September 2016 Financial Results

Transcription

1 September 2016 Financial Results Unaudited financial results for the one months ending 30 September 2016

2 Contents Executive Summary Statement of Activities (Budget).. 3 Statement of Activities (Actual).. 4 Statement of Activities (Actual vs. Budget).. 5 Statement of Position 6 Funds Under Management.. 7 Cash Flows Synopsis. 8 Reserve Fund 9 New gtld Financial Summary 10 New gtld Historical Development Costs 11 New gtld Historical Auction Proceeds.. 12 Note - All financial information is unaudited.

3 Executive Summary of Unaudited Financial Results For the Three Months Ending 30 September 2016 Overview - Operations and New gtld Program The total change in net assets is $139.8M higher than budget for the period mainly as a result of (i) unbudgeted Auction Proceeds ($135.0M); (ii) higher than budgeted revenues for Operations ($3.4); (iii) underspend in planned operations for Ops ($2.9M) primarily due to delayed activities across the organization; and (iv) total investment gains of ($2.8M); partially offset by (v) lower revenue recognized for the New gtld Program (-$1.9M), (vi) higher expenses due to auctions fees; offset by lower evaluation costs due to extension of the New gtld Program (-$1.4M); and (vii) unbudgeted risk costs for the New gtld Program (- $1.0M). See below. The Funds Under Management by increased by $135.2M during the period to a total of $476.1M, mainly as a result of (i) auction proceeds collected ($135.0M); (ii) net funds collected from contributors and contracted parties ($34.9M); and (iii) Reserve Fund gains ($2.8M), partially offset by (iv) general operating expenses for Ops (-$29.9M); and (v) the payment of refunds and evaluation expenses and general operating expenses for the New gtld Program (-$7.6M). Financial Position The Funds Under Management increased by $135.2M during the period as a result of the following: - An increase of the Operations funds by $11.5M due to: (i) funds collected from contributors/ parties of $34.9M (ii) the reimbursement to Ops from the New gtld Program for direct/allocated costs for $6.6M and Historical Development Costs for $0.5M, and (iii) the appreciation of investments for $2.3M, partially offset by (iv) payments to vendors/ employees of $32.8M, $2.9M of which were on behalf of the New gtld Program. - A increase of the New gtld funds by $123.7M due to: (i) Auction proceeds received of $135M and (ii) the appreciation of investments for $0.5M, partially offset by (iii) the reimbursement to Ops from the New gtld Program for direct/allocated costs for $6.6M and Historical Development Costs for $0.5M, (iv) payments to vendors of $4.1M, and (v) net refunds to New gtld applicants of $0.6M. The decrease of the deferred revenues balance of $6.4M corresponds to: (i) the amount of revenues recognized for the New gtld program $5.7M and (ii) the net refunds to New gtld applicants $0.7M Funding Funding for Operations was $3.4M favorable to budget primarily due to: (i) higher Registry fees by $0.7M resulting from higher registry transaction-based fees; (ii) higher Registrar fees by $2.3M due to the one-time register application fees resulting from the application of new registrars and higher application fees by $2.0M, and higher registrar transaction fees by $0.3M; and (iii) higher cctld contributions by $0.3M and meeting sponsorships by $0.1M due to timing. Funding for New gtld program was $133.1M favorable to budget primarily due to net auction proceeds of $135.0M, partially offset by lower funding recognized of -$1.9M as a result of the extension of the evaluation period for the New gtld program. Operating Expenses Personnel expenses for Operations were below budget by $2.1M primarily as a result of: (i) lower average compensation (including fringe) than planned and (ii) lower average headcount than planned (348.9 vs 375) due to lower headcount entering the fiscal year, slower hiring and attrition. Personnel costs for the New gtld Program were $0.3M favorable to budget due to (i) lower average compensation (including fringe) than planned and (ii) lower average headcount (10 vs 11) due to lower headcount entring the fiscal year, slower hiring and attrition. 1

