Be Human, Be Humble, Be Helpful: Earnings Communications in the Time of COVID-19

April 1, 2020

Over the last few weeks, every day has been unprecedented. Last week’s unprecedented jobless claims numbers followed weeks of unprecedented stock market volatility, which followed unprecedented news about an unprecedented global pandemic. As March and the first quarter of 2020 end, companies are putting together their strategies for reporting financial results in the middle of a global crisis that continues to grow in scale in the United States. 

When companies announced their earnings guidance earlier this year, the world was different. Since then, large portions of the economy have been turned off completely. Consumers and workers have stayed home, by choice or by government directive, closing many businesses or slowing their activities to a crawl. While the—again, unprecedented—stimulus bill will alleviate some pressure for many Americans and businesses, challenges remain, and very few have any idea of what to expect from corporate America when earnings season begins in earnest later this month. Many leading companies have already pulled guidance. The SEC has offered more time for companies affected by COVID-19 to report their results. 

The punchline? Stay tuned for even more volatility and uncertainty. 

As my team and I begin counseling clients on how to approach earnings communications, here’s what we’re thinking they should do: 

Be human. 

Everybody at Ketchum is working from home. My only escape from isolation is when my wife and I walk the dogs a few times a day, swerving six feet into the street to let the occasional neighbor pass. Colleagues on video calls are distracted by helping their kids with a math problem, answering the door for groceries, or making sure their loved ones are safe. We all need space to take care of the things that should come first. That’s the expectation for American corporations during this pandemic. 

But when it comes to quarterly earnings, question #1 is always: Was it a beat or a miss? Journalists of course will want to know COVID-19’s impact on guidance or what strategy shifts a company is making. But I’d encourage senior management to focus on people more than they focus on numbers. It’s the “S” in ESG. Investors, employees and customers will want to hear that management’s priority is keeping people safe. They’re not just there to help you beat EPS expectations. They are human, and companies should be human too. 

That means addressing employee safeguards on the earnings call, keeping customers aware of any changes to operations, and informing investors of actions to protect people while delivering shareholder value. 

Be humble. 

We should acknowledge two truths: (1) When companies issued guidance earlier this year, they had no idea that a global health crisis would shut businesses down around the world. (2) Most people care a lot more about the health and safety of their friends and families than they do about quarterly earnings. 

We’ll soon find out that a lot of companies missed their Q1 outlook. Their stock prices may take hits, but shares have already been on a roller coaster. Our recommendation is to acknowledge what went wrong, identify a forward-looking strategy to deliver for your stakeholders, and get back to helping your people. 

The stage for earnings announcements will be much smaller than it has been in the past, and that’s a good thing. Humble leaders are aware of where they fit into the story. This quarter, they are not the stars.  

Be helpful. 

A global pandemic is not a time to tell the world how good of a company you are. It’s a time to show it. We’re inspired by companies that are retrofitting manufacturing facilities to produce N95 masks or ventilators, raising wages for frontline workers, or funding initiatives to help employees manage financial hardships. 

While most companies can’t turn on a dime and redirect operations, they can still be helpful, particularly during earnings season. Members of the media are navigating the same coronavirus challenges as everybody else, but they have the additional responsibility of keeping the public informed. Companies should help journalists tell the story. Spend some time thinking about how your products or services will help people during or after the crisis. Articulate your quarterly results in a way that fills gaps in the broader narrative. Help the media, investors, employees, customers and other stakeholders understand why you matter and what you’re doing. During a pandemic, the most admired companies will be the ones that were the most helpful. 

Learning from the last crisis to prepare for the next one. 

My first job in financial communications was at a federal financial regulatory agency immediately after the global financial crisis, another crisis without precedent. Since that time, the broad assumption was that the next big threat to the world’s financial markets would come from within the financial system again. COVID-19, however, has shown that the next big crisis can come from anywhere.  

No matter the source, the expectations for corporations reporting financial results will remain broadly the same: Be human, be humble, and be helpful.  

If your company has questions about communicating financial results against the backdrop of COVID-19, please get in touch.

Scott leads financial communications for North America at Ketchum, where he advises corporations on major financial events, including mergers & acquisitions, initial public offerings, spin-offs, analyst days, and quarterly earnings. He helps clients develop and articulate investment theses and differentiate their value propositions from competitors in their industries. Prior to joining Ketchum, he led the communications team for the Commodity Futures Trading Commission immediately following the 2008 global financial crisis. Scott earned an MBA with an emphasis in finance from the Wharton School at the University of Pennsylvania and a JD from the University of Pennsylvania Law School.