Earnings call definition

What is an Earnings Call?

An earnings call is a conference call between the senior managers of a public company and members of the investment community, to discuss the performance of the business. Earnings calls are intended to provide investors with additional clarification about the financial results and financial position stated in a firm’s financial statements, typically expanding upon and explaining financial information. Many entities record these calls and then post them in the investor relations section of their websites, so that anyone can access them.

Smaller public companies that cannot afford an investor relations officer may not bother with earnings calls, since they are not required by the government.

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Advantages of an Earnings Call

Analysts find these calls to be useful, since they may provide valuable clues about the financial situation of a business that could lead to changes in a firm’s stock price. Since these calls enhance relations with investors, they can be a useful tool when the firm wants to engage in fund raising at a later date.

Structure of an Earnings Call

Members of senior management read a prepared statement and then take questions from anyone attending the call.

When to Schedule an Earnings Call

An earnings call is usually held immediately after a firm’s issuance of its annual or quarterly financial report. By doing so, you can focus the conversation on issues contained within that financial report, and not on anything that might have happened subsequent to the release of the report.

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