By John Nunziati, IR partner at Q4
The IR community is wrapping up another quarter of virtual interactions amid the latest Omicron surge. For most IR professionals, this marks the second anniversary of remote work.
To understand how the past two years’ events are impacting investor engagement, we can look at some current data and trends.
Investor conferences At Q4, our team has been monitoring publicly announced global IR-related events (primarily sell-side sponsored investor conferences). Our most recent data shows that more than 50 percent of Q2 events are expected to be held in person. This increases to 70 percent in the second half.
An emerging best practice is incorporating a hybrid or fully virtual event backup plan if a quick pivot is needed. A recent example of this was the January JPM Healthcare conference that shifted to a virtual format as Covid surged. This approach also applies to company investor days, with 40 percent of them already being planned as virtual (based on press releases from the past six months).
Shareholder changes To better understand the impact of this shift to virtual interactions, we looked at the ownership trends of 15 companies that collectively represent $10 tn in market capitalization. The companies were chosen to comprise a cross-section of market cap, industry and share performance. The Q4 team compared reported pre-pandemic ownership from December 2019 with 2021 year-end levels, net of share price change. European shareholder ownership increased slightly, but not enough to be exclusively attributed to a higher level of virtual interactions.
International travel Planning for travel to meet investors abroad is still very much country-dependent. The uncertainties of rapidly changing Covid restrictions make international travel extremely hard to plan and high risk to execute.
Rather than postponing these meetings with foreign investors, it's more prudent to use virtual interactions and unique investor events to foster and nurture those relationships.
Implications Looking forward, perhaps Covid will become like colds or flu: an environment we live with and manage around. That discussion is best left to medical experts but it is unlikely that investor relations will fully return to what used to be ‘normal’.
Before the pandemic, dialing in to earnings calls, post-earnings follow-up phone calls and webcasts of investor days or annual shareholder meetings were routine. These all continue to be standard practice, and now often include video.
Previously, sell-side conferences, non-deal roadshows and company site visits were almost exclusively carried out in person. A return to these being done entirely in person is unlikely. Corporations and institutions have internalized the benefits of reduced travel costs. Sell-side banks that can offer large in-person or hybrid events are segmented from smaller firms that may offer only virtual events. Geographic constraints have been substantially reduced.
Buy-side firms are still determining return-to-office strategies with portfolio managers and analysts looking to balance in-house with remote interactions. Management teams value the productivity benefits of interacting virtually so travel dedicated exclusively to IR may be deprioritized.
For IR teams, this requires a shift in emphasis and skills. Making virtual meetings effective demands increased focus on targeting and advanced qualification of participants. IR teams will need to take on increased responsibility for knowing current travel restrictions and understanding the risk that they might change.
IROs will need to find opportunities to leverage key executives’ operationally driven travel. They will have to better understand and adapt to the style preferences of their management and their audience, knowing the communication platform, camera-readiness and participant identification preferences of all participants.
They will have to navigate group hybrid meetings that remain the least-effective option despite the technology improvements that have been implemented. As the environment continues to evolve, investor relations professionals must continue to adapt.
Q4 is a leading capital markets communications platform provider that is transforming the way publicly traded companies, investors and investment banks make decisions to efficiently discover, communicate and engage with each other. The Q4 end-to-end technology platform facilitates interactions across the capital markets through its IR website products, virtual events solutions, capital markets customer relationship management solutions and shareholder and market analytics tools. The firm is a trusted partner to more than 2,650 public companies including 50 percent of the S&P 500. Q4 is based in Toronto, with offices in New York and London.
