Verisign (VRSN) 10-K risk factor changes: FY2020 vs FY2019

Actual results could differ materially from those projected in the forward-looking statements contained in this Form 10-K as a result of the risk factors discussed below and elsewhere in this Form 10-K and in other filings we make with the [removed: SEC.*][added: SEC.]

See the [removed: “Industry Regulation”] [added: “Competition”] section in Part I, Item 1 [added: of this Form 10-K] for further information.

In [removed: addition,] [added: addition to this contractual right,] we are entitled to increase the [removed: price] [added: annual fee of each *.com* domain name registration or renewal by] up to 7% due to the imposition of any new [removed: Consensus Policies] [added: specifications] or [added: policies adopted by ICANN pursuant to the procedures set forth in its bylaws and due process (“Consensus Policies”) or] documented extraordinary expense resulting from an attack or threat of attack on the security and stability of the DNS [removed: (“Extraordinary] [added: (an “Extraordinary] Expense”).

[removed: The Proposed *.com* Amendment would clarify that Verisign’s] [added: In addition, our] ability to increase [removed: prices] [added: the price for *.com* domain name registrations and renewals] due to a Consensus Policy or Extraordinary Expense may occur only in years [removed: where Verisign does] [added: in which we do] not [removed: take a price] increase [added: the price for *.com* domain name registrations and renewals] as described [removed: in the above paragraph.][added: above.]

It is uncertain whether circumstances would arise that would permit [added: us to take] a price increase due to a Consensus Policy or Extraordinary Expense, or if they do, whether we would seek to increase the price for *.com* domain name registrations for this reason.

We also have the right under the Cooperative Agreement to seek the removal of these pricing restrictions [added: on the *.com* TLD] if we demonstrate to the DOC that market conditions no longer warrant [removed: such] [added: these] restrictions.

However, it is uncertain whether we will seek the removal of [removed: such] [added: these] restrictions, or whether the DOC would approve the removal of [removed: such] [added: these] restrictions.

Our [removed: .*com*, .*net,*] [added: .*com*] and [removed: .*name*] [added: .*net*] Registry Agreements [removed: with ICANN] contain “presumptive” rights of renewal upon the expiration of their current terms on November 30, [removed: 2024,] [added: 2024 and] June 30, [removed: 2023 and August 15, 2020,] [added: 2023,] respectively.

[removed: If certain terms in our] [added: Additionally, each of the] *.com* and *.net* Registry Agreements [added: provide that if certain terms of these agreements] are not similar to such terms generally in effect in the registry agreements of the five largest gTLDs, then a [removed: renewal of these agreements shall be upon terms reasonably necessary to render such terms similar to the registry agreements for those other gTLDs.]

[removed: There can be no assurance that] [added: Any] such terms, if they apply, [removed: will not] [added: could be unfavorable to us and] have a material adverse impact on our business.

ICANN could [removed: terminate or] refuse to renew [added: upon expiration or terminate] our .*com* [added: Registry Agreement] or [added: our] .*net* Registry [removed: Agreements] [added: Agreement] if, upon proper notice, [removed: (i)] [added: (1)] we fail to cure a fundamental and material breach of certain specified obligations, and [removed: (ii)] [added: (2)] we fail to timely comply with a final decision of an arbitrator or court.

Our Registry Agreements with ICANN require us to implement Consensus Policies and [removed: Temporary Policies.][added: changes mandated by ICANN through temporary specifications or policies (“Temporary Policies”).]

ICANN could adopt Consensus Policies or Temporary Policies that [added: (1)] are unfavorable to us as the registry operator of *.com*, *.net* and [removed: our] other [removed: gTLDs,] [added: gTLDs] that [added: we operate, (2)] are inconsistent with our current or future plans, [removed: that] [added: (3)] impose substantial costs on our business, [removed: that] [added: (4)] subject the Company to additional legal risks, or [removed: that] [added: (5)] affect our competitive position.

[removed: Such] [added: These] Consensus Policies or Temporary Policies could have a material adverse effect on our business.

[removed: As an] [added: For] example, ICANN has adopted a Consensus Policy that [removed: requires Verisign] [added: would require us] to receive and display [removed: Thick] [added: registrants’ personal and contact information and designated administrative and technical contact information (“Thick] Whois [removed: data] [added: data”)] for *.com* and .*net*, although that Policy is [removed: scheduled to be reviewed] [added: undergoing modification] by [removed: ICANN.][added: a new Consensus Policy that may make such transfer of Thick Whois data optional.]

The costs of complying or failing to comply with [removed: these policies as well as laws and regulations, such as General Data Protection Regulation (“GDPR”), regarding personal information and data privacy, such as domestic] [added: Consensus] and [removed: various foreign privacy regimes,] [added: Temporary Policies] could expose us to compliance costs and substantial [removed: liability,] [added: liability] and [added: exposure, and] result in costly and time-consuming investigations or litigation.

[removed: *Technical Standards and ICANN Processes.*] Our Registry Agreements with ICANN require [removed: Verisign] [added: us] to implement and comply with various technical standards and specifications published by the Internet Engineering Task Force (“IETF”).

ICANN could impose requirements on us through changes to these IETF [removed: standards] [added: standards, or new standards,] that are inconsistent with our current or future plans, that impose substantial costs on our business, that subject the Company to additional legal risks, or that affect our competitive position.

Any such changes to the IETF [removed: standards] [added: standards, or new standards,] could have a material adverse effect on our business.

[added: In addition, under] Amendment [removed: 35,] [added: 35 to the Cooperative Agreement,] we have agreed to continue to operate the .*com* [removed: TLD] [added: gTLD] in a content-neutral manner and to work within ICANN processes to promote the development of content-neutral policies for the operation of the [removed: DNS] [added: DNS,] and under [removed: the Proposed LOI,] [added: our binding letter of intent with ICANN,] we have agreed to work with the ICANN community to develop certain best practices and other commitments for the security, stability and resiliency of the DNS and the internet.

Our [added: *.com*] Registry [removed: Agreements have] [added: Agreement, including its pricing provisions, has] faced, and could face in the future, challenges, including possible legal challenges, [removed: resulting from our activities] or [removed: the activities of] [added: challenges under ICANN’s accountability mechanisms, from] ICANN, registrars, registrants, and others, and any adverse outcome from [removed: such] [added: these] challenges could have a material adverse effect on our business.

Governmental regulation and the application of new and existing laws in the U.S. and [removed: overseas] [added: internationally] may slow business growth, increase our costs of doing business, create potential liability and have an adverse effect on our business.

The costs of complying or failing to comply with these laws and regulations could limit our ability to operate in our current [removed: markets,] [added: locations,] expose us to compliance costs and substantial liability, and result in costly and time-consuming litigation.

For example, the government of China has indicated that it will issue, and [removed: in some instances] has [removed: begun to issue,] [added: issued,] new regulations, and has begun to enforce existing regulations, that impose additional costs on, and risks to, our provision of registry services in China and could impact the growth or renewal rates of domain name registrations in China.

Any failure to obtain the required licenses, or to comply with any license requirements or any updates thereto, by us or our [added: China-based] registrars could impact our current and future business in China.

[removed: For example, laws] [added: Laws and regulations, including those] designed to restrict who can register and who can distribute domain [removed: names, online gambling, counterfeit goods, and intellectual property violations such as cybersquatting; laws designed to] [added: names or] require registrants to provide additional documentation [removed: or information in connection with] [added: to register] domain [removed: name registrations;] [added: names, have,] and [removed: laws designed to promote cybersecurity] may [added: in the future,] impose significant additional costs on our business [removed: or] [added: and] subject us to additional [removed: liabilities.][added: liabilities or could prevent us from operating in certain jurisdictions.]

To conduct our operations, we regularly move data across national borders and receive data originating from different jurisdictions, and consequently [added: we] are subject to [removed: a variety of] [added: these] continuously evolving and developing laws and regulations [added: both] in the United States and [removed: abroad] [added: internationally] regarding privacy, data protection and data security.

The scope of the laws [added: and regulations] that [removed: may be] [added: are] applicable to us is often uncertain and may be conflicting, particularly with respect to [removed: foreign laws.][added: international laws and regulations.]

[removed: For example,] [added: Similarly,] the European Union’s [removed: GDPR,] [added: General Data Protection Regulation,] which greatly increases the jurisdictional reach of European Union law and adds [removed: a] broad [removed: array of] [added: new] requirements for handling personal data, including the public disclosure of significant data breaches, and significant penalties, became effective in May 2018.

[removed: Other countries and other states] [added: the California Consumer Privacy Act,] have enacted or are enacting data [removed: localization] [added: protection] laws regulating or limiting [removed: data] [added: the] collection, [removed: storage] [added: storage,] and [removed: transfer] [added: processing of personal data] as well as granting new rights to data subjects.

[removed: All of these] [added: These] evolving [removed: compliance] [added: legal, regulatory] and [removed: operational requirements can] [added: compliance frameworks could] impose significant costs for us that are likely to increase over time.

In addition, as we [removed: continue to launch and] market our [removed: IDN gTLDs and increase our marketing efforts of our other] TLDs in [removed: foreign countries,] [added: international locations,] we [removed: may] [added: are likely to] raise our profile in certain foreign countries thereby increasing the regulatory and other scrutiny of our operations.

Any [removed: such] [added: negative] developments [added: arising from such increased scrutiny] could [added: diminish demand for our domain names,] increase [removed: the] [added: our] costs of regulatory [removed: compliance for us,] [added: compliance,] affect our reputation, expose us to liability, penalties or fines, force us to change our business practices or otherwise materially harm our business.

[removed: Undetected or unknown defects in our systems or services,] [added: Attempted] security [removed: breaches] [added: breaches,] including from [removed: vulnerabilities, defects in] the [removed: technologies, components, and services in our supply chain,] [added: exploitation of vulnerabilities, cyber-attacks] and Distributed Denial of Service (“DDoS”) attacks [removed: could] [added: against our systems and services increase our costs,] expose us to [removed: liability] [added: potentially material liability,] and [added: could] materially harm our business and reputation.

