Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Financial Statement Description			Page
Reports of Independent Registered Public Accounting Firm			33
Consolidated Balance Sheets			36
Consolidated Statements of Comprehensive Income			37
Consolidated Statements of Stockholders’ Deficit			38
Consolidated Statements of Cash Flows			39
Notes to Consolidated Financial Statements			40

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

VeriSign, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of VeriSign, Inc. and subsidiaries (the Company) as of December 31, 2024 and 2023, 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, 2024, 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, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2024, 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, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 13, 2025 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

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 judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Evaluation of accounting for income taxes

As discussed in Notes 1 and 11 to the consolidated financial statements, the Company recognized $281.3 million of deferred tax assets, net as of December 31, 2024. The Company’s income tax expense was $236.2 million for the year ended December 31, 2024. The Company conducts business globally and consequently is subject to U.S. federal, state, as well as foreign income taxes in the jurisdictions it operates. The Company exercises judgment in the application of complex tax regulations in multiple jurisdictions.

We identified the evaluation of the accounting for income taxes as a critical audit matter. Evaluating the Company’s application of complex tax regulations in the domestic and foreign jurisdictions it operates and the impact of those regulations on U.S. federal, state, and foreign income tax provisions required complex auditor judgment, and the use of tax professionals with specialized skills and knowledge.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s income tax process, including controls related to the application of complex tax regulations in the Company’s various tax jurisdictions and the impact on the Company’s U.S. federal, state, and foreign income tax provision. We involved domestic and international tax

professionals with specialized skills and knowledge in various tax jurisdictions who assisted in evaluating the Company’s analyses over the application of complex tax regulations in those jurisdictions.

/s/ KPMG LLP

We have served as the Company’s auditor since 1995.

McLean, Virginia

February 13, 2025

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

VeriSign, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited VeriSign, Inc. and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control – Integrated Framework (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, 2024, based on criteria established in Internal Control – Integrated Framework (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, 2024 and 2023, 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, 2024, and the related notes (collectively, the consolidated financial statements), and our report dated February 13, 2025 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

McLean, Virginia

February 13, 2025

VERISIGN, INC.

CONSOLIDATED BALANCE SHEETS

(In millions, except par value)

			December 31, 2024						December 31, 2023
ASSETS
Current assets:
Cash and cash equivalents			$	206.7					$	240.1
Marketable securities			393.2						686.3
Other current assets			63.9						61.9
Total current assets			663.8						988.3
Property and equipment, net			224.5						233.2
Goodwill			52.5						52.5
Deferred tax assets			281.3						301.0
Deposits to acquire intangible assets			145.0						145.0
Other long-term assets			39.4						29.0
Total long-term assets			742.7						760.7
Total assets			$	1,406.5					$	1,749.0
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable and accrued liabilities			$	257.8					$	257.4
Deferred revenues			973.5						931.1
Current senior notes			299.8						—
Total current liabilities			1,531.1						1,188.5
Long-term deferred revenues			330.7						315.0
Long-term senior notes			1,492.5						1,790.2
Long-term tax and other liabilities			10.1						36.3
Total long-term liabilities			1,833.3						2,141.5
Total liabilities			3,364.4						3,330.0
Commitments and contingencies
Stockholders’ deficit:
Preferred stock—par value $.001 per share; Authorized shares: 5.0; Issued and outstanding shares: none			—						—
Common stock and additional paid-in capital—par value $.001 per share; Authorized shares: 1,000; Issued shares: 355.2 at December 31, 2024 and 354.9 at December 31, 2023; Outstanding shares: 95.0 at December 31, 2024 and 101.3 at December 31, 2023			10,645.3						11,808.0
Accumulated deficit			(12,600.7)						(13,386.4)
Accumulated other comprehensive loss			(2.5)						(2.6)
Total stockholders’ deficit			(1,957.9)						(1,581.0)
Total liabilities and stockholders’ deficit			$	1,406.5					$	1,749.0

See accompanying Notes to Consolidated Financial Statements.

VERISIGN, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions, except per share data)

			Year Ended December 31,
			2024						2023						2022
Revenues			$	1,557.4					$	1,493.1					$	1,424.9
Costs and expenses:
Cost of revenues			191.4						197.3						200.7
Research and development			96.7						91.0						85.7
Selling, general and administrative			211.1						204.2						195.4
Total costs and expenses			499.2						492.5						481.8
Operating income			1,058.2						1,000.6						943.1
Interest expense			(75.3)						(75.3)						(75.3)
Non-operating income, net			39.0						51.2						12.4
Income before income taxes			1,021.9						976.5						880.2
Income tax expense			(236.2)						(158.9)						(206.4)
Net income			785.7						817.6						673.8
Other comprehensive income			0.1						0.1						0.1
Comprehensive income			$	785.8					$	817.7					$	673.9
Earnings per share:
Basic			$	8.01					$	7.91					$	6.24
Diluted			$	8.00					$	7.90					$	6.24
Shares used to compute earnings per share
Basic			98.1						103.4						107.9
Diluted			98.2						103.5						108.0

See accompanying Notes to Consolidated Financial Statements.

