Fasken
Alright, Jason, so we were trying to do the math. I didn't have a calculator. I couldn't do the math in my head before the call. So you've been at iStar for 17 years, almost 17 years.
Fooks
Yeah. Oh, yeah.
Fasken
And so how many earnings calls or in investor events? Do you think you've done?
Fooks
Jeez, I will say this. I've done 67 with IStar. And five years ago, we launched Safehold. And so instead of doing eight earnings calls, sorry, four earnings calls a year now I'm doing eight a year. And so I would say over my tenure here I have done 89, approaching 100 earnings calls.
Fasken
Century Club. Nice!
Fooks
Awesome. You've seen it all over those years. Yeah. We've had technical difficulties, we've had issues with the SEC website, we've had, you know, callers call in that, you know, probably shouldn't have gotten in, we've had, you know, executives that couldn't make it in that day. So we've had every single mishap, you got to prepare for all of them. And you got to just assume that over time, you know, everything's gonna happen.
Fasken
There has to be some sort of meme created for earnings call issues. For IROs.
Fooks
Someone more clever than me should definitely work on that. I think that would be, at least for the small audience of people that know, it'd be a riot.
Fasken
Yeah. For those that know, they know. Well, so then you are extremely qualified to talk about our topic today, which is earnings calls. And I think the first question we wanted to get into is why are earnings calls are so important? And how can IR teams make the most of them?
Fooks
It's a great question. You know, the way I think about our earnings calls, and it's evolved over time, my own thinking on it has evolved. But I really think that the earnings call represents this incredible opportunity you have every year, every quarter, rather, to tell your story, to probably the largest audience, you're going to get every quarter. And so well, perhaps the common thinking is we just got to talk about our earnings. And let people know, you know, what happened during the quarter and answer some questions. I think that in many ways, that is a missed opportunity. Being able to communicate your strategy, how your performance in the quarter helped advance the goals that you've set out. And I think reiterating for the investment community, your vision is just as important as talking about what happened in the quarter.
And I think by doing that, not only are you going to be providing a service to investors, and helping them understand not just you know, what happened, but why it happened and what's important, and simplifying it for them too in a world that has so much noise and data that all comes at them in a short period of time. I think you can also make the earnings call that much more useful and important to listen to, and in effect grow your audience.
Fasken
Yeah, one of them was one of the things that you mentioned in a previous conversation, we had this idea of growing the audience. Any thoughts on what companies can do to grow that audience? Things that have worked for you in the past, or maybe that you've seen other companies do that you thought was interesting?
Fooks
I think what we've seen not just in the IR world, but really across almost any corporate effort these days is really about growing your audience, whether you are a consumer brand, or if you are trying to create content, or if you are just in general trying to grow your business, building an audience of people that care is paramount and critical to getting the word out about your company and I think IR should really is no different and in fact, I think there's a lot of things we can learn from how you know sales organizations work and how you know, content creation works and how marketing functions work and what what can we learn from all those efforts and bring that into the IR world.
Growing an audience is critical to being able to tell your story to as broad an audience or universe of investors as possible, and hopefully find the right investor base that ultimately, you know, achieves our goal of getting this our security as fairly valued as possible.
In fact, I think it's so important, so misunderstood that, in some ways, we look for ways to evaluate tangible, hard ways of evaluating the success of an IR effort you know, I think we all understand that, you know, the stock price is not a good one. And, you know, measuring how many meetings you do, and you know, some of the other kinds of more quantitative ways, there are pros and cons to all of those. One of those in the mix, I really think should be how large your audience is every year, especially around your earnings call.
And so, you know, being able to grow your audience is not easy. I mean, I think a lot of what can make that successful is making the earnings call, something that you want, the investors have to tune into, you're going to give them information on the earnings call that they can't get from a press release, they're going to listen to the tone, they're going to get new information, you're going to simplify things, you're going to, you know, you're going to wrap the whole earnings into a narrative, you're going to have dynamic questions that are you're prepared for and, and I think. And then as time goes on exploring with different formats, whether you're doing slides that you're talking over, or ultimately as I think as earnings calls evolve, more likely, they will turn into video calls. And so creating content in a format that is a draw for investors to listen to, ultimately, is going to be one of the ways you can grow your audience.
Fasken
Yeah, those are great points. And one of the things I think is really important in that comment you made, which is kind of thinking about the content and thinking about the narrative. Yeah, and that was, that was something that jumped out at me. Because I do think to your point, a lot of these earnings calls do tend to be very focused on financial metrics. And it can be a bit dry at times and hard to get through. And so you talk about sort of deciding on what are some of those key themes? And so how do you do that? Like, maybe you can speak to that?