Despite testing, [removed: defects] [added: services as complex as those we offer] or [removed: errors may occur in our existing] [added: develop could contain undetected defects] or [removed: new services,] [added: errors,] which could result in service outages or disruptions, compromised customer data, including DNS data, diversion of development resources, injury to our reputation, tort or contract claims, increased insurance costs or increased service [removed: costs, any of which could harm our business.][added: costs.]

Performance of our [removed: services] [added: services, whether or not defective,] could have unforeseen or unknown adverse effects on the networks over which they are [removed: delivered as well as, more broadly,] [added: delivered,] on internet users and consumers, and on third-party applications and services that [removed: utilize] [added: use] our services, [added: any of] which could result in legal claims against [removed: us, harming our business.][added: us.]

[removed: These include] [added: As an operator of critical internet infrastructure, we experience a high rate of cyber-attacks and attempted security breaches targeting our systems and services, including] the most sophisticated forms of attacks, such as advanced persistent threat attacks and zero-hour threats.

In addition to external threats, [removed: we may be] [added: our systems and services are] subject to insider [removed: threats,] [added: threat risks,] including [removed: those] [added: physical or electronic break-ins, sabotage, and] from [removed: third-party suppliers] [added: suppliers,] such as consultants and advisors, SaaS providers, hardware, software, and network systems manufacturers, [added: regional internet registries,] and other [removed: outside] vendors, or from current or former contractors or [removed: employees; these threats can be realized from intentional or unintentional actions.][added: employees.]

Any physical or electronic break-in or other security breach or compromise of the information stored at our data centers or domain name registration systems may [removed: cause an outage of, or] jeopardize the security [removed: of,] [added: of] information [removed: stored on our premises] [added: we retain] or [added: that is retained] in the computer systems and networks of our customers.

In such an event, we could face [removed: significant liability,] [added: material liability and exposure from litigation and investigations,] fail to meet contracted service level obligations, [removed: customers could be reluctant to use our services and we could] [added: or] be at risk for loss of various security and standards-based compliance certifications needed for operation of our businesses, [removed: all or] [added: and customers could be reluctant to use our services,] any of which could [added: also] adversely affect our reputation and harm our business or cause financial losses that are either not insured against or not fully covered through any [removed: insurance that we maintain.][added: insurance.]

Additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give rise to or amplify many of the risks discussed below.*

Cybersecurity and Technology Risk Factors

The forms of these attacks are constantly evolving and may involve methods, tools and strategies that have not been previously identified or observed until the moment of launch, or until sometime after, making these attacks virtually impossible to anticipate and difficult to defend against.

These threats and any resulting security breach can arise from intentional or unintentional actions.

Our continued exposure to these threats and the potential that they could lead to material liability claims against us requires us to expend significant financial and other resources.

Our failure to identify, remediate and mitigate security threats, including insider threats, could result in material harm to our business, including loss of or delay in revenues, failure to meet contracted service-level obligations, material liability claims, failure to maintain market acceptance, injury to our reputation, and increased costs, and could call into question our ability to preserve the security and stability of the internet.

Security vulnerabilities in our systems and our vendors’ systems, including vulnerabilities in third party software and hardware, pose a material risk to our operations.

However, such measures cannot provide absolute security.

Our failure to identify, remediate and mitigate security vulnerabilities, including any potential failure to timely replace and upgrade network equipment, servers, or other technology assets, could result in material harm to our business, including loss of or delay in revenues, failure to meet contracted service-level obligations, material liability claims, failure to maintain market acceptance, injury to our reputation, increased costs, and call into question our ability to preserve the security and stability of the internet.

In recent years, the size of DDoS attacks has grown rapidly.

We are employing new technologies and new and different services and capabilities to help mitigate DDoS attacks.

If these new technologies, services and capabilities are not effective, our networks could be disrupted, our response times could increase, our ability to meet our contracted service level obligations could be negatively impacted, and our ability to provide reliable service to our customers and the broader internet community could be impeded.

We may introduce undetected or unknown defects into our systems or services, which could materially harm our business and harm our vendors or our customers.

While we strive to prevent, detect and remediate defects or errors, they can and do occur and they could result in our inability to meet customer expectations in a timely manner, failure to meet our contracted service level obligations, injury to our reputation, and increased costs.

Our infrastructure and services are subject to vulnerabilities in the global routing system for the internet, as well as risks arising from internet services providers’ increasing adoption of the Resource Public Key Infrastructure system.

Routing on the internet depends on the Border Gateway Protocol (“BGP”), which is a protocol that relies on networks within the internet infrastructure acting in a trustworthy manner when sharing information about destinations for connectivity and the routing of internet traffic.

As a trust-based protocol, BGP has a number of vulnerabilities that may lead to outages or disrupt our services, including as a result of “route hijacks” that involve accidental or malicious rerouting of internet traffic, or “route leaks” that involve the malicious or unintentional propagation of routing information beyond the intended scope of the originator, receiver, and/or one of the networks along the route’s path.

Both route hijacks and route leaks can result in partial or full rerouting of internet traffic for the impacted destinations.

To address internet routing system vulnerabilities, many internet service providers are beginning to adopt and apply internet reachability policies based on a system known as the Resource Public Key Infrastructure (“RPKI”) operated by the regional internet registries (“RIRs”).

The RIRs allocate internet number resources, such as internet protocol addresses, to enterprises and network operators.

We have limited visibility into the maturity of and investment in the RIRs’ operational and security controls, which are outside of our control.

When the availability, integrity, or confidentiality of any of the information in the RPKI system, or systems used to maintain and administer RPKI data and systems, are impacted or otherwise compromised in any of the RIRs, or any network operator that is a relying party of the RPKI system, or the operations or ingestion of data from the RPKI system are otherwise impacted by a known or unknown vulnerability, our services may be negatively impacted.

Such impacts may include degraded or full loss of reachability of service addresses in the global internet routing system, resulting in degradation or complete loss of availability of our services.

A compromise of the RPKI system and related services, or unintentional or unauthorized manipulation of data therein, may also result in other denial of service attack conditions for our infrastructure and services.

The systemic dependencies introduced by RPKI and relying parties of the RPKI system, including network service providers, are outside of our control and are only as secure as the weakest elements of the RPKI system.

We may contract with one or more RIRs to employ RPKI, which carries material operational risks, as described above, as well as material contractual risks, which may expose us to service disruptions and material liability.

We could encounter system interruptions or systems failures resulting from activities beyond our direct control that could materially harm our business.

Our systems and operations are vulnerable to damage or interruption from power loss, transmission cable cuts and other telecommunications failures, damage or interruption caused by fire, earthquake, and other natural disasters, intentional acts of vandalism, terrorist attacks, unintentional mistakes or errors.

We are also subject to state suppression of internet operations.

Our data centers, including the Shared Registration Systems located at our data centers, and our resolution systems are vulnerable to damage or interruption, which could impede our ability to provide our services, expose us to liability, and harm our reputation.

These data centers are vulnerable to damage or interruption, including from fires, earthquakes, hurricanes, floods, power loss, hardware or system failures, physical or electronic break-ins, human error or interference.

If our data center facilities or the updated

network architecture do not operate as expected, including the ability to quickly switch over between sites, we could experience service interruptions or outages.

A failure in the operation of our Shared Registration System could also impact our ability to provide up-to-date information in our resolution systems, which could result in breaches of our service level obligations pertaining to our resolution services as well as impacting the resolution of domain names on the internet.

Any of these problems or outages could create potential material liability and exposure from litigation and investigations, could result in a failure to meet our service level agreements, and could decrease customer satisfaction, harming our business.

These problems could also result in adverse publicity, decrease the public’s trust in the security of e-commerce, or call into question our ability to preserve the security and stability of the internet.

Although the overall root server system is redundant and dispersed, a failure or interruption in the operation of the root server system could impact the effectiveness of our .*com* and .*net* authoritative servers and therefore negatively impact directory services necessary for the operation of the internet.

Contractual, Regulatory, Legal and Compliance Risk Factors

Any loss or modification of our right to operate the .com and .net gTLDs could have a material adverse impact on our business and result in loss of revenues.

Substantially all of our revenues are derived from our operation of the .*com* gTLD under our Cooperative Agreement with the DOC and our .*com* Registry Agreement as well as our operation of the .*net* gTLD under our *.net* Registry Agreement.

Risks arising from our agreements governing our business could limit our ability to maintain or grow our business.

We are parties to (i) a Cooperative Agreement, as amended, with the DOC with respect to the .*com* gTLD and (ii) Registry Agreements with ICANN with respect to the *.com*, *.net, .name,* and other gTLDs including our IDN gTLDs.

As substantially all of our revenues are derived from operation of these gTLDs, limitations and obligations in, or changes or challenges to, these agreements, particularly the agreements that involve .*com* and .*net*, could have a material adverse impact on our business.

Certain competing registries, such as the ccTLDs, are not subject to the same limitations or obligations that we are subject to in our agreements.

Verisign and the DOC entered into Amendment 35 to the Cooperative Agreement on October 26, 2018, which, among other things, extends the term of the Cooperative Agreement through November 30, 2024.

As amended by Amendment 35, the Cooperative Agreement will automatically renew on the same terms for successive six-year terms unless the DOC provides written notice of non-renewal within 120 days prior to the end of the then-current term.

Further changes to the Cooperative Agreement require the mutual agreement of the DOC and the Company.

*Modifications or Amendments.* In October 2016, the Company and ICANN entered into an amendment to extend the term of the *.com* Registry Agreement to November 30, 2024 (“First *.com* Amendment”).

As part of the First *.com* Amendment, the Company and ICANN agreed to negotiate in good faith to amend the terms of the *.com* Registry Agreement: (i) by October 20, 2018, to preserve and enhance the security and stability of the internet or the *.com* TLD, and (ii) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

On January 3, 2020, the Company and ICANN announced that they reached a proposed agreement to amend the *.com* Registry Agreement (“Proposed *.com* Amendment”) and to enter into a new proposed framework for working together on initiatives related to the security, stability and resiliency of the DNS in the form of a binding Letter of Intent (“Proposed LOI”).

Together these agreements satisfy the requirements described as part of the First *.com* Amendment.

In conjunction with the public announcement, ICANN published the Proposed *.com* Amendment and the Proposed LOI for public comment until February 14, 2020.

