Hey everyone, welcome to VeriSign's fourth quarter and full year 2023 earnings call. Today's conference is being recorded. Recording of this call is not permitted unless pre-authorized. 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 fourth quarter and full year 2023 earnings call. Joining me are Jim Bidzos, Executive Chairman and CEO; Todd Strubbe, President and COO; and George Kilguss, 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 report on Form 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 two 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 George 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. 2023 marked another solid year of execution, delivering consistent financial results while enhancing our critical internet infrastructure and extending our record of.com and.net DNS availability beyond 26 years. During 2023, revenue grew 4.8% year-over-year, while operating income increased by 6.1%. Shares outstanding at the end of 2023 decreased by 3.7% from the total of outstanding shares at the end of 2022. Our financial and liquidity position remained stable, with $926 million in cash, cash equivalents, and marketable securities at the end of the year. Over the course of the year, we returned $883 million of capital to shareholders through the repurchase of 4.2 million shares. At year-end, $1.12 billion remained available and authorized under the current share repurchase program, which has no expiration. At the end of December, the domain name base in.com and.net totaled 172.7 million domain names, down 0.6% from 173.8 million names at the end of 2022. During the fourth quarter, the domain name base decreased by 1.2 million domain names. From a new registration perspective, the fourth quarter ended with nine million new registrations compared with 9.7 million names for the same quarter last year. For the full year, new registrations were 39.4 million names, down 490,000 names from the 39.9 million names we saw during 2022. The renewal rate for the fourth quarter of 2023 is expected to be approximately 73.1% compared with 73.3% a year ago. For the full year 2023, the preliminary renewal rate of 73.9% is below the 74.2% renewal rate of 2022. Both first-time and previously renewed names were lower. Rates were lower year-over-year. While there are many factors that drive demand for domain names, declining demand from China remains the primary source of drag on the overall domain name base growth. Our domains under management from China-based registrars declined by 2.2 million names in 2023. China-based registrar demand has been weak as a result of several factors, including challenging economic conditions, a more stringent regulatory environment, and the impact of a weaker local currency combined with retail pricing adjustments. Excluding registrars based in China, our domain name base grew by 1.2 million names, or 0.8%, during 2023. While the domain name base thus far in 2024 has grown quarter to date, we have not yet seen any material changes in the current macroeconomic or regulatory landscape in China. Therefore, we believe it's prudent to expect China to continue to negatively impact revenue and domain base growth during 2024. However, with the China-based portion of our base now at about 5% of our overall domain name base, we see the negative trend in China having a less pronounced effect on our overall business after 2024. For 2024, we're expecting the domain name base to remain flat year-over-year, with a range of -1% to +1%. As announced in today's earnings release, we have given notice of a price increase of $0.67 to the annual wholesale price for.com domain names, which raises the wholesale price from $9.59 - $10.26, effective September 1st, 2024. Even after this increase, we believe.com will remain highly competitive with other TLD choices. As a reminder, any of our domains may be registered for terms up to 10 years at the current wholesale price. Now I'd like to turn the call over to George. I'll return when George has completed his financial report with closing remarks. Thanks, Jim, and good afternoon, everyone. For the year-ended December 31st, 2023, the company generated revenue of $1,493 million, up 4.8%, and delivered operating income of $1 billion, up 6.1% from 2022. Operating expense totaled $492 million in 2023 and was up 2.2% from the previous year. The full year 2023 operating margin was 67%, and free cash flow was $808 million. For the quarter-ended December 31st, 2023, the company generated revenue of $380 million, up 3% from the same quarter of 2022, and delivered operating income of $256 million, an increase of 4.4% from the same quarter a year ago. Operating expense in Q4 totaled $124 million compared to $122 million last quarter, and it was flat from a year earlier. Net income in the fourth quarter totaled $265 million compared to $179 million a year earlier, which produced diluted earnings per share of $2.60 for the fourth quarter of 2023 compared to $1.70 for the same quarter of 2022. As stated in today's earnings release, net income for the fourth quarter of 2023 included the recognition of income tax benefits related to the items noted in our release. Cumulatively, these income tax benefits increased net income by $69.3 million and increased diluted earnings per