million new registrations, which is an increase of approximately 5% year-over-year, and our largest third quarter on record for new registrations.

The Q2 2011 renewal rate was 73.1%. Our renewal rates are not fully measurable until 45 days after the end of the quarter. We believe that the renewal rate for the third quarter of 2011 will be approximately 73.4%. We expect the Q4 net names added to the base to be between 1.8 million and 2.1 million names, which reflects the continued growth and the underlying drivers of Internet growth as well as seasonality.

With regard to our NIA business, the team performed very well and exceeded target bookings for the third quarter. We continue to study this fast-growing and evolving market for the best ways we might leverage our core strengths, and optimize our offerings to scale for long-term success, with an emphasis on quality of revenue.

Finally, before turning the call over to John, let me address our management changes. As you know, since August 1 of this year, I have assumed the responsibility of full-time CEO of the Company. As you saw in our press release, there is no change to my status, and the Company will not be conducting a search for a new CEO. However, we will be conducting a CFO search. Until we complete that search, John Calys is in that interim role. He's been at VeriSign for nearly a year now, and has been a successful financial operating executive in other public companies as well.

Thanks for your attention, and now I'll turn the call over to John.

Thanks, Jim, and good afternoon, everyone. This was another solid quarter for us, as Jim explained. Let me recap our performance this quarter on our key operating metrics, which are revenue, deferred revenue, non-GAAP operating margin, non-GAAP EPS growth, and free cash flow. Then I will discuss progress towards our annual guidance for 2011.

Revenue of $197 million for the third quarter was up 4% from the prior quarter and 14% year-over-year. Deferred revenue ended the quarter at $723 million, an increase of $9 million from Q2 and an 11% increase from the same period in 2010. Non-GAAP operating margin for Q3 was 50.1% compared to 51.7% in Q2, which was benefited by 3.1% as a result of a $6 million nonrecurring expense reversal. Q3 non-GAAP operating expenses were $98 million, up 7% sequentially and flat year-over-year.

The third-quarter operating margin expansion was driven by revenue growth and through realizing efficiencies in our business. Based on the progress to date, we expect fourth-quarter 2011 exit non-GAAP operating margin to be at least 50%. Non-GAAP net income for the third quarter was $64 million, resulting in non-GAAP earnings per share of $0.39 compared to $0.38 in Q2 and $0.28 for the same period in 2010.

Income related to transition services, included as a part of nonoperating income on the P&L, was approximately $1.3 million in the third quarter. We expect approximately $1.1 million in the fourth quarter of 2011. With respect to taxes, we think a non-GAAP tax rate of approximately 30% remains a reasonable estimate. In 2011, we expect to pay cash taxes of approximately $34 million, $28 million of which is related to the divestiture of the authentication services business. We exit third quarter with a diluted share count of 164 million shares compared to 170 million shares at the end of second quarter.

Operating cash flow on a consolidated basis was $108 million in the third quarter. Free cash flow was a positive $75 million in Q3, given a $1 million increase in excess tax benefits and $34 million in capital expenditures in the quarter. Related to capital expenditures, as we said in September 2010, we signed a long-term lease to move our corporate headquarters to Reston, Virginia. During third quarter 2011, VeriSign exercised its right of first refusal to purchase these corporate headquarters. During the third quarter, the Company made an $11.8 million escrow payment, and we expect to close the property purchase on November 15, 2011.

We think capital expenditures, excluding the purchase of the Reston building, will be about 10% of revenue in 2011. Also, we are exploring a range of options to finance the purchase of the Reston property.

To reiterate, we saw solid performance in Q3. We have grown non-GAAP operating income and net income. We have a strong balance sheet and expect strong cash flow generation to continue as a result of our financial model.

With respect to 2011 guidance, revenue for 2011 should be in the range of $770 million to $775 million, representing growth of 13% to 14%. That's changed from $765 million to $775 million range given during the July earnings call. Non-GAAP gross margin is still expected to be about 79%. Q4 2011 exit non-GAAP operating margin is expected to be at least 50%. We said at least 48% on the July call. Non-GAAP interest expense and non-GAAP nonoperating income net is still expected to be $25 million for 2011. Capital expenditures are expected to be 10% of revenue, excluding the Reston property purchase.

