You should read the following discussion in conjunction with the interim unaudited Condensed Consolidated Financial Statements and related notes.

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These forward-looking statements involve risks and uncertainties, including, among other things, statements regarding our anticipated costs and expenses and revenue mix. Forward-looking statements include, among others, those statements including the words "expects," "anticipates," "intends," "believes" and similar language. Our actual results may differ significantly from those projected in the forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to, those discussed in the section titled "Risk Factors" in Part II, Item 1A of this Quarterly Report on Form 10-Q. You should also carefully review the risks described in other documents we file from time to time with the Securities and Exchange Commission, including the Quarterly Reports on Form 10-Q or Current Reports on Form 8-K that we file in 2009 and our 2008 Form 10-K, which was filed on March 3, 2009, which discuss our business in greater detail. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release any revisions to the forward-looking statements or reflect events or circumstances after the date of this document.

Overview

We are the trusted provider of Internet infrastructure services for the networked world. We offer a comprehensive spectrum of products and services that help a growing number of organizations and individuals to communicate and conduct commerce with confidence.

We have the following two reportable segments: Internet Infrastructure and Identity Services ("3IS") which consists of Naming Services and Authentication Services. Authentication Services is comprised of Business Authentication Services, formerly known as Secure Socket Layer ("SSL") Certificate Services; and User Authentication Services, formerly known as Identity and Authentication Services; and (2) Other Services, which consists of the continuing operations of non-core businesses and legacy products and services from divested businesses. See Note 10, "Segment Information," for further information regarding our reportable segments. In our 2008 Form 10-K, we presented VeriSign Japan as a separate component of our 3IS segment. Beginning in the first quarter of 2009, we have reclassified the results of operations of VeriSign Japan into the results of operations of our Authentication Services which is also a component of our 3IS segment, as VeriSign Japan is a majority-owned subsidiary whose operations primarily consist of Business and User Authentication Services.

Naming Services is the authoritative directory provider of all .com, .net, .cc, .tv, .name and .jobs domain names. Business Authentication Services enable enterprises and Internet merchants to implement and operate secure networks and websites that utilize SSL protocol. Business Authentication Services provide customers the means to authenticate themselves to their end users and website visitors and to encrypt communications between client browsers and Web servers. User Authentication Services includes identity protection services, fraud detection services, managed public key infrastructure ("PKI") services, and unified authentication services. User Authentication Services are intended to help enterprises secure intranets, extranets and other applications and devices, and provide authentication credentials. The Other Services segment consists of the continuing operations of our non-core Pre-Pay billing and payment ("Pre-Pay") Services business, as well as legacy products and services from the divested Content Delivery Network ("CDN") business. We are in the process of winding down the operations of the Pre-Pay Services business.

During the fourth quarter of 2007, we announced a change to our business strategy to allow management to focus its attention on our core competencies and to make additional resources available to invest in our core

businesses. The strategy calls for a divestiture or winding down of all the non-core businesses. These businesses, except the Pre-Pay Services business, are classified as disposal groups held for sale as of June 30, 2009, and their results of operations have been classified as discontinued operations for all periods presented. The continued execution of our divestiture plan is subject to the availability of financing, identification of buyers, and general market conditions, including further developments in the current global economic environment and potential continued deterioration of the credit markets. While we are executing our divestiture plan, we will experience additional risks, including, but not limited to the disruption of our business and the potential loss of key employees; difficulties separating operations, services, products and personnel; the potential damage to relationships with our existing customers; and the delay in completion of transition services. For example, our divestiture plan requires a substantial amount of management, administrative and operational resources. Once our divestiture plan is completed, the scale and scope of our operations will decrease in absolute terms, which we expect will allow our remaining core services to benefit from a more efficient and streamlined operational structure. However, we cannot assure you that we will be able to achieve the full strategic and financial benefits we expect from the divestiture of our non-core businesses and there is no guarantee that the planned divestitures will occur or will not be significantly delayed, all of which may result in future variability in our results of operations. By divesting our non-core businesses, additional resources should be available to invest in our core services that will remain: Naming Services and Authentication Services.

Our Core Services

Our core services consist of our Naming Services and Authentication Services.

Naming Services

As of June 30, 2009, we had approximately 93.5 million domain names registered under the .com and .net registries, which are our principal registries. The number of domain names registered is largely driven by Internet usage and broadband penetration rates. Although growth in absolute number of registrations remains greatest in mature markets such as the United States ("U.S.") and Western Europe, growth on an annual percentage basis is expected to be greatest in markets outside of the U.S. and Western Europe where Internet penetration has demonstrated the greatest potential for growth. We are largely insulated from the risk posed by fluctuations in exchange rates due to the fact that all revenues paid to us for .com and .net registrations are in U.S. dollars.