VERISIGN, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(In millions)

			Year Ended December 31,
			2024						2023						2022
Total stockholders’ deficit, beginning of period			$	(1,581.0)					$	(1,562.2)					$	(1,260.5)
Common stock and additional paid-in capital
Beginning balance			11,808.0						12,644.5						13,620.1
Repurchase of common stock			(1,225.6)						(901.4)						(1,048.1)
Stock-based compensation			62.1						60.8						60.2
Issuance of common stock under stock plans			12.3						12.3						12.3
Excise tax on repurchase of common stock			(11.5)						(8.2)						—
Balance, end of period			10,645.3						11,808.0						12,644.5
Accumulated deficit
Beginning balance			(13,386.4)						(14,204.0)						(14,877.8)
Net income			785.7						817.6						673.8
Balance, end of period			(12,600.7)						(13,386.4)						(14,204.0)
Accumulated other comprehensive loss
Beginning balance			(2.6)						(2.7)						(2.8)
Other comprehensive income			0.1						0.1						0.1
Balance, end of period			(2.5)						(2.6)						(2.7)
Total stockholders’ deficit, end of period			$	(1,957.9)					$	(1,581.0)					$	(1,562.2)

See accompanying Notes to Consolidated Financial Statements

VERISIGN, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

			Year Ended December 31,
			2024						2023						2022
Cash flows from operating activities:
Net income			$	785.7					$	817.6					$	673.8
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation of property and equipment			36.9						44.1						46.9
Stock-based compensation expense			61.1						59.7						58.6
Amortization of discount on investments in debt securities			(21.1)						(27.8)						(7.7)
Other, net			3.6						3.3						3.8
Changes in operating assets and liabilities:
Other assets			(12.4)						(1.5)						9.5
Other liabilities			(28.9)						(2.2)						(13.3)
Deferred revenues			58.1						27.0						65.7
Net deferred income taxes			19.6						(66.4)						(6.2)
Net cash provided by operating activities			902.6						853.8						831.1
Cash flows from investing activities:
Proceeds from maturities and sales of marketable securities			1,195.1						1,278.9						1,721.5
Purchases of marketable securities			(880.7)						(1,330.5)						(1,338.4)
Purchases of property and equipment			(28.1)						(45.8)						(27.4)
Net cash provided by (used in) investing activities			286.3						(97.4)						355.7
Cash flows from financing activities:
Repurchases of common stock			(1,225.6)						(901.4)						(1,048.1)
Proceeds from employee stock purchase plan			12.3						12.3						12.3
Payment of excise tax on repurchases of common stock			(8.2)						—						—
Other financing activities			—						(0.7)						—
Net cash used in financing activities			(1,221.5)						(889.8)						(1,035.8)
Effect of exchange rate changes on cash, cash equivalents and restricted cash			(0.8)						(0.1)						(0.8)
Net (decrease) increase in cash, cash equivalents and restricted cash			(33.4)						(133.5)						150.2
Cash, cash equivalents, and restricted cash at beginning of period			245.5						379.0						228.8
Cash, cash equivalents, and restricted cash at end of period			$	212.1					$	245.5					$	379.0
Supplemental cash flow disclosures:
Cash paid for interest			$	72.8					$	72.8					$	72.8
Cash paid for income taxes, net of refunds received			$	230.5					$	239.7					$	211.7

See accompanying Notes to Consolidated Financial Statements.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2024, 2023 AND 2022

Note 1. Description of Business and Summary of Significant Accounting Policies

Description of Business

VeriSign, Inc. (“Verisign” or “the Company”) was incorporated in Delaware on April 12, 1995. The Company has one reportable segment. The Company helps enable the security, stability, and resiliency of the Domain Name System (“DNS”) and the internet by providing Root Zone Maintainer services, operating two of the thirteen global internet root servers, and providing registration services and authoritative resolution for the .com and .net top-level domains, which support the majority of global e-commerce.

Basis of Presentation

The accompanying consolidated financial statements of Verisign and its subsidiaries have been prepared in conformity with generally accepted accounting principles (“GAAP”) in the United States (“U.S.”). All significant intercompany accounts and transactions have been eliminated.

The preparation of these consolidated financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Significant Accounting Policies

Cash and Cash Equivalents

Verisign considers all highly-liquid investments purchased with original maturities of three months or less to be cash equivalents. Cash and cash equivalents include certain money market funds, debt securities and various deposit accounts. Verisign maintains its cash and cash equivalents with financial institutions that have investment grade ratings and, as part of its cash management process, performs periodic evaluations of the relative credit standing of these financial institutions.

Marketable Securities

Marketable securities primarily consist of debt securities issued by the U.S. Treasury. All marketable securities are classified as available-for-sale and are carried at fair value. Unrealized gains and losses, net of taxes, are reported as a component of Accumulated other comprehensive loss. The specific identification method is used to determine the cost basis of the marketable securities sold. The Company classifies its marketable securities as current based on their nature and availability for use in current operations. The Company amortizes the discount on debt securities purchased below par value over the term of the instrument, and recognizes the amounts as interest income included in Non-operating income, net.

Property and Equipment

Property and equipment are stated at cost less accumulated depreciation. Depreciation is calculated using the straight-line method over the estimated useful lives of the assets of 35 to 47 years for buildings, 10 years for building improvements and three years to six years for computer equipment, software, office equipment, and furniture and fixtures. Leasehold improvements are amortized using the straight-line method over the lesser of the estimated useful lives of the assets or associated lease terms.

Capitalized Software

Software included in property and equipment includes amounts paid for purchased software and development costs for internally developed software. The Company capitalized $6.7 million and $7.2 million of costs related to internally developed software during 2024 and 2023, respectively.

Goodwill and Other Long-lived Assets

Goodwill represents the excess of purchase consideration over fair value of net assets of businesses acquired. The Company has only one reporting unit, which has a negative carrying value. Therefore, the goodwill is not subject to impairment.

Long-lived assets, such as property, plant, and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset, or asset group, may not be recoverable. Such events or circumstances include, but are not limited to, a significant decrease in the fair value of the underlying business. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset, or asset group, to estimated

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

undiscounted future cash flows expected to be generated by the asset, or asset group. An impairment charge is recognized in the amount by which the carrying amount of the asset exceeds its fair value.

As of December 31, 2024, the Company’s assets include a deposit related to the purchase of the contractual rights to the .web gTLD. The amount paid to date has been recorded as a deposit until such time that the contractual rights are transferred to the Company. This asset would be tested for recoverability if the Company were to determine that it is no longer probable that the rights will be transferred. At the time of the transfer of the contractual rights, the Company will record the amount as an indefinite-lived intangible asset subject to review for impairment on an annual basis or more frequently if events or changes in circumstances indicate that an impairment is more likely than not.