Our guidance is based on expectations of continued growth and increased operating efficiencies in our businesses in addition to our financial projections for interest income and expense.

I will now turn the call back to Jim.

Thank you, John. In summary, during the third quarter, we saw 14% year-over-year revenue growth, repurchased $235 million worth of the Company's shares, grew the zone by nearly 2 million names, and improved and narrowed the range of our guidance for revenue in Q4 exit operating margin. We'll provide guidance for 2012 when we report year-end numbers.

We'll now take your questions. Operator, we're ready for the first question.

(Operator Instructions). Walter Pritchard, Citi.

Jim, you're a trooper. I think this is the third time you've stepped in as interim CEO and decided to make it permanent. I'm just wondering what was behind that decision?

Well, thanks, Walter. Yes, here I am again. So we had our Board meeting over the last couple of days, and the Board had in front of it a specification for a CEO. I think the more we looked at it, the more the Board concluded that I would be a good fit. And we had a discussion about my availability to do that, and I was highly motivated and excited to do it. So here I am.

Great. Got it. And then -- well, congrats.

Thank you.

And then just on NAI, your language there, I think you're happy with the performance there, your billings exceeded your plan. I heard you use the words leverage and scale that business. And I'm just wondering, are you thinking at all differently about how much you invest in that business? Whether or not you pursue acquisitions and so forth? Maybe it was just me kind of detecting a different way of talking about that, but wanted to get your view on that.

Sure. I'm sorry, your question was specific to my comments (multiple speakers) --?

To NAI. Yes, your comments around NAI suggest you might be looking to expand that business more than I had thought the Company was looking to expand it before.

Yes, NAI. Well (multiple speakers) -- yes, my comments that we're happy with the fact that the team is performing well and that they're exceeding their targets, I think is where we are with that business. I think it's exciting because it's certainly a growth business, so we're watching it very closely, as I said.

I think that if I would refer you to any particular part of what I said, it would be the emphasis on quality of revenue. I think that's a really important feature of VeriSign's general business. And so as we look at growth opportunities, that's really the primary measurement for us -- the primary consideration is quality of revenue that's as close as possible to our core business. So, I would point you more to that as kind of an interesting area for us. We are investing in it, and we're excited about its prospects, but we'll be able to tell you more about it next year.

In the last three months, we noticed that DOC has put the IANA agreement out for bid and from ICANN. And I know that's early in the process, but just wanted to get your view on what impact, if at all, that might have on your relationship with the two parties in your business.

So if under some circumstance the IANA function bids somehow were not awarded to ICANN, that should not affect in any way our contractual relationship and our operation of dot-com and dot-net.

Great. Thanks a lot for taking my questions and congrats on the job, Jim.

Thank you very much.

(Operator Instructions). Steve Ashley, Robert W. Baird.

Maybe I'll start with kind of a housekeeping question that's probably for John. I understand that you sell in US dollars overseas, but is there any impact to the deferred revenue that resides on your balance sheet outside the United States from recent FX movements?

All of our business is conducted, even overseas, in US dollars. So it's US-dollar-denominated. So the answer is no.

Okay, great. A number of -- I know you bought $235 million worth of stock, do you know how many shares of stock you may have repurchased in the period?

I believe that number was 7.9 million shares.

Perfect. And Jim, do you plan to be kind of hands-on in terms of the day-to-day operations of the Company? Or is there a Chief Operating Officer or some role that is more day-to-day? Or how do you see yourself just in that role going forward?

Well, I consider myself to be very much hands-on. Among the criteria for the new CEO that we considered was someone who had an understanding of the technical nature of the Company's business; someone who is familiar with the community that we operate in. So my relationships with people in the ICANN community that go back more than 25 years, and my long history in the technical space, particularly as it relates to Internet infrastructure as founder of the Company, and security technology, I think were key qualifiers.

In addition to that, I think other important parts of the considerations for the Board were my relationship with the management team. Three years ago, when I came in as CEO, I worked with very much of the management team that's here today. For three years, I've actually been Executive Chairman. I've been mostly behind the scenes and maybe wasn't a hands-on; but since August 1 when I returned as CEO, I think it would be fair to say that I've been very much hands-on.

