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Oct 24, 2023

Marching to the same tune: Top tips for a smooth earnings call

From internal information gathering to Q&A prep styles and the value of a live document, an IR Magazine Webinar hears from experts on how to run a smooth earnings call

‘I don’t think there is such a thing as stress-free earnings,’ said Christopher Ferris, head of investor relations at Braze, talking about the prospect of a stress-free earnings call on a recent IR Magazine Webinar. ‘Even when it’s a fantastic quarter and you know the stock’s going to pop, there’s always something to be worried about: is there a number wrong in a presentation or the script? God forbid something goes wrong with the audio. It’s a cliché, but it all starts with preparation.’

Click here to watch a replay of the webinar.

Ferris shared the panel with Sameet Sinha, vice president of investor relations and corporate development at Edgio, and John Nunziati, assistant vice president and investor relations partner at Q4, which sponsored the webinar. The event was hosted by Tim Human, senior reporter at IR Magazine.

Preparation is key

All three panelists stressed the importance of preparation. ‘Our quarter ends on October 31 but I’m already prepping for our [next] earnings release,’ said Ferris, adding that his ‘earnings work-back spreadsheet’ has meetings and milestones scheduled, while ‘shells’ of files are already up and running.

Ferris added that he creates ‘an outline of the earnings call’ quite early on: ‘Here’s what we’re going to go through and why. I send that to management and it provides feedback and pointers. Then we can start working on the earnings script based on last quarter’s script.’

Top tips for a smooth earnings call

Sihna follows a similar process, beginning around four weeks before the expected call date. ‘I set up a call with our CEO to discuss key messages, updates and data points,’ he said. ‘Then I have calls of 15-30 minutes with product managers, heads of solutions, the chief revenue officer and chief marketing officer to collect as much information about what happened in the quarter [as possible]: what changes were made, what worked, what did not, any changes in the industry, [in our] competitive environment, key wins. This provides me with all the basic ingredients to get started.

‘What’s surprising is that despite the fact it’s an earnings release, the numbers probably come toward the end. [Those are] the last thing that goes into the script or the press release.’

Nunziati reminded listeners of the ongoing, continuous nature of the earnings process. ‘When I think about the [earnings call] challenge, and trying to reduce the stress, one of the key [things to remember] is that this is a recurring process,’ he said.

‘When we think about when to start [prep], one of the vital things is that the next quarter starts as soon as the current quarter ends: that’s when you begin your outreach. That starts to inform the messaging and the Q&A prep and all of the information you’re going to need to be adequately prepared for next quarter’s earnings. It’s an ongoing activity.’

Know your role

This focus on preparation extends well beyond IR. ‘The only way to reduce stress is to plan everything so that other people can march to the same tune,’ explained Sinha.

Nunziati agreed: ‘There are things IR provides to the rest of the of the company and, ultimately, externally to the investment community. There are other things where IR is a customer of internal providers of information.’ Essentially, once a company finds its earnings rhythm – where information comes from, when it is needed and who is involved in that process – the earnings cycle becomes somewhat less stressful.

‘This just comes with time and experience, but everybody involved in the process knows what their deliverables are, whether it’s the comms folks, our SEC team, accounting or management,’ added Ferris. ‘We’ve been public for two years now, we’ve been through a number of quarters and everybody here knows what’s expected.’

Evolve quarter to quarter

Where Ferris and Sinha – two former sell-siders – perhaps differ most is in their Q&A approach. Ferris creates a live, shared document in which he tags various members of the organization to provide input, and which evolves over the quarter.

‘For the prepared remarks, I’ll start working on the outline right after the quarter, share that with management and then start with last quarter’s script,’ he explained. ‘In terms of the Q&A, I take the prior quarter’s package and begin amending it as necessary throughout the current quarter as questions from analysts and investors begin to shift and new questions come in.’

Speaking on the webinar on October 18, he provided an example: ‘Just yesterday, we completed our customer conference and there were numerous sell-side notes published on us this morning. There were several new themes that emerged from those notes [and] I’ve already chatted with management via Slack this morning about these topics. Based on that discussion, I think I have some new questions and new answers.’

Sinha, meanwhile, said the ‘constant back and forth’ between IR and management on the script means ‘our Q&A prep is around 20 minutes: I highlight the tough questions and ask myself whether we are aligned on the answers.’

He does send the full, ‘extensive’ Q&A to the CEO and CFO, though, a practice that came out of a difficult question. ‘This emerges from the fact that we had one call previously where an odd question came from left field,’ Sinha recalled. ‘Unfortunately, the CFO had just joined and didn’t have an answer for it so I created this extensive document with all the data.’

What each agreed on is the long life of such a document, noting how it extends well beyond the earnings call.

‘People often forget that the Q&A package and that prep is not just for the earnings call,’ explained Ferris. ‘It helps with the callbacks and all subsequent meetings [and] roadshows we’ll be conducting. It’s sort of a living, breathing document you can use the whole quarter.’

The full, hour-long webinar also looked at why a pre-record is so important, the value of authenticity and which tech tools IROs are using today – as well as how those might evolve in the era of artificial intelligence. Click here to watch a replay of the webinar.

Garnet Roach

An award-winning journalist, Garnet Roach joined IR Magazine in October 2012, working on both the editorial and research sides of the publication. Prior to entering the world of investor relations, her freelance career covered a broad range of...