Foreign Currency Remeasurement

Verisign conducts business in several different countries and transacts in multiple currencies. The functional currency for all of Verisign’s international subsidiaries is the U.S. dollar. The Company’s subsidiaries’ financial statements are remeasured into U.S. dollars using a combination of current and historical exchange rates and any remeasurement gains and losses are included in Non-operating income, net. The Company recognized net remeasurement gains of $14.7 million in 2023. Net remeasurement gains and losses were not significant in 2024 and 2022.

Verisign maintains a foreign currency risk management program designed to mitigate foreign exchange risks associated with the monetary assets and liabilities that are denominated in currencies other than the U.S. dollar. The primary objective of this program is to minimize the gains and losses resulting from fluctuations in exchange rates. The Company does not enter into foreign currency transactions for trading or speculative purposes, nor does it hedge foreign currency exposures in a manner that entirely offsets the effects of changes in exchange rates. The program may entail the use of forward or option contracts, which are derivatives and are recorded at fair market value. The Company records gains and losses on foreign currency forward contracts in Non-operating income, net. The Company recognized a $9.8 million loss related to foreign currency forward contracts in 2023. Gains and losses related to foreign currency forward contracts were not significant in 2024 and 2022.

As of December 31, 2024, Verisign held foreign currency forward contracts in notional amounts totaling $44.8 million to mitigate the impact of exchange rate fluctuations associated with certain assets and liabilities held in foreign currencies.

Revenue Recognition

Revenues are recognized when control of the promised services is transferred to customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. Revenues primarily arise from fixed fees charged to registrars for the initial registration or renewal of .com, .net, and other domain names. Individual customers, called registrants, contract directly with registrars or their resellers, and the registrars, who are our direct customers, in turn register the domain names with Verisign. Fees for domain name registrations and renewals are generally due at the time of registration or renewal. Domain name registration terms range from one year up to ten years.

Most customers either maintain a deposit with Verisign or provide an irrevocable letter of credit in excess of the amounts owed. Verisign also offers promotional incentive-based discount programs to its registrars based upon market conditions and the business environment in which the registrars operate. Amounts payable for these programs are recorded as a reduction of revenue.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. Each domain name registration or renewal is considered a separate optional purchase and represents a single performance obligation, which is to allow its registration and maintain that registration (by allowing updates, DNS resolution and Whois and Registration Data Access Protocol services, which allow users to find information about registered domain names) through the registration term. These services are provided continuously throughout each registration term, and as such, revenues from the initial registration or renewal of domain names are deferred and recognized ratably over the registration term. Fees for renewals and advance extensions to the existing term are deferred until the new incremental period commences. These fees are then recognized ratably over the renewal or extension term.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Costs Incurred to Obtain a Contract

The Company recognizes the fees payable to ICANN for each annual term of domain name registrations and renewals as an asset, which is amortized on a straight-line basis over the related registration term. These assets are included in Other current assets and Other long-term assets.

Income Taxes

Verisign uses the asset and liability method to account for income taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company records a valuation allowance to reduce deferred tax assets to an amount whose realization is more likely than not. The Company does not consider various minimum taxes imposed in certain jurisdictions for purposes of evaluating whether a deferred tax asset will be realized. For every tax-paying component and within each tax jurisdiction, all deferred tax liabilities and assets are offset and presented as a single net noncurrent asset or liability.

The Company recognizes the U.S. income tax effect of future global intangible low-taxed income inclusions in the period in which they arise.

The Company’s income taxes payable are reduced by the tax benefits from restricted stock unit (“RSU”) vestings equal to the fair market value of the stock at the vesting date. If the income tax benefit at the vesting date differs from the income tax benefit recorded based on the grant date fair value of the RSUs, the excess or shortfall of the tax benefit is recognized within income tax expense.

Verisign operates 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 the Company’s 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. The final taxes payable are dependent upon many factors, including negotiations with taxing authorities in various jurisdictions and resolution of disputes arising from various tax examinations. The Company only recognizes tax positions taken or expected to be taken on its tax returns that are more likely than not to be sustained upon examination, and records a tax benefit amount that is more likely than not to be realized upon ultimate settlement with the taxing authority. The Company adjusts its estimate of unrecognized tax benefits in light of changing facts and circumstances; however, due to the complexity of some of these uncertainties, the ultimate resolution may result in an outcome that is materially different from the estimate. See Note 11, “Income Taxes,” for details of the changes to the Company’s unrecognized tax benefits for the periods presented.

Stock-based Compensation

The Company’s stock-based compensation consists of RSUs granted to employees and the employee stock purchase plan (“ESPP”). Stock-based compensation expense is typically recognized ratably over the requisite service period. Forfeitures of stock-based awards are recognized as they occur. As substantially all of the RSUs granted by the Company are routine annual grants, none of the awards are designed to be spring-loaded, and as such, the Company does not adjust the market price of its common stock when estimating the grant-date fair value of these awards. The Company also grants RSUs which include performance conditions, and in some cases market conditions, to certain executives. The expense for these performance-based RSUs is recognized based on the probable outcome of the performance conditions. The expense recognized for awards with market conditions is based on the grant date fair value of the awards including the impact of the market conditions, using a Monte Carlo simulation model. The Company uses the Black-Scholes option pricing model to determine the fair value of its ESPP offerings. The determination of the fair value of stock-based payment awards using the Monte Carlo simulation model or the Black-Scholes option-pricing model is affected by the Company’s stock price as well as assumptions regarding a number of complex and subjective variables.

Earnings per Share

The Company computes basic earnings per share by dividing net income by the weighted-average number of common shares outstanding during the period. Diluted earnings per share gives effect to dilutive potential common shares, including unvested RSUs and ESPP offerings, using the treasury stock method.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Fair Value of Financial Instruments

The Company applies the following fair value hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement:

• Level 1: Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.