I think my background and tendencies are more in strategy and technology, so I would prefer to spend more of my time there. So I think you can look for the CFO hire and other management hires that we make to be complementary and support that desire of mine to spend more times in those areas.

Terrific answer. Thank you so much.

Phil Winslow, Credit Suisse.

Good quarter. And Jim, welcome back. Just one question, Jim, I guess for people on the line here just so they can have a better sense of your view of use of cash and what your goals are for the Company. I mean, obviously, you were one of the guys spearheading the movement to get down to the core business. I'm assuming it's not in your plan to change that at all, but just if you could kind of just answer that for everyone.

But also just -- how do you think about use of cash in terms of buyback and dividend going forward, versus potential investment or M&A? Thanks.

Sure, Phil, happy to answer that. First of all, I know a lot of you are aware of this, maybe not all of you are, so let me just say it again that -- what we've just done is completed a four-year restructuring that the Board put into motion in 2007. The Board decided then that we wanted to change direction. We wanted to divest our non-core businesses, focus on our core businesses, and look for opportunities in core adjacencies.

We've done that. And as Chairman, I do speak for the Board. But the Board collectively is what initiated that move. And we, I believe, have been very successful in doing that.

We also committed to return excess cash to the shareholders. And just again as a bit of a -- some historical info for those who aren't familiar with the Company's history, the Company was formally and legally formed in April of 1995. It took $10 million in seed money from some strategic investors. It took roughly -- later on, it took tens of millions from venture capitalists. It did $150 million strategic [round] prior to an IPO in January of '98, raising a substantial amount of money. That and a secondary that was done later raised hundreds of millions of dollars. And obviously, billions of dollars of revenue, netting many, many millions of dollars in profits were reinvested in the business and acquisitions.

When we did the divestiture program, we said we would return excess cash to the shareholders, and I believe we've delivered on that, including what I think was a very disciplined approach to analyzing an offer to purchase our authentication business, which, as you know, we closed in August of 2010. The sale of that business for $1.28 billion also generated excess cash that we return to the shareholders.

So that strategy executed by the Board -- directed by the Board, now completed, was followed then by, call it a transition period, where we provided transition services to the acquiring parties of our divest businesses. We are for all practical practical purposes now at the end of that. So we're exactly where we wanted to be.

So I would say that the philosophy of the Board -- and I think I, as Chairman, one of my responsibilities is to speak for the Board -- is that we did that and now here I am as a member of the Board, back in management. So I think if I can put it this way, I think we told you what we were going to do, but we walk the walk as well. And we did what we said we would do, and return it.

And I think we have a great opportunity going forward. But if you look back on share repurchase and how we've used cash -- of course, we utilized extraordinary dividends when we thought that was appropriate and good for our shareholders, and we used share repurchase when we thought that was appropriate.

We do, on a quarterly basis like every company, responsibly analyze our cash needs and how we're going to use that cash. And with the cash available, we look for the best ways to return that cash to the shareholders. I think you can expect nothing different in the future; we'll continue to do exactly that.

Great. Thanks, guys.

Sterling Auty, JPMorgan.

Jim, prior to Mark McLaughlin being named CEO, it felt like you were pretty adamant that you did not want to be a permanent CEO of VeriSign. I just want to make sure I'm clear as to what has changed? Or does this in any way provide any type of signal in terms of VeriSign as maybe a merger candidate?

I wouldn't read anything into this, absolutely nothing into this other than the fact that the Board decided that I would be a good candidate for CEO. And I made the decision to accept the offer to take that position.

I found that -- you know, the question was -- obviously, I have been living in California, although I do spend a lot of time in other places. Now for the last three months, I have essentially been here. And I found that it's not inconvenient at all for me to be the full-time CEO and be hands-on. I'm very interested in the strategy. I'm very interested in where the Company can go. I think the opportunities here are as great as they've ever been. I think that we're in a huge growth area. We're positioned very strongly. I'm excited about the prospects. I like the management team. I like the people at the Company. And I'm excited about being the hands-on CEO and running it. I don't think you should read anything into this announcement more than that.