4 Executive Summary of Unaudited Financial Results For the Three Months Ending 30 September 2016 Travel and Meetings expenses for Operations were below budget by $0.4M primarily due to lower travel rates than planned and delayed staff travel. The New gtld Program Travel and Meetings costs were favorable to budget $0.1M due to lower travel rates and less staff travel taken than planned. Professional Services expenses for Operations were below budget by $0.5M primarily due to: (i) delayed progress on planned activities across the organization and timing differences across various projects such as IDN, Security and Technical Services projects (+$2.6M), partially offset by (ii) IANA Stewardship Transition Project activities, primarily legal fees, for (-$1.2M), and (iii) higher costs for critical IT infrastructure projects for (-$0.7M). Professional Services costs for the New gtld Program were $1.8M higher than budget due to unbudgeted auction fees. Auction fees are offset by the auction proceeds. Administration expenses for Operations were below budget by $0.3M primarily due to: (i) the timing of sponsorship contributions in support of global stakeholder engagement ($0.2M) and other planned activities across the organization (+$0.1M). Administrative costs for the New gtld Program were $0.1M favorable to budget primarily due to the extension of the evaluation period for the New gtld program. Bad debt: On the basis of the historical trend of uncollectible receivables, the level of bad debt on reserve at the end of the period was sufficient and therefore no additional bad debt expenses were budgeted or reserved during the period. Depreciation costs were $0.3M unfavorable to budget primarily due to underestimated depreciation in the the period budget. Other Income /Expense Due to market fluctuations, the Ops investment accounts had realized gains of $2.4M and unrealized losses of $1.0M during the period. The New gtld investment accounts had unrealized gains of $0.5M and realized losses of $0.3M for the period. The New g TLD program also had $0.3M of dividends and interest on the investment accounts. 2

5 Statement of Activity FY17 Budget by Quarter Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total Year Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Total Funding $31.6 $7.6 $39.1 $32.5 $7.0 $39.5 $34.5 $6.2 $40.7 $33.8 $7.0 $40.8 $132.4 $27.7 $160.1 Expenses Personnel Travel & Meetings* Professional Services Administration Bad Debt Expenses Depreciation Expenses Total Expenses Contingency Interest - General FX Translation (Gain) / Loss Investment (Income)/ Loss Total Other (Income)/Expense Change in Net Assets Before Historical Costs and Reserves (2.7) (0.6) (6.8) 2.9 (4.0) (9.6) Hist. Development Costs/ (Reimbursement) (0.8) (0.7) (0.6) (0.7) (2.9) Risk Costs Change In Net Assets $1.3 $2.3 $3.7 ($2.0) $2.2 $0.2 $0.1 $1.9 $2.0 ($6.1) $2.2 ($4.0) ($6.7) $8.6 $1.9 *Includes Community Support Requests 3

6 Statement of Activities FY17 Actuals by Quarter For the Three Months Ending 30 September 2016 Unaudited Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year to Date Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Total Funding $35.0 $140.7 $175.7 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $35.0 $140.7 $175.7 Expenses Personnel Travel & Meetings * Professional Services Administration Bad Debt Expenses Depreciation Expenses Total Expenses Contingency ** Interest - General FX Translation (Gain) / Loss Investment (Income)/ Loss (2.3) (0.5) (2.8) (2.3) (0.5) (2.8) Other (Income)/Expense (0.0) 0.0 (0.0) (0.0) 0.0 (0.0) Total Other (Income)/Expense (2.2) (0.5) (2.7) (2.2) (0.5) (2.7) Change in Net Assets Before Historical Costs and Reserves Historical Development Costs/(Reimbursement) (0.6) (0.6) Risk Costs Change In Net Assets $9.7 $133.8 $143.5 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $9.7 $133.8 $143.5 *Includes Community Support Requests **Contingency items have been reported in the expense categories above based on the nature of the expense. 4