Fooks
Yeah, I think that's right. I always like to start off our earnings call with, you know, reminding our investors of what the strategy is. I mean, yes, we just told them three months ago, what the strategy was, okay, let them know, again, and continue inculcating into the investment community, “What's the strategy? What's the vision? What's the goals? How are we going to get there?”
I think the measure of a good communicator and CEO, is you can ask any employee in the company, “what's the reason this company exists? What's our mission?”, and any employee should be able to rattle that off. If they can't, then, you know, managers not doing a very good job of focusing everyone so that we're all rowing in the same direction, I think the same can be true of an IR effort when you're talking to any investor that's, you know, engaged in the story that you should be allowed to ask any investor, “What does this company do? What is the purpose of this company? What's its mission? What's its strategic, you know, advantages?” And they should be able to tell that to anyone. And if they don't, then maybe you need to be spending more time on those basics, and so don't miss that opportunity. And usually, it's probably most appropriate in the CEOs commentary to talk about, again, reminding everyone where we are and how this quarter fits into that bigger picture. Do we achieve any objectives this quarter that are aligned with the goals? Or did we push forward on some of these objectives? I think that's the first big thing that you should tackle every single quarter.
The second thing is there's lots of data that's flying out all over the market around earnings. Putting out a 22 page, press release with financial tables and paragraph after paragraph after paragraph and asking people to digest it in, you know, an hour or two before your earnings call. You know, I know that's what a lot of them are forced to do. But make the earnings call about: “let me tell you the three things you should remember” And you should understand about what this quarter was both good and bad. But here are the good things that happened that were positive during the quarter. You know, our results came in as expected or results were better or results were worse and why were they worse? You know, we achieved A, B, or C, and you know, and we going forward, we, you know, we think we can achieve, you know, X, Y and Z.”
So I think really framing the entire earnings call around three big ideas, that then you can continue to support it. Because the truth of the matter is, at the end, you know, when people get off the call, they're not going to remember everything you said, and so make sure that at least there are three big ideas that they can remember when they get off the call.
Fasken
I think that what's great about that is two things. One is to your point, it drives home those points that you really want to make sure people remember whether that's to your point how you present it, if you just keep repeating the same points over and over again, through the call to drive it home.
The other piece, though, and I kind of didn't really think about it until you were going through this now, which is, you know, a lot of I feel like there's been a lot of criticism of the quarterly reporting. And if it's, it's too short term, we're not thinking about the long term vision or opportunity of some of these companies. And I feel like that approach of saying, here's the three ideas, but also, let's keep reminding people the strategy of the vision of where we're going, also can probably help to avoid people having too strong of a reaction to anything on a quarterly basis. Yes, these were the results in the last 90 days. But don't forget where we're going over the next 5, 10, 20 years.
Fooks
Absolutely, I think providing context around your results is key for the earnings call messaging. And so the results were, let's say, lower than expectations. That's okay. Be straightforward around that and provide context that, “listen, this was a quarter that, you know, you know, overall market slowdown, we are, you know, impacting our own ability to transact during the quarter. But as markets stabilize, you know, we'll be moving forward. We took this time to be more defensive, we took this time to be more prudent” or, you know, however you want to position it, again, in the context of the larger strategy. And the more you can go back to that, I think it does ground investors into why you're doing the things you're doing. And then doesn't necessarily make it all about, you know, the individual quarterly results and the quarterly performance.
Fasken
Okay, great.
Fooks
Mark, the other thing I would say is the last thing you can do, or at least another thing you can do on your earnings calls, again, to try and build an audience and make your call something people want to tune into, is think about, what's the, what's some data points, or what some interesting context, we can save exclusively for the earnings call, you know, what's the exclusives that we don't put into the earnings release, but we only really share with people that are tuned into the earnings call. It could be perhaps guidance, longer term guidance. It could be some metrics around let's say, you know, investment activity or capital raising or, you know, something that is not necessarily critical to the financial results. But as an investor who's following the story, certainly nice to know. So think about how you can create some exclusivity around the earnings call and giving people another reason to tune in.
Fasken
It's a great idea. You've used the term mission critical when, not on this call yet, but when describing earnings calls, which is why, you know, there's so much talk about everything going well and the different providers that provide their earnings, you know, the conference, calling technology, all these different things. What are some of the steps that you and your team take when prepping for an earnings call to ensure that it goes smoothly?
Fooks
You know, it's interesting IROs are in this really unique and challenging situation, which is, on one hand, we have this great opportunity to have this big audience. And we want to tell a great story. We want to grow that audience, make the earnings call compelling. Some of that requires being creative, trying new ideas out, trying new formats, trying new content, bringing new people to make it something dynamic and engaging. At the same time, your earnings call is again your largest audience every single year. And it certainly puts the company in a big spotlight, it puts the IR function in a big spotlight and everything has to go well. It is a mission critical part of the IR playbook because if things don't go well, it certainly is a black mark on the company, it's a black mark for IR. You know, it undermines a lot of the credibility if you can't make these things go nice and smooth.