• Level 2: Inputs reflect quoted prices for identical assets or liabilities in markets that are not active; quoted prices for similar assets or liabilities in active markets; inputs other than quoted prices that are observable for the assets or liabilities; or inputs that are derived principally from or corroborated by observable market data by correlation or other means.

• Level 3: Unobservable inputs reflecting the Company’s own assumptions incorporated in valuation techniques used to determine fair value. These assumptions are required to be consistent with market participant assumptions that are reasonably available.

Legal Proceedings

Verisign is involved in various investigations, claims and lawsuits arising in the normal conduct of its business, none of which, in its opinion, will have a material adverse effect on its financial condition, results of operations, or cash flows. The Company can provide no assurance that it will prevail in any litigation. Regardless of the outcome, any litigation may require the Company to incur significant litigation expense and may result in significant diversion of management attention.

While certain legal proceedings and related indemnification obligations to which the Company is a party specify the amounts claimed, such claims may not represent reasonably possible losses. Given the inherent uncertainties of the litigation, the ultimate outcome of these matters cannot be predicted at this time, nor can the amount of possible loss or range of loss, if any, be reasonably estimated, except in circumstances where an aggregate litigation accrual has been recorded for probable and reasonably estimable loss contingencies. A determination of the amount of accrual required, if any, for these contingencies is made after careful analysis of each matter. The required accrual may change in the future due to new developments in each matter or changes in approach such as a change in settlement strategy in dealing with these matters. The Company does not believe that any such matter currently being reviewed will have a material adverse effect on its financial condition, results of operations, or cash flows.

Adoption of New Accounting Standards

The Company adopted Accounting Standards Update (“ASU”) No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires additional disclosure of significant segment expenses on an annual and interim basis. This guidance has been applied retrospectively. The adoption of ASU 2023-07 did not have a material impact on the Company’s consolidated financial statements. Refer to Note 7, “Segment Information,” for segment reporting disclosures.

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. This guidance will be effective for our 2025 Form 10-K. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires additional disclosure of certain costs and expenses within the notes to the financial statements. This guidance will be effective for our 2027 Form 10-K. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Note 2. Financial Instruments

Cash, Cash Equivalents, and Marketable Securities

The following table summarizes the Company’s cash, cash equivalents, and marketable securities and the fair value categorization of the financial instruments measured at fair value on a recurring basis:

			As of December 31,
			2024						2023
			(In millions)
Cash			$	21.7					$	25.6
Time deposits			1.8						1.0
Money market funds (Level 1)			188.6						160.3
Debt securities issued by the U.S. Treasury (Level 1)			393.2						744.9
Total			$	605.3					$	931.8
Cash and cash equivalents			$	206.7					$	240.1
Restricted cash (included in Other long-term assets)			5.4						5.4
Total Cash, cash equivalents, and restricted cash			212.1						245.5
Marketable securities			393.2						686.3
Total			$	605.3					$	931.8

The gross and net unrealized gains and losses included in the fair value of the debt securities were not significant for the periods presented. All of the debt securities held as of December 31, 2024 are scheduled to mature in less than one year.

Fair Value Measurements

The fair value of the Company’s investments in money market funds approximates their face value. Such instruments are included in Cash and cash equivalents. The fair value of the debt securities consisting of U.S. Treasury bills is based on their quoted market prices. Debt securities purchased with original maturities in excess of three months are included in Marketable securities. The fair value of the Company’s foreign currency forward contracts is based on foreign currency rates quoted by banks or foreign currency dealers and other public data sources. The fair value of all of these financial instruments are classified as Level 1 in the fair value hierarchy.

As of December 31, 2024, the Company’s other financial instruments include cash, accounts receivable, restricted cash, and accounts payable whose carrying values approximated their face values. The aggregate fair value of the Company’s current and long-term senior notes is $1.69 billion as of December 31, 2024 and 2023. The fair values of these debt instruments are based on available market information from public data sources and are classified as Level 2.

Note 3. Selected Balance Sheet Items

Other Current Assets

Other current assets consist of the following:

			As of December 31,
			2024						2023
			(In millions)
Prepaid expenses			$	30.8					$	23.3
Prepaid registry fees			24.3						23.8
Accounts receivable, net			5.6						6.3
Taxes receivable			2.2						7.3
Other			1.0						1.2
Total other current assets			$	63.9					$	61.9

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Property and Equipment, Net

The following table presents the detail of property and equipment, net:

			As of December 31,
			2024						2023
			(In millions)
Computer equipment and software			$	418.7					$	409.0
Buildings and building improvements			264.8						261.3
Land			37.9						37.9
Office equipment and furniture			11.1						11.0
Capital work in progress			16.9						16.1
Leasehold improvements			1.6						1.6
Total cost			751.0						736.9
Less: accumulated depreciation			(526.5)						(503.7)
Total property and equipment, net			$	224.5					$	233.2

Substantially all of the Company’s property and equipment were held in the U.S. for both periods presented.

Goodwill

The following table presents the detail of goodwill:

			As of December 31,
			2024						2023
			(In millions)
Goodwill, gross			$	1,537.8					$	1,537.8
Accumulated goodwill impairment			(1,485.3)						(1,485.3)
Total goodwill			$	52.5					$	52.5

There was no impairment of goodwill or other long-lived assets recognized in any of the periods presented.

Deposits to Acquire Intangible Assets

The Company’s Deposits to acquire intangible assets represents the $145.0 million paid for the future assignment to the Company of contractual rights to the .web gTLD, pending resolution of objections by other applicants, and approval from ICANN.

