The Use of Social Networks to Engage Investors During the Quarterly Reporting Period
Quarterly reporting is a key part of communicating a company’s financial story to the investment community. As many companies are in the midst of another earnings season right now, I thought it would be timely to highlight some of the interesting things they are doing to interact and engage their shareholders in the quarterly reporting process.
Right now, the social network predominantly being used to share this material is Twitter. So what follows are concrete examples from our Twitter for IR report we issued in November 2009. However, I will also be highlighting a company or two that reported in January of this year who are trying new approaches to engage investors during the quarterly process.
A number of interesting ideas came to light from our research and I have categorized them into three groups: 1) Proactively engaging shareholders before the quarterly call; 2) Keeping shareholders engaged during the quarterly call; and 3) Providing additional commentary after the quarterly call has ended.
Proactively engaging shareholders before the quarterly call
Virtually all public companies supplement their earnings release with a conference call and web cast. The obvious benefits include providing all shareholders, whether they are retail or institutional, with fair access to the management team.
The majority of companies only allow analysts and institutional investors to ask questions, leaving the retail shareholder and financial media in a “listen only” mode. More often than not, this tactic can lead to a barrage of follow up calls to the IR department for clarification on certain line items and can generally take up more time on the phone than necessary.
Social networks should not only be viewed as a one-way mode of communication; rather, they can be used to interact with and engage users. One example of how social media can encourage two-way conversation (and help head off any additional questions after the quarterly call), is to reach out to shareholders to gauge their top-of-mind concerns.
For example, in preparation for third quarter (’09) results, both Microvision and WEG S.A. proactively tweeted to see if their followers wanted to submit questions they would like answered on the quarterly call. Each company asked followers to submit the questions via different networks. For example, Microvision pointed people to their blog and asked them to submit questions there:
On the other hand, WEG S.A. provided hashtags so followers could submit questions directly on Twitter. Hashtags allow the company to easily track the questions that were being submitted through the channel and this allowed others to see these questions:
Proactively reaching out to shareholders indicates the company is truly interested in the issues that are important to them, which will help strengthen relationships on all levels. In return, getting questions in advance about the issues that are important to shareholders can help the company tailor key messages around these issues and, in the end, could potentially limit the number of follow up calls after the conference call is over.
While the upcoming earnings date has not been announced yet, it will be interesting to see if Microvision and WEG S.A. do the same thing for this quarter – stay tuned.
Keeping shareholders engaged during the quarterly call
A select group of the companies in our study “live tweeted” their quarterly earnings call. EBay was the very first company to do this and since then more have followed, including CGI, Garmin, Compellent and Best Buy.
The practice for live tweeting also includes the use of hashtags to allow people to follow conversations and compile feeds on a particular subject if they were unable to take part during the actual call.
Live tweeting the call may seem like an onerous task, but there are ways to streamline this process. EBay’s Chief Blogger Richard Brewer-Hay recommends preparing the tweets before the call starts. This is easily done by extracting key messages from the release and the script. Compiling the information for the tweets prior to the call will ensure consistent messaging and help mitigate the risk of tweeting anything that was not previously disclosed over an approved disclosure channel.
Update:
BMC Software reported their Q3’10 results on January 27th. They are being highlighted as they “tweeted” their earnings call. While they did not use hashtags, they kept the commentary to a handful of relevant tweets including the number of license bookings; operating income and revenue.
Google also recently reported earnings (Q4 on January 21, 2010) and used YouTube to webcast their earnings. They also posted a separate stream of the Q&A session. A lot of investors are more interested in how management handles the Q&A and having two separate streams gives investors an easier option to listen to the portion of the call they want.
However, using YouTube to webcast their call is not quite as innovative as what they did for Q3’09 (recall they allowed people to submit questions as well as vote for their favourite questions using Google Moderator. They then addressed the most popular questions during the Q&A session). According to a post by IR Magazine that highlighted Google wouldn’t be using the moderator app “a source close to the tech company suggests Google is still experimenting with different approaches to its conference call”.
The IR Magazine post went out to further state “The change at Google was one of a number of ways in which companies have recently tried to shake up the traditional earnings call model. Last week, Intel published a CFO commentary to its website an hour before its call began, to cut down on prepared comments and allow more time for Q&A. Intel first used this approach for its Q3 results in October last year”.
Additional commentary after the quarterly call has ended
The opportunity to convey your company’s financial story doesn’t stop once the conference call is over. Some companies have posted a video of the CEO/CFO providing commentary on their financials. Cisco provided a link to a video interview that was made available on their website with their CEO and CFO in which they provided insights on the financials:
Similarly, Time Warner provided a link to a YouTube video where the CEO discussed the results:
Providing additional commentary by the CEO/CFO puts a face to the name. By having the CEO/CFO provide more color (without stepping outside of Reg FD) may also help all shareholders in understanding what the results mean to the company’s future success.
As an IRO, you already deal with challenges that include the ever-changing regulatory environment. The current economic situation has imposed additional challenges, with conditions that lead to budget cutbacks and the need to do more with less. The downturn has also made communicating with shareholders more important now than ever.
The growing use of social networks provide another way for companies to reach out to and proactively engage their shareholders. The quarterly reporting process remains an important avenue for telling the company’s story and to connect with the investment community. There is mounting evidence that social networks provide another valid source of information for institutional investors to make investment decisions.
As more companies report their earnings over the next little while, it will be interesting to see the different things they are implementing to enhance the quarterly reporting process.
Related posts:
- Case Study: How NovaGold Uses Social Media to Augment Their Quarterly Reporting
- Institutional Investors and Analysts Increasingly Using Blogs and Social Networks for Research
- Effective Uses of Hashtags on Twitter to Help Attract Investors
- Trending on Twitter: What Q4 is reading & sharing on social networks – week of July 25, 2011
- Case Study: Westport Innovations Shares Tips, Wins & Pitfalls of Using Social Networks
Related posts brought to you by Yet Another Related Posts Plugin.
