Must see T.V. – Thoughts on using video broadcasting for earnings conference calls
Earnings calls are arguably the most important form of communication that companies have with the investment community. Investors expect management teams to discuss business updates and financial performance every 90 days. This is the best opportunity management teams have to broadly disseminate material information and provide context to the formulaic legalese of quarterly SEC filings while gaining Reg FD cover.
Amid the wave of social media proliferation and big data, investors now have more resources than ever to do their due diligence on companies. Using mediums like Twitter and LinkedIn for corporate communication requires companies to be aware of all content creation and dissemination to ensure consistent messaging.
To stay in line with this progression and take complete control of messaging to investors, some companies have started video broadcasting their earnings calls. The early pioneers of this are telecom, media and tech companies, who can use earnings calls to demonstrate and promote their own products, services and values in order to create a deeper connection with customers and shareholders. T-Mobile and Netflix stream their calls on YouTube. Recent IPO Zoom used their own video conferencing software to host their first call as a public company. We’ve watched these calls, and here is a breakdown of the structure of each.
T-Mobile US (TMUS) Q1 2019 Earnings
T-Mobile has been video broadcasting earnings calls for about four years, and they are certainly leaders of the format. From their IR site, the video stream is as easy to find as the webcast. During the call, the management team is situated in standard press conference position, with leadership seated on one side of a table and the company logo and ticker behind them. As would be expected from a large-cap company with significant resources, the production quality is high. Multiple cameras are used, one on the whole team and others focused separately on individual speakers. For the prepared remarks, CEO John Legere reads from a script on the table in front of him. Q&A is moderated via telephone operator, and camera angles adjust to t focus in on the speaker. The flow and structure is similar to a standard earnings call.
Netflix (NFLX) Q1 2019 Earnings
Earnings reports from Netflix are unique because they forego the standard call format; instead, they publish a letter to shareholders and then hold a video conference call that consists only of Q&A moderated by a sell-side analyst. The discussion lasts around 30 minutes, and sections of the shareholder letter are expanded upon and referenced. The structure is very conversational.
Zoom (ZM) 1Q FY2020
In an effort to highlight their technology, Zoom webcasts their earnings report using their own software. The video conference includes live video of management delivering prepared remarks along with corresponding slides. This webinar format is familiar and works well for an earnings call. When it comes time for Q&A, analysts ask questions on video. This demonstrates an important connection between participants.
In each of these video-broadcasted earnings calls, Q&A is what sets this format apart from the standard audio call. Video enhances the experience and allows for more engaging discussion between management and analysts. Body language and facial expressions convey information and tone that disembodied voices on a Polycom do not. Much like a one-on-one meeting, there is value in seeing how someone answers a question. Video provides management teams with the ability to show genuine confidence, conviction and excitement about developments and initiatives. Investors and analysts appreciate this level of transparency. Overall, the video experience fosters highly effective communication.
Unfortunately, a quality production requires additional preparation, logistics, time and resources, but in terms of effectiveness, it is hard to identify shortcomings. Now that video streaming technology is widely available and accessible, we expect to see this format become more prevalent over time. To make this transition easier for companies, consider starting with one video report a year, such as the annual report.
Could video broadcasting earnings calls make sense for your company? Contact us today to set up a meeting with our team. We’d love to work with you and strategize what is best for your company.
Philip Taylor, Associate