Do Prepared Remarks Help or Hurt an Earnings Call? What the Data Says

prepared vs qa

To help our clients make sure they’re delivering best-in-class financial communications, we use our proprietary language analytics platform to measure every S&P500 earnings call, every quarter. This comprehensive benchmark allows us to show clients how their calls compare to individual competitors, industry peers, and the broader corporate sphere.

But our database also allows us to find trends in these communications and, every quarter, we see a similar pattern: companies consistently communicate in a more engaging, conversational manner during the Q&A section of their earnings call than during the prepared remarks.

In fact, when we looked at all the S&P 500 earnings calls from 2015, we found that the Q&A responses scored far better than the prepared remarks in three of the five key characteristics of financial communications:

On average, the Q&A section was three times clearer and 50 percent more engaging than the prepared remarks — and two times more trustworthy.


These results aren’t altogether surprising. Many executives read directly from the script during prepared remarks, which leads to an overly formal, unnatural presentation style.

So what does this mean for my earnings call? Should we abandon prepared remarks?

A handful of companies, including Netflix, Progressive, and Tesla, have abandoned prepared remarks altogether, and we’ve seen support for that practice from a handful of experts, including this McKinsey analyst. In some cases, this departure from the norm may make sense. After all, if a company has published earnings information in a press release, investors have already seen the headlines and developed thoughtful questions. Their time (and yours) may be better spent in discussion than in recitation.

We’ve seen evidence of this mindset spreading, with the average length of prepared remarks decreasing by 12.3% over the last five years.


However, there are other factors to consider. As the average experience level of analysts decreases — and the number of companies they cover increases — analysts may be spending less time familiarizing themselves with your company ahead of the call, in which case prepared remarks may remain an important opportunity to provide a high level overview of your company’s goals and performance.

How do we make sure the Q&A is “friendly?”

Like any speaking engagement, the key to ensuring the Q&A section goes smoothly — i.e. maintains a friendly dialogue with analysts — is preparation. The primary objective here is to ensure each member of the team is an expert on the numbers, as well as the overarching message the company is hoping investors will take away from the meeting.

Once that’s clear, all that’s left is to rehearse. These rehearsals will be a little different from prepared remarks rehearsals, since you can’t be completely sure which direction the conversation will take. But, by studying the questions the IR team has fielded during recent calls, your team can formulate a good idea of what you might be asked.

Does one analyst always bring up a particular topic? Has your team been caught off guard by certain topics in the past? Aligning on responses and rehearsing talking points in advance will help the team feel more confident — and therefore less defensive — during the Q&A.

Don’t be afraid to ask the audience

Earnings calls are designed as an opportunity to open up a conversation with investors about recent performance and long-term strategy. But as the financial communication landscape keeps changing, the best way to have that conversation becomes less clear. So as you consider the structure of your next call, don’t be afraid to ask trusted investors what format they prefer. Sometimes your audience is your best advisor.

Just keep in mind that no matter what format your company decides to use, it’s important to seek outside help to make sure your leadership delivers your company’s financial message as effectively as possible.

More on financial communication measurement and data-driven investor relations from Quantified Communications.

To learn more about how we can help your team use analytics to evaluate and strengthen your financial communications, contact us at