Other Long-Term Assets

Other long-term assets consist of the following:

			As of December 31,
			2024						2023
			(In millions)
Long-term prepaid expenses			$	13.5					$	4.8
Operating lease right-of-use asset			9.3						7.4
Long-term prepaid registry fees			8.2						8.3
Restricted cash			5.4						5.4
Other			3.0						3.1
Total other long-term assets			$	39.4					$	29.0

Long-term prepaid expenses as of December 31, 2024 reflect longer-term contracts for software licenses and maintenance entered into during 2024. The prepaid registry fees in the tables above primarily relate to the fees the Company pays to ICANN for each annual term of .com domain name registrations and renewals which are deferred and amortized over the domain name

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

registration term. The amount of prepaid registry fees as of December 31, 2024 reflects amortization of $39.5 million during 2024 which was recorded in Cost of Revenues.

Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities consist of the following:

			As of December 31,
			2024						2023
			(In millions)
Accounts payable and accrued expenses			$	10.6					$	12.5
Accrued employee compensation			66.9						61.2
Taxes payable			65.8						49.5
Customer deposits			64.6						77.2
Interest payable			19.5						19.5
Accrued registry fees			12.6						12.3
Customer incentives payable			8.9						6.5
Current operating lease liabilities			5.2						5.1
Foreign currency forward contracts			1.1						10.7
Other accrued liabilities			2.6						2.9
Total accounts payable and accrued liabilities			$	257.8					$	257.4

Accrued employee compensation primarily consists of liabilities for employee leave, salaries, payroll taxes, employee contributions to the employee stock purchase plan, and incentive compensation. Customer deposits varies from period to period due to the timing of payments from certain large customers. Taxes payable reflects amounts accrued for the income tax provision and payments made during the year. This balance fluctuates from period to period due to the timing of income tax payments in the Company’s major tax jurisdictions. The liability related to the unrealized loss on foreign currency forward contracts as of December 31, 2023 was remeasured and paid upon settlement of the forward contract in 2024.

Long-term Tax and Other Liabilities

Long-term tax and other liabilities consist of the following:

			As of December 31,
			2024						2023
			(In millions)
Long-term tax liabilities			$	6.1					$	34.1
Long-term operating lease liabilities			4.0						2.2
Long-term tax and other liabilities			$	10.1					$	36.3

Long-term tax liabilities as of December 31, 2024 reflects a $24.3 million reclassification to current liabilities of the final installment of the transition tax liability on accumulated foreign earnings resulting from the 2017 Tax Cuts and Jobs Act.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Note 4. Debt

Senior Notes

The following table summarizes information related to our Senior notes:

						Issuance Date			Maturity Date			Interest Rate			Principal
															As of December 31,
															2024						2023
															(in millions except interest rates)
Senior notes due 2025						March 27, 2015			April 1, 2025			5.25		%	$	500.0					$	500.0
Senior notes due 2027						July 5, 2017			July 15, 2027			4.75		%	550.0						550.0
Senior notes due 2031						June 8, 2021			June 15, 2031			2.70		%	750.0						750.0
Less: unamortized issuance costs															(7.7)						(9.8)
Total senior notes															1,792.3						1,790.2
Less: current portion of senior notes due 2025															(299.8)						—
Total long-term senior notes															$	1,492.5					$	1,790.2

The 2031 Notes were issued at 99.712% of par value. The 2025 and 2027 notes were issued at par and all outstanding senior notes are senior unsecured obligations of the Company. Interest is payable on each of the senior notes semi-annually. Each of the senior notes issuances is redeemable, in whole or in part, at the Company’s option at times and redemption prices specified in the indentures.

Current and long-term senior notes as of December 31, 2024 reflect the classification of $299.8 million of the Company’s $500.0 million senior notes due April 1, 2025 (“2025 Senior Notes”), net of unamortized debt issuance costs, as current liabilities, and the remaining $200.0 million as long-term liabilities. Under existing market conditions, the Company intends to refinance all of its 2025 Senior Notes through the issuance of new long-term debt. As of December 31, 2024, the Company has $200.0 million in borrowing capacity under its credit facility discussed below. If a suitable refinancing arrangement is not available due to a change in market conditions, the Company intends to utilize the credit facility to repay $200.0 million of the 2025 Senior Notes.

2023 Credit Facility

On December 6, 2023, the Company entered into a credit agreement for a $200.0 million committed unsecured revolving credit facility (the “2023 Credit Facility”) which takes the place of its prior unsecured revolving credit facility. The 2023 Credit Facility includes a financial covenant requiring that the Company’s leverage ratio not exceed 4.0 to 1.0, which may be increased subject to certain conditions defined in the 2023 Credit Facility Agreement. As of December 31, 2024, there were no borrowings outstanding under the 2023 Credit Facility, and the Company was in compliance with the financial covenants. The 2023 Credit Facility expires on December 6, 2028, at which time any outstanding borrowings are due. Verisign may from time to time request lenders to agree on a discretionary basis to increase the commitment amount by up to an aggregate of $150.0 million.

Note 5. Stockholders’ Deficit

Treasury Stock

Treasury stock is accounted for under the cost method. Treasury stock includes shares repurchased under stock repurchase programs and shares withheld in lieu of the tax withholding due upon vesting of RSUs.

Effective July 25, 2024, the Company’s Board of Directors authorized the repurchase of its common stock in the amount of approximately $1.11 billion, in addition to the $388.0 million that remained available for repurchases under the share repurchase program, for a total authorization of up to $1.50 billion under the program. The 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. As of December 31, 2024, there was approximately $1.02 billion remaining available for repurchases under the program.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

The summary of the Company’s common stock repurchases are as follows:

			2024												2023												2022
Shares						Average Price						Shares						Average Price						Shares						Average Price
			(In millions, except average price amounts)
Total repurchases under the repurchase plans			6.6						$	183.84					4.2						$	210.28					5.5						$	187.07
Total repurchases for tax withholdings			0.1						$	188.23					0.1						$	211.29					0.1						$	202.21
Total repurchases			6.7						$	183.90					4.3						$	210.30					5.6						$	187.28
Total costs			$	1,225.6											$	901.4											$	1,048.1

Since inception, the Company has repurchased 260.2 million shares of its common stock for an aggregate cost of $14.88 billion, which is recorded as a reduction of Additional paid-in capital. The share repurchase and authorization amounts disclosed within this Form 10-K exclude the excise tax on share repurchases.

