By Farah Merchant, Specialist, Global Disclosure & Financial Reporting Services
Every year our team is asked to share best practices for financial earnings calls and webcasts. So much has changed in recent years, that we decided to put together a short list of facts, figures, benefits and best practices for maximizing this crucial communications program.
NIRI’s recent Earnings Call Practices Survey shows some very interesting facts and figures. Did you know that in 2014:
- 97% of responding companies held earnings calls versus 80% in 1996?
- Almost 80% of companies that do hold calls do not utilize social media platforms during the call.
- For the few companies that do use social media during the earnings call, the most popular medium was Twitter (5%), followed by StockTwits, podcasts (~2% each), and Facebook, LinkedIn, and SlideShare (each 1%).
Investors have emphasized the importance of quarterly financial calls and webcasts for some time as they provide listeners with the opportunity to make wiser investment decisions. Some of the additional benefits include:
- They provide analysts with the opportunity to ask questions of C-level executives, and base their research, valuation and estimates on the information revealed in the call that may not have been disclosed in the press release.
- They provide an opportunity for the company to mention upcoming events, such as analyst days, annual shareholders meeting and investor conferences. Some even mention the company’s full calendar of upcoming events.
- Calls and webcasts provide companies the opportunity to leverage social media messaging to increase visibility of the discussion. Home Depot is an excellent example of a company successfully tweeting live information.
- Webcasts can be archived with replays accessible through company’s investor relations site.
Because earnings calls and webcasts are predominantly presented in a live format, here are a few preparation tips to keep in mind:
- Present a cohesive message that communicates what your earnings results indicate for the future of your company.
- Pick your presenter based on position in the company and speaking skills (usually CEO or IRO and CFO to present the financials).
- Do a dry run of the presentation and potential Q&A topics.
- Utilize visual components such as power point presentations, infographics and downloadable content to increase engagement with your audience.
- Use multiple channels to announce the earnings webcast date/time, insuring the widest possible outreach. Most common methods of alerting audiences of the call are via press release, your company’s investor relations website page, and social media outlets such as Twitter, LinkedIn and Facebook.
Consider combining traditional earnings call and webcast methods with the power and reach of social media platforms the day of the event, to both increase the intended reach of the event and generate higher levels of engagement with investors, analysts and the media.
There are many companies consistently exhibiting ‘Best Practices’ through various mediums during their earnings calls. One company is FedEx (NYSE: FDX), and how they use Twitter and their $FDX StockTwits symbol to showcase their key headline numbers:
As you can see, there are many components that go into a quarterly earnings call, and best practices are constantly evolving. Public companies should always be on the lookout for new trends and mediums for earnings calls as well as more ways to actively engage with their audience during these events.
Earnings calls present a valuable opportunity for public companies to communicate key messages to investors, analysts and the media. By following best practices for the call presentation and leveraging multiple distribution mediums (press releases, webcasts, social media), they can maximize their earnings call even further.
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