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At a glance Rhythm maker Tele-options Analytics advantage |
Ah, results announcements. They are the drumbeat that sets the rhythm of your calendar, whatever jazz improvisations you manage to pound out in the gaps. This is especially true for IR professionals in the US and other markets where quarterly reporting is mandated: the results call is the familiar refrain, repeated with variations, that grounds your story in the recent past while listening for what’s next.
There is infinite variety within this familiar pattern, however, so IR Magazine decided to take a look at the humble earnings call to see what’s happening now and what’s on the horizon.
It’s definitely getting more jazzed up, with live and on-demand webcasts and video adding interactive and engaging content and even greater complexity. But IROs are understandably risk-averse when it comes to innovation in the earnings call. Marc Gutman, CEO of Lighthouse Conferencing, says IR’s loyalty to the audio-only format is understandable. ‘First and foremost, the success of the call and being comfortable with the IR presentation trumps everything because both senior management and your shareholders have an expectation that the earnings call itself will go off without a hitch,’ he says.
Not only do you have your CEO and CFO on the line with your shareholders, but you can also almost guarantee that employees, competitors and board members are listening in. Add an unnecessary bell or whistle and it’s just one more thing to worry about.
Even with that natural conservatism, some companies are bravely adopting more interactive and media-rich ways to put their results before investors. Perhaps the extreme example is Netflix, which in 2013 began using Google Hangouts On Air to broadcast a video conference call moderated, not by the IRO, but by an analyst and a journalist who put pre-submitted questions to the CEO and CFO.
‘Here we are in the 21st century and the anachronistic format of the earnings call hasn’t changed, despite all the technology around it,’ said Jonathan Friedland, Netflix chief communications officer, shortly after the company made the change.
The video format reinforces the company’s brand as an industry leader in video streaming while also delivering more practical benefits, Friedland added. Pre-selecting questions is a more efficient use of everyone’s time, and using third-party moderators makes for ‘a more insightful exchange,’ he said.
The expansion of webcasts
It’s unlikely Netflix’s highly polished Hollywood approach to earnings calls will become the standard. While the majority of IR calls are still audio-only, a sample of vendors serving the IR community report webcasts are slowly becoming more accepted as part of the results call. Most vendors contacted report that fewer than a quarter of their IR-related clients use webcasts and only one says most of its IR business includes media beyond audio. But they all predict a dramatic increase as IROs become more comfortable with the technology, the platforms become easier to manage and – most importantly – the investor community comes to expect it.
Given the proliferation of webinar platforms, such as Adobe Connect, Cisco WebEx, Citrix GoTo and Google Hangouts, your biggest challenge may be wading through the options (see below for comparisons of different formats). You’ll have a choice of doing it yourself or partnering with a service provider. As most webinar services are priced on a monthly subscription plan for volume users, regular calls coinciding with results announcements may not make much sense as a stand-alone purchase. One option is to check with your sales and marketing folks, who may already have a webinar platform agreement you can employ for your calls as well.
Alternatively, conference call vendors serving the IR community have been quick to add enhanced webinar services to their offering, often building the capability on top of those off-the-shelf platforms, priced as an add-on that can add a couple of thousand dollars or more to the earnings call. As part of their value-add, they will hold your hand through every step of the process ‘to reduce the stress of logistics… and keep the CEO and CFO at ease,’ says Damien Bayle, who runs the global virtual event business for Arkadin out of Paris.
Extra benefits
Presenting richer and more engaging content is the most obvious, but not the only, benefit to moving beyond the traditional teleconference. The only analytics available from a teleconference are the participant list, but a webinar can track each viewer’s behavior throughout the presentation. Both Gutman and Brian Balbirnie, CEO of Issuer Direct, point to analytics as a major benefit of webcasts over audio teleconferences. If you can see that your audience keeps returning to one particular slide, you know the contents have struck a nerve, good or bad. Knowing that one of your most important shareholders spent a lot of time on your capex slide – but never asked a question – prepares you for a follow-up conversation armed with that insight.
