Updated: Aug. 23, 2004
EARNINGS releases are important disclosure devices that should be written and formatted to make it easy for investors and the media to obtain essential material information as rapidly as possible.
How you write and format your releases should reflect the realities of online behavior. Studies have found that the vast majority of IR website users access earnings releases on the day they are released, with many analysts accessing them as soon as they’re made available. Time is of the essence to these users. They want to be able to obtain as much essential information as possible in the shortest time.
Writing releases that quickly convey essential information is a challenge for any business communicator. But when you add the unique environment of the Internet to the communications mix, the challenge becomes much harder.
Consider, for example, that the average page view on the Internet typically is less than 60 seconds, according to Nielsen//NetRatings. This is not a lot of time for investors to obtain useful information from your release.
Also consider that researchers have found that people read slower online than on paper. Researchers at Sun Microsystems estimated in a study that it is 25% slower to read from a screen than from paper. We discuss some of the reasons for this in our article Writing for IR Websites.
While the two conditions are related, they do combine to make communicating essential information to investors and the media on the Web more challenging for investor relations communications professionals and other business communicators.
This article discusses online writing and formatting improvements for earnings releases. These techniques can be universally applied because they are distinct from the actual content of releases. They can and should be used by companies in every country and sector. And while we do not provide specific content recommendations, the techniques will help financial reporting professionals to prepare clearer, well structured and more effective online releases.
Organize like information into categories.
Group like or related content in your release into categories. If you’re writing a lengthy earnings release, your document might have several layers of information within larger sections.
Creating an outline of your earnings release is a good idea. It provides a structure for your document that is useful when designing a document-level navigation scheme and when you write descriptive headings for each category of information.
Since the precise content of earnings releases is unique to each company, it is impossible to provide a universally applicable structure. However, a simplified outline for an earnings release might look like this:
- Related information and links
- Conference call webcast
- Regulatory filings
- Downloads
- Contact information
- Highlights
- EPS
- Revenue
- Cash Flow
- Market Share
- Operational Highlights
- Financial Statements
- Income statement
- Balance sheet
- Cash flow statement
- Reconciliations
- Outlook
- Discussion of financial and business performance
- Profitability
- Liquidity
- Business trends
- Industry trends
- Accounting changes
- Other
- Segmented results
- Business unit results
- Geographic results
- Cautions
Put the most important information at the top.
Recent research of how people use online news sites found that participants rarely made it to the bottom of a story. They typically got only three quarters of the way down a page.
A useful feature for news releases is to include a list of bullet-points summarizing the main points at the top of release. If you’ve written good headings for each category of information in your release, you can use these as the basis for the sequence and content of your bullet points.
It can also be a good idea to provide a financial highlights table at the top of the release. Both of these elements improve the communications effectiveness of your document by putting pertinent facts in a place where people are most likely to start on a page.
All links to documents and resources related to the release — such as the conference call webcast, quarterly presentations, downloadable spreadsheets and any related filings or reports — should also appear high up on the page. If these are placed at the bottom of the release, investors who do not scroll all the way to the bottom of the page may not see them.
This is why in the simplified earnings release outline provided above, the Related information and links category is at the top of the outline.
This earnings release from Bank of Montreal starts with a bullet list of key operational highlights followed by a table of financial highlights. Both allow users to quickly obtain an overview of the important news.
Write descriptive headings.
For reasons partly explained already, most people don’t read online content in the traditional sense. Instead, usability researchers and scientists who’ve conducted eye-tracking studies have found that people skim and scan Web pages looking for pertinent information in headings, pull-quotes, captions, hyperlinks and other textual design elements.
You can make your earnings releases much more communicative by writing informative headings for each category of information. These headings should impart information to the reader by summarizing the main points contained in the section.
Avoid label headlines like “Revenues,” “Outlook,” or “North America Division.” Although labels signpost information for readers, they don’t go the next step to explain the essence of the information provided. When a heading isn’t informative, investors have to refer to the body of the release to get the information, something which consumes valuable time.
It’s better to say things like
- Revenues rise 9%, driven by strong retail demand for accessories
- Outlook for /images/0.30 EPS and 8% revenue growth maintained
- Strike at Virginia plant resolved, but hampers North America performance in Q2
Someone scanning just the descriptive headings in a release will get a useful overview of the most important developments in just a few seconds. Armed with this general orientation, they can then decide if they want to delve deeper into specific issues or topics.
Headings are also important for people who are looking for specific categories of information rather than a general overview. In these reference scenarios, good headings make it quicker and easier for these people to find the information they want because they don’t have to waste time reading a lot of unnecessary information.
Users can pick up the main points of this release merely by scanning the informative headings.
Write tightly.
Simply put, this means being short and to the point. Some useful tools to tighten up your writing include:
- Bullet listing multi-part sentences.
- Using personal pronouns like we and you rather than the company, the reader etc.
- Using the active tense where sentences make someone or something perform an action.
- Starting a sentence with the main clause to save people time if information doesn’t apply to them.
- Eliminating adjectives and technical or legal jargon to shorten your writing and make it clearer.
