As we approach the reporting and earnings call season we reiterate some of our top tips for earnings calls, as Part 1 of a three part series on earnings calls.
Earnings calls provide a great opportunity to showcase your top management and to give additional detail, explanation and background to the results published in the earnings release. The prepared remarks, or management discussion and analysis section, also gives management the opportunity to go into more detail on particular drivers of growth and risks that investors face, as well as to mention other topics such as new executive hires or to provide reassurance over pending lawsuits or tax issues. In addition, management can give their thoughts on the future outlook for the company and the sector. Perhaps most importantly, senior management answer the questions on minds of analysts and investors, and find out thereby what their concerns are. In short, the earnings can be a central part of a company’s IR strategy, and thus needs to be a priority (which is not easy given that IR team is focused exactly at the same time on getting out the quarterly earnings release).
Our top tips for a successful earnings call:
1) Select the right date and time for your earnings call so that it doesn’t clash with others in the same sector and you get the maximum analyst and investor attendance. To help with this, look at when your peers have held their earnings calls in the past, and check Miranda’s earnings call calendar.
2) Ideally earnings calls should be held the day after your quarterly results are published, however in some circumstances two days afterwards is acceptable.
3) Send out a reporting and earnings call calendar to your distribution list each year/quarter and include this on your website.
4) Send your earnings call invitation out to your distribution list around 3 weeks before your earnings call and a reminder 1 week before the call.
5) The invitation should include:
a) The date and time of the call in both EST and CST.
b) The reporting date.
c) Details to connect to the call from Mexico, the US and other international destinations.
d) The link to connect to the webcast (if relevant).
e) IR contact details.
6) Use a quiet room which does not produce an echo. If there is an echo consider adding soft furnishings or canvases to the room.
7) Use headphones and a microphone to improve sound quality – test to make sure you are close enough to the microphone to hear your voice clearly, but not so close that you can hear breathing.
8) Do tests to check the internet connection and the sound (and video) quality and to familiarize yourselves with the technology/platform.
9) Remind your coworkers or members of your home not to use the microwave while you are giving your presentation as it is known to interfere with the WiFi, and to avoid playing loud disco music nearby which is reliably known to distract those on the call.
10) Talk with a strong voice, with clear diction and phrasing. Make sure your words have energy to hold the audience’s attention. Remember to breathe!
11) Consider using video. (See Part 2 of our earnings call series next week for more comments on using video for your earnings call).
12) Be prepared: make a list of possible questions (from FAQs to your IR team, analyst reports, questions last quarter, questions to peers etc.) and draft answers.
13) If possible, get your CEO to join and lead the call. It’s a great opportunity to showcase him or her. Investors join the call to hear senior management and to get to challenge them.
14) Other speakers on the call should include the CFO and/or the IRO, and in certain cases could include e.g. the Chief Medical Officer for a pharmaceuticals company or the CIO for a data company. Try to keep the speakers relatively consistent throughout your earnings calls, bringing in specialists for the Q&A session in certain circumstances. For example if there have been developments in your European business line, for which you expect to receive a lot of questions, it could be helpful to have your Head of Europe on the call to take part in the Q&A session.
15) Use a script and a presentation and rehearse. Rehearsing the script can make it sound more natural. (See Parts 2 & 3 of our earnings call series for more comments on using a presentation).
16) Make sure that the script/prepared remarks touch on the main points in the quarterly report, but also add value. This is an opportunity for management to give their insights on how they see the industry, the market, and the results in a wider context, amongst other things.
17) Answer ‘why’ sales increased and ‘how’ you reduced expenses etc.
18) Keep the prepared remarks to 15 minutes or less, communicating the top three messages you wish to deliver.
19) If you have a large number of questions then prioritize those from your most diligent investors and analysts to reward them.
20) When answering questions, give direct answers with your conclusion and the positive message you want to communicate at the beginning of your answer, before going on to give more detail and explanation. (Most listeners only focus on the initial response to a question, so do not bury your conclusion).
21) Take care with any forward-looking statements. Use ranges where possible.
22) Publicize upcoming events e.g. your investor day.
23) Keep your earnings call to between 45-60 minutes in length, depending on market capitalization.
24) Ensure that there is a replay of the call available on your website as soon as possible.
25) Pay special attention to your analysts and major shareholders by setting up personal calls with them for after the earnings call to allow them to ask any additional questions and strengthen your relationship.
Over the next two weeks we will bring you Part 2: “Pros and Cons: Different Earnings Call Formats and Providers” and Part 3: “Delivering Standout Virtual Presentations” of our earnings call series.
As always, if you need any advice on IR matters, including how to deliver a successful earnings call, Miranda IR is here to help.
Contacts at Miranda Partners