Verisign

Verisign has essentially unconstrained pricing power for its registry services. Domain registrations are mission-critical for businesses and extremely price-inelastic. Even small fee increases flow almost directly to profit.

For example, Verisign implemented a.com fee increase in Sept 2024 and in Q3 2024 achieved a 68.9% operating margin as these price hikes “fell to the bottom line”. Its gross margin is ~88% (dominated by fixed-cost infrastructure) which further accentuates pricing power.

Management could, in theory, raise prices substantially and still retain virtually all customers. Far from margin erosion, Verisign has consistent margin expansion whenever it raises its fixed per-domain fee. Accordingly, we score pricing power at 95/100.