VeriSign (VRSN)

VeriSign Reports Fourth Quarter and Full Year 2005 Results

MOUNTAIN VIEW, CA – January 26, 2006 – VeriSign, Inc. (Nasdaq: VRSN), the leading provider of intelligent infrastructure services for the Internet and telecommunications networks, today reported its results for the fourth quarter and year ended December 31, 2005.

Q4 2005 Financial Results

VeriSign reported total revenue of $401 million for the fourth quarter of 2005. These results include approximately $8 million of revenue related to the payment gateway business that was sold on November 18, 2005 and which is reported under discontinued operations on the income statements. A table reconciling discontinued operations revenue is appended to this release.

On a GAAP basis, VeriSign reported net income of $271 million for the fourth quarter of 2005 and earnings per share of $1.06 per fully-diluted share. These results include a one-time net gain of $252 million from the sale of the payment gateway business in Q4.

On a non-GAAP basis, using a 30% effective tax rate on non-GAAP pre-tax income of $94 million, earnings per share for the fourth quarter was $0.26 per diluted share. These non-GAAP results exclude the following items which are included under GAAP: amortization of intangible assets, acquired in-process research and development, stock-based compensation charges, litigation settlements, restructuring and other charges, the net gain on the sale of the payment gateway business, the net gain on the sale of investments and income tax expense. These non-GAAP results include approximately $3 million of net income from discontinued operations related to the payment gateway business that was sold on November 18, 2005. A table reconciling the non-GAAP to GAAP net income reported above is appended to this release.

“Our fourth quarter results capped a solid year marked by strategic execution and strong revenue growth,” said Stratton Sclavos, Chairman and Chief Executive Officer of VeriSign. “Looking at 2006, we believe VeriSign is well-positioned to execute on our mission of enabling and protecting the world’s voice and data interactions as the tectonic shifts in communications and commerce continue.”

2005 Financial Results

For the year ended December 31, 2005, VeriSign reported total revenue of $1.66 billion, a 42% increase over 2004. These revenues include $52 million related to the payment gateway business through November 18, 2005. A table reconciling the discontinued operations revenue is appended to this release.

On a GAAP basis, VeriSign reported net income of $406 million for 2005 with earnings per share for the year of $1.54 per diluted share. On a non-GAAP basis, using a 30% effective tax rate on non-GAAP pre-tax income of $396 million, earnings per share for 2005 was $1.05 per diluted share. These non-GAAP results exclude the following items, which are included under GAAP: amortization of intangible assets, acquired in-process research and development, stock-based compensation charges, litigation settlements, restructuring and other charges, the net gain on the sale of the payment gateway business, the net gain on the sale of investments and income tax expense. These non-GAAP results include net income from the payment gateway business for the year through November 18, 2005. A table reconciling the non-GAAP to GAAP net income reported above is appended to this release.

“2005 marked a significant year in terms of strong results, improved financial metrics, and continued investment in the future for VeriSign,” said Dana Evan, Chief Financial Officer of VeriSign. “Although the mobile content business continues to be challenging, we are pleased with the company’s performance for Q4 and 2005 particularly in terms of operating cash flow which reached a record $141 million in Q4 and $480 million for the full year.”

During the fourth quarter, VeriSign completed the sale of its payment gateway business to PayPal, an eBay company, for $370 million in cash. VeriSign will also provide eBay and PayPal with a suite of security services that includes the deployment of two-factor authentication, a security system that gives customers a one-time password or digital certificate to help protect against online identity theft. Under the three-year security technology agreement, eBay will purchase up to one million two-factor authentication tokens.

The VeriSign Naming and Directory Services (VNDS) business has changed its name to VeriSign Information Services (VIS) to highlight and address its movement into new business areas. The new name more accurately characterizes the expanded focus of the business to provide relevant, real-time information that enables intelligent network interactions. In 2005, the acquisitions of R4 Global Systems and Retail Solutions International, Inc. (RSI) broadened the business into supply chain services and the acquisitions of Moreover and Weblogs launched VeriSign into real-time publisher services.

Also during the Q4, VeriSign Communications Services (VCS) announced the launch of a new Jamster brand campaign in the United States and the United Kingdom (U.K.), that represents the first of several important steps in a global Jamba / Jamster brand roll-out strategy designed to improve the customer experience. The new campaign launched with a new Jamster logo, simplified subscription plans, improved advertising, and a redesigned Jamster Web site that promotes easier navigation for consumers. Taking the lead in providing parents with control over family usage by giving them the ability to block content downloads to specific phone numbers, VeriSign also launched the Jamster Guardian service in the U.S. and U.K. Roll-out of these programs to other countries is scheduled for this year.

On January 24, 2006, VeriSign completed its acquisition of Seattle-based CallVision, a leading provider of online call analysis applications for $30 million net of acquired cash. The acquisition will enable VeriSign’s VCS business to deliver converged electronic bill presentment, payment and customer self-care applications to mobile operators, Tier 1 carriers, broadband companies and consumer-branded MVNOs worldwide. In addition, on January 25, 2006, VeriSign completed its acquisition of Soltrus Inc., a reseller of VeriSign services based in Toronto, Canada, for approximately $11 million in cash. Neither of these transactions is expected to have a material impact to 2006 financial results.