Moving to a webcast format requires careful planning, advanced preparation and a commitment on the part of senior management to stick with the change. ‘It’s important to get senior leadership to attend dry runs,’ advises Gutman. Most vendors advise you to start the planning four to six weeks in advance. You’ll have to inform your shareholders of the change, send them the URL and make sure access works, whether on their desktop or mobile device. You’ll also have to work through the logistics of pacing through slides and managing incoming questions. The first time through, some vendors provide on-site handholding as part of the package.
Balbirnie compares the evolution of conference calls to the adoption of social media a few years ago. He predicts that companies are going to be ‘forced to move the message’ to webcasts, simply because investors will come to expect it and will think ‘there is something odd’ about those companies that stick with an audio-only call.
But he sees the primary driver of change coming from the new generation of IR professionals and investors, who are much more comfortable with a visually rich, interactive and mobile environment. ‘That’s how the next generation of workers is connecting with content visually,’ he observes.
Given the global nature of financial markets, on- demand webcasts make sense for companies with a global shareholder base, Bayle says. Shareholders and analysts can engage with their portfolio companies across different time zones and language barriers, viewing the presentation when convenient, receiving translated transcripts and sending written questions for follow-up. And details matter: even in an audio-only teleconference, it’s important to ensure an Australian or Singaporean company each has a teleconference moderator speaking with the right ‘local’ English accent, Bayle adds.
Guide: audio vs webcasts and video
Audio teleconference
Description: Tried and true dial-in group conference call
Advantages:
– Lowest cost and minimal risk of technical glitches
– Quick set-up with content changeable on the fly
– Familiar format and turn-key execution
Limitations:
– Audience size restricted by availability of vendor’s audio ports
– Starts becoming more cost-effective to go webcast route above 100 participants
– Audience engagement for most participants limited to listen-only
– Minimal audience analytics available
Trending:
– IRO solicits participants to send questions in advance of call
– IRO tweets key points and monitors social media comments during call
– Pre-recorded comments (and script) released prior to call. Live call focuses on Q&A
Cost: Depends on audience size and duration of call. Can range from a few hundred to a few thousand dollars
Other considerations: Easy to set up at short notice but if peer companies are adding interactive content, sticking to audio-only calls may paint you as behind the curve
Live webcast
Description: On-line presentation with visuals keyed to your script
Advantages:
– Easily scalable audience size from just a few to thousands
– Increased audience engagement and the ability to easily focus discussion and illustrate key points
– Enhanced analytics on audience engagement and interests n Participants can submit questions privately during the call
Limitations:
– Increased prep time, technical/logistical rehearsals needed
– Slide content has to be frozen in advance, so no last-minute changes possible
Trending: While the risk-averse bias limits adoption for IR use, IR quarterly calls are increasingly incorporating online content as technology becomes more stable and easy to use
Cost: Ranges from less than $1,000 to several thousand dollars depending on content, duration and add-ons (such as video, transcripts and translations)
Other considerations: Webcasts can be adapted to mobile platforms to meet your audience, wherever it is. You can post your recorded webcast for on-demand viewing
On-demand webcast
Description: Pre-recorded add-on to a live audio earnings call that investors can view when convenient
Advantages:
– Has all the advantages of a live webcast without the hassle of live webcasting logistics
– As a stand-alone format, less costly than a live webcast Limitations
– Same as a live webcast: you’ll need advanced preparation
Trending: Some companies are adopting on-demand webcasts as a lower-risk/lower-hassle approach to providing interactive content on earnings calls
Cost: About half the incremental cost of a live webcast
Other considerations: You need to clearly set expectations that questions posted to the webcast will not be answered live, but as a follow-up by the investor relations team
Video
Description: Live or pre-recorded video of senior management
Advantages:
– Lends ‘eyes-across-the table’ credibility to presentation and graphically signals that management is striving for transparency and investor connection
– As online content increasingly includes video, positions company as web-savvy communicator
Limitations:
– Inherently more complex logistics and production considerations – and greater cost than alternatives
– Little ability to edit content on the fly
Trending:
– Professional video costs are falling
– Group videoconferencing (Vidyo) and no-cost DIY video options (such as Periscope) are becoming available
Cost: Anywhere from $3,000 to $10,000+ for traditional services
Other considerations: Need to alert participants well ahead of time so they can ensure video access. On-site video crew will be added to the ‘war room’ contingent
This article appeared in the Fall 2016 issue of IR Magazine