Although we do not anticipate changes to these documents, we can provide no assurance that modifications will not be made in connection with the public comment process or otherwise.

Under the Cooperative Agreement, as amended by Amendment 35, standard renewals of the .*com* Registry Agreement will not require further DOC approval, although removal of, or any changes to the pricing section (other than as approved in Amendment 35), changes to the vertical integration provisions (other than the clarification approved in Amendment 35), changes to the security, stability and resiliency posture as reflected in the functional or performance specifications (including the SLAs), changes to the conditions for renewal or termination, or changes to the Whois service (other than such changes mandated by ICANN through temporary specifications or policies (“Temporary Policies”) and specifications or polices adopted by ICANN pursuant to the procedures set forth in its bylaws and due process (“Consensus Policies”)), as set forth in Amendment 35, the prior written approval of the DOC is required.

We can provide no assurances that such approval would be provided.

In addition, our Registry Agreements for new gTLDs, including the Registry Agreements for our IDN gTLDs, include ICANN’s right to amend the agreements without our consent, which could impose unfavorable contract obligations on us that could impact our plans and competitive positions with respect to new gTLDs.

At the time of renewal of our *.com* or *.net* Registry Agreements, ICANN might also attempt to impose this same unilateral right to amend these Registry Agreements under certain conditions.

ICANN has also included new mandatory obligations on new gTLD registry operators, including us, that may increase the risks and potential liabilities associated with operating new gTLDs.

ICANN might seek to impose these new mandatory obligations in our other Registry Agreements under certain conditions.

We can provide no assurance that any changes to our Registry Agreements as a result of the above obligations will not have a material adverse impact on our business, operating results, financial condition, and cash flows.

*Pricing*.

Under the terms of the Cooperative Agreement, as amended by Amendment 35, the Company and ICANN may agree to amend the terms of the .*com* Registry Agreement to permit the price of registrations or renewals of .*com* domain names to be increased by up to 7% per year in each of the final four years of each six-year period beginning on October 26, 2018.

The Proposed *.com* Amendment would allow such price increases.

In comparison, under the terms of the *.net* and *.name* Registry Agreements with ICANN, we are permitted to increase the price of domain name registrations and renewals in these TLDs up to 10% per year.

Additionally, ICANN’s registry agreements for new gTLDs do not contain such pricing restrictions.

*Vertical integration*.

Under Amendment 35, the parties clarified that the restrictions in the *.com* Registry Agreement relating to vertical integration apply solely to the .*com* TLD.

This clarification is now set forth in the Proposed *.com* Amendment.

As to the .*com* TLD, we are not permitted to acquire, directly or indirectly, control of, or a greater than 15% ownership interest in, any ICANN-accredited registrar that sells .*com* domain name registrations.

Historically, all gTLD registry operators were subject to a vertical integration prohibition; however, ICANN has established a process whereby registry operators may seek ICANN’s approval to remove this restriction, and ICANN has approved such removal for certain other registry operators.

Additionally, ICANN’s registry agreement for new gTLDs generally permits such vertical integration, with certain limitations including ICANN’s right, but not the obligation, to refer such vertical integration activities to competition authorities.

If we seek to become vertically integrated, except with respect to .*com*, it is uncertain whether approval to do so would be obtained under ICANN’s processes.

Furthermore, even if we obtain such approval, we can provide no assurances that we will enter the domain name retail market, or that we will be successful if we choose to do so.

If registry operators of other TLDs, including ccTLDs, are able to obtain competitive advantages through vertical integration, and we are not, it could materially harm our business.

*Renewal and Termination*.

The Registry Agreements for our new gTLDs including our IDN gTLDs are subject to a 10-year term and contain similar “presumptive” renewal rights.

A failure by ICANN to approve the renewal of the *.com* Registry Agreement prior to the expiration of its current term on November 30, 2024 or to approve the renewal of the .*net* Registry Agreement prior to or upon the expiration of its current term on June 30, 2023, would have, absent an extension, a material adverse effect on our business.

ICANN’s termination or refusal to renew either the .*com* or .*net* Registry Agreement would have a material adverse effect on our business.

*Consensus Policies*.

In addition, ICANN has adopted an interim Consensus Policy that establishes temporary requirements for registry operators and registrars regarding the collection, display and disclosure of Thick Whois data pending ICANN’s establishment of a permanent Consensus Policy.

*This [removed: Report on] Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act.

*This section of this Form 10-K generally discusses [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] items and year-to-year comparisons between [removed: 2019] [added: 2020] and [removed: 2018.][added: 2019.]

Discussions of [removed: 2017] [added: 2018] items and year-to-year comparisons between [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of [removed: the Company’s] [added: our] Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2018.*][added: 2019.*]

As of December 31, [removed: 2019,] [added: 2020,] we had approximately [removed: 158.8] [added: 165.2] million .*com* and .*net* registrations in the domain name base.

Growth in the number of domain name registrations under our management may be hindered by certain factors, including overall economic conditions, competition from ccTLDs, [removed: the introduction of new] [added: other] gTLDs, [added: services that offer alternatives for an online presence, such as social media,] and ongoing changes in the internet practices and behaviors of consumers and businesses.

[removed: 2019 Business] [added: 2020 Business] Highlights and Trends

[removed: | • |] [added: -] We recorded revenues of [removed: $1,231.7] [added: $1,265.1] million in [removed: 2019,] [added: 2020,] which represents an increase of [removed: 1%] [added: 3%] compared to [removed: 2018. |][added: 2019.]

[removed: | • |] [added: -] We recorded operating income of [removed: $806.1] [added: $824.2] million during [removed: 2019,] [added: 2020,] which represents an increase of [removed: 5%] [added: 2%] as compared to [removed: 2018. |][added: 2019.]

[removed: | • |] [added: -] We finished [removed: 2019] [added: 2020] with [removed: 158.8] [added: 165.2] million *.com* and *.net* registrations in the domain name base, which represents a 4% increase from December 31, [removed: 2018. |][added: 2019.]

[removed: | • |] [added: -] During [removed: 2019,] [added: 2020,] we processed [removed: 40.3] [added: 42.4] million new domain name registrations for .*com* and .*net* compared to [removed: 38.2] [added: 40.3] million in [removed: 2018. |][added: 2019.]

[removed: | • | The final *.com* and *.net* renewal rate for the third quarter of 2019 was 73.7% compared with 74.8% for the same quarter in 2018.] Renewal rates are not fully measurable until 45 days after the end of the quarter. [removed: |]

[removed: | • | We repurchased 3.9 million shares of our common stock for an aggregate cost of $738.5 million in 2019.] As of December 31, [removed: 2019,] [added: 2020,] there was [removed: $327.5] [added: $335.6] million remaining for future share repurchases under the share repurchase program. [removed: |]

[removed: | • |] [added: -] Effective February [removed: 6, 2020,] [added: 11, 2021,] our Board [added: of Directors] authorized the repurchase of our common stock in the amount of [removed: $743.0] [added: $747.0] million, in addition to the [removed: $257.0] [added: $253.0] million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.0 billion under the program. [removed: |]

[removed: | • |] [added: -] We generated cash flows from operating activities of [removed: $753.9] [added: $730.2] million in [removed: 2019,] [added: 2020,] which represents [removed: an increase] [added: a decrease] of [removed: 8%] [added: 3%] as compared to [removed: 2018. |][added: 2019.]

The final taxes payable are [added: also] dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from [removed: U.S. federal, state, and international] [added: various] tax [removed: audits.][added: examinations.]

We only recognize or continue to [removed: only] recognize tax positions [added: and tax benefit amounts] that are more likely than not to be sustained upon examination.

[removed: We adjust these amounts in light] of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in [removed: a payment] [added: an outcome] that is materially different from our current estimate of [removed: the] [added: unrecognized] tax [removed: liabilities.][added: benefits.]

| | [added: | |] Year Ended December 31, | | | | | | | | [added: | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | [removed: 2018] | | | [removed: 2017] [added: 2018] | | [added: |]

| Revenues | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % | | [added: | |] 100.0 | [added: |] % |

| Costs and expenses: | | | | | | | | | [added: | | | | | | | | |]

| Cost of revenues | [added: | | 14.2 | | | | | |] 14.6 | | | [removed: 15.8] | | | [removed: 16.6] [added: 15.8] | | [added: |]

| Sales and marketing | [added: | | 2.9 | | | | | |] 3.8 | | | [removed: 5.3] | | | [removed: 7.0] [added: 5.3] | | [added: |]

| Research and development | [added: | | 5.9 | | | | | |] 4.9 | | | [removed: 4.8] | | | [removed: 4.5] [added: 4.8] | | [added: |]

| General and administrative | [removed: 11.2] | | [added: 11.8] | [removed: 10.9] | | | [added: | |] 11.2 | | [added: | | | | 10.9 | | |]

| Total costs and expenses | [added: | | 34.8 | | | | | |] 34.5 | | | [removed: 36.8] | | | [removed: 39.3] [added: 36.8] | | [added: |]

| Operating income | [added: | | 65.2 | | | | | |] 65.5 | | | [removed: 63.2] | | | [removed: 60.7] [added: 63.2] | | [added: |]

| Interest expense | [removed: (7.4] | [removed: )] | [added: (7.1)] | [removed: (9.5] | [removed: )] | | [removed: (11.7] | [removed: )] | [added: (7.4) | | | | | | (9.5) | | |]

| Non-operating income, net | [added: | | 1.2 | | | | | |] 3.5 | | | [removed: 6.3] | | | [removed: 2.4] [added: 6.3] | | [added: |]

| Income before income taxes | [added: | | 59.3 | | | | | |] 61.6 | | | [removed: 60.0] | | | [removed: 51.4] [added: 60.0] | | [added: |]

| Income tax [removed: expense] [added: benefit (expense)] | [removed: (11.9] | [removed: )] | [added: 5.1] | [removed: (12.1] | [removed: )] | | [removed: (12.2] | [removed: )] | [added: (11.9) | | | | | | (12.1) | | |]

| Net income | [removed: 49.7] | [added: | 64.4 | |] % | | [removed: 47.9] | [added: | 49.7 | |] % | | [removed: 39.2] | [added: | 47.9 | |] % |

For domain names registered [removed: with] [added: in] the *.com* and *.net* registries we receive a fee from registrars per annual registration that is [removed: fixed] [added: determined] pursuant to our agreements with ICANN.

