Companies Spice Up Earnings Calls With Creativity
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Yahoo! (NASDAQ: YHOO) did it. Netflix (NASDAQ: NFLX) followed. Then Zillow (NASDAQ: Z) tried a completely different approach. We've officially reached the era of the high-tech earnings calls, with companies turning to poorly-produced videos and social media to entertain and amuse the stockholders with their quarterly earnings news.
As these three companies start what will likely be a new trend, the public can't help but feel a little disappointed at what promised to be an exciting way to present less-than-exciting material. But, does presentation matter as much as what the report says?
The response to Yahoo!'s video call was generally positive, with the company's stock rising shortly following the call. This was despite the fact that CEO Marissa Mayer and finance chief Ken Goldman delivered disappointing results while seated behind a desk in a TV news format. Mayer and Goldman revealed that the company's revenue was down 7%. Earnings exceeded analyst expectations, however, coming in at $0.35 per share.
But what really wowed viewers was the visual aids Mayer used during the call, especially one that showed Yahoo!'s traffic is growing after experiencing a steady decline. But despite Mayer's great ideas and forward-thinking strategies, the company continues to come up short in finding ways to make money. As interesting as the visual aids were, they might be better served in showing how they're going to turn around ad revenue, which was down 11% ex-TAC in this quarter. Additionally, they set a high standard for Yahoo!, with many analysts wondering what the company will do if those numbers fall in the next quarter.
Yahoo!'s recent announcement that it would be overhauling its Right Media platform rather than selling it didn't bolster anyone's confidence. In fact, some analysts were downright critical of the move, with AdWeek labeling the display advertising exchange "deeply flawed." Yahoo!'s future performance will likely rely heavily on how it works its mobile strategy, since mobile ad revenue is expected to continue to be a huge part of every tech company's bottom line. With fund managers still putting money into the stock, it's evident some still have faith in the company, although the company faces stiff competition.
Streaming good news
But, Yahoo!'s presentation of its earning call not only won brownie points, it inspired other companies to find more interesting ways to spice up what is normally a humdrum experience. Netflix celebrated the success of its production ventures by setting up its own live streaming experience, available to the public through YouTube. The low production quality and homemade video feel were intended to give the call a "fireside chat format," increasing viewers' comfort level as they tuned in.
But, entertainment value did little to ease the mind of investors, who watched as CEO Reed Hastings reported the company's subscriber base grew by less than six million. Although this missed expectations, it seemed to be good enough for Hastings, who seemed happy to talk about overseas subscriber growth of more than four million. The company also experienced a 20% increase in sales, totaling nearly $890 million and net income increased to nearly $30 million, five times its net income in the same quarter in 2012.
With a series of Emmy nominations for its original show House of Cards, Netflix is poised to have an even more fruitful earnings video later this year. While new episodes of Arrested Development aren't quite gelling with fans, the site's new drama, Orange is the New Black, is a hit with both viewers and critics, giving investors reason to hope that this is only the beginning for the company. Still, the company's forecast of only $18 million to $34 million in earnings disappointed Wall Street, falling below predictions for the third quarter. As Netflix heads into the second half of the year, will the company be able to provide a pleasant surprise to its stockholders?
Zillow takes to Twitter
Zillow tried a novel approach for its most recent earnings call, holding the traditional conference call by phone but adding a social media element in, as well. During the call, the real estate site invited friends and investors to send questions in on both its Twitter and Facebook pages. While reception was lukewarm, the tactic did serve to promote the company's social media presence.
Throughout the call, on which the company announced revenue was up 71% from the previous year, CEO Spencer Rascoff answered questions from investors. The company had a loss of $0.11 per share on $39 million in revenue, which beat analysts' predictions of a loss of $0.13 per share. The news was so good that Zillow raised its 2013 revenue forecast to between $178 million and $182 million. In February, the company's fiscal year forecast was between $165 million and $170 million. With a forecast that promising, Zillow may have plenty to tweet about in its next call.
While some are critical of the decision to make earnings calls more entertaining, in the end, investors just want the bottom line. Of the three, Zillow appears to be ready to outperform its "creative earnings call" competition. Even the most creative earnings call will never mean as much as a call with good news would mean.
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Stephanie Faris has no position in any stocks mentioned. The Motley Fool recommends Netflix, Yahoo!, and Zillow. The Motley Fool owns shares of Netflix and Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!