perspective and viewpoint

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Do you think your quarterly call is “just fine”, but your valuation isn’t what you think it should be?  That disconnect should tell you something.  

Early in my career, I landed a new IR job where that’s what management thought, but valuation lagged the peer group, and I immediately polled our sell-side analysts and institutional investors.  Their response was a resounding thumbs-down on the company’s quarterly call content.

Let’s self-diagnose your call with a few questions.

Do you primarily read the quarterly earnings release content on the call, such as, “Second quarter 2024 net income was $24.9 million, up 4.3% from $23.9 million in the second quarter 2023…”?

Do your sell-siders tune-out to multi-task on other things while waiting for the Q&A to start?

Do you get a number of the same questions every quarter?

Is your internal process to prepare for the call difficult and frustrating?

Do you leave the difficult questions for the Q&A, and hope nobody asks?

Your four quarterly calls are the most important disclosures you have with the Street through the year, as they’re more directly personal and authentic, and you convey more about how you think about the industry, your business and your differentiation than any of your rigidly structured SEC filings.  Your enthusiasm and engagement, or lack thereof, shows through.

Let me offer some suggestions for how to get to a better quarterly call script and release.

First, please, please, please -- stop reading your press release at your investors.    Per the above ‘reading AT the audience’ example, droning on with numbers and comparative percentages puts everyone to sleep.  I am horrified at the number of companies that do this. There are better things to talk about.  To the sell side analysts and institutional investors who happen to read this, you’re welcome.

Second, on a related note, please put your earnings release out 30-40 minutes ahead of your call.  You want people to have enough time to read, but not to start jumping to conclusions, or worse, start typing their reviews.  By the way, this is another reason for NOT reading your release at your investors.  While you’re doing that, the analysts have turned the volume way down and are starting to write their reports while waiting for Q&A to start.

Third, choose a head chef.  Companies get themselves twisted up with too many cooks in the kitchen.  I’ve worked with companies where Sales, Marketing, Finance or Legal each want to dictate or edit messaging.  Nobody knows your investor audience as well as your IR leader.  They should be the lead working with the CEO and CFO to determine the story.

Fourth, put some thought into the audience before you write.  What are your investors biggest concerns? Is there something going on in the industry, customer trends, technology, or regulatory issue that investors may be concerned about or should know about?  Is there an elephant in the room that should be addressed?  What numbers are most helpful to them or useful for you to explain the current and expected future state of the business?  

Fifth, remember what the quarterly call is for – Color Commentary – e.g. Monday Night Football.  The CEO and CFO are John Madden and Al Michaels.  Provide some color on the quarter.  Talk about the keys to winning the rest of the year.  

Sixth, have a point of view every quarter.  If you’re the captain of the ship, how do you want to present yourself to the passengers to project confidence?  What did you say to the Board about the quarter?

Finally, lucky number 7, If there’s an elephant in the room, take it on from the beginning.  Nothing makes the management team look weaker than to leave the big issue to the Q&A.  Hitting it head-on shows investors that you’re not afraid of it and you have an answer.  And, if you don’t step up on this, don’t complain about your valuation.  

Encompassing these suggestions, there is a much easier and harder-hitting proprietary call scripting process we recommend, which we can teach in one quarterly earnings call cycle.