In his 1983 book The visual display of quantitative information, Yale University’s Professor Edward Tufte writes: ‘Graphical displays should make large datasets coherent and encourage the eye to compare different sets of data, induce the reader to think about the substance rather than about methodology, avoid distorting what the data has to say and be able to present many numbers in a small space.’
Tufte’s 1983 definition still speaks to the purpose of what we today call infographics, which seek to condense large amounts of information into a visual form that is more easily absorbed by the reader. Social media has played a key role in transforming the way corporations and organizations worldwide convey and display information.
Innovative earnings releases hitting the tape
In the last few quarters, we have seen forward-thinking companies, including GE* and Walmart*, completely revamp their earnings press release into an infographic. We have seen other large public companies supplement their earnings announcements with independent infographics that are reader-friendly and visually engaging. We anticipate this is the start of a major trend in visualizing financial reporting.
There are several benefits to a more visual earnings release. This new approach offers a company new tools to put its numbers and commentary in an easy-to-understand context, drawing the most important figures from the P&L statement or balance sheet to front and center. A more graphical framework also allows companies to give greater focus to management quotes, guidance, key accomplishments and important strategic initiatives. In short, these new visual releases are an opportunity to rethink an antiquated and conventional form of financial communication to make the information more readily readable for fast-moving financial press, investors and other constituents.
Initial response to this new approach is broadly positive; both press and investors say they appreciate that the new format allows them to get through the top-line financial results more quickly, and the overall document is easier to read.
‘The response from the investment community and media to our more visual earnings press release format was overwhelmingly positive,’ says Carol Schumacher, vice president of global IR at Walmart. ’Analysts told us it saved them time – especially important when they have several companies reporting on the same day – and identified key facts and figures more easily than our previous copy-heavy release. This approach helped our numbers stand out and be reported more accurately by the sell side and the media. Internally, it also helped Walmart associates better understand our company’s performance.’
Walmart plans to incorporate more visual communications into other financial reports. The IR team also regularly makes photos on all areas of its business available to the media on its website to support its financial news.
Avoiding ‘chartjunk’
While this new style is exciting, it is important to remember that earnings press releases are serious documents and must provide adequate explanation of GAAP vs non-GAAP reporting or non-recurring items, report data consistently from quarter to quarter and conform to regulations concerning financial reporting and forward-looking commentary. In other words, it is important not to get ‘too cute’.
Professor Tufte also coined the term ‘chartjunk’ to refer to graphics that are visually appealing to the point of losing the information – this is a word we definitely would not want applied to a corporate earnings press release!
*Edelman client
Deb Wasser is executive vice president of Edelman’s financial communications and special situations in New York City