All right, great. And then one question on the actual operation. When you look at the name growth, the 1.9 million names added, any insight from conversations with the registrars as to where they're seeing the growth coming from? And any commentary that you can give us around special marketing programs that maybe you guys ran in the quarter to help spur that growth?

I think the short answer to your question is there are no extraordinary insights or unusual events that happened in the quarter that led to that growth. But just in case somebody asks really interesting questions about the domain name has, and that business and the registrar relationships, I have Pat Kane, our Senior Vice President who runs that business for us. And I'll ask Pat to comment, as well.

So, basically, the registrars have not seen a change in the behavior of the buying of names other than they see more small and medium businesses coming online. We see the international growth coming out of India and China and EMEA, as far as the growth in Q3. So it's been positive for the registrars. And as a result, you heard earlier that we had the largest Q3 as far as new units that we've ever had.

Great. Thank you.

Rob Owens, Pacific Crest Securities.

I know you addressed this early, I apologize, we had some technical difficulties, but what was the renewal rate for Q2?

The renewal rate we expect after the 45-day period when we nail it down to be -- it was 73.1% in Q2 -- I'm sorry, you were asking about Q2, not Q3. (multiple speakers) Yes. 73.1% was the final renewal rate in Q2 of 2011.

Okay. And then your anticipated one for Q3?

73.4%.

73.4%, okay. And given the macro state, what are some of your expectations with renewal rates? Do you think you can sustain it here in this kind of low 70's or 73% to 74% type of range? Or could we see slippage to that number?

I'll let Pat comment on that, but let me just say first of all, that there is a natural evolution here that we watch closely. The base of names is growing larger. The longer a name is in our zone and the more often it's renewed, the higher the renewal rate for that particular name. So even though, for example, in 2011, in Q1, we had the highest number of absolute net new adds in the history of the Company. And we had the highest Q2 of any Q2 in the Company's history, and the highest number of net new adds for this Q3 of any Q3 in the Company's history.

Despite those, the ratio of net new adds to the base of names obviously changes every quarter as you grow. So tracking the renewal rate, and making projections and understanding and interpreting it, I'm learning is an extremely tricky business. So I think it's difficult to generalize, although I'll invite Pat to add some color to that, if he'd like.

The thing that I would add there is that the older the base gets, you're going to naturally have progression to whether the renewal rate is going to go up. And so, for example, this specific quarter, we had 66% of our base was previously renewed domain names. And then when we get into 2012, that percentage will go up. So you'll see a trend as the percentage of the base is older that that renewal rate will continue to go up.

Yes, I guess, just along those lines, so if we look back at Q2, Q2 is down modestly year-over-year. And I would assume that the base had aged over that year. So was there something within that quarter that was one-time in nature or --?

Yes, it's -- we have, from time to time, we have registrars that have one-time events that can affect by 1% or 2% -- 0.1% or 0.2% the renewal rate itself from the behaviors that we expect. So we did see an event that happened at the end of Q2 that affected that specifically, yes.

Yes, there are anomalies. And there was an anomaly associated with a single registrar that gives us some comfort that that was a one-time benefit essentially.

And then in terms of the new name growth that you're seeing -- I think it's around 5% this quarter. Do you think it should stay in this kind of low to mid-single digit range over the next year?

I think the answer is yes.

Okay. Great. Thanks, guys.

(Operator Instructions). Gregg Moskowitz, Cowen.

Wanted to ask about the new name guidance in Q4 of 1.8 million to 2.1 million names. Certainly, a healthy level but a little higher than what we were expecting. And in recent years, I believe more often than not, we've seen new name adds be lower in Q4 than Q3. So just wanted to ask about that net add guidance and your confidence level in that.

I think that the guidance is based simply on expected growth in the name base and seasonality. I don't think there's anything more to it than that.

Pat, do you want to add anything to it?

Well, we basically pay attention to what each registrar does in terms of their behaviors, and then map that out moving forward, in terms of expected renewal rates from each of them and expected growth from each of them. September has shown -- it's come back -- it always comes back seasonally after the summer months. We expect that to continue for the next couple of months.

