Periods of change can provide valuable lessons, and in a shifting macro environment that affects just about every investor in every company.
Companies can also emphasize that their long-term
growth prospects, three to five years in the future, remain intact and the company’s fundamentals remain stable. Ask yourself how well-positioned your company is compared to your peers, and if it has the underpinnings to emerge from a crisis better positioned in the future. For example, this year companies started hosting
investor day events that are product- or technology- focused, without an overview from the Chief Financial Officer. Similarly, your company will benefit from providing a long-term view of your company’s value drivers, growth prospects, and long-term strategic goals, such as three- to five-year targets. Sharing the long-term view is a fantastic op-
portunity to educate key stakeholders regarding expectations given future business conditions and key performance indicators tied to the company’s long-term strategic goals and health.
Monitor Your Peer Group Keep a close eye on your peer group and ecosystem to understand the changing guidance dynamics and vernacular. Closely monitor the words used by others to describe a crisis or the anticipated length of a business disruption. For example, if everyone else is withdrawing
niri.org/ irupdate
quarterly or year-end guidance and you’re not, be prepared to justify your decision. You need to do what’s best for your company, but also be ready to defend your assumptions in your earnings call. It is also imperative to look at the tone and lan- guage used to characterize a crisis situation. Many companies use similar terms, such as “global mac- roeconomic crisis” or “industry-wide impact,” that signal that their company is faced with a broader set of challenges that are not unique. Periods of change can provide valuable lessons, and in a shifting macro environment that affects just about every investor in every company. Tose lessons learned should fuel fluid guidance practices as the situation evolves. IROs can guide leadership teams toward transparency about fluidity of a situation without assuming the role of reading a crystal ball. Ultimately, every company needs to evaluate their guidance practices on a case-by-case basis, but adding or subtracting thoughtful disclosures about business fundamentals and their long-term growth strategy is a good place to start. IR
Nicole Noutsios is Founder of NMN Advisors, Inc.;
nicole@nmnadvisors.com. She is on the NIRI San Francisco Board and the NIRI Ethics Council.
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