7 Statement of Activity - Total Actual vs. Budget For the Three Months Ending 30 September 2016 Unaudited Ops FY17 Actual FY17 Adopted Budget Variance vs Budget New gtld Total Ops New gtld Total Ops New gtld Total Total Funding $35.0 $140.7 $175.7 $31.6 $7.6 $39.1 $ % $ % $ % Expenses Personnel % % % Travel & Meetings * % % % Professional Services % -1.8 (66.6%) -1.3 (14.7%) Administration % % % Bad Debt Expenses % % % Depreciation Expenses (19.3%) % -0.3 (19.3%) Total Expenses $28.0 $5.8 $33.9 $31.0 $4.4 $ % -1.4 (31.9%) % Contingency ** % % % Interest - General % % % FX Translation (Gain) / Loss % % % Investment (Income)/ Loss % % % Other (Income)/Expense % % % Total Other (Income)/Expense -$2.2 -$0.5 -$2.7 $0.0 $0.0 $ % % % Change in Net Assets Before Historical Costs and Reserves % % % Hist. Development Costs/ (Reimbursement) % % % Risk Costs % % % Change In Net Assets $9.7 $133.8 $143.5 $1.3 $2.3 $3.7 $ % $131.4 n/a $139.8 n/a Average Headcount % % % *Includes Community Support Requests **Contingency items have been reported in the expense categories above based on the nature of the expense. 5

8 Statement of Position As of 30 September 2016 ASSETS Unaudited 09/30/16 06/30/16 Increase/ (Decrease) Notes Ops NgTLD Total Ops NgTLD Total Ops NgTLD Total Cash & Cash Equivalents $44.1 $140.0 $184.1 $25.6 $11.8 $37.4 $18.5 $128.2 $146.7 (1) Investments (6.9) (4.5) (11.4) (2) Funds Under Management Receivables (0.1) (0.1) Prepaid Expenses Plant, Property & Equip - Net Other Assets 3.6 (1.1) (4.8) 0.6 (1.8) TOTAL ASSETS LIABILITIES AND NET ASSETS Payables (0.1) 0.7 (3) Deferred Income (6.4) (6.4) (4) Other Liabilities (0.0) 0.0 (0.0) TOTAL LIABILITIES (6.5) (162.1) UNRESTRICTED/RESTRICTED ASSETS CURRENT YEAR CHANGE IN NET ASSETS TOTAL NET ASSETS TOTAL LIABILITIES & NET ASSETS $170.3 $367.1 $537.3 $159.8 $239.8 $399.6 $10.5 $127.3 $137.8 Notes (1) and (2): "See Funds Under Management". Note (3): The reduction of payables is driven by the timing of expenses and related payments. Note (4): The reduction of deferred income is resulting mainly from the revenues recognized during the quarter on the new gtld program, reflecting from the progress of the evaluation process, and from the refunds of application fees. 6

9 USD in Millions Funds Under Management As of 30 September Jun Jun Sep-16 Auction Proceeds New gtld Funds Operating Fund Reserve Fund The variances from 30 June 2016 to 30 September 2016 are as follows: New gtld Auction Proceeds increased 132.3M due: (i) to the receipt of funds for the auctions held during the period ($135.0M); and (ii) gains on the investment of funds (+$0.2M), partially offset by auction fees (-$2.9M) New gtld funds decreased by $8.6M mainly as a result of: i) the repayment to Ops for Historical Development costs and accumulated direct allocated costs incurred on behalf of the program (-$7.1M); and ii) net refunds to applicants and disbursements to vendors of (-$1.8M), partially offset by the appreciation in the market value of investments (+$0.3M). The Operations Operating Fund increased by $18.5M as a result of: i) the net impact of cash received from contracted parties of (+34.9M); ii) a transfer from the Reserve Fund for FY16 Q3-4 IANA Stewardship Project costs (+$9.2M); and iii) the cash received from the New gtld Program for repayment of Historical Development costs and accumulated direct allocated costs incurred on behalf of the program (+$7.1M), partially offset by iv) payments to employees/vendors of (-$32.8M), $2.9M of which was on behalf of the new gtld Program. The operations Reserve Fund decreased $6.9M as a result of the transfer to the Operating account for the reimbursement of IANA Transition Project expenses of (-$9.2M), partially offset by the appreciation in the market value of investments of (+2.3M). 7

