By Hannah Kelly, Editor, Business Wire Paris
With the earnings period once again upon us, investor and public relations professionals are coming together to publish what is often considered the most important release of the quarter: the earnings release.
Quarterly earnings releases are a reflection of the financial health of an organization and are most frequently read by the financial community, shareholders, customers and employees.
Earnings releases, which must succinctly showcase this extremely important information, are often a cause of stress and anxiety, particularly in terms of readability. Today the average news consumer reads only around 20% of provided text, leaving today’s communicators asking how they can optimize the impact of their press releases.
- Write your company name in the headline
Including your company name in your press release headline is the quickest and easiest way to associate your company with its earnings release, and yet it is overlooked time and time again. Furthermore, the inclusion of the company name often leads to a higher SEO ranking – ideal for your annual results!
- Ensure the most important information is at the top of your release
Readers spend 80% of their time reading information found above the fold , so this is where your most important information should be. An operating highlights summary in the form of a bulleted list, positioned just after the first sentence of the release, can greatly improve adoption and understanding of your news.
- Include financial tables in your release The importance of including complete financial tables within your press release cannot be stressed enough. Financial tables serve as a visual, simplifying wordy paragraphs and allowing quick and relatable comprehension of a company’s situation. In addition, many analysts utilize models to predict company health. Financial tables provide all the detail needed to update these models. And of course, don’t forget to include the reporting currency.
- Quote a company executive
Ideally, the quote accompanying your earnings release will be provided by the company’s CEO. A comment, no matter how long or short, goes a long way toward the personalization of your company and presentation of your key message. This comment can provide a justification, explanation oract as a written pat on the back. Either way, a comment from an executive provides true context of the quarter’s financials – particularly useful given that a large majority of readers of this release will be your shareholders.
- Subtitle your sections
Earnings releases are notoriously difficult to read and comprehend, making subheadings the perfect solution. Included just below the press release headline, sub heads should indicate the type of information to follow, allowing the reader to easily navigate the different categories of information.
- Group together similar information
When possible, similar content should be written consecutively, or as close together in the release as possible. This keeps repetition to a limit, and again, allows the reader to navigate your release more easily.
- Be succinct
There is an unavoidable need to include certain information, for regulatory reasons, but this doesn’t mean that your whole release should follow a lengthy, wordy pattern. Be as concise as you can be, but take care to include all the necessary information.
- Keep historical information towards the end of the release
Readers look for the most current and important information first. This goes back to readers spending most of their time above the fold. Historical information, although useful, is not the most relevant in these types of releases. If it is essential – for example, year-on-year comparisons – this ideally should be included within the financial tables or near the end of the press release, below the fold.
- Enhance your earnings release with multimedia
The fastest way to increase effectiveness of news consumption is to include additional visual content. An infographic of your financials, such as the one created and distributed by Ace Hardware, is an easy way to represent your quarterly results. Or use video from your CEO or division head, like ARC Resources’ Myron’s Minute, to explain, in plain language, the story behind the data.
- Use numbered footnotes – and group them together!
There is nothing worse than having to match up symbols, and to guess where they are inside the release. A nice, neat, numbered footnote list, found at the very bottom of the release, makes everyone’s life easier. In addition, consider hyperlinking to footnoted information to provide easy access when needed.
The combination of these techniques will improve your earnings release’s readability and ensure that the most important information is found and read by the majority of desired readers. In addition to increased comprehension of your financials by your core audience, you may just get more coverage as your target reporters and shareholders find it easier to digest the news.
How to Write a Compelling Earnings Release
With regard to the information that should be included in terms of structure and content, companies will inevitably vary in the type of information provided, but should try to keep to consistent and complete information in plain English. Here are a few helpful guidelines:
- The date of release and city and state of headquarters should be at the beginning of the release
- The most important news should be summarised in the first paragraph
- Subheadings should be used to further clarify and highlight important corporate developments
- The last paragraph should include a business description, with the company’s complete name, ticker symbol and equity market
- Media contact information and a website address should always appear at the end of the release
- Changes in disclosure from quarter to quarter, or year to year, should be specified and explained (sales, revenues, net income, diluted earnings per share and percentage change for each section)
- Observations should be made only between comparable periods – for example, it is better to compare a third quarter of year N to the third quarter of year N-1, rather than year N’s second quarter
- Key value drivers and other important line items should be clearly noted
- Charges/gains/losses should be included if they contribute to the results, and it is advisable to explain how and why they have had an effect (eg. extraordinary gains, losses, equity losses and accounting changes)
- A consistent format should be used throughout the press release (this is particularly important when reconciling GAAP and non-GAAP financial measures)
- It is prudent to mention key events and changes, such as government practices and changes to the Board of Directors, plus any steps being taken to address these changes
- Information on gross profit and margin (plus percentage change), cash flow, share repurchase activity and other measures of performance (capital expenditures, R&D expense and nonfinancial measures) should be included where appropriate
- Provide forward-looking insights when possible, for the next quarter and/or year, and how the previous forecast has measured up to the current results
Financial statements should always be labeled as audited or unaudited, and can include: complete income statement (with current and year-ago quarter numbers, current year-to-date and year-ago year-to-date comparable period numbers, outstanding shares – both fully diluted and basic), balance sheet (current quarter numbers and end of prior-year numbers), plus cash flow tables, current quarter numbers and year-to-date.
Interested in learning more about increasing the impact of your financial press releases? Let us know! With more than 50 years of news distribution experience, we have quite a few tips and tricks to share.
 Standards of Practice for Investor Relations, Earnings Release Content (NIRI, page 7)