Whether a company is facing its first earnings call after an initial public offering or is experienced in earnings calls but looking to make a bigger impact, preparation is key. Preparing for an earnings call, regardless of a company’s stage, requires meticulous attention to detail. Creating a timeline and assigning appropriate responsibilities to team members ensures not only an informative earnings call, but also an engaging and effective one.
Updates from the Quarter
Messaging is the most essential element for an earnings call. Thus, it is important to solidify a company’s messaging well in advance. Start with major developments from the quarter, creating a narrative around the company’s performance – highlighting important operational milestones and developments, while also addressing what are known to be stakeholders’ key questions or concerns. Ensure that management uses clear, straightforward language that is not overly technical.
Visual Examples – Investor Presentation
It is common to use an investor slide presentation as part of the quarterly earnings call, which can serve as a crucial visual element. When doing so, make sure that the presentation is up to date for the quarter, including all operational and financial information, graphs and charts. Given the large amount of information provided in quarterly earnings presentations, it is important to be selective with what is shown visually, highlighting the most impactful elements of the story. Make sure to include a ‘forward-looking statement’ slide and that your SEC attorneys have approved the deck prior to the call. The slide presentation should be filed as an exhibit in the 8-K.
Preparing an Earnings Call Script
While a company’s investor presentation serves as a base, it is critical to develop a script which parallels the press release and presentation to ensure the call stays on message. Having said that, the script should add color to the press release while remaining in the legal realm of SEC regulations. Highlight major events from the quarter, address any potential concerns, and outline upcoming milestones to create a cohesive and compelling script. Involve key team members in the creation and review process to ensure all important areas are covered.
Question and Answer Session
One of the most challenging parts of an earnings call is the question-and-answer session. Assuming there is active engagement with the investment and analyst communities, it should be possible to anticipate certain themes and questions, but it is not possible to fully predict what will be asked. To ensure management is as prepared as possible, collaborate with the investor relations team to create an internal Q&A document. This will also help all parties to stay ‘on message.’
Earnings Call Logistics
Earnings Call Press Releases
To help attract the widest audience, it is recommended that companies issue two press releases. The first will be the conference call announcement, which includes the date and time of the earnings call and instructions on how to join, as well as information regarding the availability of any archived version of the earnings call.
The second is the quarterly earnings release itself. This should include quarterly and most recent highlights, a quote from a key member (or members) of the management team, a review of upcoming milestones and a discussion of the financial results, along with a copy of the consolidated income statement and balance sheet.
Webcasts
Hosting a live webcast to review quarterly earnings is an important part of a proactive investor relations effort, allowing company followers to hear directly from management, and ensuring the quarterly results and messages a company intends to convey reach the largest possible audience. Additionally, the webcast can be archived on the investor relations section of the company’s website. The investor relations team is best served by partnering with a professional, third-party company to host earnings calls and handle all of the logistics.
Practice Makes Almost Perfect
Rehearsal is crucial ahead of each call. Start with each team member reading through the script, followed by at least one rehearsal in the days leading up to the call. This ensures everyone is comfortable with the material and the flow of the presentation. Anticipate difficult questions and rehearse answers. Practice deflecting hostile or angry comments for the audience.
Earnings Calls with Rx Communications
At Rx Communications, we specialize in helping companies prepare for effective and engaging earnings calls. Our team of experts will assist you in crafting clear and impactful messaging, designing visually appealing presentations, and ensuring seamless execution on the day of the call. Let us help make your next earnings call a success.
