From the switch to virtual to the rise of the retail investor, the last year and a quarter have proved a tumultuous time for the IR industry. Companies have had to think about new ways to engage with investors and make sure their message is accessible to various stakeholders.
The effects of this period have filtered through to the earnings call. Over recent quarters, companies have experimented with new channels and tools to give investors fresh insight into their business.
Below, we highlight three ways companies are using technology to rethink the earnings process. Spotted any other innovations? Get in touch and let us know.
Zoom earnings calls
When societies went into lockdown last year, executives and IR teams lost the ability to be in the same room during the earnings call. This posed a problem, as the ability to share non-verbal cues between participants is important to the smooth running of a call. Many companies turned to videoconferencing to solve the problem. They would run a video chat internally so everyone taking part could see each other, while broadcasting an audio conference call as normal to attendees.
But why not just make the video element live as well? That was the decision taken by Axon Enterprise, the taser manufacturer. Since May 2020, the company has run video earnings calls using Zoom – with management and analysts appearing on screen. Following the call, the video is posted to Vimeo. Feedback to the new approach has been ‘universally positive,’ said Andrea James, senior vice president of corporate strategy and IR, speaking on an IR Magazine Webinar last month.
Axon's Q1 2021 earnings call on Zoom
Axon went through various stages of rehearsals prior to the first Zoom call. Initially, the IR, IT and accounting teams got together to iron out the tech and segues between speakers. Then the management team joined for further tests, with employees playing the role of the sell side. Axon also asked covering analysts whether they wanted to practice asking questions over Zoom. ‘It’s important, if you are going to make that transition, to be prepared,’ said James.
Soliciting questions through an app
The influx of retail investors into the market –10 mn new brokerage accounts were opened in 2020, according to an estimate by JMP Securities – has pushed companies to consider new ways to engage with this audience. One option is to make retail holders more active participants in the earnings process, by finding out what questions they have on their mind and then putting those to management.
This earnings season, a number of companies have done this using a platform called Say. Coinbase, Tesla and Lemonade are among the issuers to make use of the technology, which allows users to submit questions and vote on their favorite ones. Companies can then select some of the questions to include on the call.
Some of the questions submitted for Lemonade's earnings call
The Say Q&A application was used by seven companies during this quarter’s earnings season, with five of those companies using the tool for the first time in 2021, says Zach Hascoe, co-founder and chief commercial officer of Say.
‘Depending on the company, we’ve seen anywhere from 50+ questions to well over 1,000+ questions submitted per event,’ he says. ‘On the earnings call, management teams typically answer between five and 10 shareholder questions from Say.
‘One important aspect of the platform is that shareholders can support other shareholders’ questions, which allows for 80 percent-90 percent of participating shareholders to have at least one question they asked or upvoted answered during the call.’
Post-earnings Clubhouse chats
One of the biggest social media hits of 2021 has been Clubhouse. The audio-based, invitation-only platform saw surging downloads and a lot of buzz in the early months of the year, with speakers such as Tesla founder Elon Musk stopping by to take part in informal chats.
The app’s success has encouraged some IR teams to try it out. In February Marcus Händel, head of investor relations and sustainability at Cembra Money Bank, held a conversation about integrating ESG into IR. Then companies started adding Clubhouse chats to engage with retail investors after earnings.
RBI and CarParts.com both held post-earnings chats on the application a few months back following fourth-quarter results. This earnings season, CarParts.com repeated the event while SmileDirectClub also got in on the act. The dental company invited retail investors to join a conversation with CFO Kyle Wailes, moderated by Jason Raznick of financial media group Benzinga.
SmileDirectClub's tweet about its Clubhouse chat
‘We’re embracing new, innovative ways to increase transparency with our shareholders to democratize access to information and level the playing field for our institutional and retail investors,’ says Alison Sternberg, vice president of IR at SmileDirectClub, adding that the company hopes to hold more Clubhouse discussions and continue testing other approaches to engagement.