DEFINITION of Conference Call
A conference call is an event in which investors can listen to a company's management team detail aspects of the current quarter as well as forward, or projected, earnings growth. The call typically begins with an uninterrupted message from management wherein the chief executive officer, chief financial officer, and other C-level executives greet participants and congratulate the internal team for a great quarter. This leads to a larger discussion about the company's financials and other key performance indicators (KPI) that drive business operations.
For a company like Facebook (FB), Mark Zuckerberg may also address the lingering data and privacy issues dominating headlines these days. After comments from management conclude, the meeting is opened up for questions. While the average investor can only listen to the call, the reporting company will often answer questions from analysts. This type of conference call is also known as an "earnings conference call," "analyst call," "earnings call" or "results-earnings call."
BREAKING DOWN Conference Call
Conference calls are held four times a year, typically after each quarterly earnings announcement. Most of the time, the calls are recorded and broadcast live on the internet. Some services also transcribe conference calls for investors to consume the content through written text. The company management participating in the call usually includes some combination of the CEO, CFO and senior vice presidents.
The CEO may make general remarks about the quarter, any controversy that may have occurred, and some big-picture forward-looking statements. The goal for the CFO and other C-suite executives is to address specific financial metrics that impacted quarterly results. That may include revenue growth, profitability, margin expansion and any KPI specific to the company. For example, Facebook outlines many of these high level numbers in addition to monthly active users (MAU) and ad revenue.
After some time, the operator will open the line with a question and answer period from analysts. Some questions you typically hear on a conference call involve financials, forward-looking statements, and background on business operations.
Benefits of a Conference Call
For many companies, the conference call can allay fears created during the quarter or reinforce the message of positive future growth. If a company was the center of controversy, missed analyst's estimates or issued weak guidance, the call is an opportunity for management to address that weakness. It's beneficial for analysts to get the additional background about financial performance and business operations before they change price targets or recommendations.