VeriSign, Inc. (VRSN) DCF Valuation & Fundamental Primer
VeriSign, Inc. (VRSN) currently trades at $242.95 with an enterprise value of $13.47B. Our proprietary institutional model rates VeriSign, Inc. at 80/100 (Grade: A · High-Quality Compounder). The current market price prices in an implied 5-year revenue CAGR of 19.9% vs. historical growth of 5.3% (Aggressive Growth Expectations Priced In).
Institutional fundamental teardown of VeriSign, Inc. (VRSN) covering SEC 10-K/10-Q cash flow conversion, SBC dilution friction, and Reverse-DCF valuation hurdles.
VeriSign, Inc. (VRSN) 3-Scenario DCF Valuation Range
Stress-test VRSN's 5-year growth, target FCF margin, WACC, terminal methodology, and SBC/dilution friction in real time.
Split between 5-Year Explicit Cash Flows and Discounted Terminal Value
2D Institutional Valuation Sensitivity Heatmap
Implied share price & upside/downside spread across 25 valuation states (Current Price: $242.95).
| WACC \ Terminal | 1.5% | 2.0% | 2.5% | 3.0% | 3.5% |
|---|---|---|---|---|---|
| 8.5% | $144.31 -41% | $154.01 -37% | $165.31 -32% | $178.68 -26% | $194.71 -20% |
| 9.3% | $128.44 -47% | $136.07 -44% | $144.84 -40% | $155.01 -36% | $166.95 -31% |
| 10.0% | $115.37 -53% | $121.51 -50% | $128.47 -47% | $136.42 -44% | $145.59 -40% |
| 10.8% | $104.43 -57% | $109.45 -55% | $115.08 -53% | $121.43 -50% | $128.66 -47% |
| 11.5% | $95.14 -61% | $99.30 -59% | $103.92 -57% | $109.09 -55% | $114.91 -53% |
Institutional Software Quality Scorecard (80/100 · Grade A)
Strong fundamentals, above-average cash generation, and robust competitive positioning.
Solid cash generation with minor working capital absorption
Minimal dilution friction; management compensation aligned with shareholders
Elite Tier-1 SaaS compounder with high gross margin and superior Rule of 40
Moderate leverage or cash burn; monitor liquidity runway
Core Investment Strengths & Moats
- Low dilution friction: SBC is only 3.9% of revenue
- Top-quartile software unit economics: 87.7% gross margin and 61.5% Rule of 40 score
Key Operational & Dilution Risks
Reverse-DCF Solver: What Growth is Priced Into VRSN?
The current share price demands 19.9% 5-year CAGR (21.4% net of SBC & dilution)—a +14.5% acceleration over historical run-rate (5.3%). Any growth slowdown risks valuation multiple contraction.
Headline Reverse-DCF ignores Stock-Based Compensation (3.9% of revenue) and annual share dilution (0.5%/yr). Accounting for both requires 21.4% 5-year revenue CAGR to justify $242.95/sh on a true per-share economic cash flow basis.
VeriSign, Inc. (VRSN) 5-Year Fundamental Forecast
| Statement Line Item | TTM Audited Base | TTM | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|---|---|
| Revenue | $1.56B | $1.56B | $1.64B | $1.73B | $1.82B | $1.92B | $2.02B |
| Gross Profit | $1.37B | $1.37B | $1.44B | $1.52B | $1.60B | $1.68B | $1.77B |
| Operating Income (EBIT) | $1.06B | $1.06B | $1.11B | $1.17B | $1.24B | $1.30B | $1.37B |
| Stock-Based Compensation (SBC) | $61.1M | $61.1M | $64.3M | $67.7M | $71.4M | $75.2M | $79.2M |
| Unlevered Free Cash Flow (FCF) | $874.5M | $874.5M | $921.2M | $970.4M | $1.02B | $1.08B | $1.13B |
| SBC-Adjusted True Cash Flow | $813.4M | $813.4M | $856.9M | $902.6M | $950.8M | $1.00B | $1.06B |
Software & Cloud Services Peer Comparables & Rule of 40 Regression
Rule of 40 vs. EV / Revenue Multiple Regression
OLS Fit: EV/Rev = -24.1 + 0.69 × (Rule of 40) · R² = 74%Stocks below the gold regression line trade at a discount relative to their Rule of 40 compounding efficiency.