Accumulated Other Comprehensive Loss

The Accumulated other comprehensive loss balances as of December 31, 2024 and 2023 primarily consists of foreign currency translation adjustment losses. There were no significant changes to accumulated other comprehensive loss balances for the periods presented.

Note 6. Calculation of Earnings per Share

The following table presents the computation of weighted-average shares used in the calculation of basic and diluted earnings per share:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Weighted-average shares of common stock outstanding			98.1						103.4						107.9
Weighted-average potential shares of common stock outstanding:
Unvested RSUs and ESPP			0.1						0.1						0.1
Shares used to compute diluted earnings per share			98.2						103.5						108.0

The calculation of diluted weighted average shares outstanding excludes performance-based RSUs granted by the Company for which the relevant performance criteria have not been achieved and any awards that are antidilutive. The number of potential shares excluded from the calculation was not significant in any period presented.

Note 7. Segment Information

The Company has one reportable segment that includes all the operations of the business. The segment’s chief operating decision maker is the Executive Chairman, President, and Chief Executive Officer. The chief operating decision maker assesses performance and decides how to allocate resources based on revenues, operating income and net income as reported on the Consolidated Statement of Comprehensive Income.

Revenues, operating income and net income are used to evaluate budget versus actual results and the overall return generated by the segment assets. The analysis of these financial results, among other metrics, is used to assess performance and drives employee incentive compensation, as well as executive compensation.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

The following table presents information about segment revenues, significant expenses and profits:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Revenues			$	1,557.4					$	1,493.1					$	1,424.9
Costs and expenses:
Compensation and benefits expenses			224.7						214.5						200.8
Stock-based compensation expenses			61.1						59.7						58.6
Equipment and software expenses			45.6						42.1						40.2
Registry fee expenses			45.3						44.1						48.5
Depreciation expenses			36.9						44.1						46.9
Other segment items			85.6						88.0						86.8
Total costs and expenses			499.2						492.5						481.8
Operating Income			1,058.2						1,000.6						943.1
Interest expense			(75.3)						(75.3)						(75.3)
Non-operating income, net			39.0						51.2						12.4
Income tax expense			(236.2)						(158.9)						(206.4)
Net income			$	785.7					$	817.6					$	673.8

Other segment items that are a part of our segment net income include professional services expenses, telecommunication expenses, legal expenses, occupancy expenses, marketing expenses, and travel expenses.

Note 8. Revenues

The Company generates revenues in the U.S.; Europe, the Middle East and Africa (“EMEA”); Australia, China, Japan, Singapore, and other Asia Pacific countries (“APAC”); and certain other countries, including Canada and Latin American countries.

The following table presents the Company’s revenues disaggregated by geography, based on the billing addresses of our customers:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
U.S			$	1,035.5					$	994.7					$	937.6
EMEA			249.6						228.2						226.0
APAC			175.7						174.8						167.7
Other			96.6						95.4						93.6
Total revenues			$	1,557.4					$	1,493.1					$	1,424.9

Revenues in the table above are attributed to the country of domicile and the respective regions in which registrars are located; however, this may differ from the regions where the registrars operate or where registrants are located. Revenues for each region may be impacted by registrars reincorporating, relocating, or from acquisitions or changes in affiliations of resellers. Revenues for each region may also be impacted by registrars domiciled in one region, registering domain names in another region.

Major Customers

Our largest customer accounted for approximately 32% of revenues in 2024, 2023, and 2022. The Company does not believe that the loss of this customer would have a material adverse effect on the Company’s business because, in that event, end-users of this customer would transfer to the Company’s other existing customers.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Deferred Revenues

As payment for domain name registrations and renewals are due in advance of our performance, we record these amounts as deferred revenues. The increase in the deferred revenues balance in 2024 is primarily driven by amounts billed in 2024 for domain name registrations and renewals to be recognized as revenues in future periods, offset by refunds for domain name renewals deleted during the 45-day grace period, and $894.2 million of revenues recognized that were included in the deferred revenues balance at December 31, 2023. The balance of deferred revenues as of December 31, 2024 represents our aggregate remaining performance obligations. Amounts included in current deferred revenues are all expected to be recognized in revenues within 12 months, except for a portion of deferred revenues that relates to domain name renewals that are deleted in the 45-day grace period following the transaction. The long-term deferred revenues amounts will be recognized in revenues over several years, and in some cases, up to ten years.

Note 9. Employee Benefits and Stock-based Compensation

401(k) Plan

The Company maintains a defined contribution 401(k) plan (the “401(k) Plan”) for substantially all of its U.S. employees. Under the 401(k) Plan, eligible employees may contribute up to 50% of their pre-tax salary, subject to the Internal Revenue Service (“IRS”) annual contribution limits. The Company matches 50% of up to the first 8% of the employee’s annual salary contributed to the plan. The Company contributed $6.0 million in 2024, $5.8 million in 2023, and $5.5 million in 2022 under the 401(k) Plan. The Company can terminate matching contributions at its discretion at any time.

Equity Incentive Plan

The majority of Verisign’s stock-based compensation relates to RSUs granted under the 2006 Equity Incentive Plan (the “2006 Plan”). As of December 31, 2024, a total of 7.3 million shares of common stock remain reserved for issuance upon the vesting of RSUs and for the future grant of equity awards. The 2006 Plan authorizes the award of incentive stock options to employees and non-qualified stock options, restricted stock awards, RSUs, stock bonus awards, stock appreciation rights and performance shares to eligible employees, officers, directors, consultants, independent contractors and advisers. The 2006 Plan is administered by the Compensation Committee which may delegate to a committee of one or more members of the Board or Verisign’s officers the ability to grant certain awards and take certain other actions with respect to participants who are not executive officers or non-employee directors. RSUs are awards covering a specified number of shares of Verisign common stock that may be settled by issuance of those shares (which may be restricted shares). RSUs generally vest over four years. Certain RSUs with performance and market conditions (“PSUs”), granted to the Company’s executives, generally vest over a three year term. Additionally, the Company has granted fully vested RSUs to members of its Board in each of the last three years. The Compensation Committee may authorize grants with a different vesting schedule in the future.

