You should read the following discussion in conjunction with the 2019 Form 10-K
and the interim unaudited Condensed Consolidated Financial Statements and
related notes included in Part I, Item I of this Quarterly Report on Form 10-Q.
This Quarterly Report on Form 10-Q contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). These forward-looking statements are based on current expectations and
assumptions and involve risks and uncertainties, including, among other things,
statements regarding our expectations about (i) the impact from the effects of
the COVID-19 pandemic, (ii) the rate of growth in revenues for the remainder of
2020, (iii) cost of revenues, sales and marketing expenses, research and
development expenses, general and administrative expenses, interest expense and
non-operating income, net, for the remainder of 2020, (iv) the impact of new
legislation and
Overview
We are a global provider of domain name registry services and internet infrastructure, enabling internet navigation for many of the world's most recognized domain names. We enable the security, stability, and resiliency of key internet infrastructure and services, including providing root zone maintainer services, operating two of the 13 global internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains ("TLDs"), which support the majority of global e-commerce. As ofMarch 31, 2020 , we had 160.7 million .com and .net registrations in the domain name base. The number of domain names registered is largely driven by continued growth in online advertising, e-commerce, and the number of internet users, which is partially driven by greater availability of internet access, as well as marketing activities carried out by us and our registrars. Growth in the number of domain name registrations under our management may be hindered by certain factors, including overall economic conditions, competition from country code top-level domains ("ccTLDs"), competition from, and the continued introduction of, new generic top-level domains ("gTLDs"), and ongoing changes in the internet practices and behaviors of consumers and businesses. Factors such as the evolving practices and preferences of internet users, and how they navigate the internet, as well as the motivation of domain name registrants and how they will manage their investment in domain names, can negatively impact our business and the demand for new domain name registrations and renewals. Business Highlights and Trends • We recorded revenues of$312.5 million during the three months endedMarch 31, 2020 , an increase of 2% compared to the same period in 2019. • We recorded operating income of$206.3 million during the three months endedMarch 31, 2020 , an increase of 3% compared to the same period in 2019. • As ofMarch 31, 2020 , we had 160.7 million .com and .net registrations in the domain name base, which represents a 4% increase fromMarch 31, 2019 , and a net increase of 1.8 million domain name registrations fromDecember 31, 2019 . • During the three months endedMarch 31, 2020 , we processed 10.0 million new domain name registrations for .com and .net compared to 9.8 million for the same period in 2019. • The final .com and .net renewal rate for the fourth quarter of 2019 was 73.8% compared to 74.3% for the fourth quarter of 2018. Renewal rates are not fully measurable until 45 days after the end of the quarter. 12
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