What Is the Big Deal About Earnings Calls?

Capital Markets / Investor Relations in Two Minutes or Less
Earnings Calls – Must See TV!

Earnings calls are the fundamental building block of relentless communication between companies and investors.

An earnings call should always strive to be Must See TV!

You want to have as many analysts, sell side, buy side, involved to listen, and get valuable information.

Success means you have convinced the investor community that:

1. Management Has the Best Operating Plan Going Forward, and that
2. Management Is the Best Team to Execute on that Plan over several quarters and years

Three things need to happen for a successful earnings call:

1. Strategic Overview: Communicate strategic vision and bright future prospects
2. Financial Modeling: Build a financial model and underlying detail
3. Q&A: allows for questions from analysts
There are a few rules that dictate how an earnings call should go.

Two Key Rules:

1. Time: A call should only be an hour, so not all 50 analysts will get a question
2. Professionalism: A negative analyst that has acted unprofessionally toward the IR person, and worse toward management, does not have an inherent right to ask a question on the earnings call.

Consistency Is Key: Talk to everyone regardless of rating; give everyone the same message!

No one, management, investor, analyst, should face downside risk to their career in order to allow someone to ask a question.

Following the fundamentals outlined here will most likely keep everyone happy!

Earnings calls represent a platform for the company to showcase the company and its future plans and to keep investors informed.

Over the balance of the week, I will do a deep dive on earnings calls to better illuminate the competing view points and needs of the call for different constituencies.

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