10 Cash Flows Synopsis For the Three Months Ending 30 September 2016 Unaudited Ops NgTLD Total Funds Under Management at Beginning of Period $96.6 $244.2 $340.8 Collected/ (refunded) from contributors/parties 34.9 (0.6) 34.4 Auction Proceeds Paid to vendors (14.9) (6.0) (20.9) Paid to employees (12.4) (1.0) (13.3) Paid to vendors and employees on behalf of New gtld (2.9) Reimbursement of payments to vendors and employees above, from New gtld to Ops: Payments to vendors NgTLD team costs (Paid to employees) 6.6 (6.6) 0.0 Overhead Allocations (Paid to vendors and employees) Historical Development Costs 0.5 (0.5) 0.0 Capital expenditures (2.7) 0.0 (2.7) Change in investment market value (excludes transfers to/ from operating account) Funds Under Management at End of Period $108.2 $367.9 $

11 Reserve Fund As of 30 September 2016 Reserve Fund Activity (unaudited) Contributions Nov Aug Sep Oct Feb Jul Total Contributions 66.3 Withdrawals May-15 (1.5) Dec-15 (7.3) Apr-16 (8.6) Sep-16 (9.2) Total Withdrawals (26.6) Balance at Beginning of Fiscal Year (01-Jul-2015) 71.0 Prior Fiscal Quarter Balance (31-Mar-2016) 77.6 Prior Fiscal Quarter Balance (30-Jun-2016) 71.0 Balance at End of Fiscal Period (30-Sep-2016) 64.1 Notes: Historical default = 12 months of operating expenses. 9

12 New gtld Financial Summary As of 30 September 2016 Program to date Full Program Program Balance Fees Unaudited Actual (Sep 2016) Current Estimate (Feb 2016) Prior Estimate (Feb 2015) Actual vs Current Estimate (Over)/Under Actual vs Prior Estimate (Over)/Under Application Fees (361.0) (1) (361.0) (361.0) Other Fees (1.7) (2) (1.1) (0.5) (0.6) (1.2) Total Fees (362.7) (362.2) (361.5) (0.6) (1.2) Refunds Withdrawal (Pre-reveal/Overpayment) Withdrawal 80%) Withdrawal 70%) (0.0) (0.0) Withdrawal 35%) Withdrawal 20%) (1.1) Total Refunds Funds Net of Refunds (319.1) (309.5) (305.6) Revenue Recognized Revenue (275.5) (309.5) (305.6) Deferred Revenue (43.6) Total Revenue (319.1) (309.5) (305.6) (9.6) (13.4) Expenses Evaluation Processing Costs Overhead NgTLD Team Staff Allocation Other Overhead Total Operating Expenses Historical Development Costs Total Expenses Net Remaining Funds (134.2) (80.8) (91.4) (53.4) (42.8) Remaining Funds (134.2) (80.8) (91.4) (53.4) (42.8) Actual Risk Costs 9.2 (3) (5.4) Net Remaining Funds (125.0) (72.0) (87.6) (53.0) (48.2) (1) (2) (3) Includes overpayments. Proceeds from Prioritization Draw and Fees for Change Request. Currently includes actual risk costs incurred. Future costs cannot be estimate. Further review of risk costs identification in progress. 10

