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VeriSign, Inc.

VeriSign, Inc. Company Update Fall 2003. Disclosure.

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VeriSign, Inc.

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  1. VeriSign, Inc. Company Update Fall 2003

  2. Disclosure Statements in this presentation other than historical data and information, including but not limited to, statements regarding new business relationships and new service offerings, constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements involve risks and uncertainties that could cause VeriSign's actual results to differ materially from those stated or implied by such forward-looking statements. The potential risks and uncertainties include, among others, VeriSign's limited operating history under its current business structure; the uncertainty of future revenue and profitability and potential fluctuations in quarterly operating results; the ability of VeriSign to successfully develop and market new services and customer acceptance of any new services; the risk that VeriSign's announced strategic relationships may not result in additional products, services, customers and revenues; increased competition and pricing pressures; and risks related to potential security breaches. More information about potential factors that could affect the company's business and financial results is included in VeriSign's filings with the Securities and Exchange Commission, especially in the company's Annual Report on Form 10-K for the year ended December 31, 2002 and quarterly reports on Form 10-Q. VeriSign undertakes no obligation to update any of the forward-looking statements after the date of this annual report. VeriSign is a registered trademark of VeriSign, Inc. Other names may be trademarks of their respective owners. The company provides quarterly and annual financial statements that are prepared in accordance with generally accepted accounting principles. Along with this information, we typically disclose and discuss certain pro forma financial information in our quarterly earnings press releases, during earnings calls and at investor conferences and related events. We believe that the pro forma info enhances investors’ overall understanding of our financial performance and the comparability of the company's operating results from period to period. We’ve provided a reconciliation of the pro forma financial information that we report each quarter with the comparable financial information prepared in accordance with GAAP and have made these reconciliations available on our web site under the Investor Relations tab at www.verisign.com.

  3. Email WiredCalls WebIdentity WirelessCalls E-commerce Content Collaboration Communication Extranets & Intranets Commerce SMS The Global Economy Relies on a Digital Infrastructure Consumers Enterprise Government Telecommunications &Internet Infrastructure ServiceProviders

  4. VeriSign’s Mission Provide the critical infrastructure services that make the Internet and telecommunications networks more reliable, intelligent and secure Naming &Directory Security Transaction Telecom ATLAS Infrastructure 10 billion DNS queries 2 billion SS7 connections 5 million SMS messages $60 million e-commerce Every .com and .net user 400,000 e-commerce sites 100,000 merchants 5,000 enterprises /carriers

  5. Trusted Infrastructure & Application Services Network & Security Services Authentication & Access Digital Brand Management Payment Services Web Presence Services Domain Names Web Site Security Web Presence Services Domain Names Web Site Security Web PresenceInfrastructure Web PresenceInfrastructure Security Infrastructure Security Infrastructure Telecom Infrastructure Telecom Infrastructure Payment Infrastructure Payment Infrastructure ATLAS Directory & Routing Infrastructure ATLAS Directory & Routing Infrastructure VeriSign Services Portfolio 22% 38% 40% Telecom Services Group SS7 Signaling Database Services Billing & Mediation Network Monitoring Internet Services Group Security & Network Services Payment Services DNS & IP Addressing Directory Services Domain Names Web Site Hosting E-mail Services Web PresenceInfrastructure Security Infrastructure Telecom Infrastructure Security Infrastructure Payment Infrastructure Transaction Infrastructure Telecom Infrastructure Web PresenceInfrastructure ATLAS Directory & Routing Infrastructure ATLAS Directory & Routing Infrastructure Q2’03 Revenue Mix

  6. Communications Commerce • Massive growth in email, instant messaging • Global events in real-time • Wireless is mainstream • Early phase of VoIP transition • Retail e-commerce growing dramatically • Supply Chain integration working • Online no longer an option • Web services will optimize businesses processes Security Mobility • Physical security and Cybersecurity merging • Fraud & identity theft rising • Corporate governance issues rising • Integrated part of business strategy • Mobile workforces demand access • Wireless email a “killer” application • Carriers will compete and grow on wireless data • Presence and availability services are coming Market Forces

