The quarterly reporting treadmill – make it count!
As we hop back onto the quarterly reporting treadmill with its familiar rhythm of results and trading statements, maybe we should take a moment to reflect. How can we make the moment count?
In most jurisdictions, with the exception of the US, quarterly reporting is not mandatory. We don’t strictly have to do this. In the UK, mandatory quarterly reporting requirements were revoked in 2014. The FCA ushered in this change to reduce short-termism, to encourage companies to focus on lasting value-creation and encourage investors to adopt a longer-term view. It aimed to reduce the burden of administration and to align with the EU which made the move in 2013.
The argument goes that removing the regulatory requirement for quarterly reporting saves management time, saves on fees and reduces short termism. The quarterly earnings cycle can leave in-house teams, investors and analysts and advisers reeling from one reporting cycle to the next. The huge amount of management time invested in that missive and the headline that hits the tape cannot be underestimated.
But a shift to a longer reporting cycle results in periods of silence and reduced data points, eroding shareholder transparency. Stepping away from these touchpoints would deprive us of an opportunity to continue to build momentum in a narrative. We often discuss the importance of “always on” communications and mid- earnings cycle touchpoints, necessary to keep any equity story front of mind with stakeholders.
So what is the optimal balance between time invested and returns, and how can we make this moment count? Whether a full earnings release or a trading update, a one-pager or a more detailed breakdown of accounts, the season does present an opportunity to control the narrative, to reiterate and cement an investment case with consistent key messaging, to highlight strategic progress, to demonstrate thought leadership and to manage expectations. An opportunity to reengage and build trust with stakeholders. Not a moment to waste.
