Earnings call
Encyclopedia
Earnings Calls are a teleconference
in which a public company
discusses the financial results of a reporting period. The name comes from the bottom line numbers in the income statement
- earnings per share
. The U.S. based National Investor Relations Institute
says that 92% of companies represented by their members conduct earnings calls and that virtually all of these are webcast.http://www.niri.org/irresource_pubs/faq.cfm#1d Transcripts of calls may be made available either by the company or a third party.
The calls are usually preceded or accompanied by a press release containing a summary of the financial results, and possibly also by a more detailed filing under securities law. Earnings calls usually happen, or at least begin, while the stock market
on which the company's shares are traded is closed to trading, so that all investors will have had a chance to hear management's presentation before trading in the stock resumes.
Generally, the call will begin with a company official reading a safe harbor
statement to limit the company's liability should the future prove different from that stated in the discussion. Then one or more company officials, often including the Chief executive officer
and Chief financial officer
will discuss the operational results and financial statements for the period just ended and their outlook for the future. The teleconference will then be opened for questions by investors, financial analysts, and other call participants. Management will answer many of these questions, although if the data is not available to them they may decline or defer response. Depending on the size and complexity of the company, the difference between actual and expected results, and other factors, the length of the call will vary.
There is no general requirement for how far in advance notice of a call must be given. However, keeping the investor and analyst communities happy is part of management's job, so the call will generally be announced a few days or weeks in advance. If the company has a website, there will probably be a section titled Investor Relations or Investors - this is the most likely part of their website to contain both call schedules and archived past calls.
Many companies are tracked by financial analysts that publish estimates of earnings per share. The company may also provide guidance as to what earnings per share are likely to be. If management knows that its results are going to be significantly different from its guidance or from analyst expectations, it may choose to make a preannouncement
of differing results.
(SEC) on form 8-K and meets certain other criteria there is no obligation to separately report the call to the SEC. Otherwise, it must be reported on form 8-K. If the call contains non-GAAP information there are additional requirements under SEC regulations, including Regulation FD.
Companies headquartered in the United States with securities traded on a U.S. based stock market or other exchange are required to file audited annual reports with the Securities and Exchange Commission (SEC) on Form 10-K
following the end of a fiscal year and unaudited reports on Form 10-Q
following the end of a fiscal quarter. These companies will announce earnings quarterly and generally hold an earnings call quarterly.
Some companies with shares traded on foreign stock exchanges also have American Depository Receipts (ADRs) that are traded on U.S. exchanges and are required to file Forms 20-F and 6-K with the SEC. (Not all companies with ADRs need to file these forms.) They are likely to have their earnings announcements and calls coordinated with the schedule required in the country where their shares are traded.
Teleconference
A teleconference or teleseminar is the live exchange and mass articulation of information among several persons and machines remote from one another but linked by a telecommunications system...
in which a public company
Public company
This is not the same as a Government-owned corporation.A public company or publicly traded company is a limited liability company that offers its securities for sale to the general public, typically through a stock exchange, or through market makers operating in over the counter markets...
discusses the financial results of a reporting period. The name comes from the bottom line numbers in the income statement
Income statement
Income statement is a company's financial statement that indicates how the revenue Income statement (also referred to as profit and loss statement (P&L), statement of financial performance, earnings statement, operating statement or statement of operations) is a company's financial statement that...
- earnings per share
Earnings per share
Earnings per share is the amount of earnings per each outstanding share of a company's stock.In the United States, the Financial Accounting Standards Board requires companies' income statements to report EPS for each of the major categories of the income statement: continuing operations,...
. The U.S. based National Investor Relations Institute
National Investor Relations Institute
The National Investor Relations Institute, known as "NIRI," is the largest professional association for investor relations professionals in the world...
says that 92% of companies represented by their members conduct earnings calls and that virtually all of these are webcast.http://www.niri.org/irresource_pubs/faq.cfm#1d Transcripts of calls may be made available either by the company or a third party.