The annual fee for a [removed: *.com*] [added: .*com*] domain name registration has been fixed at [added: $7.85 since 2012.]

On October 26, 2018, [removed: we entered into an agreement with] [added: Verisign and] the DOC [removed: to amend] [added: amended] the Cooperative Agreement.

The [removed: amendment] [added: amendment, among other items,] extends the term of the Cooperative Agreement until November 30, 2024 and permits the price of a *.com* domain name to be [removed: increased] [added: increased, subject to appropriate changes to the *.com* Registry Agreement,] without further DOC [removed: approval] [added: approval,] by up to 7% in each of the final four years of each six-year period beginning on October 26, 2018.

We offer promotional [removed: marketing] [added: incentive-based discount] programs [removed: for our] [added: to] registrars based upon market conditions and the business environment in which the registrars operate.

All fees paid to us for [removed: .*com*] [added: *.com*] and [removed: .*net*] [added: *.net*] registrations are in U.S. dollars.

| | [added: | |] Year Ended December 31, | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | | | |]

| | | [removed: 2019] | | | | [removed: % Change] [added: 2020] | | | [removed: 2018] | | | [added: % Change] | [removed: % Change] | | | [removed: 2017] | | [added: 2019] | [added: | | | | | % Change | | | | | | 2018 | | |]

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) revenue growth in 2021, (iii) continued growth in registrations in the domain name base in 2021, (iv) cost of revenues, sales and marketing expenses, research and development expenses, general and administrative expenses, interest expense, and non-operating income, net, in 2021, (v) our effective tax rate for 2021, (vi) the sufficiency of our existing cash, cash equivalents and marketable securities, and funds generated from operations, together with our ability to arrange for additional financing, (vii) cash paid for income taxes in 2021, and (viii) our planned property and equipment expenditures for 2021.

You should also carefully review the risks described in other documents we file from time to time with the SEC, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in 2021.

We undertake no obligation to update publicly or revise such statements, whether as a result of new information, future events, or otherwise, except as required by law.*

- The final *.com* and *.net* renewal rate was 73.7% for the third quarter of 2020 and 2019.

- During 2020, we recognized an income tax benefit of $204.2 million as a result of the remeasurement of certain previously unrecognized income tax benefits and the lapse of statutes of limitations related to other unrecognized income tax benefits.

- During 2020, we announced a freeze on the registry prices for all of our TLDs, including *.com* and *.net,* through March 31, 2021.

Additionally, we announced a waiver of the wholesale restore fee for expired domain names through the end of 2020.

- On February 11, 2021, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .*com* domain name registration from $7.85 to $8.39, effective September 1, 2021.

COVID-19 Update

The United States and the global community we serve are facing unprecedented challenges posed by the COVID-19 pandemic.

In response to the pandemic, we have established a task force to monitor the pandemic and have taken a number of actions to protect our employees, including restricting travel, modifying our sick leave policy to encourage quarantine and isolation when warranted, and directing most of our employees to work from home.

We have implemented our readiness plans, which include the ability to maintain critical internet infrastructure with most employees working remotely.

We believe that the effects of the pandemic to date have led to a modest increase in the demand for domain names, particularly as businesses and entrepreneurs have been seeking to establish or expand their presence online in response to the pandemic.

Our revenues increased during 2020 primarily driven by an increase in the domain name base for the *.com* TLD; however, the situation remains uncertain and hard to predict.

The broader implications of the pandemic on our business and operations and our financial results, including the extent to which the effects of the pandemic will impact future growth in the domain name base, remain uncertain.

The duration and severity of the economic disruptions from the pandemic may ultimately result in negative impacts on our business and operations, results of operations, financial condition, cash flows, liquidity and capital and financial resources.

Because fees for domain name registrations and renewals are generally due at the time of registration or renewal and revenues from such registrations and renewals are recognized ratably over their terms, the effects of the pandemic may not be fully reflected in our results of operations until future periods.

For further discussion, see “Risk Factors – The effects of the COVID-19 pandemic have impacted how we operate our business, and the extent to which the effects of the pandemic will impact our business, operations, financial condition and results of operations remains uncertain” in Part I, Item 1A of this Form 10-K.

We operate in multiple tax jurisdictions in the United States and internationally.

Tax laws and regulations in these jurisdictions are complex, interrelated, and periodically changing.

Significant judgment or interpretation of these laws and regulations is often required in determining our worldwide provision for income taxes, including, for example, the calculations of taxable income in each jurisdiction, deferred taxes, and the availability and amount of deductions and tax credits.

We adjust these amounts in light

See Note 10, “Income Taxes” of our Notes to Consolidated Financial Statements in Item 8 of this Form 10-K for a discussion of significant changes in unrecognized tax benefits during 2020.

On March 27, 2020, Verisign and ICANN amended the *.com* Registry Agreement (“Third *.com* Amendment”) that, among other items, incorporates these changes agreed to with the DOC to the pricing terms.

As part of our response to the COVID-19 crisis, we announced on March 25, 2020 that we would freeze registry prices for domain name registrations and renewals for all of our TLDs, including *.com* and *.net*, through the end of 2020.

On July 23, 2020, we announced that we would extend the freeze on registry prices for all of our TLDs, including *.com* and *.net*, through March 31, 2021.

On February 11, 2021, we announced that we will increase the annual registry-level wholesale fee for each new and renewal .*com* domain name registration from $7.85 to $8.39, effective September 1, 2021.

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Revenues from registrars based in China declined during 2020 as a result of lower new registrations and renewal rates in the country.

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Cost of revenues remained consistent in 2020 compared to 2019, as a decrease in salary and employee benefits expenses was offset by an increase in direct cost of revenues.

Salary and employee benefits expenses decreased by $2.3 million due to a functional realignment of some headcount to research and development, partially offset by headcount increases throughout the year and an increase in expenses for other employee benefits including expanded paid time off benefits provided to employees in response to the COVID-19 pandemic.

Direct cost of revenues increased by $1.8 million as a result of an increase in registry fees primarily related to the *.com* TLD.

We expect cost of revenues as a percentage of revenues to increase slightly in 2021 as compared to 2020.

These forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our anticipated costs and expenses and revenue mix.

We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.*

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Our operations involve dealing with uncertainties and judgments in the application of complex tax regulations in multiple jurisdictions.

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$7.85 since 2012.

We increased the annual fee for a *.net* domain name registration from $8.20 to $9.02 on February 1, 2018.

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Revenues in the U.S. and EMEA regions in particular, were impacted by the decrease in revenues from our security services business as customers terminated or consented to the assignment of their contracts to Neustar.

Salary and benefits expenses decreased by $5.5 million due to a reduction in average headcount primarily related to employees supporting the divested security services business.

Telecommunications expenses decreased by $5.1 million as a result of lower costs to support our operations.

Depreciation expenses decreased by $2.0 million as a result of a decrease in capital expenditures in recent years.

Sales and marketing expenses decreased by $18.3 million in 2019 compared to 2018 primarily due to decreases in salary and employee benefits expenses, advertising and marketing expenses, and allocated overhead expenses.

Salary and employee benefits expenses decreased by $9.1 million due to a reduction in average headcount primarily affecting employees supporting the divested security services business.

Advertising and marketing expenses decreased by $4.4 million as we executed fewer marketing activities and campaigns.

Research and development expenses increased by $2.9 million in 2019 compared to 2018 primarily due to a decrease in capitalized labor and an increase in allocated overhead expenses.

Capitalized labor decreased by $2.5 million due to a shift in work from capital projects to certain non-capital projects and maintenance of existing software products.

Allocated overhead expenses increased by $2.0 million primarily due to an increase in average headcount relative to other cost types.

Salary and employee benefits expenses increased by $2.8 million due to an increase in average headcount and annual salary increases.

Software license expenses increased by $2.4 million resulting from costs related to certain security initiatives.

We expect general and administrative expenses as a percentage of revenues to remain consistent in 2020 as compared to 2019.

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Following the Tax Cuts and Jobs Act, we have greater flexibility in accessing the cash, cash equivalents and marketable securities balances held by our foreign subsidiaries.

In December 2019, we entered into a new $200.0 million unsecured revolving credit facility.

This facility will expire in 2024 and takes the place of our prior unsecured revolving credit facility.

As of December 31, 2019, there were no borrowings outstanding under this credit facility.

In 2018 we settled our subordinated convertible debentures with the $1.25 billion principal value paid in cash and 26.1 million shares of common stock issued for the conversion spread.

| | | | | | | | | | | | |

The decrease in cash paid for interest on our debt obligations was primarily due to the settlement of our subordinated convertible debentures in May 2018.

The increase in cash paid for income taxes was primarily due to by higher U.S. federal income tax payments in 2019, partially offset by the $60.7 million of foreign withholding taxes paid on the repatriation of $1.15 billion cash held by foreign subsidiaries to the U.S. in the first quarter of 2018.

We are exposed to financial market risks, including changes in interest [removed: rates, foreign exchange] rates and [removed: market risks.][added: foreign exchange rates.]

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: $1.04] [added: $1.01] billion of fixed income securities, which consisted of U.S. Treasury bills with maturities of less than one year.

As of December 31, [removed: 2019,] [added: 2020,] we held foreign currency forward contracts in notional amounts totaling [removed: $26.3] [added: $27.5] million to mitigate the impact of exchange rate fluctuations associated with certain foreign currencies.

As of December 31, [removed: 2019,] [added: 2020,] the fair values of the senior notes issued in 2013, 2015 and 2017 were [removed: $762.8] [added: $758.8] million, [removed: $552.3] [added: $569.1] million, and [removed: $581.9] [added: $589.9] million, respectively, based on available market information from public data sources.

Our Annual [removed: Report] [added: Reports] on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are available, free of charge, on the Investor Relations section of our website as soon as is reasonably practicable after filing such reports with the Securities and Exchange Commission (the “SEC”).

