Thanks to the Shareholder Rights Directive II (SRD II), which came into effect in June 2019, shareholder analysis is more straightforward than previously. As an issuer, you can understand the custody chain of your shareholding up to the beneficial owners and gain access to the identity of all investors who own at least 0.5% of your shareholding. In some European Union member states, there is no lower threshold, allowing you to identify all shareholders.
Within a year of EU nations implementing SRD II, investor relations officers (IROs) were already committing to using this newfound freedom in their engagement strategies. On a Euronext webinar entitled “A practical view on the implementation of SRD II”, 40% of the IROs polled during the event said that they would increase the frequency of shareholder analysis reports thanks to the additional transparency of SRD II.
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III) How to host a successful earnings call
Why are earnings calls important to investors?
The quarterly earnings call is one of the key elements used by investors and analysts to establish the current position of the company. It is also an opportunity for them to engage with the IRO team and find out how the business plans to improve underperformance or build upon strong results.
Using this information, investors can formulate their decisions based on the financial performance reported and how much confidence they have in the narrative that the organisation has publicised.
The Corporate Finance Institute explains why shareholders are so interested in earnings calls: “The importance of earnings calls is acknowledged by the fact that investors frequently plan their trades close to the date of an upcoming conference. Equity analysts use the information provided during such events to update their earnings estimates.”
Investors can use the information within the earnings call to ascertain whether the stock is valued accurately. This enables them to decide if they should use the earnings per share (EPS) and other metrics to compare your company’s stock against another organisation’s.
Earnings conference call format
IROs have a choice between a number of different formats for presenting their quarterly earnings conference call. Here are the most popular options:
|Earnings call format||Pros||Cons|
|Phone call audio||
|Video and presentation||
How to host a successful earnings call
1. Highlight key themes from the reporting period
It is most likely that your earnings call takes place immediately following the release of your financial results, and that brings an opportunity to add context to your reports. If you have enjoyed a successful quarter, investors want to know why and how you intend to maintain your momentum. After a disappointing quarter, you can explain to them, analysts, the press and other audience members why earnings have dipped and how the organisation is working to reverse that trend.
You have to help your audience understand the drivers behind your results in an honest and transparent manner. If market conditions have shifted in your favour and that looks like a long-term change, you can celebrate this. If, however, there is an anomaly that has boosted your figures, you should manage their expectations. Otherwise, they may be disappointed in three months’ time. If your results have dipped, you must be able to explain why and give a roadmap for overcoming this setback in order to reassure shareholders that they have still invested in the right stock.
Your key stakeholders don’t just need the headlines; they want the background too, and you should communicate these aspects to them.
2. Choose the metrics your investors care about
We have all heard the quote, most often attributed to 19th-century British Prime Minister Benjamin Disraeli – “There are three kinds of lies: lies, damned lies and statistics.” And it is true that you can certainly spin a story in whichever direction you like by being selective with the figures you choose to present and, importantly, those that you choose not to share.
However, your investor relations activities are not the time for sleight of hand, as the effect can be the opposite; you may simply delay disappointing your audience rather than avoiding it forever.
In your IR efforts, you will get to know your shareholders and understand the metrics they want to hear about. Make sure you supply them with these figures when it comes to your earnings call, whether it is net income, EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation), P/E Ratio (Price to Earnings Ratio) or any other measure.
3. Choose the right tech
You need a platform that will allow you to talk to the maximum number of stakeholders at once in an engaging and easily accessible manner. Traditionally, this would take place on a conference call, but a more human and effective method of reaching your audience, whether they are shareholders, journalists, financial analysts or anyone else, is a webinar.
Pick the right platform, and you will treat your viewers to a professional-level broadcast that they can attend wherever they are based. You will also be able to give anyone who is not free at the time the opportunity to watch the event later, on-demand.
With Company Webcast, you gain access to a reliable, professional streaming environment that shows your business in the best possible light and offers many additional features to keep your viewers involved.
4. Write a script to guide you
When dealing with detailed information, like in an earnings conference call, you need a script close at hand to ensure accuracy. Still, you would not have your presenter slavishly stick to every single word written down.
Make the call itself more easily digestible for humans by making it conversational. If a presenter is clearly reading everything that they say, it can seem cold and disengaging. You want to appear genuine in the call, especially when you are explaining the reasons behind your results and you want to win key stakeholders over.
5. Rehearse answers to probable questions
When analysing your results, you can most likely guess the types of questions that will come up in your earnings call. Stumbling over answers does not engender trust or confidence, so do not leave it to chance. Make sure the presenter is fully prepared for the queries they will receive so that they can respond in a confident and informative manner.
6. Don’t filter out the difficult questions
You want to project an image of openness, transparency and honesty in your earnings call, as the audience needs to believe in what you have to say. This means that, when it comes to taking questions, you have to make sure it doesn’t look like you are filtering out tough questions or those from combative sources.
You have to stand up to scrutiny, and that means answering challenging questions during your earnings call. If you are seen to ignore queries from certain sources or on particular topics, it looks like you have something to hide.
7. Collect feedback
Your relationship with the people who attend your earnings conference call is essential to your business, whichever sector they represent. By asking for feedback on the call from your audience, you can fine-tune the proceedings for the next quarter. This should be a useful tool for attendees and, if it is not functioning as intended, you must take action to make sure they get the most out of your calls.
The importance of engagement in earnings conference calls
Engagement is key for all online meetings. There is the potential for distractions wherever your audience members are based, be that in the office or at home, so your meeting organisers have to work hard to hold their attention.
By asking questions, asking for feedback, hosting polls or otherwise requesting action, you keep your audience engaged with the call and involved in the discussion.
Should you prepare a presentation for your earnings call?
A presentation is a great way of visually backing up the presenter’s address and holding the attention of the audience. The slides should not just repeat the script. Instead, they should complement what the presenter says and maybe even answer some of the questions the audience might have before the Q&A.
Can anyone join an earnings call?
Earnings calls are a public event for public companies, usually attended by institutional investors, retail investors, financial analysts and journalists.
Your company earnings conference call should be engaging, honest and transparent about your financial statements. It is your chance to celebrate success and reassure stakeholders about how you intend to turn around a dip in performance. Investors get to know the metrics that matter to them, and other stakeholders understand more about the business and its direction of travel. It is the perfect opportunity to talk to all stakeholders at once, avoiding staggered disclosure of information. The ideal way to divulge this information is through a webinar format.
Company Webcast is a professional webinar and webcasting platform that serves some of the largest public companies in the world. It provides all the features you need to organise a remarkable online earnings call. Request a free demo of Company Webcast today.
References and further reading
- Video conference presentation tips
- Why organise hybrid events?
- Create a winning external communications strategy
- Ace your half-year results meeting
- Manage shareholder comms from home
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