And so as a result, half the time we spend on, you know, ensuring processes are put in place around the logistics of the call, you know, our vendors are really, really important and vetting your vendors. And also, you know, preparing with your vendors, has been a big part of what we do. I you know, I often remind our vendors, you know, you guys think you're in the webcasting business, you are not you are in the let me sleep well at night business. So if if I sleep well, at night, you're doing a good job if I'm worried about things not going well. You know, that's that's a big problem.
I'd say the part of the earnings call that is the most risky is the Q&A session? And how do you prepare your management team for questions that could come up? Both, you know, good and bad questions and how we want to handle them and how to prepare for them? Obviously, you know, any questions can come out of anywhere, and it's live. And so you want to be really well prepared for, you know, for that part of the call. And I think we spent a lot of time thinking about what questions could come up, preparing, doing, you know, mock Q&A sessions, getting feedback. I'll even, you know, talk to our research analysts and say, you know, "what are you hearing? What are you interested in," I'll listen to peer earnings calls, especially ones that are covered by our research analyst, because oftentimes, research analysts have thematic questions that they're asking across all the different companies they follow. And so that can give us a little bit of a clue as to what they may be interested in, or what they might be asking us. And so, as you do this every quarter, and you’re paying a lot of attention, you will get better at it. But the reality is, you know, we don't bat 100, certainly not every single quarter.
Fasken
A sort of a bit of a random question here. But I saw this actually came up in the NIRI forums recently, I think somebody was asking about feedback for management, or maybe it was presentation training for management. So when you're, when you're working with your management team, I mean, obviously, they're a big part of this presentation. And so how do you work with the management team to, you know, build the script, but also provide feedback? Because a lot of what we're talking about isn that storytelling, it's like, how do you make it engaging? Have you done things like that in the past, where it's like open feedback session, or speaker training or anything like that, that's been helpful?
Fooks
We've done management, or we've done media training. And without trying to single anyone out, we'll do media training for the whole management team, right. And even though that, clearly, there are people that are better at this, and there are people that could use more practice, and more feedback, and that allows a third party to really, you know, give the feedback without, and so it's a little bit more indirect, but it can be very effective. In doing that, can't do that all that often. But let's say when we were doing an investor day, we said, look, this is important enough, we're just going to have media training come in, and everyone's participated in it. And generally, actually, even people that are good at it, felt it was useful, and they felt, you know, they got good feedback. So I think it was certainly positive. If you're not doing an investor day, and you're looking for an opportunity to do it, you can just say, you know, every every few years, it's a good idea to just, you know, practice and watch yourself present and, and get the feedback. We're very involved in writing these scripts too, you know, for the CFO, we write the script. And so we take our first effort of really telling the story in a way that we think makes sense. Obviously, our CFO will apply their own voice to it and make their own changes. You know, in our case, our CEO writes his own script, and he's very good at it. So if necessary, I would write the CEO script too, and then give them something to react to, rather than, you know, let them do it on their own. You know, I think both of those can be very helpful.
And then, at the end of the day, you know, part of your job is to offer, as constructively as possible, real feedback. “Maybe you should”, you know, “people are concerned about”, you know, listen, people listen to tone. I mean, I can't tell you how many times investors call me, after the earnings call be like "the message sounds really good, but, you know, your CEO sounded kind of negative on the call", you know, people pay attention to these subtle cues. And so it could just been, you know, he was tired, and, you know, that is communicated. And so you can absolutely provide that sort of feedback, you know, and just say, look, investors paying attention to it. So, you know, I know it sounds silly, but if you convey a positive tone, it's going to be communicated. If someone's going too long, listen, we don't want to get in so much of the details there. Or feel free to, you know, you don't want to answer the question, the way that they're framing it, you know, answer the question you want to answer and then, you know, you can let them know that we'll follow up offline. There are other ideas that you can give them depending on the situation that doesn't necessarily create tension, but I think could be very additive and constructive?
Fasken
Yeah. I was at a NIRI panel event recently, and somebody was talking about investment managers who have hired like FBI investigators to evaluate the tone and body language of management teams, on these earnings calls, maybe a little bit too much.
Fooks
That especially makes a difference in their investing strategy, because I will just tell you, as any IR professional knows, you know, that by the time you get into an earnings call, you know, everyone's tired. And there's board meetings, and there's so many other things happening. And you do have to just, you know, really put on, you know, face for the earnings call. And sometimes that comes through and sometimes it doesn't, it doesn't mean anything is concerning going on at the company. Yeah. Yeah. It's an interesting strategy. I'm curious to see if it actually worked out?
