The Verisign earnings call for the company’s third quarter results has given some insight into its business. As mentioned in our previous piece, out of the $89 million Verisign earned from content in the third quarter $73 million came from Jamster, and a further $9 million came from M-qube. The earnings provided a bit more detail on the plans for Jamba/Jamster and the result of the m-Qube acquisition, as well as future plans.
The biggest news this quarter was the sale of 51% of Jamster to News Corp for $187.5 million, which aside from an injection of cash (which will likely be used for interest income or share buybacks) also means that Verisign won’t be listing the Jamster financials in its results but will group it under “other”. However, Verisign will sell its services to the Jamster JV, and that income will appear in the results. Dana Evan – EVP of Finance and Administration, CFO, predicted that Jamba’s revenues for 2007 would have been between $300-350 million, assuming between zero and 20% growth, if Verisign had kept it all. However, CEO Stratton Sclavos pointed out that the Jamster team “will then be responsible for building the revenue plan. So it’s just too early to tell, and it’s not appropriate for VeriSign to comment on what the revenue plan will be for that”. Sclavos also said that: “By combining Jamba!’s technology platform and international customer base with News Corp’s brands, network assets and global reach, we believe we will have the world’s first vertically-integrated mobile entertainment company.”
The other major part of Verisign’s content group is the B2B revenue mostly derived from recently acquired m-Qube. Sclavos said that the acquisition of m-Qube and 3united has allowed the company to operate the end-to-end solutions for “the vast majority” of interactive TV shows scheduled for this season. In response to a question on m-Qube Sclavos said: “What you have to, I think, realize is we have gone from about a couple dozen people focused on B2B to over 700 focused on it in less than two quarters. So, there’s a dramatic amount of internal work going on around integration and product roadmap, consolidation and centers of excellence development…So, a lot of the work so far, as we expected it would be, has been internally focused on getting all the product roadmaps together. I think we’ve just come through a set of planning exercises with those teams, where we actually are getting pretty excited about where we’re headed and which groups are going to develop which pieces of the platforms.”
The Communications and Commerce line of business also has some mobile connotations in messaging — it achieved $114 million in revenue. Sclavos said the industry is experiencing consolidation, which is lowering earnings, and Verisign is entering international markets to offset that. “In terms of business metrics, we delivered over 17 billion database queries in Q3, up 19% year over year. We also processed billing and payment services for approximately 9.3 million wireless users, up 29% year over year. The 10 billion SMS messages we helped deliver in the quarter represents more than a 100% increase from the year-ago period. Premium messaging and MMS volumes were up significantly as well.”
Finally, a question was asked about the future acquisition plans of Verisign. “We are not, I wouldn’t say, very active right now in the marketplace around these new ideas because, as I said, I think we have now got an R&D capability and an operations capability well in excess of anything we have ever had. So, we’re pretty focused right now on organic development. We really don’t have any particular areas of interest at the moment that we are feeling like we need to pursue,” said Sclavos.
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