2007 Employee Stock Purchase Plan

Eligible employees of the Company may purchase common stock under the 2007 Employee Stock Purchase Plan through payroll deductions by electing to have between 2% and 25% of their compensation withheld to cover the purchase price. Each participant is granted an option to purchase common stock. This option is automatically exercised on the last day of each six-month purchase period during the offering period. The purchase price for the common stock under the ESPP is 85% of the lesser of the fair market value of the common stock on the first day of the applicable offering period or the last day of the applicable purchase period. Offering periods begin on the first business day of February and August of each year. As of December 31, 2024, 2.8 million shares of the Company’s common stock remain reserved for future issuance under this plan.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Stock-based Compensation

Stock-based compensation is classified in the Consolidated Statements of Comprehensive Income in the same expense line items as cash compensation. The following table presents the classification of stock-based compensation:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Cost of revenues			$	8.0					$	7.1					$	7.2
Research and development			10.6						10.0						9.5
Selling, general and administrative			42.5						42.6						41.9
Stock-based compensation expense			61.1						59.7						58.6
Capitalization (included in Property and equipment, net)			1.0						1.1						1.6
Total stock-based compensation			$	62.1					$	60.8					$	60.2

The following table presents the nature of the Company’s total stock-based compensation:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
RSUs			$	49.9					$	47.1					$	43.8
PSUs			8.2						9.3						12.1
ESPP			4.0						4.4						4.3
Total stock-based compensation			$	62.1					$	60.8					$	60.2

The income tax benefit that was included within Income tax expense related to these stock-based compensation expenses for 2024, 2023, and 2022 was $12.4 million, $11.7 million, and $13.8 million, respectively.

RSUs Information

The following table summarizes unvested RSUs activity for the year ended December 31, 2024:

			Shares						Weighted-Average Grant-Date Fair Value
			(Shares in millions)
Unvested at beginning of period			0.7						$	209.80
Granted			0.4						$	194.76
Vested and settled			(0.3)						$	206.27
Forfeited			(0.1)						$	203.74
Unvested at end of period			0.7						$	203.36

The RSUs in the table above include PSUs. The unvested RSUs as of December 31, 2024 include 0.2 million PSUs. The number of shares received upon vesting of these PSUs may range from 0.1 million to 0.4 million depending on the level of performance achieved and whether any market conditions are satisfied.

The closing price of Verisign’s stock was $206.96 on December 31, 2024. As of December 31, 2024, the aggregate market value of unvested RSUs was $148.1 million. The fair values of RSUs that vested during 2024, 2023, and 2022 were $52.6 million, $58.8 million, and $51.4 million, respectively. The weighted-average grant-date fair value of RSUs granted during the years ended December 31, 2023 and 2022, was $212.80 and $210.94, respectively. As of December 31, 2024, total unrecognized compensation cost related to unvested RSUs was $100.7 million which is expected to be recognized over a weighted-average period of 2.4 years.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

Note 10. Non-operating Income, Net

The following table presents the components of Non-operating income, net:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Interest income			$	37.4					$	46.1					$	14.9
Other, net			1.6						5.1						(2.5)
Total non-operating income, net			$	39.0					$	51.2					$	12.4

Interest income is earned principally from the Company’s surplus cash balances and marketable securities. The decrease in interest income in 2024 primarily reflects the lower amounts invested in debt securities in 2024 and slightly lower interest rates on the Company’s investments in debt securities compared to 2023. Other non-operating income, net, reflects net gains and losses from the Company’s foreign currency exposure and related hedges.

Note 11. Income Taxes

Income before income taxes is categorized geographically as follows:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
United States			$	655.4					$	607.1					$	558.5
Foreign			366.5						369.4						321.7
Total income before income taxes			$	1,021.9					$	976.5					$	880.2

The provision for income taxes consisted of the following:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Current expense:
Federal			$	147.9					$	159.1					$	145.1
State			31.3						28.0						41.7
Foreign, including withholding tax			43.3						24.4						26.3
			222.5						211.5						213.1
Deferred expense (benefit):
Federal			(3.3)						(25.6)						(18.0)
State			(3.3)						11.2						(4.8)
Foreign			20.3						(38.2)						16.1
			13.7						(52.6)						(6.7)
Total income tax expense			$	236.2					$	158.9					$	206.4

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

The Company's state current expense was lower in 2024 and 2023 due to a beneficial change in certain state income apportionment rules, which became effective starting in 2023. The new apportionment rules required the Company to write down certain of its deferred tax assets resulting in a net state deferred expense in 2023.

The Company’s increased foreign current expense in 2024 was primarily driven by the Organization for Economic Cooperation and Development (“OECD”) Pillar 2 minimum tax adopted by Switzerland, partially offset by related foreign tax credits in the U.S.

The difference between income tax expense and the amount resulting from applying the federal statutory rate of 21% to Income before income taxes is attributable to the following:

			Year Ended December 31,
			2024						2023						2022
			(In millions)
Income tax expense at federal statutory rate			$	214.6					$	205.1					$	184.8
State taxes, net of federal benefit			20.4						28.5						29.2
Change in valuation allowance			(6.5)						66.1						0.1
Remeasurement of unrecognized tax benefits			2.4						(8.3)						(1.5)
Effect of non-U.S. operations			2.3						(15.5)						(9.5)
Non-U.S. intellectual property			—						(118.0)						—
Other			3.0						1.0						3.3
Total income tax expense			$	236.2					$	158.9					$	206.4

During the fourth quarter of 2023, due to a change in local tax systems, the Company recognized amortizable tax basis related to a portion of its non-U.S. intellectual property based on a fair value of approximately $1.80 billion. This intellectual property had no book value, resulting in the recognition of a $118.0 million deferred tax asset and a corresponding income tax benefit in 2023.

