The MoatWide moat

VeriSign (VRSN) — moat facet

Most moats have to be argued for. This one can be read, in a document that expires on 30 November 2030.

Most of the moats in this collection have to be argued for. This one can be read.

Operating margin57.2%201560.7%201765.4%201965.3%202167.0%202367.7%2025Return on invested capital cannot be computed: current liabilities exceed total assets.
Ten straight years of margin expansion on a price set by contract.

VeriSign's advantage is written down in a document, and the document says that VeriSign shall operate the .com registry, that its right of renewal is presumptive, and that it may raise the wholesale price by up to 7% a year in four years out of every six.1 Everything else — the reliability record, the switching costs, the extraordinary margins — either supports that document or follows from it. There is no version of this company where the contract goes away and the moat survives.

That makes VeriSign unusual in a specific way. A brand can be diluted, a network effect can tip, a cost advantage can be out-invested. A contract does not erode; it either continues or it does not. So the durability question here is not "how fast is the moat wearing down" but "who could take it away, and what would make them." The answer is ICANN and the U.S. Department of Commerce, and the honest reading of thirty years of history is that neither has wanted to, in large part because the incumbent has never given them a reason. In July 2026 VeriSign extended its record of 100% .com and .net resolution availability to twenty-nine consecutive years.2 A regulator considering whether to put critical infrastructure out to tender has to weigh a hypothetical improvement against a perfect operating record. That calculus is the moat's real defence, and it is not written in any agreement.

Underneath the contract sits a set of switching costs that are unusual for being almost invisible. Nobody experiences a .com renewal as a lock-in. It costs about ten dollars, it happens once a year, and the registrant can move registrars in an afternoon — moving registrars, of course, changes nothing about who gets paid. What cannot be moved is the name itself, and everything attached to it: the website, the email addresses, the printed materials, the links, the search rankings, the customers who type it from memory. The renewal rate measures exactly this, and it was 76.3% in the first quarter of 2026, up from 75.5%.3 The quarter of names that lapse each year are overwhelmingly speculative registrations that were never attached to anything.

The proof came in 2023 and 2024. The domain name base fell for six consecutive quarters — 173.4 million at the end of 2021, 169.0 million at the end of 2024 — while revenue over the same span rose 17.3%.4 A business that can lose 2.5% of its customers and grow revenue by a sixth has pricing power of a kind that almost nothing else here possesses.

Then there are the economics, which are a consequence rather than a cause. Operating margin 67.7%, net margin 49.8%, 928 employees, total assets of $1.33 billion against a market value of $26.8 billion,7 and negative shareholders' equity because the buybacks have run longer than the balance sheet.5 Registrants pay a year ahead, so the working capital is negative too: $1.45 billion of deferred revenue funds a business that requires no capital.6 Return on invested capital cannot be computed, because invested capital is less than zero.

The verdict is that this is one of the widest moats in the collection, and one of the most conditional. It is wide because the price is set by clause rather than by competition, the customers cannot practically leave, and the operator has never failed. It is conditional because every word of that rests on two agreements, one of which must be renewed by November 30, 2030 and the other of which gives a U.S. government agency a veto over pricing. The number that would falsify the thesis is not revenue or margin or the domain base. It is a change to the pricing section of the Cooperative Agreement.

Moat trajectory: Holding steady

The contract has renewed every time it has come up, and nothing about it is getting better or worse — the price ladder restarted on schedule, the base returned to growth, and the terms are exactly what they were. What holds the moat steady is also what caps it: an agreement running to November 2030 that nobody has proposed changing and nobody has proposed extending.

The number that tests this moat
Moat Explorer calc
Operating margin
67.7% — and return on invested capital cannot be computed

Operating income of $1,121.0 million on $1,656.6 million of revenue. The usual moat test is ROIC against a cost-of-capital hurdle, and it breaks here: invested capital (assets less current liabilities less cash) is below zero, because current liabilities of $1,333.1 million exceed total assets of $1,325.9 million. There is no denominator. Operating margin is the closest available proxy, and 67.7% against a decade of 67% to 68% is the number to watch.