Pursuant to our agreements with the Internet Corporation for Assigned Names and Numbers (“ICANN”), we make available [removed: on our website (at https://www.Verisign.com/zone)] files containing all active domain names registered in the .*com* and .*net* registries.

[removed: At the same website address,] [added: Further,] we [added: also] make available a summary of the active zone count registered in the .*com* and *.net* registries and the number of *.com* and *.net* domain name registrations in the domain name base.

Therefore, we encourage investors, the media, and others interested in our company to review the information we post on the social media channels [added: and websites] listed below.

The contents of these websites are not intended to be incorporated by reference into this [removed: Annual Report on] Form 10-K or in any other report or document we file.

As a registry, we maintain the master directory of all second-level domain names (e.g., [removed: johndoe.com] [added: example.com] and [removed: janedoe.net)] [added: example.net)] in these gTLDs and IDN gTLDs.

In addition to our registry agreements with ICANN, we have agreements to operate the [removed: registry] [added: registries] for the *.tv* and *.cc* country code top-level domains (“ccTLDs”) for Tuvalu and Cocos (Keeling) Islands, respectively, and to operate the back-end registry systems for the *.gov*, *.jobs,* and *.edu* sponsored TLDs, among others.

We also provide internationalized domain name (“IDN”) services that enable internet users to access [removed: websites] [added: domain names] in characters representing their local language.

Our gTLDs and ccTLDs can support standards-compliant [added: domain name] registrations in over 100 different native languages and scripts.

We also perform the root zone maintainer function under an agreement with ICANN for the core of the internet’s DNS and operate two of the 13 root zone servers that contain authoritative data for the [removed: very] top of the DNS hierarchy.

The fees received from operating the .*gov* registry are based on the terms of Verisign’s agreement with the U.S. [removed: General Services Administration.][added: Government.]

Our operations infrastructure consists of [removed: three] secure data centers in Dulles, Virginia; [added: Ashburn, Virginia;] New Castle, Delaware; and Fribourg, Switzerland as well as more than 100 [removed: resolution] [added: other] sites around the world.

Our domain name servers [removed: provide] [added: refer requestors to] the associated authoritative name servers [removed: and IP addresses] for [added: second level domains under our TLDs, thus enabling DNS resolution for] every *.com* and *.net* domain name on the internet and [added: for domain names under] a large number of other [removed: TLD queries, processing more than 192 billion queries daily.][added: TLDs.]

The performance and [removed: scale] [added: availability] of our infrastructure are critical for our [removed: business, and give us the platform to maintain our leadership position.][added: business.]

[removed: | • | *Distributed Servers:* We operate a large number of high-speed servers globally to support localized capacity and availability demands.] In conjunction with our proprietary software, processes and procedures, this [removed: platform] [added: global constellation of servers] offers rapid failover, global and local load balancing, and threshold monitoring on critical servers. [removed: |]

[removed: | • |] [added: -] *Networking:* We deploy and maintain a redundant and diverse global network, maintain high-speed, redundant connections to numerous internet service providers, and maintain peering relationships globally to ensure that our critical services are readily accessible to customers at all times. [removed: |]

[added: Thus, the corporate networks to which] personnel directly connect are separated from the silos that house production services; administration of production gear from corporate systems must go through an internal, fortified intermediary; and account credentials used within the corporate networks are not used within the production silos, nor on the fortified systems.

[removed: | • |] [added: -] *Data Integrity:* We employ both phased and systemic integrity validation operations via a number of proprietary mechanisms on all internal DNS publication operations. [removed: |]

*Call Centers and Help Desk:* We provide customer support services [removed: through phone-based call centers,] [added: over the phone, by] email [removed: help desks] and [added: through] web-based self-help systems.

Our network operations center [removed: is staffed] [added: monitors our systems] 24 hours a day, every day of the [removed: year.][added: year and has continued to be staffed by employees working remotely during the COVID-19 pandemic.]

We maintain [removed: dual mirrored] data centers [added: with mirrored services] that allow [removed: rapid] failover with no data loss and no loss of function or capacity, as well as [removed: off-continent] [added: a] tertiary [removed: facilities.][added: facility in Switzerland.]

The markets for our services are dynamic, characterized by [removed: rapid] [added: ongoing] technological developments, [added: shifting channel dynamics,] frequent new product introductions, and evolving industry standards.

The constantly changing nature of these markets and [removed: their rapid] [added: the continued] evolution [added: of security threats] will require us to continually improve the performance, features, and reliability of our services, [removed: particularly in response to competitive offerings,] and to introduce both new and enhanced [removed: services as quickly as possible] [added: products] and [removed: prior to our competitors.][added: services.]

We face competition in the domain name registry space from other gTLD and ccTLD registries that are competing for the business of entities and individuals that are seeking to obtain a domain name [removed: registration, establish an online presence, as well as other uses of domain names, such as branded email.][added: registration.]

In addition to the gTLDs and ccTLDs we operate or for which we provide back-end registry services, there are over 1,200 other operational gTLD registries, over 250 [removed: Latin script] [added: ASCII] ccTLD registries, more than 50 IDN ccTLD registries, and over 90 IDN gTLD registries.

Under our agreements with ICANN, we are subject to certain restrictions in the operation of *.com*, *.net* and *.name* on pricing, bundling, marketing, methods of distribution, [removed: the] introduction of new registry services, and use of registrars, that do not apply to ccTLDs and other gTLDs and therefore may create a competitive disadvantage.

To the extent end-users navigate using search engines or social media, [added: as opposed to direct navigation via domain names,] or transact on e-commerce platforms, [removed: as opposed to direct navigation,] we face competition from search engines such as Google, Bing, Yahoo!, and Baidu, social media networks such [added: as Facebook and WeChat, e-commerce platforms such as Amazon, eBay and Taobao, and microblogging tools such as Twitter.]

In addition, we face competition from these social media [removed: businesses] and e-commerce platforms if they are used by businesses and individuals to establish an online presence rather than through the use of a domain name.

Furthermore, to the extent end-users increase the use of [removed: web and] mobile applications to locate and access content, we face competition from providers of such web and mobile applications.

In addition, our [removed: markets are] [added: industry is] characterized by [removed: announcements of] collaborative relationships [removed: involving] [added: involving, and consolidation of,] our competitors.

Among our competitors are [removed: Afilias plc,] [added: Donuts,] CentralNic Ltd., and [removed: Neustar, Inc.][added: GoDaddy.]

ICANN plays a central coordination role in [removed: the] [added: this bottom-up] multi-stakeholder system.

[removed: The] [added: ICANN’s] multi-stakeholder [removed: process has] [added: policy development processes have created] and will continue to create policies, programs, and standards that directly or indirectly impact [removed: or affect] our business.

[removed: For example, under its internet domain name regulations, China’s Ministry of Industry and Information Technology awarded] [added: In China, we are required to maintain] licenses for [removed: the continued operation of the] .*com* and .*net* TLDs [removed: in China.][added: under regulations issued by the Ministry of Industry and Information Technology.]

[removed: Specifically, the Proposed .*com*] Amendment [removed: would allow Verisign] [added: 3] to [added: the .*com* Registry Agreement permits an] increase [added: to] the Maximum Price (as defined in the *.com* Registry Agreement) of [removed: a] *.com* domain name [removed: registration] [added: registrations] by up to 7% [added: over the previous year] in each of the final four years of each six-year period.

[removed: *com*] [added: Finally, Amendment 35 clarified that the restrictions in the *.com*] Registry Agreement relating to vertical integration apply solely to the .*com* TLD.

[removed: The Proposed *.com*] Amendment [added: 3] also [removed: clarifies] [added: clarified] that [removed: Verisign’s] [added: the restrictions in the *.com* Registry Agreement relating to vertical integration apply solely to the *.com* TLD and also clarified that our] ability to increase prices by 7% over the previous year due to new ICANN [removed: specifications or polices adopted by ICANN pursuant to the procedures set forth in its bylaws and due process (“Consensus Policies”)] [added: Consensus Policies] or documented extraordinary expense may occur only in years where [removed: Verisign does] [added: we do] not otherwise take the price increases described above.

The *.com* Registry Agreement [removed: includes a number of obligations, including,] [added: requires that] on a quarterly [removed: basis, that] [added: basis] we pay $0.25 to ICANN for each annual term of a domain name registered or renewed during such quarter.

[removed: The] [added: Other significant terms within the] .*com* [removed: and .*net*] Registry [removed: Agreements contain] [added: Agreement include performance specifications and] service level agreements for the availability of our DNS resolution services, our shared registration system, and our Whois services.

[removed: The Cooperative Agreement will automatically renew on the same terms] for successive six-year terms unless the DOC provides written notice of non-renewal 120 days prior to the end of the then-current term.

The zone counts and information on how to obtain access to the zone files can be found at https://www.Verisign.com/zone.

Our servers process more than 215 billion queries daily.

Our operations infrastructure operates 24 hours a day, supporting our services.

- *Distributed Servers:* We operate a large number of high-speed servers globally to support localized capacity and performance demands.

- *Security:* We incorporate architectural concepts such as protected domains, restricted nodes, and distributed access control in our system architecture.

In addition, we employ firewalls and intrusion detection software, as well as proprietary security mechanisms at many points across our infrastructure.

We perform recurring internal vulnerability testing and controls audits, and also contract with third-party security consultants who perform periodic penetration tests and security risk assessments on our systems.

We have engineered resiliency and diversity into how we host classes of products throughout our set of interconnected sites to mitigate unknown vendor defects and zero-hour security vulnerabilities.

This includes different physical security silos, which themselves are separated into bulkheads, and in which servers are located.

Corporate networks are in their own physical silo.

Our support teams are staffed with trained technical customer support agents.

Support is available for customers 24 hours a day, every day of the year.

Throughout the COVID-19 pandemic, our support teams have continued servicing our customers while working remotely.

We periodically operate services at an alternate data center during maintenance windows to ensure the availability of our data centers for disaster recovery.

Among our competitors operating gTLD and ccTLD registries are China Internet Network Information Center (CNNIC), DENIC, Nominet, Public Interest Registry (PIR), Donuts, GoDaddy, and Radix.