The calls are usually preceded or accompanied by a press release containing a summary of the financial results, and possibly also by a more detailed filing under securities law. Earnings calls usually happen, or at least begin, while the stock market
Stock market
A stock market or equity market is a public entity for the trading of company stock and derivatives at an agreed price; these are securities listed on a stock exchange as well as those only traded privately.The size of the world stock market was estimated at about $36.6 trillion...
on which the company's shares are traded is closed to trading, so that all investors will have had a chance to hear management's presentation before trading in the stock resumes.
Generally, the call will begin with a company official reading a safe harbor
Safe harbor
The term safe harbor has several special usages, in an analogy with its literal meaning, that of a harbor or haven which provides safety from weather or attack.-Legal definition:...
statement to limit the company's liability should the future prove different from that stated in the discussion. Then one or more company officials, often including the Chief executive officer
Chief executive officer
A chief executive officer , managing director , Executive Director for non-profit organizations, or chief executive is the highest-ranking corporate officer or administrator in charge of total management of an organization...
and Chief financial officer
Chief financial officer
The chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
will discuss the operational results and financial statements for the period just ended and their outlook for the future. The teleconference will then be opened for questions by investors, financial analysts, and other call participants. Management will answer many of these questions, although if the data is not available to them they may decline or defer response. Depending on the size and complexity of the company, the difference between actual and expected results, and other factors, the length of the call will vary.
There is no general requirement for how far in advance notice of a call must be given. However, keeping the investor and analyst communities happy is part of management's job, so the call will generally be announced a few days or weeks in advance. If the company has a website, there will probably be a section titled Investor Relations or Investors - this is the most likely part of their website to contain both call schedules and archived past calls.
Many companies are tracked by financial analysts that publish estimates of earnings per share. The company may also provide guidance as to what earnings per share are likely to be. If management knows that its results are going to be significantly different from its guidance or from analyst expectations, it may choose to make a preannouncement
Preannouncement
A preannouncement occurs when a company or individual announces something either prior to the time that they do it or prior to the time that they would normally announce it. Preannouncements can take the form of a press release, filing a form with the government, a conference call, or a webcast.-...
of differing results.
United States
If the call occurs within 48 hours of a press release furnished to the United States Securities and Exchange CommissionUnited States Securities and Exchange Commission
The U.S. Securities and Exchange Commission is a federal agency which holds primary responsibility for enforcing the federal securities laws and regulating the securities industry, the nation's stock and options exchanges, and other electronic securities markets in the United States...
(SEC) on form 8-K and meets certain other criteria there is no obligation to separately report the call to the SEC. Otherwise, it must be reported on form 8-K. If the call contains non-GAAP information there are additional requirements under SEC regulations, including Regulation FD.
Companies headquartered in the United States with securities traded on a U.S. based stock market or other exchange are required to file audited annual reports with the Securities and Exchange Commission (SEC) on Form 10-K
Form 10-K
A Form 10-K is an annual report required by the U.S. Securities and Exchange Commission , that gives a comprehensive summary of a public company's performance...
following the end of a fiscal year and unaudited reports on Form 10-Q
Form 10-Q
Form 10-Q, also known as a 10-Q or 10Q is a quarterly report designed to give a status of how a business is doing after three months of operation. These reports generally compare last quarter to the current quarter and last years quarter to this years quarter. The SEC put this form in place to...
following the end of a fiscal quarter. These companies will announce earnings quarterly and generally hold an earnings call quarterly.
Some companies with shares traded on foreign stock exchanges also have American Depository Receipts (ADRs) that are traded on U.S. exchanges and are required to file Forms 20-F and 6-K with the SEC. (Not all companies with ADRs need to file these forms.) They are likely to have their earnings announcements and calls coordinated with the schedule required in the country where their shares are traded.
External links
- The National Investor Relations Institute provides a FAQFAQFrequently asked questions are listed questions and answers, all supposed to be commonly asked in some context, and pertaining to a particular topic. "FAQ" is usually pronounced as an initialism rather than an acronym, but an acronym form does exist. Since the acronym FAQ originated in textual...
, from U.S. corporate management's point of view, about how to handle earnings calls.