How it's calculated: Operating margin = operating income / revenue, from the FY2025 income statement. The ROIC note uses NOPAT / (assets − current liabilities − cash), the same formula applied to the other charted companies, which returns a negative denominator for VeriSign.
Source: VeriSign Form 10-K, FY2025 ↗
Aspects of the moat
DIG DEEPER 01
The Contract That Is the Moat
The competitive advantage is a clause: seven percent a year, in four years out of six, available on a calendar rather than won in a market.
DIG DEEPER 02
The Name Nobody Can Move
The registrant can change registrar in an afternoon and it costs VeriSign nothing, because the thing that cannot be moved is the name itself.
DIG DEEPER 03
Twenty-Nine Years of One Hundred Percent
Not five nines — one hundred percent, since 1997, which is the real reason no regulator has been willing to put .com out to tender.
DIG DEEPER 04
A Business That Runs on Negative Capital
Total assets of $1.33 billion, equity below zero, and a return on invested capital that cannot be computed because the denominator is negative.
References
  1. ReportedThe .com Registry Agreement grants operation of the registry with a presumptive right of renewal, must be renewed or extended by 30 November 2030, and permits price increases of up to 7% a year in four years out of six; the Cooperative Agreement gives the Department of Commerce approval rights over pricing changes.
    VeriSign, Inc., Form 10-K for the fiscal year ended 31 December 2025 (SEC, CIK 1014473) — Item 1, Business. VeriSign operates the .com and .net registries under registry agreements with ICANN, and .com additionally under a Cooperative Agreement with the U.S. Department of Commerce (most recently amended by Amendment 35 on 26 October 2018, automatically renewed on the same terms on 30 November 2024 for a successive six-year term, renewing again on 30 November 2030 unless the DOC gives notice). The .com Registry Agreement runs a six-year term that must be renewed or extended by 30 November 2030 and contains a presumptive right of renewal, with ICANN able to terminate or refuse in certain prescribed circumstances; it permits an increase to the Maximum Price of up to 7% over the previous year in each of the final four years of each six-year period, the current period having begun on 26 October 2024. The .net Registry Agreement was renewed on 29 June 2023, runs to 1 July 2029 and permits increases of up to 10% each year. VeriSign remits $0.2575 to ICANN quarterly for each annual .com registration and $0.25 for each .name registration. It also operates .cc under an agreement with the Cocos (Keeling) Islands, operates .name and internationalised gTLDs, provides back-end services for .edu, performs the Root Zone Maintainer function for ICANN and operates two of the thirteen global internet root servers. Retail pricing is established by registrars; VeriSign must provide ICANN-accredited registrars with non-discriminatory access, faces marketing and bundling limits, must submit new Registry Services for ICANN review, and is subject to vertical-integration restrictions that apply solely to .com — obligations it states do not apply to ccTLDs and other gTLDs and may create a competitive disadvantage. Named registry competitors include CentralNic, China Internet Network Information Center (CNNIC), DENIC eG, GoDaddy, Google, Identity Digital, Nominet, Public Interest Registry, Radix and .xyz. Employee headcount 928 (256 cost of revenues, 240 research and development, 432 selling, general and administrative). — FY2025 · publ. 2026-02-05 · source ↗
  2. ReportedThe 100% .com and .net resolution availability record reached 29 consecutive years in July 2026.
    VeriSign, Inc., Reports Second Quarter 2026 Results — Form 8-K Exhibit 99.1, 23 July 2026. Revenue $435 million, up 6.0% year over year; operating income $296 million against $281 million; net income $217 million and diluted EPS $2.38 against $207 million and $2.21. Cash, cash equivalents and marketable securities $1.03 billion, up $454 million from year-end 2025; deferred revenues $1.45 billion at 30 June 2026, up $64 million from year-end. Cash flow from operations $232 million. On 26 June 2026 VeriSign issued $550 million of 5.10% Senior Notes due 2031 and on 20 July 2026 used the proceeds with cash on hand to redeem $550 million of 4.75% Senior Notes due 2027. 0.7 million shares repurchased for $197 million; an additional $884 million authorised effective 23 July 2026 bringing the total authorisation to $1.50 billion; a quarterly dividend of $0.81 per share declared on 20 July 2026. The domain name base ended at 179.1 million .com and .net registrations, a 5.1% increase year over year and a net increase of 3.05 million in the quarter; a record 12.7 million new registrations were processed against 10.4 million; the final first-quarter 2026 renewal rate was 76.3% against 75.5%. CEO Jim Bidzos: the record of 100% availability for the .com and .net domain name resolution system was extended to 29 years, and more than 100% of free cash flow was returned to the investing public through dividends and share repurchases. The .web top-level domain has been delegated into the DNS root zone with VeriSign as the designated registry operator. — Q2 2026 · publ. 2026-07-23 · source ↗
  3. ReportedThe final .com and .net renewal rate for the first quarter of 2026 was 76.3%, against 75.5% a year earlier.