Our ability to participate and benefit from such collaborative arrangements or consolidations may be limited and such collaborative arrangements and consolidations could harm our competitive position and adversely impact our business.

Certain policies can be adopted as Consensus or Temporary Policies, which we are obligated to follow under our agreements with ICANN.

For example, in response to the General Data Protection Regulation, ICANN issued a Temporary Policy modifying public access to information from the Whois services delivered by registrars and registries.

We are also subject to country-level laws and regulations in the United States and in foreign countries.

The licenses for the .*com* and .*net* TLDs must be renewed in 2022.

Additionally, in many jurisdictions in which we operate, including California, the European Union, the United Kingdom, China and elsewhere, strict new data security and data privacy regulations have been or are being adopted.

Because we do not possess extensive personal information, we have not yet experienced significant impacts from these regulations.

However, compliance costs and other business impacts could become significant as regulatory enforcement increases, as courts interpret these regulations, and as new laws and regulations continue to be adopted.

Other regulations, or changes to regulations, may also impact our business operations including changes to the Digital Services Act or Network and Information Security Directive, in the European Union, or the Communications Decency Act, in the United States.

*.com Top-Level Domain*

Our operation of the .*com* TLD is subject to the terms of a registry agreement with ICANN (as amended, the “.*com* Registry Agreement”).

The current term of the *.com* Registry Agreement is six years and must be renewed or extended by November 30, 2024.

The *.com* Registry Agreement contains a “presumptive” right of renewal; although, ICANN could terminate or refuse to renew.

See “Risk Factors - Any loss or modification of our right to operate the .*com* and .*net* gTLDs could have a material adverse impact on our business and result in loss of revenues.” in Part I, Item 1A of this Form 10-K for further information.

The .*com* Registry Agreement contains marketing limitations, including limitations on our ability to bundle products and the manner in which we provide marketing support to ICANN-accredited registrars.

We are also required under the .*com* Registry Agreement to provide ICANN-accredited registrars with access to our systems to register or take other actions related to domain names.

In order to introduce new Registry Services or make material changes to existing Registry Services, we must follow prescribed procedures which permit ICANN to review and approve such services.

Our operation of the .*com* TLD is also subject to the terms of a Cooperative Agreement with the DOC.

The Cooperative Agreement has undergone various amendments with the most recent, Amendment 35, on October 26, 2018.

Amendment 35 extended the term of the Cooperative Agreement until November 30, 2024, which will automatically renew on the same terms

Amendment 35 includes the DOC’s consent to the modification of the pricing terms in the .*com* Registry Agreement (as described above).

*.net Top-Level Domain*

Our operation of the .*net* TLD is subject to the terms of a registry agreement with ICANN (as amended, the “*.net* Registry Agreement”).

The current term of this agreement is six years and must be renewed or extended by July 1, 2023.

The terms of the .*net* Registry Agreement are substantially similar to the terms of the .*com* Registry Agreement, except that we are entitled to raise the annual price for new and renewal .*net* domain name registrations by 10% each year.

These secure data centers operate 24 hours a day, supporting our business units and services.

| | |

| --- | --- |

| • | *Security:* We incorporate architectural concepts such as protected domains, restricted nodes and distributed access control in our system architecture. In addition, we employ firewalls and intrusion detection software, as well as proprietary security mechanisms at many points across our infrastructure. We perform recurring internal vulnerability testing and controls audits, and also contract with third-party security consultants who perform periodic penetration tests and security risk assessments on our systems. We have engineered resiliency and diversity into how we host classes of products throughout our set of interconnected sites to mitigate unknown vendor defects and zero-hour security vulnerabilities. This includes different physical security silos, which themselves are separated into bulkheads, and in which servers are located. Corporate networks are in their own physical silo. Thus, the corporate networks to which |

Our Virginia call center is staffed with trained customer support agents 24 hours a day, every day of the year.

We offer promotional marketing programs for our registrars based upon market conditions and the business environment in which the registrars operate.

as Facebook and WeChat, e-commerce platforms such as Amazon, eBay and Taobao, and microblogging tools such as Twitter.

The existence or announcement of any such relationships could adversely affect our ability to attract and retain customers.

In addition, country-level regulations, such as those implemented by China, impose additional costs on our business, can affect the growth or renewal rates of domain name registrations, and may also affect our ability to do business.

These licenses must be renewed in 2022.

Domestically and abroad, legislative and regulatory bodies continue to enhance and modify data privacy protections, which impact our collection and delivery of personal data as we provide our domain name registry services and could affect our costs of operation.

As the exclusive registry of domain names within the *.com* and *.net* gTLDs, we have entered into certain agreements with ICANN and, in the case of .*com*, the DOC under a Cooperative Agreement.

*.com Registry Agreement*

The extension of the *.com* Registry Agreement effective on October 20, 2016 provides that we will continue to be the sole registry operator for domain names in the *.com* gTLD through November 30, 2024.

As part of the extension of the *.com* Registry Agreement, the Company and ICANN agreed to cooperate and negotiate in good faith to amend the terms of the *.com* Registry Agreement: (i) by October 20, 2018, to preserve and enhance the security and stability of the internet or the *.com* TLD, and (ii) as may be necessary for consistency with changes to, or the termination or expiration of, the Cooperative Agreement.

On January 3, 2020, the Company and ICANN announced that they reached a proposed agreement to amend the *.com* Registry Agreement (“Proposed *.com* Amendment”) and to enter into a new proposed framework for working together on initiatives related to the security, stability and resiliency of the DNS in the form of a binding Letter of Intent (“Proposed LOI”).

Together, these agreements satisfy the requirements described above as part of the *.com* Registry Agreement extension.

In conjunction with the public announcement, ICANN published the Proposed *.com* Amendment and Proposed LOI for public comment until February 14, 2020.

Following the close of the comment period and review of the public comments, ICANN will prepare and publish a summary and analysis report.

Thereafter, ICANN and Verisign will determine whether to enter into the Proposed *.com* Amendment and Proposed LOI.

The Proposed *.com* Amendment, among other items, incorporates the applicable terms of Amendment 35 to the Cooperative Agreement.

The first such six-year period began on October 26, 2018.

The Proposed .*com* Amendment also clarifies that the restrictions on the.

In addition, it sets forth additional obligations, including updated technical and reporting requirements that are similar to requirements in ICANN’s new gTLD base agreement.

The Proposed LOI formalizes a framework by which ICANN and the Company will work together to support additional enhancements to the security and stability of the DNS.

The Proposed LOI provides that the Company will, make payments annually to ICANN totaling $20 million over five years, beginning on January 1, 2021, to support ICANN’s initiatives to preserve and enhance the security, stability and resiliency of the DNS, including root server system governance, mitigation of DNS security threats, promotion and/or facilitation of DNSSEC deployment, the mitigation of name collisions and research into the operation of the DNS.

A material term of the Proposed LOI is a signed confirmation by an ICANN offer confirming that ICANN incurred costs in the amount of Verisign’s support payment during each period.

In addition, we are required to comply with and implement temporary specifications or policies (“Temporary Policies”) and Consensus Policies, as well as other provisions relating to registry operations.

The *.com* and *.net* Registry Agreements with ICANN contain a “presumptive” right of renewal upon the expiration of their current terms.

ICANN could terminate or refuse to renew our .*com* and/or *.net* Registry Agreements if, upon proper notice, (i) we fail to cure a fundamental and material breach of certain specified obligations, and (ii) we fail to timely comply with a final decision of an arbitrator or court.

See “Risk Factors - Risks arising from our agreements governing our business could limit our ability to maintain or grow our business” in Part I, Item 1A of this Annual Report on Form 10-K for further information.

Our *.com* and *.net* Registry Agreements contain obligations to provide access to our systems, restrictions on our ability to market and bundle our products and services, and restrictions on our ability to control our registrar channel or own a registrar.

The *.com* and .*net* Registry Agreements also provide a procedure for Verisign to propose, and ICANN to review and approve, certain changes to registry services and requests by Verisign to offer additional registry services.

*Cooperative Agreement*

Verisign and the DOC entered into Amendment 35 of the Cooperative Agreement on October 26, 2018, which, among other items, extends the term of the Cooperative Agreement until November 30, 2024.

Under Amendment 35 to the Cooperative Agreement, the Maximum Price (as defined in the *.com* Registry Agreement) of a *.com* domain name may be increased without further DOC approval by up to 7% in each of the final four years of each six-year period.

The changes to the Maximum Price under Amendment 35 are not effective until such price increases are incorporated in the *.com* Registry Agreement with ICANN through the Proposed *.com* Amendment.

Also, under Amendment 35, we clarified that the restrictions in the *.com* Registry Agreement relating to vertical integration apply solely to the .*com* TLD.

*.net Registry Agreement*

We entered into a renewal of our .*net* Registry Agreement with ICANN that was effective on July 1, 2017.

As [removed: we] previously disclosed, [removed: Afilias,] a [added: subsidiary of Afilias plc (“Afilias”), a] competitor and losing bidder in the [removed: .web] [added: *.web*] auction, filed a form of arbitration proceeding against ICANN, an Independent Review Process [removed: (IRP)] [added: (“IRP”)] under ICANN’s bylaws, on November 14, 2018.

Afilias alleges that the agreement between Verisign and Nu Dotco, LLC [removed: (NDC)] [added: (“NDC”)] pertaining to [removed: .web] [added: .*web*] violated ICANN’s new gTLD Applicant Guidebook.

As a result, Afilias claims that ICANN had a duty to disqualify NDC’s bid and award [removed: .web] [added: the .*web* gTLD] to Afilias.

Afilias also claims that ICANN would violate its bylaws pertaining to competition by awarding [removed: .web] [added: the .*web* gTLD] to Verisign.

Afilias amended its IRP [added: request] on March 21, 2019 in part to oppose Verisign’s and NDC’s participation in the IRP.

We believe that Afilias’ claims regarding Verisign’s and NDC’s conduct are without [removed: merit] [added: merit,] and we intend to vigorously oppose [removed: Afilias] [added: Afilias’ claims] in this matter.

In early August 2020, the IRP panel held a hearing on Afilias’ claims.

