Investor Relations and Earnings Call Timing

The earnings call represents a company’s primary forum for updating investors about underlying business performance. Last week, we found ourselves in a discussion with a management team regarding how do you determine the optimal time for an earnings call? The question caught us slightly off-guard, as our initial take is that a company likely schedules its earnings call according to the standard protocol of its industry e.g., technology prints at 4:05 pm ET and calls typically begin at 5 pm ET.

For management teams that wonder what the optimal time is to hold an earnings call, we think there four primary considerations:

(1) time allotted for updating models,

(2) competitor call times,

(3) the West Coast, and

(4) industry protocols.

Picking the optimal time for a company’s earning call is paramount, as it will dictate investor community participation. Selecting the right time and right message can mean the difference between several hundred investors participating and only a few dozen investors participating in your earnings call. The best earnings calls provide ample time for analysts to update their models, are not scheduled at the same time as competitors, consider West Coast investors, and lastly follow industry protocols.

Time for Updating Models: The best-timed conference calls provide ample time for an analyst and their team to appropriately update the financial model. At a minimum, management should allot enough time for the analyst to update the model for the print. The best timing allots enough time to not only update the model for the print, but also provides enough time for the analyst team to take an initial cut at forward guidance (at least contemplate it). The GIGO (Garbage In, Garbage Out) principle applies here. If you provide little time for analysts to update their models, then you should not expect to receive questions on your earnings call about the detail of the quarter.

Competitor Call Times: One of the gravest sins committed by an Investor Relations Officer and company revolves around scheduling the earnings call at the same time of a competitor, or a much larger company. The need to consider competitor call times represents a function of your analyst coverage list. If the company has a well-defined competitive set, then the analysts covering the company in question will also likely cover the competitors, as well. Scheduling your call at the same time as a competitor just aggravates people and causes bandwidth issues. If you schedule the earnings call at the same time as a competitor, the analysts will engage with the highest profile story.

Additionally, the company should avoid scheduling an earnings call for the same time as a bellwether company within its industry. Again, the analyst community, both buy-side and sell-side, will find this timing problematic. The rule of thumb again holds that the investment community will engage with the highest profile company reporting. Therefore, scheduling an earnings call at the same time as a competitor or larger bellwether company, only serves to lower your relevancy and anger the investor community.

The West Coast: If the goal is to drive optimal engagement with the earnings call, then the company must consider the optimal time for West Coast investors, too. If you print at 6 am ET or 7 am ET and then the call starts at 8 am ET, you are causing the West Coast to start at 3 am PT.

Companies will likely argue that starting so early allows them to get better control of their business day. In my view, the day of earnings is typically shot due to investor community call backs. The importance of considering the West Coast time difference increases significantly as your stature declines from industry bellwether.

Just remember, no one wants to listen to an earnings call at 5 am PT for a micro cap company!

Industry Protocols: The simplest answer to the optimal earnings call timing question is to follow the industry protocol. In technology, for example, companies often print earnings between 4:01 pm ET and 4:15 pm ET, and typically have their calls start at 5 pm ET. The evening timing works well because it clearly shows consideration for the West Coast, as it is the afternoon there. Secondly, the evening represents the lowest business productivity time. Certainly, after market hours are prime family time, but sacrificing those hours once a quarter represents the sacrifice IROs, executives, and investors accept as participants in the investment world.

Remember, the optimal earnings call timing provides ample time to update models, does not overlap with a competitor, considers West Coast investors, and lastly follows industry protocols. If you need help thinking through your earnings call timing, please feel free to use us as a sounding board!