Due to the change in the tax systems mentioned above, the Company determined that it is more likely than not that a portion of the deferred tax asset related to certain non-U.S. intellectual property previously transferred as part of a legal entity reorganization, will not be realized, and as a result, recognized a valuation allowance of $64.7 million in 2023.

The tax effects of temporary differences that give rise to significant portions of the Company’s deferred tax assets and liabilities are as follows:

			As of December 31,
			2024						2023
			(In millions)
Deferred tax assets:
Intellectual property			$	227.4					$	266.2
Deferred revenue, accruals and reserves			72.4						72.9
Research and development costs			32.5						23.6
Tax credit carryforwards			6.1						4.6
Net operating loss carryforwards			1.7						2.2
Other			3.9						6.0
Total deferred tax assets			344.0						375.5
Valuation allowance			(61.8)						(73.6)
Net deferred tax assets			282.2						301.9
Deferred tax liabilities			(0.9)						(0.9)
Total net deferred tax assets			$	281.3					$	301.0

With the exception of a portion of deferred tax assets related to intellectual property and certain state and foreign net operating loss and foreign tax credit carryforwards, management believes it is more likely than not that the tax effects of the deferred tax liabilities together with future taxable income, will be sufficient to fully recover the remaining deferred tax assets.

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

As of December 31, 2024, the Company’s deferred tax assets included $32.9 million of state net operating loss carryforwards, before applying tax rates for the respective jurisdictions. The tax credit carryforwards as of December 31, 2024 consisted primarily of foreign tax credit carryforwards. The state net operating loss carryforwards expire in various years from 2025 through 2034. The foreign tax credits will expire between 2028 and 2034.

A reconciliation of the beginning and ending balances of the total amounts of gross unrecognized tax benefits is as follows:

			As of December 31,
			2024						2023
			(In millions)
Beginning balance			$	9.6					$	15.1
Increases in tax positions for prior years			0.3						0.1
Decreases in tax positions for prior years			(2.8)						—
Increases in tax positions for current year			0.4						5.0
Lapse in statute of limitations			(1.0)						(10.6)
Ending balance			$	6.5					$	9.6

As of December 31, 2024, approximately $4.3 million of unrecognized tax benefits, including penalties and interest, could affect the Company’s tax provision and effective tax rate. The Company does not expect the balance of unrecognized tax benefits to change materially during the next twelve months.

In accordance with its accounting policy, the Company recognizes accrued interest and penalties related to unrecognized tax benefits as a component of tax expense. These accruals were not material in any period presented.

The Company’s major taxing jurisdictions are the U.S., the Commonwealth of Virginia, and Switzerland. The Company’s U.S. federal income tax returns are not currently under examination by the IRS and only the Company’s tax returns for 2020 and years thereafter are subject to examination. The Company’s other material tax returns are not currently under examination by their respective taxing jurisdictions. Because the Company has previously used net operating loss carryforwards and other tax attributes to offset its taxable income in income tax returns for the U.S. and Virginia, such attributes can be adjusted by these taxing authorities until the statute of limitations closes on the year in which such attributes were utilized. The open years for examination in Switzerland are the 2020 tax year and forward.

Note 12. Commitments and Contingencies

The following table represents the minimum payments required by Verisign under certain purchase obligations, certain U.S. income tax obligations, leases, and the interest payments and principal on the Senior Notes:

			Purchase Obligations						Transition Tax						Senior Notes						Total
			(In millions)
2025			$	45.6					$	24.3					$	559.5					$	629.4
2026			12.7						—						46.4						59.1
2027			5.3						—						596.4						601.7
2028			3.0						—						20.3						23.3
2029			0.5						—						20.3						20.8
Thereafter			—						—						780.2						780.2
Total			$	67.1					$	24.3					$	2,023.1					$	2,114.5

The amounts in the table above exclude $4.3 million of unrecognized tax benefits, as the Company is unable to reasonably estimate the ultimate amount or time of settlement of those liabilities.

Verisign enters into certain purchase obligations with various vendors. The Company’s significant purchase obligations include firm commitments with telecommunication carriers, other service providers and the fixed portion of registry fees related

VERISIGN, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

DECEMBER 31, 2024, 2023 AND 2022

to the operation of certain top-level domains. Registry fees for top-level domains that we operate where the amounts are variable or passed-through to registrars have been excluded from the table above.

The Company has an agreement with Internet Corporation for Assigned Names and Numbers (“ICANN”) to be the sole registry operator for domain names in the .com registry through November 30, 2030. For each period presented, the Company paid ICANN a fee of $0.25 for each annual term of a domain name registered or renewed. The Company incurred registry fees for the .com registry of $38.0 million in 2024, $38.1 million in 2023, and $39.9 million in 2022. Effective January 1, 2025, these fees increased to $0.2575 for each annual term of a domain name registered or renewed.

In connection with the .com Registry Agreement with ICANN, the Company is required to make annual payments of $4.0 million to ICANN through 2025 to support efforts to maintain the security and stability of the DNS. The payment for 2025 is included in Purchase obligations in the table above.

Verisign leases a small portion of its office space and a portion of its data center facilities under operating leases, the longest of which extends into 2029. Rental expenses under operating leases were not material in any period presented. Operating lease obligations for 2025 through 2029 are included in Purchase obligations in the table above.

The Transition Tax amount in the table above is the final installment of U.S. income taxes payable on our accumulated foreign earnings pursuant to the 2017 Tax Cuts and Jobs Act.