Authentication Services

Business Authentication Services

We currently offer the following Business Authentication Services: VeriSign®, thawte®, and GeoTrust® branded SSL certificates. As of June 30, 2009, we had an installed base of SSL certificates of approximately 1.2 million. The major factors impacting the growth and performance of our Business Authentication Services are the penetration and adoption of the Internet, especially through broadband services, the spread of e-commerce, the utilization of electronic means for executing financial transactions (such as credit card payments), and the extent to which advertising through search engines encourages consumers to engage in e-commerce. As a result of the growing impact of the Internet on global commercial transactions and the current economic environment, we expect continued but slowing revenue growth in our business, primarily in markets outside of the U.S. where e-commerce has the largest growth potential.

User Authentication Services

As with our Business Authentication Services, the major factors impacting the growth and performance of our User Authentication Services are the penetration and adoption of the Internet, especially through broadband services, the spread of e-commerce, the utilization of electronic means for executing financial transactions (such as credit card payments), and the extent to which advertising through search engines encourages consumers to engage in e-commerce.

From time to time we engage in promotional activities in both our Naming Services and Authentication Services.

Business Highlights and Trends-Three and six months ended June 30, 2009

• We recorded revenues of $256.6 and $511.6 million during the three and six months ended June 30, 2009, an increase of 6% and 7%, respectively, as compared to the same periods last year. The increase was primarily due to an increase in revenues from both our Naming Services as well as Authentication Services.

• We recorded income from continuing operations of $43.4 million and $89.8 million during the three and six months ended June 30, 2009, respectively, compared to a loss from continuing operations of $14.0 million and income from continuing operations of $1.6 million during the three and six months ended June 30, 2008, respectively. The increase is primarily due to an increase in revenues, a decrease in operating costs and expenses due to the implementation of strategic cost-saving initiatives and a decrease in restructuring charges.

• We received $18.3 million and $104.0 million from The Reserve International Liquidity Fund, Ltd. (the "International Fund") during the three and six months ended June 30, 2009, respectively. We received $5.6 million and $13.9 million from The Reserve's Primary Fund (the "Primary Fund") during the three and six months ended June 30, 2009, respectively. As of June 30, 2009, we have an aggregate of $32.4 million outstanding in the Primary Fund and the International Fund.

• On May 5, 2009, we sold our Real-Time Publisher ("RTP") Services business. During the three and six months ended June 30, 2009, we recorded a gain on sale of $7.7 million, net of an income tax benefit of $5.8 million, including a reversal of estimated losses on disposal recorded prior to sale.

• On May 1, 2009, we sold our Communications Services business to Transaction Network Services, Inc. ("TNS") for cash consideration of $226.2 million. During the three and six months ended June 30, 2009, we recorded a loss on sale of $57.3 million, net of an income tax expense of $55.3 million, including estimated losses on disposal recorded prior to sale.

• On April 10, 2009, we sold our International Clearing business which enables financial settlement and call data settlement for wireless and wireline carriers. During the three and six months ended June 30, 2009, we recorded a gain on sale of $12.2 million, net of an income tax benefit of $6.0 million, primarily representing cumulative translation adjustments associated with the business.

Assets Held for Sale and Discontinued Operations

During the first quarter of 2009, we disaggregated our Enterprise and Security Services ("ESS") disposal group held for sale as of December 31, 2008, into the following three businesses: (i) Global Security Consulting ("GSC"),
(ii) iDefense Security Intelligence Services ("iDefense") and (iii) Managed Security Services ("MSS"). We decided to retain our iDefense business and, accordingly, reclassified the assets and liabilities related to iDefense as held and used in 2009. We also reclassified the historical results of operations of iDefense from discontinued operations to continuing operations as part of Naming Services for all periods presented. See Note 3, "Assets Held for Sale and Discontinued Operations," of our Notes to Condensed Consolidated Financial Statements for further information.

As of June 30, 2009, businesses classified as held for sale and presented as discontinued operations are the following:

Global Security Consulting

Our GSC business, part of our former ESS disposal group, helps companies understand corporate security requirements, comply with all applicable regulations, identify security vulnerabilities, reduce risk, and meet the security compliance requirements applicable to the particular business and industry.

Managed Security Services

Our MSS business, part of our former ESS disposal group, enables enterprises to effectively monitor and manage their network security infrastructure 24 hours per day, every day of the year, while reducing the associated time, expense, and personnel commitments by relying on VeriSign's security platform and experienced security staff. We sold our MSS business on July 6, 2009, for a net consideration of $42.9 million.

