From the “forward-looking” disclaimers to the remarks from chief financial officers essentially restating what’s in the company press release, quarterly earnings calls haven’t changed much over the years—which is to say, they remain pretty boring.
Arguably they are designed to be unmemorable. Executives generally wish to avoid saying things that will sink their share price or stir the press, and their disembodied voices on speakerphone are well suited to the task, leaving analysts and journalists to divine the executives’ tones—or even use software—to understand management’s sentiment.
Some companies have over the years made tweaks to the traditional conference-call format, streaming low-quality audio over a PowerPoint presentation, for example. A few companies, like Netflix and T-Mobile, stream management’s discussion of quarterly results via YouTube.
But video conferencing software company Zoom Video Communications has taken things up a notch.
Earlier this month, Zoom disclosed its first quarterly results as a public company. After its press release went out, founder and CEO Eric Yuan and other senior executives hopped onto a Zoom video call to discuss the earnings with analysts, press, and investors. The interactive webinar showed off the company’s technology—and reinvented notions of what a quarterly earnings call should be.
The format introduced a greater degree of transparency between the company and analysts. It wasn’t just the executives whose faces appeared on the screen; when asking questions, the analysts on the call could also be seen—both by the executives and by everyone else on the call.
“You’re not just sort of talking into a box or a handheld—you’re actually looking at each other in the eye and you’re actually talking to feel like we’re connecting with a lot more people,” says Tom McCallum, Zoom’s head of investor relations.
The dynamics transformed the call from a presentation to more of a conversation, with executives and analysts essentially chatting face-to-face via video screens (journalists on the call were in view-only mode). The ability to see each speaker’s face brought a distinctly human touch to something that, with other companies, often feels like an anonymous, formulaic encounter steered by barely-human-sounding teleconference operators reading from scripts and frequently betraying their lack of familiarity with either the presenters or the callers on the line.
Zoom features helped to enable an “off-the-cuff” feel. Some analysts got creative with their screens—one had a backdrop of San Francisco’s Golden Gate Bridge, while another featured an enlarged logo for Bank of America Merrill Lynch. A couple of the analysts appeared to have been calling in from home.
Credit Suisse analyst Brad Zelnick says Zoom’s way of doing earnings calls is “a fantastic showcase of their technology to everybody participating in the call,” and that its executives’ embrace of real-time, visual engagement with Wall Street speaks to their confidence.
The connection is also logistically smoother—analysts no longer need to wait for an operator who will let them onto the call or recite instructions on what numbers to press to get in the queue to ask questions. “I’m sick and tired of sitting on music hold for a long period of time to wait for an operator to go through [the instructions for participants],” says JPMorgan analyst Auty Sterling. “Using Zoom as the conference call, I punch in the nine- or 10-digit code and click join, and I’m done.”
Both Zelnick and Sterling say this way of doing earnings call also helps with their branding in the age of social media. As Sterling describes, in the beginning of his career, voicemail was an incredibly important medium for connecting Wall Street to clients, then it morphed into email, but now, with most clients overloaded with email, there’s a much greater use of video content to stand out.
Zoom is not the first company to think of this. T-Mobile also wanted to create a more engaging, transparent forum for those who want to interact with the company. Starting in the fourth quarter of 2014, CEO John Legere and his leadership team decided to stream quarterly earnings calls via YouTube and allow anyone to ask the executives questions via Twitter or by phone. Though novel at the time, it was perhaps not much of a stretch for a CEO known for his stage presence, and for hosting a slow cooker show via Facebook Live on Sundays. The analysts’ faces, though, are still hidden on T-Mobile’s earnings calls; just their voices get piped into the set where Legere and his team are sitting.
Netflix, meanwhile, posts videos of what it calls its “quarterly earnings interviews,” which feature several executives taking questions from one analyst who has been invited to join them on screen.
While Zoom’s first quarterly earnings as a public company beat Wall Street’s expectations, what happens when the discussion on a call isn’t as positive?
Sometimes, earnings calls don’t go as scripted. For instance, last year, Tesla CEO Elon Musk chastised an analyst who ruffled him. “[B]oring, boneheaded questions are not cool,” Musk scolded.
It’s normal for most companies to have a “war room”-like approach to earnings calls, with multiple laptops and whiteboards and notebooks out. Just check out the setup for T-Mobile’s 2019 first-quarter call, starting at the 10:30 mark:
At Zoom, though, McCallum says, “we didn’t have any paper on the table—all the stuff that we needed was up on the screen.”
Zelnick suggests that Zoom’s approach to quarterly earnings calls “raises the bar” for other companies.
There are roughly 4,000 publicly traded US companies. Surely Zoom would be happy to sell its software to any that want to use it.