| Company | Ticker | Market Cap | TTM Revenue | Gross Margin | FCF Margin | Rule of 40 | SBC % Rev | EV / Rev |
|---|---|---|---|---|---|---|---|---|
| VeriSign, Inc. | VRSN | $22.52B | $1.56B | 87.7% | 56.1% | 61.5% | 3.9% | 15.5× |
| ServiceNow | NOW | $152.61B | $10.98B | 79.2% | 31.1% | 54.2% | 15.9% | 13.9× |
| Workday, Inc. | WDAY | $50.35B | $8.00B | 75.0% | 27.4% | 43.9% | 19.0% | 6.4× |
| Salesforce | CRM | $217.10B | $37.90B | 77.2% | 32.8% | 42.8% | 8.4% | 5.8× |
| Datadog | DDOG | $46.05B | $2.68B | 80.8% | 31.1% | 57.7% | 21.3% | 17.4× |
| Snowflake Inc. | SNOW | $71.79B | $3.63B | 66.5% | 25.2% | 57.7% | 40.8% | 20.0× |
| Hubspot | HUBS | $19.89B | $2.63B | 85.0% | 21.3% | 52.7% | 19.2% | 7.7× |
| Peer Cohort Median Benchmark (N=6) | 78.2% | 29.2% | 53.5% | 19.1% | 10.8× | |||
EV / Revenue Multiple Compression Stress Test
| Multiple Scenario | EV / Revenue | Implied Enterprise Value | Implied Equity Value | Implied Share Price | Delta vs Current |
|---|---|---|---|---|---|
| Current Multiple | 15.5× | $24.08B | $22.52B | $242.95 | 0.0% |
| -20% Multiple Compression | 12.4× | $19.26B | $17.71B | $191.01 | -20.0% |
| -35% Multiple Compression | 10.0× | $15.65B | $14.10B | $152.06 | -35.0% |
| Software Baseline Floor (5.0× EV/Rev) | 5.0× | $7.79B | $6.23B | $67.25 | -67.7% |
Frequently Asked Questions: VeriSign, Inc. (VRSN) Valuation
What is VeriSign, Inc. (VRSN)'s intrinsic DCF valuation and implied share price?
Based on audited SEC 10-K/10-Q filings and a 5-year 3-statement discounted cash flow (DCF) model, VeriSign, Inc. (VRSN) has a Base Case implied value of $128.58 per share (with a Bear Case of $67.32 and a Bull Case of $196.62), compared to its current price of $242.95. The model discounts projected free cash flows at a 10.0% WACC and a 2.5% terminal growth rate.
What is VeriSign, Inc. (VRSN)'s Rule of 40 score and Free Cash Flow margin?
VeriSign, Inc. achieves a Rule of 40 score of 61.5%, combining a 5.3% revenue growth run-rate with a 56.2% TTM free cash flow margin on $1.56B in trailing twelve-month revenue. In the Software & Cloud Services peer cohort, the median Rule of 40 benchmark is 53.5%.
What revenue growth rate is priced into VRSN stock according to Reverse-DCF analysis?
At $242.95 per share (Enterprise Value of $24.08B), our Reverse-DCF solver indicates the market is pricing in a 5-year implied revenue CAGR of 19.9%, compared to VeriSign, Inc.'s historical CAGR of 5.3%. Overall market expectations are rated as "Aggressive Growth Expectations Priced In".
How does VeriSign, Inc. compare to Software & Cloud Services software peers?
VeriSign, Inc. (VRSN) earns an institutional Software Quality Score of 80/100 (Grade A — High-Quality Compounder). Across its Software & Cloud Services peer group (NOW, WDAY, CRM, DDOG, SNOW), the cohort trades at a median EV/TTM Revenue multiple of 10.8× and a median gross margin of 78.2%.
How does Stock-Based Compensation (SBC) impact VeriSign, Inc. (VRSN)'s valuation?
VeriSign, Inc. recorded $61.1M in TTM stock-based compensation (3.9% of revenue). When treating SBC as a cash-equivalent compensation expense, VeriSign, Inc.'s SBC-adjusted free cash flow yield is 3.6%, scoring 25/25 on our Shareholder Dilution Friction pillar.