Takeaways from Two Calls: Tableau vs Equifax


Two companies, Tableau Software (NYSE:DATA) and Equifax (NYSE:EFX) are dealing with different and difficult situations; some lessons for investor relations professionals?

Equifax has been reeling from a huge security breach and a host of fallout from the news in September that over 140 million customer records had been stolen. No surprise the stock got hammered early September on the announcement. The earnings call on November 10th was the first for a new CEO and the security breach lit up all the red tone signals on our dashboards. The stock, up 20% for the year before the breach, dropped 36%, then recovered and stabilized at a 21% loss, about 8% down for the year. Despite the tough questions from analysts, the stock showed negligible impact following the call.

Tableau’s call was tough for different reasons. Up 80% this past year, Tableau missed earnings and revenue after three straight beats and the stock dropped about 10% on the news. Revenue missed but grew 4% YoY and the company expects revenue to grow from $214m to over $235m in the 4th quarter. The miss was attributed to faster conversion to subscriptions than forecast, a transition the company had disclosed earlier.

Using our Boulder Earnings Call Tracker analytics, we can look at the calls to see what happened and how each company’s management performed. Investor (and media) relations are handed bad news from time to time. Analytics can help support the best communications strategy with qualitative metrics from companies under similar situations.

Tableau: the Call Order Tone chart gives us the best look at the analyst questions and management’s responses. While the questions in the first half of the call averaged negative to neutral they finished positive for the last eight questions suggesting Tableau’s Management Intro got out ahead of the analysts acknowledging the problem/solution and management handled the questions well. Note that even during the negative questions, management returned positive answers and remained on message for every answer, retaining credibility with the analysts.

Equifax: the Call Order Tone for the Equifax call clearly shows this was a tough one for the management team. In contrast to the Tableau call, the questions started and stayed negative with some of the worst in the second half of the call. Management tried to keep it positive toward the beginning but couldn’t keep the call in positive territory, finishing with 4 of the last five negative tone answers.

While each team had difficult situations, it could have been worse.

Tableau performed well, sticking to a disciplined message around the transition from licenses to subscriptions. The fact that they disclosed this transition well in advanced helped their credibility. In the intro there were only 3 negative tone paragraphs out of 57 with a high ratio of facts and numbers to words.

While an earlier warning to the street on the miss could have helped, exceeding next quarter’s guidance will be key to moving the stock higher. We expect it to trade sideways until then. Assuming they hit guidance for Q4, we expect the analysts to turn their attention back to new products, competition and market share.

Equifax had negative analytics all around but under the circumstances, this was unavoidable. They mitigated the damage with frank admission of the issues in the Intro, not attempting to make excuses or sweep the issue under the rug. As evidence, the Management Intro had an amazing 28 negative paragraphs out of 61, most on the security breach and increased cyber security measures.

Since two months had passed since the breach, new CEO Paulino Barros was probably given the benefit of the doubt for now and EFX price stabilized, probably reflective of the company’s strong market position. The market appears to have priced in the costs of the breach. There is still downside in the event of new disclosures, additional litigation cost, higher security spending and/or evidence that Experian or TransUnion have been able to gain share.

Boulder’s Earnings Call analytics provide the means for investor relations to learn from the performance of their peers to find and apply the best practices for their company. It allows them to:

  • Study past calls to determine the best communications strategy for each situation

  • Determine and prepare for each analyst’s questions based on analysis of their history

  • Understand and improve the tone of proposed intro statements and responses

Investor relations can’t change the facts and context of the situations they confront. They can use analytics to find the best strategy and messaging with a better understanding of what the machines will say about it.

Tom

#textanalytics #linguistics #AI #finance #fintech #investing

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