What you need to know about Earnings Calls

Earnings calls allow investors to ask questions about company's financial performance and discuss upcoming events that affect the stock price. 

How do companies conduct an earnings call?

Companies hold quarterly press conferences where executives present their findings and outlook for future performance. At times, the conference may be preceded by a pre-recorded video presentation. The earnings call begins with a statement from management regarding current results. This is followed by questions from investors and analysts. Usually, the CEO answers questions directly, while CFOs answer questions related to accounting issues. An analyst who asks a question may then get a follow-up interview. If there are no further questions, the management team will provide an outlook for the future, and sometimes, discuss plans to repurchase shares. Companies are not obligated to publicly announce their intentions to buy back shares, but they must disclose any intention to sell them.

When is an earnings call necessary?

An earnings call is usually scheduled at least once a quarter. Investors typically want to know what happened in the past three months. However, some companies have a tendency to hold earnings calls annually, providing both long-term and short-term information.

What does an earnings call consist of?

During an earnings call, management teams explain the company's recent financial performance and review upcoming events that could influence future earnings. There is usually a formal opening statement from management followed by Q&As with analysts. Management teams may also brief the market on upcoming projects, share details about acquisitions and divestitures, and announce dividend payouts.