You spend all this time preparing for an earnings call… then all that adrenaline flows as you publicly address the Street giving them an update on the progress you've made over the last 90 days. So it's no surprise that when the clock strikes 6pm ET on earnings day, nobody wants to do a post-earnings call-back with anyone… let alone with 10 or 20 sell-side analyst (no offense to them of course).
Except, it's probably one of the most important things you can do. Prepare and take it seriously… that's my advice. Here's why.
When I started in this business in the late 90s, a really good sell-side analyst might cover 8 or 10 stocks. That meant that he/she would be on every earnings call and would know every detail about every line in the model. Today however, analysts frequently cover 40 or more stocks and have throngs of research associates helping them with the models. Earnings season is short and the list of companies they cover is long… so they only listen live to a fraction of the live earnings calls of the companies they cover (they do read the transcript, but probably later that night or the next day). But their name is on the research report, so they're likely on all (or nearly all) of the earnings call-backs with management teams.
Don't believe me?
How many times have you gotten on a call with an analyst who said something like this, “Congrats on a great quarter guys. I wasn't on the live call because I had 6 other companies reporting tonight, but I see the headlines and how the stock is reacting in the after-market. Tell me guys, what do I need to know? What is on other peoples' minds so far tonight? What are the most common questions you’re getting?"
This happens with increasing frequency and it happens to basically everyone. So don't take it personally.
But it creates an opportunity for you to help "shape your message."
I counsel IR teams and investor relations consultants to use this opportunity to drive home the top 3 or 4 most important points from their earnings calls. Essentially, it's an executive-summary / Cliff's notes version of the call.
A dialogue from one of my clients to the sell-side analyst who wasn't on the live call might go something like this:
Analyst: Tell me guys, what do I need to know? What is on other peoples' minds so far tonight?
Company: Well, we did $_ in revenue and $__ in EPS (or whatever the 2-3 relevant metrics are) - both were ahead of the guidance we provided 90 days ago. Then we updated the Street on the 3 strategic priorities we outlined at the start of the year. We said that [insert 1 phrase on each progress point]. We also offered guidance for next quarter and the year. In both cases, the midpoints are ahead of where the consensus is by more/less than the amount of the beat - so we are/are not flowing through the upside because of _. From a Q&A perspective, we addressed most of the items in the prepared remarks, but I'd say people seem most focused on x or y and our response has been _."
Analyst: wow. Super helpful. This is exactly what I needed and gives me the opportunity to get to the other 5 companies who also reported tonight. Their numbers were really hard to decipher, so I'm going to be up all night trying to figure that out. I can probably bang your note out in the next 20 minutes, so I really appreciate this.
The next day, that very analyst's earnings summary will likely look a lot like the Cliff's Notes version that you told them the night before. They're not plagiarizing....don't get me wrong. And if they smell BS in what you’re telling them, they’re not going to go quietly into the night and ignore their concerns. What I’m saying is that if your quarter is, in fact, easy to decipher, make it that much easier for the analysts to get the key points.
Analysts are insanely busy. Unless you're hiding something (which I am decidedly not advising you do), you're helping them do their jobs. They appreciate that. And you do your best to ensure that your story is told properly.
Everyone wins.