share by $0.68. Operating cash flow for the fourth quarter of 2023 was $204 million, and free cash flow was $199 million compared with $217 million and $209 million, respectively, in the year-ago quarter. Operating cash flow and free cash flow for the full year 2023 totaled $854 million and $808 million, respectively. I'll now discuss our full year 2024 guidance. Revenue is expected to be in the range of $1.56 billion-$1.56 billion. Operating income is expected to be between $1.045 billion and $1.065 billion. Interest expense and non-operating income net, which includes interest income estimates, is expected to be an expense of between $30 million - $40 million. Capital expenditures are expected to be between $35 million - $45 million, and the GAAP effective tax rate is expected to be between 21% and 24%. Overall, VeriSign has continued to demonstrate sound financial performance during the last quarter and throughout 2023, and we look forward to building on our strengths in our mission in the coming year. I'll now turn the call back to Jim for his closing remarks. Thank you, George. While demand from our registrars in China is expected to continue to remain soft in 2024, the fundamentals of our business remain strong. We firmly believe our responsible and disciplined management of our business and capital continue to serve us well, allowing us to report another solid year, which in our view is one in which we fulfill our stewardship mission of providing secure and reliable infrastructure services, manage our business responsibly and efficiently, and return capital to our shareholders. These goals remain unchanged and support our commitment to deliver strong financial results, including steady growth in revenue, operating income, and EPS. Thanks for your attention today. This concludes our prepared remarks. Now we'll open the call for your questions. Operator, we're ready for the first question. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow the signal to reach our equipment. Once your question has been stated, please mute your line. Again, press star one to ask a question. We'll pause for just a moment to assemble the queue. We will take our first question from Rob Oliver with Baird. Please go ahead. Great. Thank you. Good afternoon, everyone. Jim, you pointed out China. Obviously, that's on everybody's mind. And so just we'd be curious to start, just to get a sense from you what, if anything, has changed in China. You alluded to the more stringent regulatory environment, but would love to get a thought from you on that, and then I had a couple of follow-ups. Thanks. Okay. Thanks. Yeah, definitely China is the main focus of the results that we had. I mentioned in my remarks that we saw a 2.2 million unit decline from China registrars and that we had 1.2 million growth from registrars outside of China. So the issues for us are definitely concentrated in China. And as I've said today and have for several quarters, it's a variety of factors in China. Those are hard to predict. The challenging economic climate there, very difficult to predict what impact it's having, how long that will last. The regulatory environment is one in which the process of obtaining domain names is a little bit more challenging, a lot more process, a lot more identification, confirmation, authentication of the person registering, etc., process basically that makes it a little bit more difficult. And as we've mentioned for a couple of quarters now, foreign exchange is an issue as well. It increases cost of goods, obviously, for registrars selling domain names. So all of those things are contributing. It's really hard to say. It's an opaque market to try to understand. It's very fluid. There's a lot going on there. Some of the things that are going on, migration and other stuff, are things, are shifts, are making it difficult to really assess the impact. Is it at the bottom? Is it bouncing along the bottom? When will it change? Those are really hard to see inside of a very opaque market. And so, and an abundance of caution, we just find it prudent to really be careful about guidance concerning China and where it might go. Those are certainly the influences guiding to a flattish DNB, domain name base as a result. It's just really difficult to predict. As I mentioned, we are reaching the point here where the China-based registrars represent about 5% of our zone. I guess the impact, if the negative impact continues at whatever rate, it should be less pronounced, as I mentioned. Got it. Okay. Very helpful. Thanks, Jim. And George, if I may, on that domain base guide of -1% to +1%, how should we think about the impact of China within that, if you give us a sense of how we might ballpark that? In other words, is China coming out of the numbers? Is China are we moving beyond China in terms of the forecast, or is it starting to moderate? I know Jim just rightfully said this is hard to predict, but I guess you have made some predictions. So just curious how we can ballpark that. Yeah, Rob. As Jim mentioned, in 2023, China clearly was a drag, down about 2.2 million units. And from a revenue perspective, which you'll see when we file our 10-Q, our revenue from China was down about $14.4 million. As we think about the guidance that we've provided, both from a