  7. VeriSign Value Proposition • Domain expertise • Intelligent services platform • Time and Cost advantages • Scalable, global infrastructure Customer Spending Trends - 2003 Complexity • Network management • Partner interaction • New technology • Best-of-breed integration Cost • Operating expenses • Capital outlays • Human resources • Quote to cash Compliance • Regulation • Governance • Peace of mind • Privacy

  8. Broad Reach of Customers & Partners

  9. VeriSign Financial Themes • Leading provider in key markets • Security, telecom, directory & naming • Profitable, recurring revenue businesses • Subscription, monthly or transactional • Scaleable model with operating leverage • Cost management and margin stability • Strong balance sheet and financial position • Cash, A/R, deferred revenue, no debt • Meaningful growth opportunities • Volume growth, new services, cross-sell opportunities • International and Tier 1 account penetration

  10. VeriSign Revenue Model ~ 90% of revenue is subscription-based/recurring Telecom Services Internet Services Network Solutions Domain Name Services: Annual/Multi-AnnualSubscriptions* Value Added Services: Monthly & Annual/ Multi-Annual Subscriptions* Network Services: Monthly Database Services: Per Query Wireless Services: Per Message Security Services: Annual/Multi-AnnualSubscriptions* Payment Services: Monthly/Transactional Registry Services: Annual/Multi-Annual Subscriptions* * Deferred and amortized

  11. The Revenue Picture Domain Name: 90% Value-Added: 10% NSI $59M (22%) Network: 15-20% Database: 30-35% Wireless: 40-45% Clearinghouse: <5% TSG $101M (38%) ISG $105M (40%) Security & Mgd. Svcs: 50-55% Payment Svcs.: 5-10% Naming & Directory: 40-45% Based on Q2’03 Revenue

  12. The Margin Picture Contribution Margin** Gross Margin* 56% 17% * Based on Q2’03 Results ** Should be used for indicative purposes only; does not reflect 100% allocation of all corporate expenses

  13. Q2 ’03 Financial Snapshot Income Statement Revenue$265 million Anticipated decline at Network Solutions Gross margin56%Consistent with guidance Operating margin(pf)17%Maintained margin through revenue decline from continued cost controls & expense management Net income(pf)$47 millionLeverage in model generated solid income EPS(pf)$0.14In-line with expectations, consistent QTR-QTR Operating Cash Flow$81 millionAhead of guidance of $60-70m Balance Sheet Cash & cash equivalents$530 millionIncreased $55m QTR-QTR A/R$101 millionContinued benefits; declined by $18m from Q1 Deferred revenue$502 millionGrew by 1% quarter-over-quarter

  14. Cash Flow Engine $ millions Free Cash Flow* Operating Cash Flow* Cumulative Q1’02 – Q2’03

  15. Strong Management Discipline Over the last 4 quarters … • $350 million in operating cash flow • $250 million increase in cash and equivalents • $145 million reduction in AR • 44 day reduction in net DSO’s • $50+ million reduction in quarterly operating expenses • Deployed new infrastructure and business systems • Continued investment in new services for future growth

  16. Solid Growth Drivers Security • Extend network security • Strong authentication for users, devices, networks • App security for Web services • Transaction intelligence Telecom Naming & Directory • New end-user services in naming • Expand international footprint • Drive ATLAS into new markets • RFID, DRM • Tier 1 share of wallet • New mandated services • New wireless data platform • Expand international footprint

  17. VeriSign • Network intelligence & monitoring • VoIP directory, security and mediation • Propagation into all devices, networks • ATLAS foundation for all services Solid Growth Drivers Security • Extend network security • Strong authentication for users, devices, networks • App security for Web services • Transaction intelligence Telecom Naming & Directory • New end-user services in naming • Expand international footprint • Drive ATLAS into new markets • RFID, DRM • Tier 1 share of wallet • New mandated services • New wireless data platform • Expand international footprint

  18. Conclusion • Purpose-built strategy • Strong position in growing markets • Indispensable utility services for commerce and communications • Unmatched capability and infrastructure • Unique business model • Strong team focused on execution

  19. VeriSign, Inc. Company Overview Fall 2003

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