April 10, 2014
As the first-quarter earnings season gets underway, now is a great time to assess whether your company is communicating as effectively as it can with its earnings disclosures. Here are a few ideas to consider:
1) Provide supplemental financial information
Are you spending hours on follow-up calls with analysts who are all asking for the same data points needed for their models? If so, you may want to provide additional financial data within your earnings release or as a supplemental disclosure on your website. For example, LinkedIn posts a document called Selected Company Metrics and Financials along with its earnings release. This could help you not only improve the quality of your callback discussions, but also mitigate the disclosure risk during these conversations.
2) Keep your conference call focused on strategy
Make sure your conference call speakers are not just reading your earnings release back to investors. Focus on what drove your quarterly results and where the company is headed. Prepare to discuss what you are seeing across the industry as well as internally and the impact these variables have on your strategy and performance. And keep it impactful but brief (usually 15 to 20 minutes of prepared remarks is ample) as you want to leave time for a productive Q&A session. Posting commentary from your CFO ahead of your call – as NVIDIA does– could help you get some of the nitty-gritty details out into the market and free up time for more strategic messaging during the prepared remarks.
3) Reinforce key messages via social channels
What are the three to five key takeaways from your earnings announcement? Consider using additional communications channels to reinforce these messages with your investor audience and the media. For example, “live tweeting” your earnings call is a great opportunity to highlight key messages (and it’s also an easy way to begin integrating social media into your investor relations program). Twitter is becoming an even more important medium for both the buy side and sell side, as it is integrated into Bloomberg terminals and some trading platforms.
4) Use video to bolster your messaging
Investors like to see and hear directly from the executive team, and we’re seeing more and more companies using video messaging to make that happen. These videos don’t need to be heavily produced sessions (like what we’ve seen from Yahoo) and could be recorded in a more casual setting (a la Bill Gates) or even on a smart phone. ARC Resources does an excellent job using video in Myron’s Minute – a series of short videos produced each quarter where the company’s president and CEO discusses ARC’s performance, upcoming plans and factors affecting the industry. As a plus, these short videos can easily be shared via social media channels.
5) Don’t forget about traditional media
Be sure to set aside time for key reporters following your earnings announcement. This remains an effective way to clarify and reinforce your message, as investors still look to traditional media as a primary source of information.
6) Remember that tone matters
In Winning Investors Over: Surprising Truths About Honesty, Earnings Guidance, and Other Ways to Boost Your Stock Price, Baruch Lev talks about the importance of conference calls and shares proof that they do matter. Interestingly, his research revealed that earnings and book values (net assets) — account for no more than 10 percent of stock price changes that occur around the time financial reports are released. Therefore, what you say on the call, how you say it and the relevancy of the information shared does have an important impact on investor reaction and trading.