revenue perspective and a domain name base perspective, we're assuming that the impact that we saw here in 2023 is going to have a similar impact in 2024. And as a result of that, that's factoring into kind of the midpoint of our guidance of revenue and also factoring into the midpoint of our guidance of the domain name base. Got it. Okay. Very helpful. Thanks. Then last one for me, and then I'll pass the baton on. Just Jim, just wanted to see if there was any update that you guys have heard that we should be aware of about.web. I think we had that communication in late August, and you guys commented on the last call just about where things stood, but just wanted to see if we could get a refresher on that or if there's anything we should be aware of coming up. Thank you. Yeah. Thanks for that question too. So there's not a new update on.web. I'll just reiterate what I said last time, which hasn't changed, which is that I can't publish their response to the latest IRP. And they were very dismissive of it, described in detail. Again, their process that they employed in determining that.web was handled properly and that there are no issues. And so what we've seen so far is basically process and procedure delays. And we are confident that that's going to come to an end, that those will run out eventually. I just don't think that anything is going to change in the meticulous process that ICANN, again, concluding with a board vote without objection to instruct staff to proceed with processing the.web application. Those were the last official communications of the board in writing to the community and to staff. We're waiting for some of these process things to clear up. We're watching the website. Nothing new from the last time. I'll just reiterate our confidence in what the outcome will be and reiterate our strong desire and exciting anticipation of bringing.web to market, to our extended channel, and to their millions of customers. Great. Thanks for that, Jim. Thanks, guys. Appreciate it. Thank you. We will take our last question from Ygal Arounian with Citi. Please go ahead. Hey, good afternoon, guys. Maybe just to start, I don't know. I'm assuming there's probably not a lot you can comment on the upcoming.com renewal, but if there is any chance there is something you could say or something you want to comment on, just figured I'd ask about that first. I'll just say that the.com renewal is based on a presumptive right of renewal. The.net renewal last year was similar and executed smoothly and onto.com. Okay. Great. That's what I figured. For the global trends, understanding what's going on in China, you talk about the one million growth in domains outside of China. Can you frame that a little bit more? Is that typical? Is it still not at what you would call kind of normal historical levels, understanding there's some fluctuations over time? What are the trends you're seeing globally that give you confidence or not? And if there's anything in particular that you could point on, kind of maybe the U.S. or U.S. and Europe to be helpful? Yeah. Sure, Ygal. This is George. So yeah, as you just articulated, we did grow about 1.2 million domain names in our base outside of China. When we look at that growth, that primarily came from both EMEA and our all-other segment. Both of those were up. The U.S. was a little flat. It was down by about 500,000 units in the domain name base year-over-year. But as a reminder, many of our US registrars are global in their reach. So I wouldn't necessarily attribute all of that weakness here to US registrants. But we do notice that US registrants have been focused more on ARPU this year in 2023. So we think that can be a factor as well. But we did see good growth in EMEA as well as in our all-other segment. Got it. And then just, I guess, following down the line, want to maybe dig into the margin outlook for next year and costs. Less margin expansion, at least to start here on the expectation for next year than what we saw this year. Can you just talk about investments and where you're looking to spend next year and then maybe tie in with that expectations around buybacks for next year as well? Yeah, I can help you a little bit with that. I mean, first, in 2023, our expenses grew by 2.2%. But I will point out that that was favorably impacted by a $5 million reduction in fees paid to the government of Tuvalu that went away here in 2023 as that contract transitioned at the end of 2022. So on a normalized basis, if you were to adjust for that, we would have been closer to a 3.3% expense growth rate here in 2023, which is still, I think, a good job by the teams in managing the expenses that they're responsible for. If you look at the midpoint of our guidance, that would imply about a 4.6% expense growth rate, which would be very similar to the growth rate we had back in 2022. So hopefully, that gives you some idea on the expense front. We're always investing with our strategic framework in mind, making sure we're obviously protecting unconditionally, growing responsibly, and obviously managing continuously. And so we'll continue to focus on that framework that has served us well over the past several years. As far as buybacks, we really don't guide to buybacks for a variety of reasons, as we've talked about. But