Fasken
Well, it goes back to the point of people paying attention. So it's the importance of they are right, and really thinking through and what's the message and people are really listening. So going back to the sort of first question that I asked you: 17 years, 89 earnings calls? What's changed? Like, what would you say are the big the biggest changes from when you started doing certain calls to now? Are they relatively the same? And then obviously, went through the pandemic, everything went online and went virtual? Do you think expectations have changed?
Fooks
Yeah, lots changed over 17 years. You know, I think that back then the earnings press release was everything, you know, you put everything into your earnings press release, you put all the data, you put all the tables, it was a 26 page document you put out there and, and in general, the earnings call was kind of just regurgitating your press releases, at least that's, you know, when I listened to earnings calls and earning earnings calls, it's it felt very much like that. And, and honestly, you could get a lot of what you needed to do out of the transcripts. I think, over time, as the technology has improved, you have seen companies really rely more on the earnings call. The earnings release has become much smaller, many of them are using earnings decks rather than a press release. And using the earnings calls as an opportunity to really present the contents that are in the decks. And so think you have a very visual, and you know, audio combination there, that makes it much more engaging, much simpler, more memorable, and differentiated than then a lot of other companies are doing. And, again, as we become a lot more comfortable with, you know, video, Zoom and Teams and, you know, WebEx, more and more companies are starting to just go to a full video call. Again, I think a lot of this stuff is really exciting, continuing to push what can be done on an earnings call, but this is where I start going the other way, which is again, we always have our foot in both on both sides of this which is what risks to doing a video call, you know, create. There's no more slipping a piece of paper with the you know the answer to the question that someone asked to your CEO so they can answer it very smoothly. You know, everything's much more exposed. And so while I think that the trend seems to be going in that direction. I am cautiously watching. And, and appreciating that right now, you know, we get to be still audio only for our calls.
Fasken
But I feel like a lot of people will do that until we hopefully not knock on wood, something goes wrong, and then people will revert back to the risk free, or less risky approach to it.
Fooks
Yeah. You know, I've seen other interesting, you know, formats. I mean, I love to see people exploring it. I mean, what interesting format that some folks do is they invite a research analyst, and they'll rotate it on to basically conduct a fireside panel. And so it'll be the CEO and the research analyst, it's a video not that dissimilar to a fireside panel you might do at a presentation, but it's very much kind of earnings focused. And again, it can feel more like a conversation, which I think is, again, an interesting idea. One of the things that you can use your earnings call for, is also as a way to build your relationships with your research analysts. Our relationship loses analysts is very simple, symbiotic. I do think it's a partnership. You know, we certainly rely on them and get something very, very valuable out of them, they rely on us and get something very, very valuable out of us. And so, you know, think about how you want to queue your Q&A session, during the earnings call. Definitely.
One of the ways you can reward research analysts is by making them first in the call. That first question is definitely the one that gets the most eyeballs on it. They have no, you know, they get the best to get the best question to ask. And so, you know, I certainly put research analysts that have gone above and beyond and paying attention and writing and working on the company, I give them the opportunity to ask the first question, and I think they really appreciate some ask some say, Hey, can you put me in first, so definitely matters to them. And so think about your earnings call also, as a way, as a carrot, you know, with some of your research analysts,
Fasken
Right. So we've covered a lot in here, a lot of great, great tips, good, actionable stuff, a few that I've sort of noted down, one of the first ones you brought up was the idea of growing the audience. So:
- Think about the earnings calls, as not just a reporting exercise, but an opportunity to speak to the audience and growing that audience over time is obviously something that's very valuable.
- Thinking about the content: how do you make it interesting, deciding on those main points, and having those main points drive the earnings call rather than perhaps the other way around?
- Talking about creating, being creative and pushing boundaries, but finding balance and not going too far.
And then this last one you just made, which is ,
- Using that earnings call as a bit of a carrot in the bartering process with the sell side.
Anything else we missed?
Fooks
You know, I'm sure there's, there's always, you know, more ideas that, you know, people will have around how to make this as useful of a time as possible. There's lots of people that are exploring interesting techniques, whether it's rather interesting formats, whether it's the fireside chat I mentioned before, bringing in, you know, other members of management to talk about a specific part of the business. You know, to me, again, those are interesting to watch. But I'm always, you know, those all seen that, you know, additional risks that, you know, doesn't seem quite worth it at the moment. And so I think each individual IRO is going to have to find the right balance for their for themselves and find the right balance for their companies. But I think that by being thoughtful and purposeful in how you approach it will make you much more effective in the role and help the decision making process in terms of do we want to do this? Does it help grow our audience? Does it make the call more engaging, does it add risk? It's gonna make you much more efficient and effective.
Fasken
Awesome. Jason, 17 years 89 earnings calls, lots of good learnings through the process. Thanks a lot for the time really appreciate it.