Messaging Services

Our Messaging Services business consists of the following two businesses:

Messaging and Mobile Media Services

Our Messaging and Mobile Media ("MMM") Services business consists of the InterCarrier Messaging, PictureMail, Premium Messaging Gateway, and Mobile Enterprise Service offerings. The MMM Services business is an industry-leading global provider of short-messaging, multimedia messaging, and mobile content application services. MMM Services enables messages and multimedia content to be sent globally across any wireless operator and mobile device. MMM Services offers the global connectivity, network reliability, and scalability necessary to capitalize on the fast growing global messaging and media content markets.

m-Qube Services

Our m-Qube Services business is comprised of Mobile Delivery Gateway ("MDG") Services and CPS. MDG Services offer solutions to manage the complex operator interfaces, relationships, distribution, reporting and customer service for the delivery of premium mobile content to customers. MDG messaging aggregation services enable short messaging and multimedia messaging service connectivity for content providers, aggregators and others to all wireless subscribers of certain carriers and/or countries and regions. MDG services enable content providers to more rapidly expand their global reach. CPS enables a seamless end-to-end business solution focused on providing best-in-class digital content storefront services. CPS can be used as a content delivery platform for games, ringtones, and other content services. CPS are provided to mobile carriers and media companies primarily located in Canada.

Subsequent Events

On July 6, 2009, we sold our MSS business for a net consideration of $42.9 million.

Results of Operations

The following table presents information regarding our results of operations as
a percentage of revenues:



                                                 Three Months Ended              Six Months Ended
                                                      June 30,                       June 30,
                                               2009             2008            2009           2008
Revenues                                          100 %            100 %          100 %          100 %

Costs and expenses
Cost of revenues                                   22               23             23             24
Sales and marketing                                18               18             16             19
Research and development                            9               10              9             10
General and administrative                         17               20             18             22
Restructuring and other charges                    -                35              1             21
Amortization of other intangible assets             1                1              1              1

Total costs and expenses                           67              107             68             97

Operating income (loss)                            33               (7 )           32              3
Other loss, net                                    (4 )             (2 )           (4 )           (2 )

Income (loss) from continuing operations
before income taxes and income (loss)
from unconsolidated entities                       29               (9 )           28              1

Income tax expense (benefit)                       12               (3 )           10             -
Income (loss) from unconsolidated
entities, net of tax                               -                -              -              -

Income (loss) from continuing operations,
net of tax                                         17               (6 )           18              1
(Loss) income from discontinued
operations, net of tax                             (3 )            (23 )            2            (17 )

Net income (loss)                                  14              (29 )           20            (16 )

Less: Net income attributable to
noncontrolling interest in subsidiary              -                -              -              -

Net income (loss) attributable to
VeriSign common stockholders                       14 %            (29 )%          20 %          (16 )%

Revenues

We have two reportable segments: 3IS and Other Services. A comparison of
revenues is presented below:



                                          Three Months Ended
                                               June 30,              %
                                          2009           2008      Change
                                        (Dollars in thousands)
            3IS:
            Naming Services           $     153,418    $ 133,981       15 %
            Authentication Services         101,830      100,467        1 %

            Total 3IS                       255,248      234,448        9 %
            Other Services                    1,371        7,585      (82 )%

            Total revenues            $     256,619    $ 242,033        6 %

                                           Six Months Ended
                                               June 30,              %
                                          2009           2008      Change
                                        (Dollars in thousands)
            3IS:
            Naming Services           $     301,726    $ 261,198       16 %
            Authentication Services         205,734      197,096        4 %

            Total 3IS                       507,460      458,294       11 %
            Other Services                    4,154       19,004      (78 )%

            Total revenues            $     511,614    $ 477,298        7 %

The changes in revenues during the three and six months ended June 30, 2009, are described in the segment discussions that follow.

3IS:

Naming Services

Revenues related to our Naming Services are derived from registrations for domain names in the .com, .net, .cc, .tv, .name and .jobs domain name registries. Revenues from .cc, .tv, .name and .jobs are not significant. For domain names registered with the .com and .net registries, we receive a fee per annual registration that is fixed pursuant to our agreements with the Internet Corporation for Assigned Names and Numbers ("ICANN"). Individual customers contract directly with third-party registrars or their resellers, and the third-party registrars in turn register the .com, .net, .cc, .tv, .name and .jobs domain names with VeriSign. Changes in revenues are driven largely by increases in the number of new domain name registrations and the renewal rate for existing registrations, as well as fee increases as permitted under our agreements with ICANN. As of June 30, 2009, we have the contractual right to increase the fees for .com domain name registrations up to 7% each year during any two years over the remaining term of our agreement with ICANN through November 30, 2012. As of June 30, 2009, we have the contractual right to increase the fees for .net domain name registrations up to 10% each year during the remaining three years of our agreement with ICANN through June 30, 2011. We frequently offer promotional marketing programs for our registrars based upon market conditions and the business environment in which the registrars operate.

