The revolution in digital commerce and communications means that there's a critical need for a digital infrastructure that lets people and businesses find, connect, secure, and transact across the Net. VeriSign (NASDAQ:VRSN) has been providing just that -- what it calls an "intelligence infrastructure" -- for more than 10 years. In fact, VeriSign handles 20 billion network interactions per day.
As yesterday's earnings report shows, the company knows how to monetize that intelligence infrastructure. In the first quarter, revenues surged 75% to $401 million, while net income grew from $9 million to $49 million. On the news, the stock increased roughly 7% to around $28.
VeriSign showed solid growth in all of its business lines. The company greatly increased the number of online merchants by 9,000 to 136,000, and the quarter also saw a net increase of about 3 million domain name registrations. In all, VeriSign now runs more than 41 million active domain names.
The company has the advantage of being a pioneer in Internet infrastructure. With its large customer base, sophisticated technology, and scalability, VeriSign has built a sustainable business with a significant amount of recurring revenues.
No doubt, the company could have easily lived off its cash cow. However, a few years ago, VeriSign saw a new arena ripe for growth: wireless. The company realized that as handheld devices become more sophisticated, mobile transactions should increase.
To capitalize, VeriSign made key acquisitions for wireless concerns Jamba and LightSurf. Each acquisition was well thought out, and as a result, VeriSign has built a full suite of infrastructure solutions for the mobile market.
With the Jamba acquisition, VeriSign got a sophisticated wireless platform that helps manage and deliver mobile content, as well as deal with billing and payment services. Jamba also has a rich library of content and relationships with 13 European carriers.
By acquiring LightSurf, VeriSign also got key carrier relationships with companies such as Sprint (NYSE:FON), Bell Mobility, mm02, Rogers Wireless, Microcell, Telecom New Zealand, Iusacell, and Qwest (NYSE:Q). What's more, LightSurf is a leader in mobile multimedia, allowing for video and image messaging.
VeriSign's venture into the wireless world has turned out to be a big growth driver. On the conference call, the company upped annual guidance on earnings per share from $0.90 to $1.04 and on revenues from around $1.5 billion to $1.75 billion. And since the mobile applications market is still in its infancy, the growth should last for the long term.
Fool contributor Tom Taulli does not own shares of any companies mentioned in this article.
