By Jeff Tryka, CFA, Senior Director
I recently had the opportunity to participate in a wonderful online class addressing investor presentations and approaches to virtual investor days that was sponsored by the National Investor Relations Institute (NIRI) and presented by David Fine, founder of Fine Communications in Toronto. David did a wonderful job with this webinar, and I felt inspired to share what I thought were the most interesting insights.
Let’s start with the discussion of virtual analyst days, which many investor relations professionals are now pursuing, whether willingly or grudgingly. I will start with some basics on what investors are looking to get out of an investor day, whether virtual or traditional in person format, and then drill down to some of the peculiarities of virtual investor days.
The first question to consider is: What is of greatest importance to investors?
Based on a survey of buy-side investors by Rivel Research, many of the areas of greatest importance to investors are also areas where IROs and management teams do not excel. The research team asked what investors consider “highly important” for an investor day and to evaluate how well companies presented during an investor day. The greatest gap in the research was found between the importance and company performance of question and answer sessions. Approximately 80% of the buy-side investors surveyed thought the Q&A session was important, but only 41% felt that companies currently do a good job with Q&A! That 39-percentage-point gap shows that as IR professionals we need to devote more time and effort to Q&A, rather than simply leaving five minutes at the end of the presentation for questions. This was even more evident when it came to investors views of how much time should be spent on Q&A, as in Rivel’s survey, 73% of buy-side investors wanted to see time split evenly between Q&A and presentations, while an additional 12% actually preferred a preference in dedicated time toward Q&A session over presentation.
The second largest gap between importance and performance was the review of business strategy. Investors are keenly interested in company strategy, as 78% thought it highly important, but only 44% felt that companies do a good job reviewing business strategy. Other aspects that investors viewed as highly important for an investor day included highlighting progress on achieving key goals, forward-looking financial guidance, capital allocation plans and introducing new, previously undisclosed insights on the company.
From an information perspective, most investors view investor days as an opportunity to learn more about the company’s strategy and vision – and 65% of buy-side investors surveyed by Rivel agreed. The vast majority of investors are not looking for a basic overview of the business when they attend an investor day event. Instead, they want deeper knowledge and seek to understand the vision – where the company is headed – and the strategy – how it plans to get there. Finally, from a buy-side perspective, investors also want to be exposed to a broader array of management team members than simply the CEO and CFO. Companies should think about involving more of the C-suite, and particularly business unit or division heads that might be able to provide greater insights into the inner workings of the business, customer base and supply chain, in these types of presentations.
The next consideration is what, if any of this, should change when going virtual?
When shifting from a traditional, in-person investor day event, there are three areas of consideration to make a virtual event just as effective.
The first is timing. In person events are most often scheduled for 3-4 hours, perhaps including a series of sessions with a lunch or food break at critical moments. In a virtual setting, most investors surveyed by Rivel want the event to be at most 2-3 hours. So, tightening up the schedule is a must – companies are encouraged to decide on key messages and focus intensely on them.
The second factor to consider is that the audience will be even more distracted than usual. While we have all experienced attendees of like events looking down at their phones regularly to check e-mail or texts, or just see what the markets are doing, with virtual events, the distractions may be exponentially more intense. On top of the usual distractions, we have to account for pets, children, and all other potential household events that may further distract attendees from virtual events. With intense competition for attendee mindshare, companies will be well served taking more creative approaches in developing content for virtual analyst days and shifting away from a traditional presentation with slides. Companies might think about adapting panel discussions with various members of the management team or even inserting multimedia clips into presentations. Rather than speaking about specific business processes, imagine showing short video clips that show exactly what the management team is addressing. Including customer or supplier testimonials can also liven up content.
The third area to consider when going virtual is focus – this includes both content and delivery. Presenters should share a clear, compelling message within the presentation deck with a focus on two to three key messages to instill in the audience. It may help to visualize what optimal covering analyst report headlines might be the day after the event, and even attempt to write those headlines for them within the body of the presentation. Management teams should also focus intently on their presentation delivery. So often, IROs and C-suite members focus on the minutiae of the presentation, often to the detriment of actually practicing what they will be saying to their audiences. This is especially unfortunate as studies have shown that 70% of audience impressions come from the delivery and not the slides! So, if planning to deliver presentations live, plan on consistent practice with at least two full rehearsals that include all team members (remember, it’s not just your own part that you need to have down, you also need to have smooth transitions to other speakers).
An even better option involves pre-recording presentations, which will allow everyone to view their performance and make any adjustments necessary to present a flawless end product to the audience. There are a few hints I can provide on this front, based on previous experience pre-recording such presentations. First, if filming, remember to wear the same attire when doing the live Q&A that was worn for the recording. This could be as simple as wearing corporate logo apparel that reinforces the company identity while offering a consistent look for the team. Second, and most importantly, when the replay is happening, don’t be lulled into distractions. We all have heard the horror stories of management teams recording earnings calls and then abruptly being brought into the Q&A and thrown off their game. So, pay attention and be ready when the Q&A starts (this might also be helped by starting with a set question that the team has already prepared to break the ice).
Finally, when it comes to virtual investor days, take hold of the many advantages that the format provides. Remember, an in-person investor day is limited by time and location, but a virtual format eliminates much of that. Companies can literally bring in operations from around the globe into the virtual analyst day through video clips. These events can also include a broader segment of the management team to talk about what they do to add shareholder value every day. Companies can highlight products, demonstrate how they work, and show clips of how they are actually produced. Each of these aspects can be done increasingly well in a virtual setting, which also helps to keep the audience’s attention over the entire event. And, if you think that putting the time, effort and cost into such efforts might be worthwhile – remember, this is no longer a one-time event. This is an event that will live on the company website for as long as desired, and the video used should be repurposed in many other areas, from IR websites and corporate brand pages to social media. So, in summary, as with all my clients, I encourage you to utilize this great opportunity to the maximum extent possible, as we may even see the benefits of a virtual analyst day transformed into an annuity stream.