We expect the IRP panel to issue its decision in the first quarter of 2021.

| | |

| --- | --- |

[removed: FORM 10-K][added: FORM 10-K]

| ☒ | [added: | |] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

For the fiscal year [removed: ended December] [added: ended December] 31, [removed: 2019][added: 2020]

| ☐ | [added: | |] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | [added: | |]

Commission File [removed: Number: 000-23593][added: Number: 000-23593]

| Delaware | | | [added: | | | | | |] 94-3221585 | [added: | |]

| (State or other jurisdiction [removed: of incorporation] [added: of incorporation] or organization) | | | [added: | | | | | |] (I.R.S. [removed: Employer Identification] [added: Employer Identification] No.) | [added: | |]

| 12061 Bluemont Way, | | | | [added: | | | | | | | |]

| Reston, | [added: | |] Virginia | | [added: | | | |] 20190 | [added: | |]

| (Address of principal executive offices) | | | [added: | | | | | |] (Zip Code) | [added: | |]

Registrant’s telephone number, including area code: [removed: (703) 948-3200][added: (703) 948-3200]

| Title of each class | [added: | |] Trading Symbol(s) | [added: | |] Name of each exchange on which registered | [added: | |]

| Common Stock, $0.001 par value per share | [added: | |] VRSN | [added: | |] Nasdaq Global Select Market | [added: | |]

Yes ☒ No [removed: ☒][added: ☐]

| Large accelerated filer | [added: | |] ☒ | | [added: | | | |] Accelerated filer | [added: | |] ☐ | [added: | |]

| Non-accelerated filer | [added: | |] ☐ | | [added: | | | |] Smaller reporting company | [added: | |] ☐ | [added: | |]

| | | | [added: | | | | | |] Emerging growth company | [added: | |] ☐ | [added: | |]

The aggregate market value of the voting and non-voting common equity stock held by non-affiliates of the Registrant as of June 30, [removed: 2019,] [added: 2020,] was [removed: $16.1] [added: $15.1] billion based upon the last sale price reported for such date on the Nasdaq Global Select Market.

Number of shares of Common Stock, $0.001 par value, outstanding as of the close of business on February [removed: 7, 2020: 116,417,738] [added: 12, 2021: 113,094,561] shares.

Portions of the [added: Registrant’s] definitive [removed: Proxy Statement] [added: proxy statement] to be delivered to stockholders in connection with the [removed: 2020] [added: 2021] Annual Meeting of Stockholders are incorporated by reference into Part III [added: of this Annual Report on Form 10-K where indicated.]

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| | [removed: [PART III](#sAD973E156C8E508A8F27AD97DDF7420E)] | | [added: [PART III](#i5fa635c92d5445ec8cdfd4f770e2aae2_133) | | | | | |]

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Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

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| | | | [PART I](#i5fa635c92d5445ec8cdfd4f770e2aae2_10) | | | | | |

| | | | [PART II](#i5fa635c92d5445ec8cdfd4f770e2aae2_34) | | | | | |

| | | | [PART IV](#i5fa635c92d5445ec8cdfd4f770e2aae2_151) | | | | | |

| [Signatures](#i5fa635c92d5445ec8cdfd4f770e2aae2_160) | | | | | | [61](#i5fa635c92d5445ec8cdfd4f770e2aae2_160) | | |

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| | [PART I](#s84185E9E8AE05E9AA6C6CEA52EF3D3DF) | |

| | [PART II](#sEBDBAC07ED0657C798C61A82E3993FED) | |

| | [PART IV](#s0FA42D95724651ACBC753A4ECE3B9FC8) | |

| [Signatures](#s3B6F6F60DF5F5971B6FBD1F9B401064D) | | [65](#s3B6F6F60DF5F5971B6FBD1F9B401064D) |

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As of December 31, [removed: 2019,] [added: 2020,] we owned each of our significant properties, which include our corporate headquarters facility in Reston, Virginia, and data center facilities in New Castle, Delaware and Dulles, Virginia.

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On February [removed: 7, 2020,] [added: 12, 2021,] there were [removed: 367] [added: 353] holders of record of our common stock.

The following table presents the share repurchase activity during the three months ended December 31, [removed: 2019:][added: 2020:]

| | [added: | |] Total [removed: Number of Shares Purchased] [added: Number of Shares Purchased] | | | [removed: Average Price Paid per] [added: | | | Average Price Paid per] Share | | | | [added: | |] Total [removed: Number of Shares Purchased as Part] [added: Number] of [removed: Publicly Announced Plans or Programs] [added: Shares Purchased as Part of Publicly Announced Plans or Programs] (1) | | | [removed: Approximate Dollar] [added: | | | Approximate Dollar] Value [removed: of Shares] [added: of Shares] That [removed: May Yet] [added: May Yet] Be [removed: Purchased Under] [added: Purchased Under] the Plans [removed: or Programs] [added: or Programs] (1)(2) | | |

| | [added: | |] (Shares in thousands) | | | | | | | | | | | | | [added: | | | | | | | |]

[removed: | (1) | Effective] [added: (1)Effective] February [removed: 7, 2019,] [added: 6, 2020,] our Board [added: of Directors] authorized the repurchase of our common stock in the amount of [removed: approximately $602.9] [added: $743.0] million, in addition to the [removed: $397.1] [added: $257.0] million [removed: remaining] [added: that remained] available for [removed: repurchase] [added: repurchases] under the [removed: previous] share repurchase program, for a total repurchase authorization of up to $1.0 billion under the [removed: share repurchase] program. [removed: |]

[removed: | (2) | Effective] [added: (2)Effective] February [removed: 6, 2020,] [added: 11, 2021,] our Board [added: of Directors] authorized the repurchase of our common stock in the amount of [removed: $743.0] [added: $747.0] million, in addition to the [removed: $257.0] [added: $253.0] million that remained available for repurchases under the share repurchase program, for a total repurchase authorization of up to $1.0 billion under the program. [removed: The share repurchase program has no expiration date. Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions. |]

The graph assumes that $100 (and the reinvestment of any dividends thereafter) was invested in our common stock, the S&P 500 Index and the S&P 500 Information Technology Index on December 31, [removed: 2014,] [added: 2015,] and calculates the return annually through December 31, [removed: 2019.][added: 2020.]

[removed: ][added: ]

| | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 – 31, 2020 | | | 271 | | | | | | $205.95 | | | | | | 271 | | | | | | $ | 449.8 | million |

| November 1 – 30, 2020 | | | 282 | | | | | | $197.67 | | | | | | 282 | | | | | | $ | 394.1 | million |

| December 1 – 31, 2020 | | | 279 | | | | | | $209.14 | | | | | | 279 | | | | | | $ | 335.6 | million |

| | | | 832 | | | | | | | | | | | | 832 | | | | | | | | |

The share repurchase program has no expiration date.

Purchases made under the program could be effected through open market transactions, block purchases, accelerated share repurchase agreements or other negotiated transactions.

| | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 12/31/15 | | | 12/31/16 | | | 12/31/17 | | | 12/31/18 | | | 12/31/19 | | | 12/31/20 | | |

| VeriSign, Inc. | | | $ | 100 | | $ | 87 | | $ | 131 | | $ | 170 | | $ | 221 | | $ | 248 | |

| S&P 500 Index | | | $ | 100 | | $ | 112 | | $ | 136 | | $ | 130 | | $ | 171 | | $ | 203 | |

| S&P 500 Information Technology Index | | | $ | 100 | | $ | 114 | | $ | 158 | | $ | 158 | | $ | 237 | | $ | 341 | |

| | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| October 1 – 31, 2019 | 429 | | | | $184.83 | | | 429 | | | $ | 442.8 | million |

| November 1 – 30, 2019 | 302 | | | | $188.04 | | | 302 | | | $ | 386.1 | million |

| December 1 – 31, 2019 | 308 | | | | $190.04 | | | 308 | | | $ | 327.5 | million |

| | 1,039 | | | | | | | 1,039 | | | | | |

| | |

| --- | --- |

| | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | 12/31/14 | | | 12/31/15 | | | 12/31/16 | | | 12/31/17 | | | 12/31/18 | | | 12/31/19 | | |

| VeriSign, Inc. | $ | 100 | | $ | 153 | | $ | 133 | | $ | 201 | | $ | 260 | | $ | 338 | |

| S&P 500 Index | $ | 100 | | $ | 101 | | $ | 113 | | $ | 138 | | $ | 132 | | $ | 174 | |

| S&P 500 Information Technology Index | $ | 100 | | $ | 106 | | $ | 121 | | $ | 167 | | $ | 167 | | $ | 251 | |

The following table sets forth selected financial data [added: for, and] as of [removed: and for] the [added: end of, each of the] last five fiscal years.

| | [added: | |] Year Ended December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| | [added: | | 2020 | | | | | |] 2019 | | | | [added: | |] 2018 | | | | [removed: 2017] | | [added: 2017] | | [removed: 2016] | | | | [removed: 2015] [added: 2016] | | |

| Revenues | [added: | |] $ | [removed: 1,232] [added: 1,265] | | | [added: | |] $ | [removed: 1,215] [added: 1,232] | | | [added: | |] $ | [removed: 1,165] [added: 1,215] | | | [added: | |] $ | [removed: 1,142] [added: 1,165] | | | [added: | |] $ | [removed: 1,059] [added: 1,142] | |

| Operating income | [added: | |] $ | [removed: 806] [added: 824] | | | [added: | |] $ | [removed: 767] [added: 806] | | | [added: | |] $ | [removed: 708] [added: 767] | | | [added: | |] $ | [removed: 687] [added: 708] | | | [added: | |] $ | [removed: 606] [added: 687] | |

| Net income (1) | [added: | |] $ | [removed: 612] [added: 815] | | | [added: | |] $ | [removed: 582] [added: 612] | | | [added: | |] $ | [removed: 457] [added: 582] | | | [added: | |] $ | [removed: 441] [added: 457] | | | [added: | |] $ | [removed: 375] [added: 441] | |

| Earnings per share: | | | | | | | | | | | | | | | | | | | | [added: | | | | | | | | | |]

| Basic | [added: | |] $ | [removed: 5.17] [added: 7.08] | | | [added: | |] $ | [removed: 5.13] [added: 5.17] | | | [added: | |] $ | [removed: 4.56] [added: 5.13] | | | [added: | |] $ | [removed: 4.12] [added: 4.56] | | | [added: | |] $ | [removed: 3.29] [added: 4.12] | |

| Diluted | [added: | |] $ | [removed: 5.15] [added: 7.07] | | | [added: | |] $ | [removed: 4.75] [added: 5.15] | | | [added: | |] $ | [removed: 3.68] [added: 4.75] | | | [added: | |] $ | [removed: 3.42] [added: 3.68] | | | [added: | |] $ | [removed: 2.82] [added: 3.42] | |