Okay. Great. That's helpful. I wonder if you could update us on how much of your $1.2 billion-plus in cash right now is onshore?

Yes, we have about $1.1 billion offshore and a little over $100 million onshore right now.

Okay. I guess that begs the question, Jim, with the high level of buybacks that we saw here in the Q3, clearly, that is not a sustainable level. I wanted to get your sense or your philosophy in regards to potentially issuing debt to increase the buybacks, and just how you're looking at that going forward.

I think John mentioned in his prepared comments during the call that we're looking at some financing options for the building. So, cash for us is sort of a moving strategic issue that we discuss often. And all I can tell you is that on a quarterly basis, based on the cash available, we'll make decisions about returning cash to shareholders via buyback.

There is a repatriation of some previously taxed income in our Swiss entity that I think we've talked about to you in past quarters. And there is a process underway. It generally seems to be a bit of a, I would say, a process that does have some red tape associated with it, some approvals that are required. But we put into process a repatriation of income from our Swiss entity that's previously taxed, and therefore, made available for repatriation.

So there are other components to the cash story that may not be readily apparent from some of our earlier comments. And again, with all of that factored in, the team will sit down -- John and I will sit down, and we'll make an assessment of what our cash needs are and what's available. So we prefer to look backward on share repurchase and not forward, of course, but.

Right. Okay. Thanks very much.

Sterling Auty, JPMorgan.

I just wanted to go back -- Jim, you mentioned the trickiness in analyzing the growth of the base. That's why I could use some help. So you have the all-time high on net new adds of names, but the base grew by 1.9 million names. I think the peak increase or the highest increase that you saw in the quarter was somewhere around 3.9 million or 4 million names.

Maybe can you compare and contrast the levers that go into that, whether it be the renewal rate, the new names, transfers, deletions, et cetera? What are some of the moving parts that we should pay attention to? And where could that net increase in the base get back to? Should we get back to a 2 million, 2.5 million? Or should we think about this 1.9 million or 2 million to be the normalized level?

Okay, let me -- I'll let Pat add some color to that, but I would just say that you asked a lot of questions in there, and I think there are a lot of different components to domain name growth to have zone growth to analyze.

First of all, just remember that some of the ratios are moving targets as the base grows the number of net new adds. There are -- with a record number, for example, of net new adds in Q2 and Q3, for the quarters, of course, historically, what that means is that we also had good growth in 2010. But essentially, you have a lot of first-time renewing rate names, which have an entirely different renewal rate than the names that are in the zone. And obviously, the longer they're there, the more changes.

So tracking and analyzing the movement, and understanding what other influences there are, anomalies, changes in advertising policy, technical changes that have been made in the past -- for example, by Google, and factoring all that in, I think it makes it really easy -- difficult, sorry -- very difficult for us to give you one or two metrics that you can track. And I think it's hard to say that you look at only net changes in the zone as a measurement. I think it's risky to do that, and I don't think it's possible on this call for us to give you enough information about the variables, the components, and the levers to sort of make any sense out of that.

You want to add anything to that, Pat?

Yes. The only thing I would add to that is that if you take a look at the last four years, only four quarters have been 2.5 million zone growth or above. And two of those go back to Q1 and Q2 of 2008. So as your base get larger and your renewal rates stayed fairly consistent, you've got to start from a lower spot within a quarter to see zone growth. So if you have 100 million names that are going to expire, and you've got a 70% renewal rate, then you're going to have 30 million that you're going to have to replace to get growth. So as that base gets larger, then you're going to end up with a lower starting point to fill that gap in.

And the different components that go into that calculation -- the number of net new adds, the number of expiring names, are subject to being unduly influenced by anomalies or register activity. There are a couple of registrars, you're probably aware, who are involved currently right now in very, very aggressive advertising campaigns. In Q2, as Pat mentioned, we had one registrar who essentially took a large number of names out of the base [of one times that]. So it's hard with all those things to sort of track it. That's not one statistic I'd be comfortable saying you should monitor.

Okay. All right, thank you.

Ed Maguire, CLSA.

Just two questions. One is on expenses. How much room is there in the model to continue to show operating leverage?

