Announced revenues for the second quarter of fiscal 2001 were $231.2 million, compared to $70.3 million for the same period last year, a 229.1% increase. The year-ago results reflect the purchase acquisition of Network Solutions, which closed on June 8, 2000, and therefore include only 22 days of Network Solutions’ activity.
Pro forma net income for the quarter ended June 30, 2001, excluding the amortization and write-down of goodwill and intangible assets related to acquisitions, stock-based compensation charges related to acquisitions, and benefit for income taxes, was $52.6 million, or $0.25 diluted earnings per share compared to pro forma net income in the quarter ended June 30, 2000 of $10.3 million, or $0.07 diluted earnings per share.
Pro forma operating income for the second quarter, excluding stock-based compensation charges and the amortization and write-down of goodwill and intangible assets, was $33.8 million, or a 14.6% operating margin, as compared to $3.5 million, or a 5.0% operating margin, in the quarter ended June 30, 2000.
Our strong second quarter results reflect the continued adoption of the Internet as a platform for web services and global commerce, said Stratton Sclavos, president and CEO of VeriSign. While the macro-economic environment remains challenging, we remain confident that the demand for our infrastructure services will continue to grow throughout the remainder of the year.
For the second quarter of fiscal 2001, deferred revenue balances increased 5% sequentially to $570 million and cash and investments totaled $1.3 billion for the quarter ended June 30, 2001. Including the amortization and write-down of goodwill and intangible assets related to acquisitions, stock-based compensation charges, and benefit for income taxes, the net loss for the quarter ended June 30, 2001 was $11.2 billion.
VeriSign reported a one time, non-cash charge in the second quarter of $9.9 billion. This non-cash charge relates to a portion of the goodwill for acquisitions made with stock over the last two years. This action recognizes that macro-economic conditions have led to a reduction in market value for these acquisitions, said Chief Financial Officer and Executive Vice President Dana Evan. The acquisitions have performed at or above expectations, and on an operating basis we continue to show increased operating income, positive cash flow, and a debt free balance sheet with $1.3 billion in cash and investments.
VeriSign’s Enterprise and Service Provider Division, which sells its services through a direct sales force, includes managed public key infrastructure (PKI) services, network and security consulting, corporate domain name management, the worldwide affiliate program and global registry services.
In the enterprise arena, VeriSign ended the quarter with over 3,330 active enterprise customers, an indication of the continued strong demand for a broad range of services. In particular, VeriSign continued to extend its leadership in the PKI space adding over 200 new customers in the quarter, including AIM Advisors, Qualcomm, Qwest and SCI Systems. More than 2,200 businesses, government agencies, and healthcare organizations have adopted VeriSign’s managed PKI services to secure online business processes including supply chain and customer relationship management, secure messaging, and virtual private networks (VPNs).
VeriSign’s Affiliate program continued to expand the company’s global reach, adding a new service provider in Poland and bringing the total number of affiliates in the VeriSign Trust Network to 38, up from 28 in the second quarter ended June 30, 2000. VeriSign also strengthened its relationship with two existing affiliates for the Denmark and China territories in the quarter adding payment platforms to their existing PKI platforms.
The Registry Services group continued to see healthy demand in the domain name market with the addition of 2.8 million new names in the second quarter. The Registry Services group ended the quarter with 32.4 million active domain names in its authoritative database of domain names ending in .com, .net and .org, up 68% from 19.3 million names at the end of the second quarter ended June 30, 2000, and up 6% over the first quarter ended March 31, 2001. The Registry Services group also processed the renewal, extension or transfer of an additional 3.0 million domain names during the quarter, bringing the total number of paid domain name transactions to 5.8 million.
VeriSign’s Mass Market Division, which sells services through its retail websites as well as a network of ISPs, includes domain name registration and web presence services, website digital certificates, and B2C payment services.
In the web presence space, VeriSign continued to demonstrate its market leadership in the second quarter by adding approximately 1 million net new domain names under management. VeriSign also acquired an additional 750,000 domain names from Registrars.com in the quarter. In addition, VeriSign renewed and extended 1.4 million domain names ending the quarter with some 16.0 million active domain names, which is up 36% over the second quarter of 2000, and represents 6.5 million unique customers.
