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Verisign Expects Higher Non-Renewal Rates From Those 4th Q Domains Reg By Chinese Investors

Posted on the 12 February 2016 by Worldwide @thedomains

Verisign reported its earnings for the 4th quarter of 2015 and financial results for 2015.

In the earnings call today, Verisign made some interesting comments about that huge volume of .Com domain name registration we saw from Asia the 4th quarter of 2015:

Bottom line Verisign expects those domain names registered in the 4th quarter, which those in the domain investor community, know consisted of a lot of numeric domain names going into the 8,9 and even 10 digits long, and domain names containing random letters as well as number and letter combo domain names to renew at lower levels, even saying the 4th Q of 2016 might see the number of domain “deletions could exceed additions”:

“Towards the end of the third quarter and mainly during the first two months of the fourth quarter, we saw higher volume of gross additions coming largely in our Asia-Pacific region, primarily through registrars in China.

While we believe China and the Asia-Pacific region will continue to perform well, we expect these markets to return to more normal levels in 2016.

“Based on registrar feedback, the most likely contributor of the additional gross addition volume appears to have been driven primarily from domain investment activity in that region. ”

“Also, as we have noted in the past, the renewal rates for domain names registered in emerging markets, such as Asia-Pacific, have historically been lower than those registered in more developed markets.”

“While it’s difficult to assess what the renewal characteristics of these new names will be due to the unusually large upcoming Q4 2016 expiring base, we expect fourth quarter deletions to be elevated. Accordingly, deletions could exceed additions in the fourth quarter of 2016. Based on these and other factors, we expect the first quarter 2016 net change to the domain name base to be an increase of between 1.5 million and 2 million names. And we are forecasting the full-year 2016 domain name base growth rate to be between 0.5% and 2%.”

Later in the call Verisign said:

“Last year in the fourth quarter of 2014, 8.2 million adds versus the 12.2 million adds in the fourth quarter of this year, so 4 million increase in the additions. As we historically know, first-time renewal rates are typically around 50%, so that would mathematically suggest that there’s maybe a 2 million unit increase in deletions.

We’ve also said that when we look around the world from a renewal rate perspective, we do see emerging markets having a slightly lower renewal rate, on average. So that could impact the number as well.

Clearly, what would dictate Q4 net adds would be the other side of that equation as to what gross adds would be. But clearly, as we said in our prepared remarks, the renewing name base is going to be large. I mean, we had a great, great fourth quarter. And so we’ll have those names come up for renewal, and we’ll keep an eye on what the renewal rate is. ”

“But historically, our first-time renewal rate has been 50%.”

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