    VeriSign, Inc., Reports Second Quarter 2026 Results — Form 8-K Exhibit 99.1, 23 July 2026. Revenue $435 million, up 6.0% year over year; operating income $296 million against $281 million; net income $217 million and diluted EPS $2.38 against $207 million and $2.21. Cash, cash equivalents and marketable securities $1.03 billion, up $454 million from year-end 2025; deferred revenues $1.45 billion at 30 June 2026, up $64 million from year-end. Cash flow from operations $232 million. On 26 June 2026 VeriSign issued $550 million of 5.10% Senior Notes due 2031 and on 20 July 2026 used the proceeds with cash on hand to redeem $550 million of 4.75% Senior Notes due 2027. 0.7 million shares repurchased for $197 million; an additional $884 million authorised effective 23 July 2026 bringing the total authorisation to $1.50 billion; a quarterly dividend of $0.81 per share declared on 20 July 2026. The domain name base ended at 179.1 million .com and .net registrations, a 5.1% increase year over year and a net increase of 3.05 million in the quarter; a record 12.7 million new registrations were processed against 10.4 million; the final first-quarter 2026 renewal rate was 76.3% against 75.5%. CEO Jim Bidzos: the record of 100% availability for the .com and .net domain name resolution system was extended to 29 years, and more than 100% of free cash flow was returned to the investing public through dividends and share repurchases. The .web top-level domain has been delegated into the DNS root zone with VeriSign as the designated registry operator. — Q2 2026 · publ. 2026-07-23 · source ↗
  4. ReportedThe domain name base was 173.4 million at the end of 2021 and 169.0 million at the end of 2024, while revenue rose from $1,327.6M to $1,557.4M.
    VeriSign, Inc., Form 10-K for the fiscal year ended 31 December 2023 (SEC, CIK 1014473). The .com and .net domain name base was 172.7 million at 31 December 2023 (−1%) against 173.8 million in 2022 and 173.4 million in 2021. Geographic revenues on the then-current basis: U.S. $994.7M (+6%), EMEA $228.2M (+1%), China $91.6M (−14%) against $106.0M in 2022 and $101.7M in 2021, other $178.6M (+15%); total revenues $1,493.1M against $1,424.9M in 2022 and $1,327.6M in 2021. — FY2023 · publ. 2024-02-15 · source ↗
  5. ReportedOperating margin 67.7%, net margin 49.8%, 928 employees and total assets of $1,325.9M against negative shareholders' equity.
    VeriSign, Inc., Form 10-K FY2025 — Item 8, consolidated financial statements and notes. Net income $825.7M (2024 $785.7M, 2023 $817.6M); diluted EPS $8.81 ($8.00, $7.90) on 93.8 million diluted shares (98.2, 103.5); income before income taxes $1,068.5M; income tax expense $242.8M. Balance sheet at 31 December 2025: cash and cash equivalents $307.9M, marketable securities $272.6M, property and equipment net $213.7M, goodwill $52.5M, deferred tax assets $233.2M, deposits to acquire intangible assets $145.2M, total assets $1,325.9M; accounts payable and accrued liabilities $298.0M, deferred revenues $1,035.1M current and $349.4M long-term, long-term senior notes $1,788.2M, total current liabilities $1,333.1M — a total stockholders' deficit with an accumulated deficit above $11.3 billion. Net cash provided by operating activities $1,091.1M; the deferred revenues balance increased $80.2M in 2025 ($58.1M in 2024, $27.0M in 2023) and $934.7M of revenue recognised in 2025 had been in the opening deferred balance. Major customers note: the largest customer accounted for approximately 31% of revenues in 2025 and approximately 32% in 2024 and 2023, and the Company does not believe the loss of this customer would have a material adverse effect because end-users would transfer to its other existing customers. Dividends of $0.77 per share were declared in each of the three quarters from the second quarter of 2025, totalling $2.31 per share and $215.2M, accounted for as a reduction of additional paid-in capital; a dividend of $0.81 per share was declared on 3 February 2026. — FY2025 · publ. 2026-02-05 · source ↗
  6. ReportedDeferred revenues of $1.45 billion at 30 June 2026 exceed the company's total assets.
    VeriSign, Inc., Reports Second Quarter 2026 Results — Form 8-K Exhibit 99.1, 23 July 2026. Revenue $435 million, up 6.0% year over year; operating income $296 million against $281 million; net income $217 million and diluted EPS $2.38 against $207 million and $2.21. Cash, cash equivalents and marketable securities $1.03 billion, up $454 million from year-end 2025; deferred revenues $1.45 billion at 30 June 2026, up $64 million from year-end. Cash flow from operations $232 million. On 26 June 2026 VeriSign issued $550 million of 5.10% Senior Notes due 2031 and on 20 July 2026 used the proceeds with cash on hand to redeem $550 million of 4.75% Senior Notes due 2027. 0.7 million shares repurchased for $197 million; an additional $884 million authorised effective 23 July 2026 bringing the total authorisation to $1.50 billion; a quarterly dividend of $0.81 per share declared on 20 July 2026. The domain name base ended at 179.1 million .com and .net registrations, a 5.1% increase year over year and a net increase of 3.05 million in the quarter; a record 12.7 million new registrations were processed against 10.4 million; the final first-quarter 2026 renewal rate was 76.3% against 75.5%. CEO Jim Bidzos: the record of 100% availability for the .com and .net domain name resolution system was extended to 29 years, and more than 100% of free cash flow was returned to the investing public through dividends and share repurchases. The .web top-level domain has been delegated into the DNS root zone with VeriSign as the designated registry operator. — Q2 2026 · publ. 2026-07-23 · source ↗
  7. ReportedVeriSign trades at about $297 a share, a market capitalisation near $26.8 billion on 90.3 million shares, roughly 31.8 times trailing earnings and 15.7 times trailing sales, at a dividend yield of about 1.1%.
    VeriSign (NASDAQ: VRSN) market data — share price about $297 and market capitalisation about $26.8 billion on 90.3 million shares outstanding; trailing price/earnings about 31.8 and price/sales about 15.7 on trailing revenue of $1.71 billion and trailing net income of $850 million; price/book not meaningful on negative shareholders' equity; dividend yield about 1.1%. — August 2026 · publ. 2026-08-27 · source ↗
Sources
Generated September 23, 2026