JPK

Gro

up

June 14-15 • Boston, MA

Ensuring Financial Planning Success

& Avoiding Common Pitfalls

Assessing common and unique financial planning pitfallsand discovering relevant and proven concepts

June 14, 11:00am

View presentation online at:

http://www.jpkgroupsummits.com/attendee3

Ed Goldfinger – CFO at Veracode

Ed Goldfinger is a seasoned financial executive, with over 25 years of financial leadership

experience. Goldfinger is currently the CFO for Veracode, a fast growing, venture-backed

organization in the Boston area that provides automated web and mobile application

security, delivered as a cloud-based subscription service. In this role, Goldfinger is in

charge of leading and managing Veracode’s financial direction as well as providing

strategic, operational and analytical insight to the business and overseeing legal, sales

operations, services and investor relations. In this role, Goldfinger is in charge of leading

and managing Veracode’s financial direction as well as providing strategic, operational and

analytical insight to the business and overseeing legal, sales operations, services and

investor relations. Goldfinger is a graduate of the Wharton Undergraduate program at the

University of Pennsylvania, and he was a CPA in the State of Connecticut.

Business Forecasting and Analytics Forum

And Avoiding Common Pitfalls

Ed GoldfingerJune 14, 2016

2016 BUSINESS FORECASTING

AND ANALYTICS FORUM

7 Years

9 Years6 Years

5 Years

2 Years

4 Months

3 Years

Where does a Planning Process Go Wrong?

• Make planning a Finance exercise

• Create financial plan concurrently with (or in advance of) determining strategy

• Take a “bottom up” approach (aka, the food fight method!)

• Start late and just sort of wing it

• Don’t plan for contingencies (assume all goes to plan and unprecedented metrics are achieved!)

• Be arbitrary on where investments are made (peanut butter method or squeaky wheel approach)

• Use Excel

• Plan at too high a level so no one knows what is in and out of plan

• Don’t get buy-in from business units and functions

• Don’t plant the acorns of the future

As a Senior Leadership Team, based on Strategy

• Establish growth target and profit target

• Difference = cost investment

• Allocate cost investment; reserve holdback!

CurrentYear

PlannedYear

Cost Investment

Sales Marketing R&D

Services Product Mgmt G&A

Holdback

Based on Strategic and Operational Priorities & Benchmarks

Note: same applies for Business Units – determine at highlevel what growth and profit aspirations are and allocate resources

Strategic Considerations• New markets

• New products

• Distribution

• Competition

Operational Considerations

• Marketing plan

• Sales model

• R&D roadmap

• Headcount

• Capex

• Balance sheet items such as AR and inventories

• Financing plan

• Select peer group– Competitors

– Peers

• Compare key ratios– Growth

– Gross margins

– Operational expense as a % of Revenues

– Balance sheet metrics (DSO, DII, Capex, etc.)

• OK to be different!– But good to understand where and why

Your company

Your company

Your company

Your company

Your company

Provide top and bottom line targets to plan owners (BUs or functions)

• Require that targets are achieved within planning system (preferably NOT Excel!)

• Allow flexibility on how to achieve

• Any incremental asks recorded separately outside the system with justification

Cost Envelope

14

Determine company targets; allocate investmentsstrategically

1

Provide top andbottom line targets to BUs and functions that support company level targets reserving holdback

2

3

Have detailed operating plans prepared by BUs and functions within their targets – identify risks, issues and wish list but hold outside of plan

4Consolidate plan and confirm within target; review key assumptions and metrics and ensure reasonable continuity between past and future;

5Based on review of detailed “wish lists” and justification, allocate some portion of the holdback as necessary and have built into the plan, preferably not in Q1.

6 Ensure milestones and metrics clearly identified by BU and function for measurement and accountability.

North Contingency Total Corporate Total

America EMEA Asia Market Operations Corporate Contingency Company

Revenue 600 200 50 (50) 800 - - 800

Cost of Sales 180 60 20 (20) 240 - - 240

Gross Margin 420 140 30 (30) 560 - - 560

Sales 120 50 20 (5) 185 10 - 195

Marketing 60 30 10 (5) 95 20 - 115

Research & Development - - 30 30

G&A 30 20 10 - 60 20 15 95

Total Opex 210 100 40 (10) 340 80 15 435

Operating Income 210 40 (10) (20) 220 (80) (15) 125

Illustrative Plan

• Not designed for in-depth planning

• Version control is a nightmare

• Prone to mistakes

• Not scalable – at some point becomes unwieldy

• Not access privileged; confidential information like salary

• Updating with actuals for forecasting can be complex

• Many cloud-based, easy-to-implement planning systems now available at reasonable cost

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015

Revenue($ Millions)

The problem with this…

30%

23%

19%

16%

14%

0%

5%

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015

Revenue Growth

…is this!

0

50

100

150

200

250

300

350

400

2010 2011 2012 2013 2014 2015

Revenue($ Millions)

30%

23%

18%

14%11%

7%

7%

7%

7%

5%

5%

5%

4%

4%

3%

0%

5%

10%

15%

20%

25%

30%

35%

2011 2012 2013 2014 2015

Revenue Growth

Acquisition

New Product

New Geography

New Channel 30% 30% 30%30%30%

"Someone's sitting in the shade today

because someone planted a tree a long

time ago," Warren Buffett .

20

(It means you’re making important trade-offs and tough decisions!)