I think you can expect us to continue to be responsible in returning excess capital to shareholders as we have done for many, many years here in the past. Okay. Great. Thanks. And then last one, maybe bigger picture. GoDaddy had an interesting announcement earlier this week, a partnership with Ethereum Name Service or ENS. And some of this stuff still on the crypto side goes a little over my head. But just wanted to get your thoughts on that, particularly because there was some commentary about the DNS and some of the challenges with integration there and just thinking about the kind of broader future of domains and how blockchain can impact. Maybe have some views there. Oh, good question. Thanks, Ygal. Yeah. Well, this is really a positive development for the DNS. First of all, I don't want to speak for either ENS, of course, or GoDaddy. But what they did is make it easier to link a domain name to a blockchain address. So it's a very positive development for the DNS. And it reinforces the utility of a domain name and the already strong value proposition of a domain name. We've spoken here for years about domain names as a stable global identifier, a unique, stable global identifier, that that's the role it can play. And the reason we think a domain name is the right, the best way to obtain such a unique identifier is because of the reliability, the maturity of the underlying infrastructure, like the part that we operate, the well-governed, well-regulated space that determines registrars and registries are well-regulated and how they behave, how they serve up IP addresses, what they have to do. That's all part of our contract. That's part of our requirement to perform 24/7 without fail. So they announced that domain names can be easily linked to ENS identifiers. ENS identifiers are typically linked to wallets holding cryptocurrencies. They're usually a difficult, unintelligible string of characters. And there are other uses of ENS identifiers, but cryptocurrency wallets are a very common one. So basically, being able to link your domain name to it is basically using this domain name and tapping the DNS space with its globally unique and stable identifier, all the benefits and the security that's associated with it, linking to blockchain spaces, I think, is a smart move and really good. It adds more utility and, I think, significantly more value to domain names. And the linkage itself benefits from the cryptographic strengths of the DNS, like DNSSEC, the Domain Name System Security Extensions. So the ownership, the provenance, the resolution of a domain name, all benefit from the underlying DNSSEC, cryptographic protections, the strong public key infrastructure-based things. You don't see a lot of this work that we do. And I think many of you probably know that my previous company, RSA, basically invented a form of public key cryptography and built out infrastructure that was VeriSign 1.0. And so this underlying secure, reliable infrastructure, along with a well-governed space, is why people are navigating with the DNS. It's reliable. You're going to get where you want to go. And the ability to get a domain name, register it, and have it activated and have it resolved is also well-regulated. So having basically a unique, strong global identifier that you can use for all of the coming services and applications as we get more connected, more active, is a tremendous benefit. I mean, it's almost like that magical single password you can use everywhere in the world. Wouldn't that be a dream come true for a lot of internet users? In a way, a global, unique, stable identifier gives you that. And so this is actually a new Web3 type of application, realizing that there's a stable and secure base out there that you can link to and get all the advantages of it and let people use those identifiers they already have. So we think this is really good news. Super. Much more thoughtful answer than I expected, to be honest. But very interesting in the future of all that. Appreciate the time, guys. Well, Ygal, just to add, I mean, the reason for that is that we don't publicize a lot of the things that we do. But for years, we've been working on what we call responsible integration of alternate namespaces with the DNS for the very reason that we believe that at some point, the secure, well-regulated underlying DNS is going to be a better basis for a global identifier for folks. And that rather than you can't recreate 35 years of innovation, building, weaving all kinds of high-value applications into the DNS. This is the part of the plumbing that people don't see when we talk about operating and maintaining critical infrastructure that we do. So I jumped on your question because it's a great opportunity to point to something we've been quietly working on for a while that's, I think, now adding real value. For sure. And maybe some underappreciation of the innovation in the space. So very helpful. Yeah. Yeah. Thank you, guys. Great. Thanks. Thank you. This concludes today's question and answer session. I will now turn the conference back over to David Atchley for any additional or closing remarks. 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. Once again, this concludes today's call. Thank you for your participation. You may now disconnect.