ICANN 61 Finance Presentation Becky Nash, ICANN VP Finance Xavier Calvez, ICANN CFO ICANN 61 10 March – 15 March 2018
Agenda 3 2 1 FY18 Financial Draft FY19 Operating Reserve Fund Overview Plan and Budget Replenishment 4 5 Q&A – General Additional Topics | 2
FY18 Financial Overview | 3
ICANN Organization Reporting Structure FY18 New gTL w gTLD ICANN O NN Ope perations Progra ram PTI/ / Fund nding ng Fundi nding ng IA IANA NA Total ICANN ** ** IANA NA PTI/ / STEWARDSH SHIP Expense ses* s* TRANSIT ITIO ION IA IANA NA Expenses* enses* EXPENS NSES ES ** ** Auct ction Reser eserve Fund New gTLD New g Operat ating Fund Proceed eeds Funds nds *Excludes depreciation and bad debt expenses **IANA Services includes ICANN’s and PTI’s IANA Expenses | 4
FY18 Year-to-date (Jul 17- Dec 17) Overview ICANN OPERATIONS Fundi ding a and d Ex Expe penses be below low target. Actual al Budg dget Var ar % V Var ar FY1 Y17 Var ar % V Var ar Fund nding ng $65 $71 -$5 -8% $65 $0 1% Expen enses es ($59) ($68) $9 -13% ($57) ($2) 4% IANA S Stewards rdship p ($1) ($2) $1 -61% ($4) $4 -86% Transit itio ion E Expen enses es Ne Net $6 $6 $1 $1 $4 $4 N/A N/A $4 $4 $2 $2 58% 58% Breakd kdown o of E Expenses Actu tual Budget Bu Var % V % Var FY17 Var % Var % V IANA S I Services ($4) ($5) $1 -17% ($6) $3 -41% All O Other ($55) ($63) $8 -13% ($50) ($5) 9% Note: e: Expenses enses exclude e bad d debt and nd deprec eciation n and nd include de capital expenses. enses. In millions, USD- unaudited – Scale and Arithmetic inconsistencies are due to rounding to the nearest million. | 5
FY18 Year-to-date (Jul 17 – Dec 17) Funding vs Budget & FY17 ICANN OPERATIONS Actual: : $ 65M $ 65M Budget: : $ 71M $ 71M Fundi ding be below low t target du due t to low o lower r registration FY17: FY 17: $ 65M $ 65M volu olumes $30 $28 $24 $24 $25 $20 $18 $16 $15 $15 $15 $15 $15 $10 $8 $8 $8 $5 $2 $2 $2 $0 REGISTRY REGISTRAR REGISTRY FIXED REGISTRAR OTHER OTHER TRANSACTION FEE TRANSACTION FEE FEE FEES Actual Budget FY17 In millions, USD- unaudited – Scale and Arithmetic inconsistencies are due to rounding to the nearest million. | 6
FY18 Year-to-date (Jul 17 – Dec 17) Operating & Capital Expenses ICANN OPERATIONS Actual: : $ 59M $ 59M Lower er p profes essional s ser ervice ces co costs and timi ming Budget: : $ 68M $ 68M differ eren ences es o of project ects v vs. p . plan. FY17: FY 17: $ 57M $ 57M $40 $34 $34 $35 $30 $27 $25 $20 $14 $15 $10 $9 $9 $9 $10 $8 $8 $8 $7 $4 $5 $2 $1 $0 PERSONNEL TRAVEL & MEETINGS PROFESSIONAL ADMINISTRATION & CAPITAL SERVICES OTHER Actual Budget FY17 In millions, USD- unaudited – Scale and Arithmetic inconsistencies are due to rounding to the nearest million. | 7
Funds Under Management as of 31 Dec 2017 FUNDS UNDER MGMT. Tot otal al Fu Funds: $ 462M $ 462M ICANN Operations: $ 104M New gTLD Program-related: $ 358M $363 $358 New New gTLD gTLD Funds Funds $104 $128 $121 $96 Operating Fund Operating $34 Fund $35 Auction Auction Proceeds Proceeds Reserve $236 Reserve $235 Fund Fund $70 $62 30 Sep 2017 31 Dec 2017 30 Sep 2017 31 Dec 2017 New gTLD Program ICANN Operations In millions, USD- unaudited – Scale and Arithmetic inconsistencies are due to rounding to the nearest million. | 8
FY19 Planning Process | 9
FY19 Planning Timeline Highlights Current Fiscal Year Status End 30 June Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Kickoff PTI & IANA Draft Review PTI Board & ICANN BFC Review Drafts PTI Board & ICANN BFC Approve Drafts (Informal) PTI & IANA Public Comment Report/Revise Review PTI Board / ICANN BFC Review Proposed OP&Bs Board Workshop PTI Board Adopts PTI / BFC Approves IANA ICANN62 Review ICANN Board Reviews IANA ICANN Board Adopts IANA EC Period ICANN Draft Review ICANN BFC Reviews Draft Winter Office Closure ICANN BFC Approve Draft (Informal) 2 ICANN Public Comment Board Workshop Board Workshop 61% Report/Revise 1 Review ICANN BFC Reviews Proposed ICANN60 ICANN61 ICANN BFC Approves Proposed Review ICANN Board Review 3 ICANN Board Adopts EC Period FY19 9 Months Key Next Steps: 45 Days PTI/IANA Before FY19 Before FY19 1. Public Comment Period Ends 8 March ICANN Begins Begins 2. ICANN.org report on Public Comment Due 12 April 3. ICANN Board Approval 31 May 2018 | 10
