The technology can streamline the earnings process, experts agreed on a recent IR Impact briefing
How can AI best be employed in your earnings preparation? According to leading IR experts, it’s best not to make a facsimile of your CEO, but the technology can certainly help save time and leave you to concentrate on more strategic activities.
This was according to those speaking on a recent IR Impact briefing, held in partnership with AlphaSense and titled ‘Effective earnings preparation amid macro volatility’, who shared their insights on how to prepare for earnings season in an environment marked by constant change, global uncertainty and the increasing role of technology.
Earnings preparation has always required strategic thinking, but today’s fast-moving macro environment adds new layers of complexity, they agreed.
‘If you’re writing and preparing something, and then two days after the world changes and then what you really worked on no longer applies,’ said Ivan Zarate, manager of corporate reporting and investor relations at Air Canada.
‘For airlines things move very fast, so it’s very topical for us, how all the changes, especially coming out of the US, have been impacting the way we sort of do all our earnings prep.’
George Gosden, senior account executive for corporate finance and IR – consumer and retail at AlphaSense, emphasized the challenge of parsing large amounts of information. ‘I think just given the topic itself, there’s so much information that’s thrown at you, and it’s about making sense of it,’ he said. ‘So, one of the biggest things to consider is, how do you synthesize all that information?’
From a global and sector-specific perspective, Chip Newcom, senior director of investor relations at Equinix, described other challenges. ‘One is, how do you find the signal relative to the noise? I think secondly, we’re a very global company, and as a real estate company, also a leveraged company. So we’re looking at where interest rates are heading… and understanding how the current policies is impacting currencies.’
AI is playing a growing role in supporting IR teams, though its use is largely for producing breakdowns rather than scripting from scratch.
‘We absolutely use AI as part of our broader IR program now, but as for the earnings prep process, we aren’t using it to create or write scripts,’ said Newcom. ‘A chatbot cannot encapsulate the tone and voice of my CEO and CFO. However, we use it as a fact check using our own internal Equinix GPT.’ He also recognized AI’s value in summarizing large amounts of research and data.
Zarate echoed a similar sentiment: ‘We use a very similar approach; it’s mostly for summarizing information. Either its inputting earnings call transcript and it gives me the main items that I should be looking at, or the sales are reports. We don’t have our own system developed for us. So I use Copilot for the most part.’
When peers haven’t yet reported earnings or when facing unique circumstances, companies are getting creative with how they shape their narrative.
‘I work with a lot of companies that don’t have a ton of peers… What they did was anchor their messaging not just in their direct peer set, and they went broader. They went to adjacent sectors which is something I think more IROs should do,’ said Gosden.
Newcom shared how Equinix adapts: ‘There’s only two publicly traded data centre REITs in the United States, three globally, and so there isn’t a large peer set for us. But what we do is… look at what are other real estate companies talking about… [and] look at what other large cap tech companies are talking about. So, looking at the hyperscalers, Amazon, Microsoft, Google, Oracle etc.’
As internal collaboration becomes more essential during earnings season, IR teams are learning how to bridge departments effectively.
‘The key is to understand what each team is responsible for,’ said Zarate. ‘Let’s say the commercial team are really driving the top line growth… whereas financial planning and analysis… focus on the cost and profitability. Then IR can bring their outside knowledge, refine the message and create something that brings value to the company.’
Each speaker offered guidance for IR professionals navigating a fast-changing macro environment.
‘There is a ton of very high-level IR professionals in the world, so there’s no need to try and reinvent the wheel,’ said Gosden. ‘You can take a lot from those folks.’
‘Really dig deep on your business,’ advised Newcom. ‘My philosophy as an IRO is that I’m a proxy for the CEO and CFO… go out have those conversations. The beauty of being in the IR seat is that, outside of the executive team, you uniquely can go to anyone in the business and say, “I need 30 minutes of your time to understand what you do, why you do it, and why that matters to the company, and how that’s going to impact our business.”’
Zarate concluded: ‘It’s really about leveraging the internal teams that have and having a very close look at the different items that are affecting the company.’
To watch the full briefing ‘Effective earnings preparation amid macro volatility’ on demand, click here.
