Hosting the quarterly financial call is a basic task of a public company. Not all investor calls are as effective as they could be, and some can be downright dull and unprofessional.
How, then, should you prepare for an effective earnings call?
Here is a list of 10 do’s and don’ts that will help you get the most out of your quarterly calls:
Last year was a record for biotechnology IPOs, with some 82 companies raising a combined $5.5 billion. Not all IPOs are created equal, however. A good IPO is one that benefits all stakeholders and leaves the door open to future mutually beneficial collaboration.
What, then, are the secrets of successful IPOs?
Let’s start with one of the basics. The success of an IPO is judged first on whether or not participating investors make money on the transaction, and secondarily, on whether the listing company raises the funds it was seeking.
In the months that follow the successful completion of an initial public offering (IPO), some companies have a hard time striking a balance between under- and over-communicating. This happens, in part, because the final week of the IPO road show is one of the most frenetic and adrenalin-pumping periods in the careers of any management team, and being back in the office after so much excitement can feel like a letdown.
To fill that void, some management teams react by getting right back out there (once the 25-day quiet period has expired) to tell their story to the same or new investors all over again. At Westwicke, we advise rethinking that strategy and taking a more balanced approach. Consider these tips and real-life scenarios from the field to help you determine the right mix.
Investor conferences offer an effective platform — and a variety of opportunities — for you to tell your story to investors. During the course of the day you may connect with at least a dozen investors and possibly as many as several hundred. What could be better than that?
Whether you are meeting one-on-one or with small groups, presenting a 20-minute overview to a large room full of investors, or delivering your pitch during a chance encounter in the elevator, it’s important to tailor your presentation to the audience at hand and the amount of time you have. Some helpful tips to raise your impact and exposure:
Not long ago, I had the enjoyable task of serving as moderator for the recent evening program of the San Diego National Investor Relations Institute (NIRI) Chapter titled “Do’s and Don’ts from the Buy Side and Sell Side.” The panel of two buy-side investors and two sell-side analysts, who cover the technology and life sciences sectors, provided a lively discussion and an abundance of practical advice on the art of practicing effective investor relations (IR). We touched on just about every aspect of IR, from non-deal road shows to the corporate website, and even the perfect length of time for the safe harbor statement on a conference call. Here are some of what the panel considered the top do’s and don’ts for investor relations.
Many factors — inside and outside your company, even outside your industry — affect how investors perceive you. Some would argue there is no such thing as a misperception; in other words, whatever investors think about your company is your reality.
But perceptions can change. If the prevailing perception is not what your management team wants it to be, there are ways to alter the perspective to be more in line with how you want to be viewed. While the efficient market hypothesis states that share prices reflect all publicly available information, investor expectations about future earnings and profitability are imbedded in today’s stock price. Shaping perceptions about the future is an important goal of successful investor relations.
Stepping outside your company to see how others view it is an essential part of perception building. Assessing how outsiders respond to the following basic questions is a good place to start:
- What does the company do?
- Who are its customers?
- How much risk is there in bringing the company’s new products to market?
- What/who is the competition?
- Does management instill and exude confidence?
- What is management’s track record?
- What do bloggers and others involved in the social media sphere say about the company?
In March 2013, a journalist for The RPM Report (subscription required) wrote that the U.S. Food and Drug Administration (FDA) had held a “late cycle” review meeting with a drug candidate sponsor. The meeting – an element of the 2012 Prescription Drug User Fee Act-V – introduced a new formalization of communication between the FDA and sponsors, and hailed a new investor relations dilemma for companies: Should “sponsors” disclose what is discussed in these late cycle meetings with the agency, or not?
Late cycle review meetings are a change from past FDA practice; previously the agency engaged in less formal, ongoing communications. Formality might be a good administrative move by the FDA. The agency will now more clearly state what page it’s on, rather than making the sponsor figure out the scenario via a stream of communications over several months.