The Challenges of Communicating Financial Results

The role of investor relations has developed dramatically in recent years. This has been driven by factors such as faster moving markets, a more global reach than ever, tighter stakeholder scrutiny, an increased compliance burden, increasing shareholder expectations and a requirement to now provide a strategic advisory role internally that delves into navigating market perception and capital market dynamics.

Each earnings season sees IR departments bearing considerable pressure to communicate results in a clear and transparent manner, as well as to provide shareholders with context and a cohesive roadmap for the issuer’s future success. This is balanced with meeting regulatory requirements on reporting and managing sensitive information.

This article explores the journey that IR teams must take to meet these modern challenges and achieve success with their efforts regarding transparency, engagement and compliance. It provides insight into modelling your IR strategy and a solution for the problem of trying to carry out a streamlined workflow with fragmented tools and platforms.

1. The dual mandate of the Investor Relations Officer

Around the announcement of your company’s quarterly results, the IR lead takes on two key roles:

Ensuring that you report accurately and in accordance with international accounting standards.

Shaping the corporate narrative to contextualise the results for investors and explain how the business will turn around poor performance or build on success.

Holding earnings calls helps engage the investment community and allows IROs the opportunity to make sense of the figures for shareholders, answering their questions and reinforcing the company’s strategic positioning. However, there is a tight timescale in which to collaborate with colleagues in legal, finance, communications and the C-Suite to produce messaging on which all functions can align.

The IRO must be transparent so as not to erode the trust that investors have in the issuer, but also to communicate the positive reasons why current shareholders should stay invested and why the business is an attractive option for prospective shareholders.

1.1. Where the friction lies

There are a few factors that combine to make the IRO’s job difficult around the announcement of quarterly results. They include:

Fragmentation across both the IR and Finance departments and the tools used to carry out all the necessary tasks. This not only makes it difficult to align on a compelling narrative, but it also impacts on the ability to sync all of the disparate actions that need to happen for full, compliant disclosure.

Manual overhead of trying to prepare and publish disclosures at the same time as keeping your IR website up to date, organising an earnings call, maintaining the security of the information moving around the business and handling investor enquiries.

Time pressures that make the process seem more like an emergency response than a corporate workflow. This means rushing to ensure your messaging is on-brand as well as accurate, you fit in last-minute updates and ensure the narrative still makes sense as well as meeting all your deadlines.
Investor fatigue at a time when many other issuers will be presenting their results. You have to make sure that your messaging is consistent and delivered in a timely manner to engage them fully in your narrative. They don’t have time to chase up all the issuers in which they are invested, so make sure you stand out in the crowd.

Simply sending out releases is not the real challenge; coordinating all the other elements that accompany those disclosures is the difficult part. For example, a single announcement may require input from your legal and compliance teams, your IT function and the media relations team, as well as undergoing scrutiny for its financial storytelling and how it adds to the investor conversation.

2. Rethinking the IR operating model

There are now so many elements to the job of the IR function that there needs to be a radical overhaul of how best to meet all of your obligations. Teams are now moving away from using individual tools for separate activities, which can result in IR work becoming siloed. The emphasis instead should be on workflows. Reducing isolated systems and instead creating integrated processes that improve visibility over the whole project and encourage more effective collaboration.

The questions you should ask as you develop these new ways of working should be:

How do we reduce friction between teams?

How do we avoid repetition and delays?

How do we ensure consistency across channels?

Integrating your processes improves clarity over the direction of travel and the input needed to get there. With coherent workflows, you can improve collaboration and even small teams can improve the quantity and quality of their output because they are working together and not separate from each other.

As with messaging, consistency is key to the processes you undertake and both build trust with your investors over time as they begin to see improved outcomes and enjoy better engagement with your company. This helps you reduce complexity and be better prepared for earnings season every quarter.

3. How IR Reach can help

IR Reach is an all-in-one solution that simplifies the workflow for investor relations teams. It combines essential IR tools into a single, secure ecosystem that enables leaders to carry out necessary processes with confidence, reducing manual input and enhancing investor engagement.

IR Reach includes:

EuroStockNews, to streamline the drafting and distribution of both regulatory and non-regulatory disclosures to all necessary bodies and outlets.

LiveEquity, which showcases important financial and IR information on the company website with dynamic, real-time widgets for increased transparency.

IR website design from Inderes, providing a fully compliant, professional-standard investor website tailored to individual businesses, sectors and pieces of legislation. It is easy to update so you can maintain transparency and engage more effectively with investors.

IR events, powered by our partner, Inderes. You can deliver polished, reliable online and hybrid investor events, such as earnings calls, with end-to-end support from technical experts.

InsiderLog, offering streamlined insider list creation and management in a MAR-compliant manner.

Try IR Reach today to see how you can streamline your IR workflow.

4. Conclusion

IR teams sit at the intersection of compliance, communication, numbers and narrative having to master all around each earnings season. Of course, your shareholders are interested in your financial performance, but the way you communicate that performance can have a more lasting effect and make the difference between maintaining and increasing shareholding or divesting in your stock. Effective shareholder engagement is powerful, particularly in times of volatility and uncertainty.

Now is the time to reshape the way you work to create a more strategic future that recognises that IR work requires input from all areas to help achieve its aims.