An Earnings call is a teleconference or video conference amongst the senior management of a public company, and its shareholders, analysts and the media. It is aimed at discussing the company's financial outcomes for a given reporting term. It could be held for each quarter, half-yearly or annually, just after the earnings report's release. The call highlights vital financial information and the management comments on the economic and strategic whereabouts of the company.
The earnings call aims to provide a platform to investors and analysts who want to discuss the financial reports. Various laws worldwide mandate publicly listed companies to provide detailed financial results and conduct a qualitative discussion. Almost all listed companies operate earnings-related conference calls to discuss their financial reports. Most companies offer a phone recording, or a media release presentation of the earnings call on their company websites. These stay on the web portal for a few weeks after the actual call date. It provides the investors who could not attend access to the discussion in the earnings call.
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During the earnings call, the company's top management lays out details of its Quarterly annual report. The management discusses and provides qualitative information for further analysis of financial statements. It is a comprehensive discussion covering vital performance metrics. Reasons for the growth or decline in the company's revenues, profits, assets and liabilities, along with changes in the cash flow statement, are discussed. The forum highlights risks faced by investors while extending funds to the company in equity or debt form. Any pending lawsuits or convertible contingencies are also highlighted. Management often outlines future targets and methodologies for new initiatives and any changes in top management or group of key managerial persons.
The details related to holding the earnings call is made available in advance by a company's officials. Media persons are also called to attend the event for coverage. Investors and market analysts are sent the information as well. Investors follow the call to know the company's pursuits and past; market analysts attend to get details for ascertaining values and making forecasts. The structure of the earnings call is as follows
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Earnings calls are an essential resource for investors. Any vital detail missed out by an investor previously is reiterated here. The information provided in it is utilized for fundamental analysis by equity analysts. It is the best source for first-hand qualitative information. As it contains earnings updates and future strategies, it is very important for share traders.
Transcripts of the call are also made available to the public over the company website. It is very useful for investors, media representatives and analysts.
Stereotypically, an earnings call has a duration of 45 to 60 minutes, i.e. 1-hour maximum. This is because the key managerial persons do not have a lot of time to spare from their hectic schedules. However, there are no strict legislative rules for determining an ideal call duration. It primarily depends on the amount of time used by participants in the question and answers session. All other segments are timed beforehand, as per the company's management.