And then one for Jim, which is really how you're looking at potential growth opportunities, both within the business and adjacently. Philosophically, what makes sense to potentially invest in? And I know it may be premature, but are you looking at really expanding the scope of what VeriSign's focused on currently? Thank you.

Yes, I'll take the first part of that. As far as operating expenses, obviously, looking at the numbers over the past year as we've worked through our restructuring, we've shown improvement in operating margin. And that's as a result of being a more efficient, more streamlined business.

As far as going forward, we'll provide guidance at our next call in terms of what our expectations are at that time.

So let me address your question about where the growth opportunities are, what looks interesting and how we'll be investing. I think there's a different way to look at VeriSign's growth opportunities and we're starting to do that now as a management team. I think that there are a lot of core adjacencies that we really need to fully explore, that would yield growth opportunities that collectively can be very exciting, but have this special property called quality of revenue that I like to use, which I think is really important.

I think all of you understand, of course, that VeriSign is a company that has a quality of revenue that makes it very different from most other companies. And so, I think the responsibility is ours to look for core growth and core adjacencies that can yield that. I think there are a lot of those. The Internet is evolving very quickly.

We've talked for years about monetizing our data streams. We're looking at ways that we can actually do that, that are very creative and I think may be very worth looking at and investing in. These are very, very modest investments that don't really change much of the way that we view use of cash and other things.

There are strategic opportunities in the iPD-4 to iPD-6 transition; NIA is doing well, as I mentioned earlier. And there are some ways I think we can offer expanded services that really haven't been considered before. So we want to do a very aggressive job of exploring those. And we've often mentioned ICANN's new gTLD program is something that we believe will be an opportunity for us. We do plan, as we've said, to apply to operate some of the new gTLDs. International growth is another area. Internationalized domain names, both in the new gTLD program and under our existing programs, are an area that's of interest to us. And there are actually quite a few more that we're looking at.

So this is an incredible and exciting opportunity to really be creative and look for sensible growth where it makes sense, right in our core and adjacent to it. Again, quality of revenue is the key.

Great. Thank you very much.

(Operator Instructions). Scott Kessler, Standard & Poor's.

So the first question I have is related -- John, maybe you can talk a little bit about the building purchase and how you expect it to affect the P&L? And I have another question. Thanks.

Sure. The building purchase -- first of all, we see it as an attractive property and an opportunity to acquire an asset that's important to our long-term corporate headquarters and employee base. As far as near-term P&L impact, it's relatively neutral to maybe slightly positive to operating margin, but it's a relatively immaterial amount.

Okay. And if I could also ask, there's been some discussion about international. Can you tell us what the international contribution to revenue was in Q3? Thanks.

Approximate -- I think about 40% roughly is our international revenue contribution -- I'm giving you an approximate number. So I think it's between 39% and [40%], yes.

Okay. Thanks a lot.

At this time, we'll take the last question from [Jay Monsoni] with Bank of America.

This is [Jay Monsoni] for Kash Rangan. Just have a very quick question. I was wondering if you can just talk about -- given that you have a price increase coming up in the first quarter of next year, in the past, when price increases were introduced, instituted, have you seen any pull-through of new domain names coming up in the quarter before, just in anticipation of the next price increase?

Pat, do you want to comment on that?

Yes, this is Pat. So we don't see a new unit pull forward. What we end up seeing is seeing a renewal transaction pull forward, which basically affects deferred revenue. But in terms of affecting the renewal rates or affecting the new units, we don't see a lot of changes.

Got it. Thank you very much.

And this does conclude the question-and-answer session. At this time, I'll turn it back over to our host for any additional or closing remarks.

Thank you, Operator. With regard to events in the fourth quarter, please note that Jim and John will be presenting at the Credit Suisse technology conference at 5.30 p.m. Eastern time on Tuesday, November 29. The webcast registration details for this conference will be available on the Investor Relations section of the VeriSign website. Please call the Investor Relations Department with any follow-up questions from this call.

Thank you for your participation and continued support. This concludes our call. Thank you and good evening.

And again, ladies and gentlemen, this does conclude today's conference call. Thank you for your participation.