13 New gtld Historical Development Costs As of September 30, 2016 In Thousands Accrued Transferred/Paid FY13 Actual $15.4 $0.0 Q1 FY14 Actual Q2 FY14 Actual Q3 FY14 Actual Q4 FY14 Actual (2.4) 0.0 FY14 Total FY14 (Program to date) Q1 FY15 Actual Q2 FY15 Actual Q3 FY15 Actual Q4 FY15 Actual FY15 Total FY15 (Program to date) Q1 FY16 Actual Q2 FY16 Actual Q3 FY16 Forecast (1.6) 0.0 Q4 FY16 Forecast FY16 Total FY16 (Program to date) Q1 FY17 Forecast Q2 FY17 Forecast Q3 FY17 Forecast Q4 FY17 Forecast FY17 Total FY17 (Program to date) $30.1 $27.2 Q1 FY18 Forecast Q2 FY18 Forecast Q3 FY18 Forecast Q4 FY18 Forecast FY18 Total FY18 (Program to date) $32.5 $27.2 NOTE: Forecast referenced above, as of Feb

14 Description Auction Development Costs Direct Contention Indirect Contention Wilmington Trust Annual Fee Subtotal: Auction Development Costs 4 June 2014 Auction Subtotal: 4 June 2014 Auction 9 July 2014 Auction Subtotal: 9 July 2014 Auction 6 August 2014 Auction Subtotal: 6 August 2014 Auction 17 September 2014 Auction Subtotal: 17 September 2014 Auction 22 October 2014 Auction Subtotal: 22 October 2014 Auction 19 November 2014 Auction Subtotal: 19 November 2014 Auction 17 December 2014 Auction Subtotal: 17 December 2014 Auction 21 January 2015 Auction Subtotal: 21 January 2015 Auction 25 February 2015 Auction Subtotal: 25 February 2015 Auction 25 March 2015 Auction Subtotal: 25 March 2015 Auction 29 April 2015 Auction Subtotal: 29 April 2015 Auction 20 May 2015 Auction Subtotal: 25 March 2015 Auction 29 July 2015 Auction Subtotal: 29 July 2015 Auction 14 October 2015 Auction Subtotal: 14 October 2015 Auction 18 November 2015 Auction Subtotal: 18 November 2015 Auction 27 January 2016 Auction c New gtld Auction Proceeds and Fees As of September 30, 2016 Program To Date In Thousands Proceeds Costs Net Proceeds $230,000 $120,000 $1,750 $ - $351,750 ($351,750) $600,000 $24,000 $500 $600,000 $24,500 $575,500 $10,000 $500 $ - $10,500 ($10,500) $20,000 $500 $ - $20,500 ($20,500) $14,349,776 $573,991 $60,000 $3,750 $14,349,776 $637,741 $13,712,035 $12,889,463 $515,579 $100,000 $5,750 $12,889,463 $621,329 $12,268,134 $700,000 $28,000 $150,000 $4,250 $700,000 $182,250 $517,750 $6,447,888 $257,916 $90,000 $3,500 $6,447,888 $351,416 $6,096,472 $0 $0 $30,000 $750 $0 $30,750 ($30,750) $25,001,000 $700,020 $40,000 $1,750 $25,001,000 $741,770 $24,259,230 $1,901,000 $76,040 $20,000 $750 $1,901,000 $96,790 $1,804,210 $10,000 $0 $10,000 ($10,000) $10,000 $500 $0 $10,500 ($10,500) $10,000 $1,000 $0 $11,000 ($11,000) $10,000 $500 $ - $10,500 ($10,500) $2,200,000 $88,000 $500 $2,200,000 $88,500 $2,111,500 $41,501,000 $1,030,020 $750 Subtotal: 27 January 2016 Auction $41,501,000 $1,030,770 $40,470, July 2016 Auction $135,000,001 $2,900,000 $500 Subtotal: 27 July 2016 Auction $135,000,001 $2,900,500 $132,099,501 Current Total $240,590,128 $134,565 $233,455,563 12

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