To postpone or go virtual? Companies adapt investor day plans due to Covid-19 lockdown
GoDaddy offered a series of virtual presentations from senior management. Moody’s Corporation switched the format to an online fireside chat. And Fiserv postponed until the fall, although it still released new cost-saving targets.
These are just a few examples of how companies are adapting their investor day plans in the face of the Covid-19 outbreak, which has led to a ban on public gatherings across much of the developed world.
The spread of the virus has resulted in the mass cancellation of events for the financial and business communities. As well as capital markets days, investment conferences, non-deal roadshows, AGMs and IR association events have all been affected.
CIRI, the Canadian IR association, provided a snapshot of issuer approaches to Covid-19 disruption in a survey released in mid-March. Of the 26 respondents, 18 percent say they have postponed an investor day and 12 percent say they have changed their event to a virtual format.
While Covid-19 restrictions are posing logistical challenges, arguably the greater difficulty facing companies with planned investor days is how to discuss long-term targets in the current environment.
More than 150 US companies have withdrawn annual guidance since March 16, according to analysis of filing data conducted for IR Magazine by Intelligize.
‘Capital markets days are typically seen as an opportunity to present a new medium-term strategy, showcase the depth and breadth of operational management, and demonstrate how different parts of the business generate value,’ says Kate Bundy, head of events and roadshows at Citigate Dewe Rogerson, a financial communications firm.
‘In the current environment, meeting any of these objectives is likely to be challenging. Many of our clients are withholding guidance for 2020 due to a lack of visibility, as they remain unable to quantify the impact of the Covid-19 crisis on this year’s results.’
Moody’s Corporation considered canceling its March investor day, but quickly dismissed the idea, according to head of IR Shivani Kak. ‘We felt strongly that it was important to provide transparency to the market about how we were doing as a business amid all the uncertainty,’ she says. ‘Since the event, all the feedback regarding our decision to proceed has been very positive.’
The ratings and data provider decided to switch the format of the event from a full investor day to a fireside chat with senior management, accessible through webcast and teleconference.
‘We thought focusing on the key questions our investors might have around the pandemic and the related business impact would be the most effective way to communicate with the market,’ says Kak. ‘The fireside chat format allowed us to respond to these questions and concerns in a balanced and thoughtful way while maintaining at least some of the personal connection of an in-person event.’
Kak says the switch to a virtual format was an ‘easy pivot’, thanks to the help of external vendors and people across the company. ‘It’s hard to compare the level of interaction on a call with an in-person investor day, where attendees can meet and talk to senior management and experience product demos,’ she says. ‘But online attendance exceeded our expectations and generated a robust discussion.’
Fiserv, the US financial technology provider, took a different approach to its investor conference, which was scheduled to go ahead on March 25. Two weeks before the event, the company announced it would push back the date until the fall, citing ‘caution related to the coronavirus, and the priority Fiserv places on the health and well-being of its investors, partners and associates.’
In the same announcement, it revealed new synergy targets related to the $22 bn acquisition last July of First Data, a payment processor, and also reaffirmed its 2020 financial outlook.
Peter Poillon, senior vice president of IR at Fiserv, says there were several reasons why the company chose to postpone rather than hold a virtual event, of which many were logistical. But the main reason related to the merger with First Data.
‘[G]iven our story as a newly combined entity was new, we believed the in-person forum to showcase our strategy and our leadership was a critical component of our investor deliverables,’ he explains. ‘We believed a multi-hour phone call would sub-optimize the clarity of our strategy and expected results. So we postponed the event to fall 2020.’
Despite delaying the event, Fiserv still released new synergy targets because they were ‘an immediate and key deliverable that we had promised our shareholders we would share at our investor conference, and we did not want to wait until late in the year to share,’ says Poillon.
‘On the day of the press release announcing the postponement, our CFO and I were at a virtual conference hosted by Wolfe. So we had the opportunity to communicate the new targets and the drivers with a good number of investors. We also hosted calls, as requested, with a number of our shareholders after the press release.’
Which way to go?
How should companies with capital markets days in the calendar decide between postponement, a virtual event or another approach? The decision will depend on a number of factors, says Bundy.
‘Those operating in the hardest-hit sectors with limited visibility may well be forced to postpone to allow leadership teams to focus fully on managing the business,’ she says. ‘There is also the question of analyst and investor capacity, as the entire market looks to reassess the value of equities while working from home.
‘Asking your key sell-side and buy-side contacts whether they would welcome an event over the coming weeks and how long they envisage being able to participate for is a worthwhile exercise. A shorter event highlighting a key segment of the business may prove more popular than a lengthy one covering all bases.’
On a global basis, companies hold an average of 0.7 investor days per year, according to the IR Magazine Global Investor Relations Practice Report 2019, which is based on a survey of more than 900 IR professionals. Looking at the stats by region, European companies hold 0.8 investor days annually, compared with 0.5 for North American companies.