Glossary
Earnings Call
A conference call where management discusses quarterly results and answers analysts' questions, usually right after the report.
An earnings call is a live conference call, usually webcast, in which a public company's executives walk through quarterly results and take questions from analysts. Most US companies hold one within hours of releasing their numbers, either after the closing bell or before the market opens. The call often moves the stock as much as the release itself, because it is where management explains the numbers and talks about what comes next.
How a call runs
- Safe-harbor statement. A lawyer-drafted warning that forward-looking comments are not guarantees.
- Prepared remarks. The CEO covers strategy and highlights; the CFO goes through revenue, margins, cash flow and, if the company gives it, Earnings guidance.
- Question and answer. Analysts from banks and research firms ask follow-ups. This is the unscripted part and frequently the most informative.
Calls typically last 45 to 75 minutes. Replays and transcripts are usually posted on the company's investor-relations site, and anyone can listen live.
What listeners pay attention to
- Changes to guidance and the reasons given.
- Tone and wording, especially compared with the previous quarter's call.
- Which questions management answers directly, and which it sidesteps.
- Details that do not appear in the release, such as backlog, pricing or hiring plans.
A note on fairness
Under the SEC's Regulation Fair Disclosure, adopted in 2000, companies may not share material information privately with selected analysts or investors before telling the public. Open, publicly announced earnings calls are one of the main ways companies meet that duty.