Leading an FP&A Team through a Crisis

Transcription

1 FP&A Intensive Workshop 2016 December 5-6 San Francisco, CA Leading an FP&A Team through a Crisis December 6, 12:45pm JPK Group Matt Armstrong Hotwire Matt Armstrong is the Director of Financial Planning and Analysis at Hotwire.com, a subsidiary of Expedia Inc. Matt has spent over 4 years leading the FP&A for various points of sale and brands within Expedia, specifically Expedia Canada, Expedia Australia, Expedia Latin America, CarRentals.com and Hotwire.com. He has also built up his ecommerce FP&A experience at the ebay Classifieds Group and Workopolis, and strategic planning at Bell Canada. Early in his career, Matt was a software engineer at a start-up bought by AOL/Time-Warner and a lecturer in SE at the University of Waterloo. Matt holds his Bachelor and Master of Mathematics from the University of Waterloo, his MBA from the Richard Ivey School of Business at Western University, and is a licensed CPA in the province of Ontario. View presentation online at:

2 Leading a team through a crisis Matt Armstrong, Director, FP&A, Expedia Inc. December 2016 Copyright 2016 Do not distribute without permission 1

3 Agenda Background & Context Organizational & Functional Challenges Short and Long-Term Plans Results Key Learnings

4 Background Unconventional background BMath, UWaterloo Software Engineer for Startup in Silicon Valley Software Engineering UWaterloo Ivey Internal Strategy Bell Canada FP&A ebay, Workopolis and Expedia Inc. 3

5 Situation Easter

6 Business Context Expedia Inc. (EI) Online Travel Agency Multiple brands Expedia, Hotels.com, Orbitz, Travelocity Revenue facilitate bookings for a fee, advertising, insurance Products Air, Hotel, Car, Package Customer Acquisition Google, , Metasearch, Affiliates Hotwire (HW) Opaque booking model & a discount brand You ll get a great deal, but not sure what you ll get Offerings complemented by standard EI products Competitive environment almost hostile to discount brands Revenue Recognition usually based on consumption i.e. a booking in January for a stay in March has its revenue recognized in March However, Air & Opaque product revenue recognized at time of booking 5

7 The Revenue Funnel Includes all visitors to our websites Those who visited our shopping path Customer bookings Portion of the booking amount that we earn Revenue Margin x Gross Bookings Shoppers X Conversion rate = Transactions Transactions X Avg. Booking Value = Gross Bookings Total booking amount received from the customer at the time of booking includes fees & taxes 6

8 Agenda Background & Context Organizational & Functional Challenges Short and Long-Term Plans Results Key Learnings

9 A Pyramid of FP&A Functions Business Partnering & Influence Analytics & Forecasting Roles & Processes Data & Reporting 8

10 Organizational Challenges 1. FP&A Leader vacant since October Two quit within two weeks after I started (of 5 total) 3. Leadership had zero confidence in reported results 4. The financial forecasting process was the most broken process at Hotwire 5. Business performance was slipping badly off plan Business Partnering & Influence Analytics & Forecasting Roles & Processes 6. Hotwire was left to run as a stand-alone business 9

11 Functional Challenges Data and Reporting 1. Hotwire Finance not integrated with Financial Systems Comprehensive Hyperion implementation not used for FP&A Excel was used to persist all management reporting records and files for 15 years, nothing lived in the systems All Excel files were linked together creating fragility and a lack of backups Directory structures essentially did not exist a hundred subdirectories within one folder The data warehouse was never in sync with financial data 10

12 Functional Challenges Data and Reporting 2. Metrics management inconsistent with the rest of EI No top-line product profitability view revenue mixed with Cost of Sales (COS) components, while Gross Profit (GP) not used Operational metrics were continually reconciled with financial metrics EI products sold by Hotwire could not be compared to HW products to determine profitability Non-standard metrics for shoppers and conversion 11

13 Functional Challenges Data and Reporting 3. Business segments and intercompany transfers realigned the month I arrived Products sold by Hotwire moved to under Hotwire s P&L from our internal partners P&L and vice-versa Revenue sharing moved from a split to a split These realignments caused a lot of short-term confusion with the leadership team 12

14 Functional Challenges Data and Reporting 4. Scorecards were incorrect and unclear MTD YoY comparisons were based on day of week instead of day of month Estimated forward-looking revenue was masked and perceived to be consumed revenue Inability to break out key drivers from the estimated revenue to determine what is changing i.e. product types, rates, margins, etc Key assumptions were fixed and not tied to reality 13

15 Functional Challenges Data and Reporting 5. Convoluted accounting practices with intercompany revenue The main product HW sells is non-cancellable its bookings have their revenue recognized immediately However with internal partner Expedia Affiliate Network (EAN) 1. A negative margin was agreed between EAN and HW 2. HW was paid a commission from EAN 3. Revenue was recognized upon consumption Hotwire EAN Supply Gross Bookings $ <--- $ <--- $ Revenue Raw Margin $ (5.00) $ Revenue Raw Margin % -7% 33% Intercompany Revenue $ $ (25.00) Intercompany Expense $ (5.00) $ 5.00 Revenue Margin post Intercompany Adj. $ Revenue Margin post Intercompany Adj. % 20% 14

16 Agenda Background & Context Organizational & Functional Challenges Short and Long-Term Plans Results Key Learnings

17 Agenda Background & Context Organizational & Functional Challenges Short and Long-Term Plans Results Key Learnings

18 Agenda Background & Context Organizational & Functional Challenges Short and Long-Term Plans Results Key Learnings