[removed: | (1) |] Net income for 2018 includes a $52.0 million after-tax gain [removed: recognized in 2018] related to [removed: the sale of customer contracts of] our [added: divested] security services business. [removed: |]

| | [added: | |] As of December 31, | | | | | | | | | | | | | | | | | | | [added: | | | | | | | |]

| Cash, cash equivalents and marketable securities (1) (2) | [added: | |] $ | [removed: 1,218] [added: 1,167] | | | [added: | |] $ | [removed: 1,270] [added: 1,218] | | | [added: | |] $ | [removed: 2,415] [added: 1,270] | | | [added: | |] $ | [removed: 1,798] [added: 2,415] | | | [added: | |] $ | [removed: 1,915] [added: 1,798] | |

| Total assets (1) (2) | [added: | |] $ | [removed: 1,854] [added: 1,767] | | | [added: | |] $ | [removed: 1,915] [added: 1,854] | | | [added: | |] $ | [removed: 2,941] [added: 1,915] | | | [added: | |] $ | [removed: 2,335] [added: 2,941] | | | [added: | |] $ | [removed: 2,358] [added: 2,335] | |

| Deferred revenues | [added: | |] $ | [removed: 1,034] [added: 1,063] | | | [added: | |] $ | [removed: 1,018] [added: 1,034] | | | [added: | |] $ | [removed: 999] [added: 1,018] | | | [added: | |] $ | [removed: 976] [added: 999] | | | [added: | |] $ | [removed: 961] [added: 976] | |

| Subordinated convertible debentures, including contingent interest derivative (2) | [added: | |] $ | — | | | [added: | |] $ | — | | | [added: | |] $ | [removed: 628] [added: —] | | | [added: | |] $ | [removed: 630] [added: 628] | | | [added: | |] $ | [removed: 634] [added: 630] | |

| Long-term debt (1) | [added: | |] $ | [removed: 1,788] [added: 1,790] | | | [added: | |] $ | [removed: 1,785] [added: 1,788] | | | [added: | |] $ | [removed: 1,783] [added: 1,785] | | | [added: | |] $ | [removed: 1,237] [added: 1,783] | | | [added: | |] $ | [removed: 1,235] [added: 1,237] | |

[removed: |] (1) [removed: |] The increases in Cash, cash equivalents and marketable securities, Total assets and Long-term debt from 2016 to 2017 was due to the issuance of $550.0 million aggregate principal amount of 4.75% senior unsecured notes due 2027. [removed: |]

[removed: |] (2) [removed: |] The decreases in Cash, cash equivalents and marketable securities, Total assets and Subordinated convertible debentures, including contingent interest derivative from 2017 to 2018 was due to the settlement of our subordinated convertible debentures in 2018. [removed: |]

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

(1) Net income for 2020 includes the recognition of $204.2 million of previously unrecognized income tax benefits.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | 2020 | | | | | | 2019 | | | | | | 2018 | | | | | | 2017 | | | | | | 2016 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

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| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | |

| --- | --- |

| Financial Statement Description | [added: | |] Page | [added: | |]

| [Reports of Independent Registered Public Accounting [removed: Firm](#s0D2CE1401DF55B93B56298C86A5EEBED)] [added: Firm](#i5fa635c92d5445ec8cdfd4f770e2aae2_61)] | [removed: [35](#s0D2CE1401DF55B93B56298C86A5EEBED)] | [added: | [33](#i5fa635c92d5445ec8cdfd4f770e2aae2_61) | | |]

| [Consolidated Balance [removed: Sheets](#s88D12C1C2E4F5E999553884B688D57EF)] [added: Sheets](#i5fa635c92d5445ec8cdfd4f770e2aae2_64)] | [removed: [38](#s88D12C1C2E4F5E999553884B688D57EF)] | [added: | [36](#i5fa635c92d5445ec8cdfd4f770e2aae2_64) | | |]

| [Consolidated Statements of Comprehensive [removed: Income](#s5F601192E687596FA74CE15916C8E66D)] [added: Income](#i5fa635c92d5445ec8cdfd4f770e2aae2_70)] | [removed: [39](#s5F601192E687596FA74CE15916C8E66D)] | [added: | [37](#i5fa635c92d5445ec8cdfd4f770e2aae2_70) | | |]

| [Consolidated Statements of Stockholders’ [removed: Deficit](#sA774377C62C05FE890CB2CEAD76ACAE5)] [added: Deficit](#i5fa635c92d5445ec8cdfd4f770e2aae2_73)] | [removed: [40](#sA774377C62C05FE890CB2CEAD76ACAE5)] | [added: | [38](#i5fa635c92d5445ec8cdfd4f770e2aae2_73) | | |]

| [Consolidated Statements of Cash [removed: Flows](#s69DD8753E902546D9F7CAD9024041973)] [added: Flows](#i5fa635c92d5445ec8cdfd4f770e2aae2_76)] | [removed: [41](#s69DD8753E902546D9F7CAD9024041973)] | [added: | [39](#i5fa635c92d5445ec8cdfd4f770e2aae2_76) | | |]

| [Notes to Consolidated Financial [removed: Statements](#s1B461C3011D8548BB2A9CF29BCF3E22B)] [added: Statements](#i5fa635c92d5445ec8cdfd4f770e2aae2_79)] | [removed: [42](#s1B461C3011D8548BB2A9CF29BCF3E22B)] | [added: | [40](#i5fa635c92d5445ec8cdfd4f770e2aae2_79) | | |]

We have audited the accompanying consolidated balance sheets of Verisign, Inc. and subsidiaries (the Company) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of comprehensive income, stockholders’ deficit, and cash flows for each of the years in the [removed: three‑year] [added: three-year] period ended December 31, [removed: 2019,] [added: 2020,] and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the years in the [removed: three‑year] [added: three-year] period ended December 31, [removed: 2019,] [added: 2020,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February [removed: 14, 2020] [added: 19, 2021] expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex [removed: judgment.][added: judgments.]

As discussed in Notes 1 and 10 [removed: of] [added: to] the consolidated financial statements, [removed: as of December 31, 2019,] the Company [removed: had $231.3] [added: recognized $67.8] million of [removed: gross unrecognized] [added: deferred] tax [removed: benefits.][added: assets, net as of December 31, 2020.]

The [added: following are the] primary procedures we performed to address this critical audit [removed: matter included the following.][added: matter.]

We have audited [removed: Verisign,] [added: VeriSign,] Inc. and subsidiaries’ (the Company) internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in [removed: *Internal] [added: Internal] Control [removed: -] [added: –] Integrated Framework [removed: (2013)*] [added: (2013)] issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of comprehensive income, stockholders’ deficit, and cash flows for each of the years in the three-year period ended December 31, [removed: 2019,] [added: 2020,] and the related notes (collectively, the consolidated financial statements), and our report dated February [removed: 14, 2020] [added: 19, 2021] expressed an unqualified opinion on those consolidated financial statements.

[removed: | | December 31, 2019 | | | | December] [added: DECEMBER] 31, [added: 2020, 2019 AND] 2018 [removed: | | |]

| ASSETS | | | | | | | | [added: | | | |]

| Current assets: | | | | | | | | [added: | | | |]

| Cash and cash equivalents | [added: | |] $ | [removed: 508,196] [added: 401,194] | | | [added: | |] $ | [removed: 357,415] [added: 508,196] | |

| Marketable securities | [removed: 709,863] | | [added: 765,713] | | [removed: 912,254] | | | [added: | 709,863 | | |]

| Other current assets | [removed: 60,530] | | [added: 51,033] | | [removed: 47,365] | | | [added: | 60,530 | | |]

| Total current assets | [removed: 1,278,589] | | [added: 1,217,940] | | [removed: 1,317,034] | | | [added: | 1,278,589 | | |]

| Property and equipment, net | [removed: 250,283] | | [added: 245,571] | | [removed: 253,905] | | | [added: | 250,283 | | |]

| Goodwill | [added: | |] 52,527 | | | | [added: | |] 52,527 | | |

| Deferred tax assets | [removed: 87,798] | | [added: 67,914] | | [removed: 104,992] | | | [added: | 87,798 | | |]

| Deposits to acquire intangible assets | [added: | |] 145,000 | | | | [added: | |] 145,000 | | |

| Other long-term assets | [removed: 39,812] | | [added: 37,958] | | [removed: 41,046] | | | [added: | 39,812 | | |]

| Total long-term assets | [removed: 575,420] | | [added: 548,970] | | [removed: 597,470] | | | [added: | 575,420 | | |]

| Total assets | [added: | |] $ | [removed: 1,854,009] [added: 1,766,910] | | | [added: | |] $ | [removed: 1,914,504] [added: 1,854,009] | |

| LIABILITIES AND STOCKHOLDERS’ DEFICIT | | | | | | | | [added: | | | |]

| Current liabilities: | | | | | | | | [added: | | | |]

| Accounts payable and accrued liabilities | [added: | |] $ | [removed: 209,988] [added: 208,642] | | | [added: | |] $ | [removed: 215,208] [added: 209,988] | |

| Deferred revenues | [removed: 755,178] | | [added: 780,051] | | [removed: 732,382] | | | [added: | 755,178 | | |]

| Total current liabilities | [removed: 965,166] | | [added: 988,693] | | [removed: 947,590] | | | [added: | 965,166 | | |]

| Long-term deferred revenues | [removed: 278,702] | | [added: 282,838] | | [removed: 285,720] | | | [added: | 278,702 | | |]

| Senior notes | [removed: 1,787,565] | | [added: 1,790,083] | | [removed: 1,785,047] | | | [added: | 1,787,565 | | |]