Aug 10, 2023 - Economy & Business

Communicating quarterly earnings

Data: Axios Research; Note: Numbers and frequently-occurring English words were excluded; Chart: Simran Parwani and Alice Feng/Axios
Data: Axios Research; Note: Numbers and frequently-occurring English words were excluded; Chart: Simran Parwani and Alice Feng/Axios

Smart CEOs bring strategic communicators into the fold before any major decision or announcement is made — and that goes for quarterly earnings, too.

Why it matters: Earnings reports are often owned by financial and legal teams, but communication professionals are stepping in to create a narrative behind the numbers.

State of play: One in 10 chief communication officers oversees investor relations (IR), according to a report by The Conference Board.

  • Meanwhile, 70% of comms leads report that investor and government relations remain key responsibilities, even if they don't oversee those functions, and 20% say investor behavior is a driving force behind their communications strategy, per Edelman.

What they're saying: "A general rule of thumb is that you can't message your way out of bad earnings, and you don't want to message your way out of good earnings," says David Meadvin, CEO of corporate strategy firm Day One.

  • "Most of the time, earnings fall somewhere in the middle, and that's when how you communicate can have an impact."

Between the lines: While IR owns the investor and board communications, their counterparts in corporate affairs supplement by running key messaging across other channels — internally and externally.

  • Earnings calls can provide an opportunity to position your executives or business as a thought leader in their space, says Heather Crowell, executive vice president of investor relations at Gregory FCA.
  • It can also be a time to plant seeds, share news or make a big announcement to grab media attention in the days following, says Crowell.

The big picture: What's said during these calls can also signal larger business trends.

  • Across 2,300 quarterly earnings press releases, the mention of words like "recession," "AI" and "cyber security" skyrocketed compared with last year, according to an analysis by Cision.
  • Meanwhile, terms like "diversity," "inclusion," "sustainability," "climate" and "metaverse" were barely mentioned across both, signaling a shift in the way leaders are communicating about these once front-and-center initiatives.

Zoom in: Though it's good for morale to give employees a sense of seeing behind the curtain, it's not always necessary with quarterly earnings reports.

  • Yes, but: "One of the biggest mistakes that a company can make is to communicate by press release to your employees," says Meadvin.
  • "In my experience, employees aren't usually terribly focused on earnings. When internal comms are necessary, it's usually because something has gone really wrong. When that happens, the best advice I can give is to treat your team like grownups, and make sure to let them know you have a plan to fix things."

The bottom line: Earnings reports can signal different things to different audiences, so communication teams can help in crafting a narrative of corporate confidence, control and strategy.

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