10 Common Questions about Earnings Calls Answered

Whether you’re a new investor trying to explore the world of investing or a mere student trying to know more about businesses, earnings calls are a great way to start. Now, earnings calls might seem confusing, but it’s actually a great way to gather insights regarding the financial stability of various companies. To better understand earnings calls, you need to know the basics. 

Here are the 10 common questions about earnings calls and their answers:

1. What is an earnings call?

Simply put, an earnings call is a live conference call conducted by publicly-traded companies to report and discuss their financial performance in a given quarter.

2. Who can participate in an earnings call?

Earnings calls are open to the public so everyone can participate in an earnings call. However, you can expect the audience to be mostly comprised of journalists, analysts, and investors whether it be experienced or beginners. 

3. How do I join an earnings call?

Earnings calls are done over a conference line, so as a participant, you can simply access it using a toll-free number that will be announced by the company. Once you are dialed in, you can simply listen to the earnings call and hear the financial report delivered by company executives themselves.

4. When does an earnings call happen?

Earnings calls happen at the end every quarter, which means there are four earnings calls in a year.

5. How do I listen to an earnings call?

Listening to an earnings call is fairly easy if you know what to do. First and foremost, you need to read the earnings release. You can also check out the previous earnings call of the company, just so you can familiarize yourself and have a reference as you listen to the new one. The next step is to listen to the call and note all the financial data presented in the call so you can analyze and compare the data.

6. What’s the structure of an earnings call?

The structure of an earnings call consists of four parts: the introduction, the safe harbor statement, the presentation and discussion of data, and the Q&A session. 

The introduction is where the management team of the company is introduced by the host or an operator. The safe harbor statement is where the management warns the listeners of forward-looking statements, predictions that have no certainty. Up next is the presentation and discussion of data where the financial report, including achievements and setbacks, is presented to the public. Last but not least is the Q&A session where participants are given the chance to ask the management some questions regarding the earnings report and the company. 

7. How long does an earnings call last?

Earnings calls are usually 46-60 minutes long. 

8. Why are earnings calls important?

Earnings calls are important because it gives companies the chance to highlight their success or progress in the quarter and to give investors and analysts a chance to explore the company’s standing before trading in the stock resumes.

9. What are some good questions to ask on an earnings call?

The Q&A session is a powerful part of the earnings call and as a participant, you have the chance to ask the management specific questions abut the quarter they just had, the company, and more. Some of the best questions to ask on an earnings call include: 

• How will you maintain or surpass this performance in the next few quarters?
• How are you going to address the risks that will affect the long-term growth of the company?
• How is the performance this quarter going to affect the long-term goals of the company?

10. I missed the live conference call, how can I access the earnings report?

If you didn’t have the chance to participate in the live conference call, you still have a chance to access it by listening to the audio recording or by downloading earnings call transcripts – companies usually post them on their respective websites so they are more accessible.