Planning Document Structure Document Document Name Description of Contents Number Overview of the key elements of the draft FY19 plans FY19 Budget Introduction & 1 Highlights 2 FY19 Total ICANN Budget High-level review of the draft FY19 budget 3 FY19 Key Projects & Activities Information on key cross-functional projects and activities planned for FY19 FY19 Operating Plan Section 1: Summary of 6 modules of work planned for FY19 4 Section 2: Breakdown of the operating plan with the budget by strategic goal FY19 Five-Year Operating High-level five-year perspective on the operations ICANN undertakes to 5 Plan Update implement its strategic plan 6 FY19 Excel Spreadsheet Detailed breakdown of the budget for each project New series of six documents that form the ICANN annual update to the fiscal Operating Plan and Budget. Introduction and Highlights document recommended to read first Each document is standalone and can be reviewed separately in no specific order, dependent on interest. Key Projects and Operating Plan Modules provide more information on planned projects and activities | 11
Draft FY19 Budget Summary FY18 18 FY17 17 FY18 18 Draft F FY19 19 Ado dopt pted d ICANN Operations Actu tuals ls Fore recast 2 Budg dget Budg dget 1 Fund nding ng $135 $135 $143 $143 $135 $135 $138 $138 $128 $128 $143 $143 $137 $137 $138 $138 Cash Expenses Funding from FY17 Savings $0 $0 $0 $0 $2 $2 $0 $0 (Approved by Board) $6 $6 $0 $0 $0 $0 $0 $0 Excess/(Deficit) $ in USD Millions 1 FY18 Adopted Budget in June 2017 2 FY18 Forecast is the most recent data on FY18 | 12
FY19 Budget Highlights FY19 Budget balanced • Funding = Operations expenses = $138M 1 • Significant shift in budgeting only for defined requirements, and not including tentative and unapproved potential work. • Draft budget include $6m of cost reductions to offset inflation and necessary increases. Funding increases at a slower rate 2 • Funding of $138M, 2.6% above the FY18 forecast $135M. • Slower growth in funding as all new gTLDs are now delegated. ICANN Operations expenses • Operations expenses are stable year on year. 3 • Personnel expenses increase offset by cost reductions (FY19 $133.5M vs. FY18 Forecast $133.3M, both excluding contingency). Headcount Trends 4 • Total ICANN headcount in FY19 is growing at a slower pace. • End of Period headcount for FY19 is 425 or 1% higher than the expected headcount of 421 for the end of FY18. | 13
FY19 Planning Timeline – Key Next Steps Step Target Dates Note ICANN Public Comment 19 Jan – 8 Mar 49 Days (7 weeks) 2 Public Sessions to discuss comments received on ICANN OP&B. ICANN 61 Community Forum 10 Mar – 15 Mar Attend SO/AC/SG Meetings to discuss comments as needed. ICANN.org Report on Public Report on Responses to Public Comment 12 April Comment Published ICANN Proposed OP&B At Least 45 Days 15 May Submitted to ICANN Board Before Next Fiscal Year (Per Bylaws) ICANN Board to Approve ICANN Target to allow for EC Review Period before 31 May OP&B 1 July | 14
ICANN Reserve Fund Replenishment Strategy | 15
Reserve Fund: Public comment #2 on Replenishment ICANN Reserve Fund created in 2007, funding through operational surpluses. Target 12 months of operating expenses. In 2014: Reserve Fund = 11 months of Operating Expenses. Starting in 2014: withdrawals to fund IANA Stewardship Transition. Total $36 million over 4 years. Target level = 12 months of Operating Expenses = US$138m Amount of Reserve Fund as of 31/12/2017 (most recently published): US$70m Shortfall: US$68m Strategy suggested: replenishment period 5 years (principle #1) Over 5 years, ICANN Org operational savings US$15m (principle #2) Auction Proceeds: US$36m, for IANA Stewardship Transition expenses Remainder shortfall of US$17m (68 less 15 less 36): • Contribution from leftover funds from the new gTLD program, if any • Additional contribution from ICANN org. • Additional contribution from the Auction Proceeds. | 16
Q&A Questions? | 17
Additional Topics | 18
FY19 SO/AC Additional Budget Requests Step Timing Process launched on Finance Community 1 December 2017 ABR Submissions received 31 January 2018 SO/AC consultations at ICANN 61 10 March – 15 March 2018 Evaluations by assessment team 15 April 2018 Recommendation to ICANN Management and ICANN 25 April 2018 BFC Recommendations to ICANN Board 15 May 2018 31 May 2018 ICANN Board Adoption of FY19 OP&B including SO/AC ABR | 19
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