The following table compares active domain names ending in .com and .netmanaged as part of our Naming Services as of June 30, 2009 and 2008:

During the three and six months ended June 30, 2009, the growth in the number of domain names registered was primarily driven by continued Internet growth and adoption primarily within international markets and new domain name promotion programs. We expect that new name registrations and renewals from customers engaged in the business of registering domain names for the purpose of on-line advertising networks will continue to have a diminishing impact on our domain name base through 2009. During 2008, we started seeing signs of the slowing of growth in some areas of new traditional name registrations due to the current macro-economic environment. We expect that the current and expected state of the economic environment may contribute to a continued slowing of growth rates in 2009 for the total worldwide domain name zone as well as for the .com and .net domain name zones under our management, even as we continue to add to the net names in our domain name zones in absolute terms. We continue to experience growth in targeted international markets where we have focused efforts to develop regions of growth with potential in both our .com and .net domain name zones over time.

Our Naming Services revenues increased during the three and six months ended June 30, 2009, as compared to the same periods last year, primarily due to a 7% year-over-year increase in the number of active domain names ending in .com and .net and increases in our .com and .net registry fees in October 2008 of 7% and 10%, respectively, to $6.86 and $4.23, respectively as per our agreements with ICANN.

Authentication Services

Our Authentication Services revenues increased during the three and six months ended June 30, 2009, as compared to the same periods last year, primarily due to an 11% year-over-year increase in the installed base of SSL certificates and increased demand for our unified authentication and identity protection services.

Business Authentication Services

Revenues related to our Business Authentication Services are derived from licensing and service fees charged to our customers for the issuance of SSL certificates that authenticate their identity to the third parties with whom they carry out secured transactions. Revenues in the Business Authentication Services are related to fees charged per certificate, which are based upon a number of factors, including: (i) the brand name under which the certificate is issued, which determines the level of encryption and rigor of authentication;
(ii) the number of servers authenticated, and (iii) the duration of the certification.

The following table compares the approximate installed base of SSL certificates in our Business Authentication Services as of June 30, 2009 and 2008:

During the three and six months ended June 30, 2009, our installed base of SSL certificates from our GeoTrust® and thawte® brands increased at a higher rate than our higher-priced VeriSign® brand, and as a result, our average-unit-revenue decreased compared to prior periods. We expect that the number of our SSL certificates issued will continue to increase at a higher rate than the revenues recognized from our Business Authentication Services. As we have a market share leadership at the high end of the SSL certificates market, our unit growth rate for the high end is limited by the overall segment growth. In the mid and low segments, we expect to see good growth opportunities for market share gains as these markets are growing faster than the high end market. Our Extended Validation ("EV") SSL certificate sales, while still a small portion of our Business Authentication Services, continue to increase year-over-year. Due to the effect of the economic slowdown, however, EV SSL certificates' adoption has slowed as large-scale customers delay their orders. We expect the mainstream adoption of EV SSL certificates will be deferred until we see improvements in the macro-economic environment. The weakening economy is affecting our Business Authentication Services and, while we expect to experience growth, we expect those growth rates to decline in 2009 compared to 2008.

User Authentication Services

Revenues related to our User Authentication Services are derived from one-time credential sales to customers seeking network services and one-time set-up fees. We also charge an annual service fee based upon the number of individual users authorized by the customer to access its network and a customer support fee. Our managed PKI services are characterized by lower growth rates than other product lines within User Authentication Services, reflecting the greater maturity of our managed PKI services. We expect User Authentication Services revenues to continue to grow in 2009 primarily from growth in our VeriSign Identity Protection ("VIP") services and fraud detection services, but at a lower growth rate than in 2008.

Other Services

Other services revenues are derived from our non-core Pre-Pay Services business as well as legacy products and services from divested businesses. We are in the process of winding down the operations of our Pre-Pay Services business.

Other services revenues decreased during the three and six months ended June 30, 2009, as compared to the same periods last year, primarily due to a decrease in revenues from our Pre-Pay Services business resulting from management's decision to wind down the business, the divestiture of our CDN business in 2008 and termination of revenues from a service agreement with our former Jamba joint ventures.

Our expectations and trends for our segments are based on what we are observing and can project about the current macro-economic environment. Our outlook is subject to broader changes in the market and could alter significantly over time.

Geographic Revenues

We operate in the U.S.; Australia, Japan and Asia Pacific ("APAC"); Europe, the
Middle East and Africa ("EMEA"); and certain other countries.

A comparison of our geographic revenues is presented below:


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