Earnings Calls

After releasing quarterly results, most public companies host an earnings call: a conference call or webcast where executives discuss the quarter, explain the outlook and answer questions from analysts. Calls often move stocks as much as the press release itself, because they reveal details, tone and context that numbers alone do not. A stock can rise or fall several percent during a call as management answers key questions.

The structure of a call#

Calls are usually held shortly after the release, either before the market opens or after it closes. Recordings and transcripts are published afterward.

What to listen for#

Reading tone and language#

Researchers have studied the language of earnings calls using text analysis. Findings include:

• Tone: more positive language in calls has been associated with better subsequent returns, and negative or uncertain language with worse ones, though the effects are modest.
• Vagueness: evasive answers or refusal to give details can signal problems.
• Changes from prior calls: a shift in tone or a topic suddenly avoided can matter more than the absolute level.

Questions from analysts#

The Q&A section often reveals the market's main concerns. Repeated questions on the same topic show what investors are worried about. Management answers that add new data points or change emphasis can move the stock.

Red flags on calls#

• Avoiding direct answers to simple questions.
• Blaming external factors repeatedly without a plan.
• Changing metrics to highlight more favourable numbers.
• Unexpected executive absence or abrupt departures.
• Cutting the Q&A short.

Using transcripts and tools#

• Transcripts let you search for keywords and compare across quarters.
• Sentiment analysis tools score tone automatically. See Sentiment Data.
• Peer calls offer read across for customers, suppliers and competitors.
• Investor days and conferences provide additional detail between earnings.

Regulation Fair Disclosure#

In the US, Regulation FD (2000) requires companies to share material information with all investors at the same time, not privately with selected analysts. Earnings calls, open to the public by webcast, are a main way companies comply.

Frequently asked questions#

What is an earnings call?#

A conference call or webcast where a company's management discusses quarterly results, gives an outlook and answers analysts' questions.

Why do stocks move during earnings calls?#

Because management's comments, guidance details and answers to questions can reveal information and context not included in the press release.

Where can I find earnings call transcripts?#

On company investor relations websites and financial data platforms, usually within a day of the call.

Next, learn what happens to stocks in the weeks after earnings in Earnings Reactions and Post-Earnings Drift.