Could Twitter Help Companies Revolutionize Earnings Calls?


On May 7 Seattle-based real estate information company Zillow became the first publicly traded company ever to take live questions from the public over Twitter and Facebook during its earnings call. Zillow opened the floor to questions from journalists, stock strategists, individual investors and other curious listeners.

It was an antidote to the usual scripted earnings update. Normally, public companies allow only a select few professional analysts to question their management. Here, seemingly, was a move towards the Internet’s promise of more democracy for investors.

During this groundbreaking call Zillow chief executive Spencer Rascoff answered real-time questions such this one: “In mortgage, with 4.5M loan requests and $4.9M in revenue, can you comment on lender quote density and CPC pricing?” Zillow was taking advantage of the Securities and Exchange Commission’s April 2 announcement that companies could share important news with investors over social media channels, as long as investors knew in advance where to look.

Zillow has sought to build a reputation for innovation since its IPO two years ago. Rascoff tweets constantly, and he once responded within minutes to a student’s question posted to his Twitter account at 1 a.m. His comfort level with the medium was apparent on the call. Answering questions from social media—22 came in from Twitter, one from Facebook—certainly gave the event a more democratized feel, keeping with the company’s mission of making real estate more transparent.

The best thing about picking questions from Twitter is that one can read the questions in advance—and select only the ones that the boss and the IR chief want to answer. Zillow stated it could not promise to answer all of the questions that came in over social media—a hedge against hecklers and time limitations, it insisted. Rascoff only answered nine of the 23 questions submitted to him.

Finally, the move gave the media something to discuss other than Zillow’s swing towards a loss in the past year—and the 10 percent plunge in Zillow’s share price that occurred the day its earnings were released.

What might the next Zillow earnings call look like—or that of others reaching for the same digital brass ring? Here are some predictions and recommendations for companies going forward:

Safe harbors. We will see more posts containing a safe harbor statement or disclaimer, or at least a link to one. For CEOs less comfortable with social media than Rascoff (i.e., most of them), this will probably be a prerequisite. Counsel will also likely recommend them, just as they require safe harbor statements before a conference call with analysts or at the bottom of a release.

Less consumer, more business. During the earnings call, Zillow received a healthy number of questions over Twitter, but its Facebook channel was noticeably lacking. It may be that for most investors, Facebook is too much of a consumer plaything to be taken seriously as an IR tool. Companies may want to focus these exchanges on Twitter, LinkedIn and their own blogs.

Focus on the core. The pool of executives using social media directly may dwindle as companies migrate to an “official” identifiable corporate handle in compliance with Reg FD and the updated guidance from the SEC. Even Zillow didn’t broadcast tweets from Rascoff’s personal account during the earnings call—it came from the official handle.

Now that Zillow has paved the path, how many other public companies will follow? As chief executives and IR departments learn how that they can use tools like Twitter and other social-media tools to reach a broader base of investors while carefully exercising control over their quarterly calls, we think the numbers will grow quickly.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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