Managing Q&As: How to handle a difficult investor question

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When planning ahead for your quarterly earnings call, it is critical to spend time focusing on the Q&A portion of your presentation. Prepping for questions that investors will likely ask allows you to be prepared and to deliver concise, impactful responses. Preparing scripted answers for Q&A sessions begins with creating a list of questions that are topical and likely to be asked.

Another critical component of your Q&A preparation is focusing on the profiles of your investors. Understanding the investor’s investing history, comparable positions in similar companies and potential areas of focus for that investor will help you anticipate what he or she may ask during the Q&A session.

Most of the questions you receive from analysts and investors will be focused on the metrics of the most recent quarter, plans for growth, guidance and general housekeeping questions for their modeling purposes. However, expecting the unexpected will help you to be thoroughly prepared to field whatever comes your way. For example, an investor or analyst may ask you a question based on information they  heard from an outside party, which may not be true. Or they could ask a question about an immaterial detail that, while small in nature, you may not have the answer to. Be prepared for any kind of question.

Below are some tips on how you and your management team can handle tough questions from the analysts and investors on your call.

Answer the question directly. Oftentimes, members of management doesn’t directly address the question that was asked. This may happen because they were not listening closely enough, or perhaps they didn’t know the answer and decided to talk about a slightly-related topic that is more in their comfort zone. Whatever the reason, you run the risk of eroding credibility with your audience or making them doubt your overall messaging if you avoid tough questions.

View every question as an opportunity. In preparing for your earnings event, you will have key messages you would like to get across. When answering those tough questions, remember that this is your chance to reinforce, restate or reframe your prior messaging. Use facts, stories and illustrations to highlight your business in the tone you would like to convey.

Stress-test your answers. As a team, go over the responses to the tough questions you anticipate. Spend time role playing by asking the questions back and forth and reviewing all possible answers. Practicing these interactions together will help your team create a cohesive message, ensuring the team comes across as confident and reassuring.

Follow-up with your analysts and investors. Although earnings calls and Q&A sessions can be an arduous and draining process, it is critical to stay on message and communicate with your investors and, most importantly, your analysts after the call. Each of the analysts will likely be writing a research note during and directly after your call to be published as soon as possible. Take the time to address unresolved questions, restate facts or make sure they have no additional concerns or questions. Putting in the time after the call will help prevent misstatements of data or facts that could spook the market.

Conclusion
Preparing well in advance for your earnings event Q&A session is a crucial step to ensure you are prepared for whatever comes your way during the session. Contact our senior team for further conversations surrounding how to make your performance on your earnings day a success!

Jessica Bornn, Principal

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