Are you maximizing your earnings announcements?
As we head towards the end of this quarterly earnings cycle, it is a good time to reflect on Investor Relations (IR) and financial media best practices to leverage for the next quarterly earnings report. In this post, I will focus on the symbiotic relationship between the Investor Relations and the Public Relations (PR)/Corporate Communications team with key takeaways to consider when working together for the good of the company and its constituents.
Bringing the internal and external teams together
Once the numbers are in, and the IR team is working on the quarterly earnings report and conference call script, it is time to bring the PR/Comms and IR teams together. Through the years working with public companies with varying market capitalizations across many sectors, both in US and international markets, I have found it best for there to be synergy between both departments, mostly when it comes to the messages that will be communicated to the investment/analyst community and media.
It is critical for both teams to think ahead, considering questions such as:
- Have you allocated time for the press post-analyst call?
- Does your timeline align with the CEO and CFO’s investor program?
- Do you have a contingency plan with multiple scenarios and messaging in place to address issues that could affect the company’s performance?
Aside from lining up all IR activities around quarterly earnings, keep in mind that speaking with reporters remains an effective way to clarify and reinforce your message. Striving towards fair and balanced coverage for the company is recommended, as investors still look to traditional media (print, newswire, online, broadcast) as a fundamental source of information.
Is it all about the numbers?
Let’s face it; the first thing investors and analysts look for in a quarterly earnings report is an increase in profits, positive quarterly guidance, double-digit growth YOY and raising forecasts. But nothing is ever guaranteed, and there is usually much more to convey about the business than the above outcomes. For example, consider the importance of context and non-financial performance metrics. Earnings present an opportunity to promote the company’s strategy for growth, trends in the market that could impact their business and thought leadership on the sector.
At the end of the day, earnings are a reflection on the broader financial ecosystem, which must be conveyed to all stakeholders, ultimately reaching a larger and potentially international audience. This is especially important for financial reporters, who sometimes misinterpret financials due to lack of context.
Transparency is Gold – Ostrich Syndrome is NOT!
Through the years, I have seen a notable shift in the way public companies report earnings. Today, with the stringent regulations of Sarbanes-Oxley and the SEC, it is imperative to be transparent and disclose material information immediately. Failure to do so will result in a significant backlash on the company’s reputation, management credibility and stock performance. Transparency is gold with the financial community. So why is it that some companies turn off their media personality when they have a bad quarter?
Here is a real scenario that I experienced a few years ago:
A foreign energy company was speaking to a group of journalists about their recent earnings. One reporter published a headline that was taken out of context. Despite outreach to the reporter, and a resulting correction, the coverage proved a blow to the Company. During this time, we strongly recommended the CEO go on a live financial broadcast and participate in one print/newswire interview to clarify the misunderstanding. With just one headline inspiring panic among investors and analysts, the IR team and CEO felt the need to avoid more dialogue with reporters and opted to stop all communications from that point onwards. This was a missed opportunity that negatively impacted the company and the stock price.
There is usually a correlation between stock price and a live broadcast interview where the Company’s CEO/CFO live broadcast interview addresses or clarifies concerns impacting the overall results. Of course, there are exceptions to the rule; Apple is a recent example.
Remember to anticipate all outcomes, as there will always be external forces that can affect the share price. Does everyone have the messaging document and Q&A? If not, now is the time to ensure that all parties are on the same page and communicating a unified message across multiple audiences.
Reinforce the message via other communications channels
Why not Twitter? I am starting to see more companies tweeting live during earnings or Investor/Analyst days, and I strongly urge Comms teams to consider this strategy. With the information already public, Twitter is an important vehicle for both the buy- and sell-side community. If you need further evidence, in 2013 Bloomberg saw the need to integrate Twitter feed into its terminal platform.
Boosting your message via videos presents another opportunity. A perfect example of a foreign company listed on NYSE is VALE. They do a great job of being consistent in their earnings communications. Each quarter the CFO shares a 1-2 minute video highlighting their earnings in a concise but informative manner. There is no need for massively produced clips. In this case, the casual format makes it more approachable.
In conclusion, be sure to keep the following best practices in mind as you begin the next earnings cycle:
- Establish a symbiotic relationship between the IR and PR/Comms team;
- Look at the bigger picture;
- Ensure transparency throughout the process; and
- Leverage all forms of communications.
Do you have any suggestions or ideas for the subsequent quarterly earnings? Please share them in the comment section below.
This post was written for Paragon by Ivette Almeida.