Provide links in your releases.
Simply by using of one of the primary tools of the Internet — hyperlinks — you can dramatically improve the effectiveness of your news release. Links in news releases serve three important objectives:
- They can shorten your documents by linking to related information rather than including it in the document itself, thereby saving you money on newswire fees and making your release easier to work with.
- They can refer people to useful context to aid their understanding of the information you are providing.
- They can attract traffic to your site and improve its prominence in search engine results.
News releases are prime candidates to be shortened by linking to related information. Instead or regurgitating vast amounts of detail that is already available in regulatory filings and other disclosure documents, you can summarize key information in your release and provide targeted links to the detailed disclosures on your website or in regulatory filings. Links to related resources on your own or other credible sites can add value to investors and improve the perceived usefulness and credibility of your site. See Good links make for good sites and Why linking away from your site is good for detailed guidelines on effective linking practices.
It is always a good idea to include a link in earnings releases to your company’s IR homepage. This is because a link back to your site can attract large numbers of people to your website since news releases distributed by newswire services are syndicated to many prominent news sites and investment portals representing a potential audience of millions.
Links to your company’s website from pages on other sites help to improve your website’s prominence on search sites. Search engines like Google rank sites in their listings based in part on the number of sites that link to a particular page or site. The reasoning is that the more links to a particular site or page, the more useful that site or page is likely to be. Links from well-known Web properties, such as those which pick up newswire feeds, are given greater weight in search engine algorithms.
Make your releases navigable.
Earnings release are getting longer and more complex. To make it easier for investors to find information in your release, you can provide a simple page-level navigation scheme for the release.
For a standard-sized earnings release, a simple menu of links at the top of the page that go to key sections of the release will do the trick. For longer documents or complete quarterly reports provided in HTML, you probably need to develop a report microsite with its own navigation menu and interface.
Navigation assistance should also be built into PDF versions of earnings releases and reports.
Provide links for users to jump to sections of the release. These should be positioned high up on the page so that investors can see them without having to scroll down.
Provide multiple formats.
The most flexible format for Web users is HTML. It does not require any special software and so is the fastest way for people to access and use Web-based information. People who want only part of the information in your release will find HTML the most convenient format, especially if you’ve given your release its own navigation menu.
HTML is also the most convenient and easiest format when users want to copy parts your release into a program like Word or Excel. This is a common activity among key users of your release like reporters and analysts who must prepare their own reports on what your company is announcing. It is much harder, and often impossible, to copy information from a PDF document.
However, since it can be uncomfortable and slower to read large amounts of information online, people who want to read your entire release will prefer to print it out. This is why you should also provide a printer-friendly version of your earnings release in HTML or in PDF.
Often, PDF is a better format for printing than HTML because the layout of the source document is preserved. With HTML pages, it’s much more hit and miss. On the other hand, PDF makes a very poor format for investors to access information quickly online, so it should not be used as a replacement for HTML. The best approach is to provide both formats.
Financial statements should always be provided in HTML and be included in the PDF version of the release. Some investors and analysts will want to obtain all of the data contained in the financial statements so that they can analyze the information using their own software. Providing the financial statements in a spreadsheet format for downloading makes life easier for these users.
Choose newswire services wisely.
Newswire services can and should do more to support their clients in optimizing their releases for the wired world. While some newswires are improving their products, others still have far to go. Ultimately it’s up to the clients to demand better services and to take advantage of them.
Formatting flexibility, audience reach and price are the key attributes to consider when choosing a wire service. You want your releases to look good and use layout attributes like larger text for headings, bolding, italics, hyperlinking and well-formed financial tables.
Also important, you want your release to reach the usual disclosure networks as well as important investment and news websites. Having your release appear on Yahoo! Finance, MarketWatch and other big finance sites will expose your company’s story to a potential audience of millions and improve your site’s profile on search engines.
Keep an eye on new technologies.
Information distribution on the Web is evolving and changes are afoot in how companies will format and distribute their news and information. XML-based languages like NewsML for news and XBRL (visit the XBRL consortium homepage) for financial reporting promise to improve information gathering and processing for companies, investors and the media.
XML also has important consequences for how information is delivered or syndicated, and this is where the changes will likely come first. New syndication technologies like XML-based RSS and Atom feeds are catching on fast, moving from the domain of “bloggers” to venerable mainstream institutions such as The New York Times, the BBC, and CBS MarketWatch, which use the technology to push out information and news to other sites like MyYahoo! and to the desktops of people using RSS reading software (called aggregators) like Newsgator.
This new, direct distribution model has potential applications for investor relations departments. XML syndication feeds can replace email alerts, which are less desirable now than in the past due to Spam. Companies can create IR feeds to keep audiences informed about website changes and important news and other developments. This will allow investors to keep track of multiple companies in a single XML feed reader.
Dominic (bio & disclosures) is IR Web Report‘s founder and an online investor relations consultant. He advises leading public companies and investor relations service providers worldwide on using the web for disclosure, engagement and profile building. You can contact him via the contacts page.
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