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8 Leading Companies in Investor Relations Practices 2024
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In a rapidly evolving world where business models and markets are in a constant state of change, the importance of robust investor relations (IR) cannot be overstated. In this article, we delve into the world of investor relations and highlight eight companies demonstrating some of the most effective initiatives we’ve come across in this domain.
Communication, Transparency, and Trust
This critical corporate function serves as a bridge between a company, its investors, and the financial community, fostering a climate of transparency, trust, and productive two-way communication.
As a platform specializing in investor relations and financial research, we at Quartr spend countless hours studying investor relations material as part of our day-to-day operations, granting us a unique perspective. As a result, we've identified and wish to highlight the investor relations departments that we believe are leading the way in this field. In this article, we delve into the world of investor relations and highlight eight companies demonstrating some of the most effective initiatives we’ve come across in this domain.
Featured companies
MercadoLibre: Clarity
At the heart of exceptional investor relations practices lies clear communication. Companies should provide clear, timely, and accurate information about their financial health, strategies, market dynamics, challenges, and opportunities. When companies share this information openly, they enable investors to make well-informed decisions.
One of the companies that impress in this area of investor relations is the e-commerce and fintech giant, MercadoLibre. They provide exceptional detail into all key variables of their business, such as capital allocation, leverage, geographical expansions, strategic decisions, and vision for the future. This allows anyone following MercadoLibre to gain a deep understanding of the business. This information is presented through reports, slides, earnings calls, all of which can be easily accessible and are fully searchable on Quartr Web App, and an easy-to-grasp fact sheet presented alongside the reports.
Additionally, MercadoLibre has added videos to its investor relations website, detailing its business units and underscoring its commitment to transparency with investors. Given these initiatives, the investor relations department of this South American giant stands out as notably top-performing, regardless of any benchmark.
Porsche: Enhances the Brand
Steve Jobs once said that every single interaction or impression a company creates with a customer, potential customer, or the public shapes the perception of the company and its brand. Given this perspective, it can be argued that investor relations play a pivotal role in brand building and preservation. This arguably makes investor relations particularly vital for companies where the brand stands as a primary competitive advantage.
Porsche stands as a prime example of a company that has fully grasped this concept. Through events such as its Capital Market Days, the company offers comprehensive insights into its history, brand, design philosophy, and business dimensions. Presented in slide format, these insights are not only information-rich but also visually appealing. These slides are easily accessible and searchable alongside millions of others through the Quartr Web App. Such initiatives undeniably help investors recognize Porsche's most valuable assets: its storied history and brand. Partly based on this foundation, we consider Porsche's investor relations department to be among the best-performing worldwide.
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Tesla: Proactive Engagement
Good investor relations practices are not just about responding to investor queries but also proactively engaging with them. Companies at the forefront of investor relations for instance do this by enabling two-way communication in different ways.
Tesla exemplifies this approach by collecting questions from the public for their earnings calls. Unlike many companies that limit question contributions to analysts during these sessions, Tesla stands out by engaging with a broader audience, not just finance professionals. Such engagements offer a platform to keep all investors informed about the company's direction and address any concerns they might have.
Kesko: Transparency
When investors feel that they are receiving clear, consistent, and transparent information, they are more likely to invest or continue investing in the company. They are also more likely to support the company's strategic decisions, contributing to stability in the company's shareholder base.
We want to highlight the Finnish retailer Kesko for its clear and consistent communication. The company runs an investor relations blog and podcast where management discusses topics relevant to investors. For instance, they provide personal portraits of top executives, highlight outstanding performances in various subsidiaries, and offer detailed follow-ups on the performance of previously acquired companies. This approach not only delivers relevant information to shareholders but also likely reinforces the company culture.
The Trade Desk: Focus
The Trade Desk effectively communicates the factors driving its growth and value to investors. What do we mean by this? The company emphasizes its belief in the fundamental drivers of its value, linking these to aspects that benefit shareholders, such as future free cash flow and its competitive position. They consistently re-use certain evergreen slides that demonstrate the company's positioning within the value chain, and they consistently highlight why this positioning is vital for their competitive advantage. Additionally, they shed light on potential issues in the business models of other advertising giants through innovative and easily understandable video commercials.
Such clarity is advantageous in investor relations. It provides investors with a comprehensible understanding of what drives the company's success, simplifying their evaluation of the company's potential. The Trade Desk thus merits recognition for its clear communication and its focus on the factors that genuinely account for the value it delivers to shareholders.
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Adyen: High-Quality Content
Providing high-quality investor relations material, including detailed shareholder letters and visually appealing slides with every earnings report, is crucial for enhancing investors' understanding of a company. It not only provides valuable insight but also makes the process of consuming this information more enjoyable.
We'd like to commend the investor relations department of Adyen for excelling in this aspect. Adyen consistently communicates its vision, successes, and challenges through its well-articulated, engaging, and information-rich shareholder letters. Additionally, the audio quality of Adyen's earnings calls stands out as some of the best we've encountered, further emphasizing their commitment to top-notch investor relations practices. These first-class earnings calls are available both live and as replays with a podcast-like experience on the Quartr Mobile App, completely free of charge.
Atlas Copco Group: Complete History
While many companies do not provide a complete backlog of their earnings reports on their investor relations websites, reports even over a decade old can contain crucial information. For example, it might be interesting for investors to observe how the company's vision has evolved and understand the reasons behind these changes. Such insights assist in evaluating the management's strategic and capital allocation skills, and demonstrate the accountability that managers put on themselves. For cyclical companies, data from more than ten years ago is especially important as it allows today's investors to assess how the business performed during significant recessions, such as the financial crisis of 2008.
One of Sweden’s largest companies, the industrial giant Atlas Copco Group, provides over a century's worth of earnings reports on its investor relations website. This approach not only offers investors full transparency but also emphasizes that Atlas Copco has successfully dominated its domain for more than a hundred years. We encourage more investor relations departments to adopt this initiative.
Norbit: Setting Expectations
Many companies provide guidance on the future results they expect to publish, using various methods and timeframes. Some offer insights for the current fiscal year while others communicate projections for more than five years into the future. These projections can relate to different key figures, including revenue, operating income, earnings, and cash flows.
Among the companies we've encountered, the small Norwegian niche player in the market for sea control and surveillance, Norbit, truly stands out. The company provides guidance on an extensive range of topics and across various timeframes. Whether addressing revenue, EBITDA, R&D, CAPEX, or leverage, Norbit sets clear expectations for its investors. Impressively, the company also offers individual guidance for each of its three subsidiaries and on group level, providing additional insight for the investor community. Despite not having a dedicated in-house investor relations function, Norbit excels in this domain. Thus, we want to highlight the company’s CFO, Per Kristian Reppe, for providing the comprehensive material investors need to understand what appears to be a complex and niche business, and for consistently setting clear expectations.
Concluding Remarks
From MercadoLibre's clarity and detailed communication to Porsche's brand enhancement through investor relations, each company demonstrates unique strengths in this field. Tesla's proactive engagement with a broad audience and Kesko's transparent and consistent communication further highlight the importance of two-way communication and transparency in investor relations.
The Trade Desk's focus on the fundamental drivers of its value, Adyen's high-quality content, and Atlas Copco's complete historical earnings reports illustrate the value of clear, comprehensive, and informative communication with investors. Finally, Norbit's detailed guidance across various metrics and timeframes, despite not having a dedicated in-house investor relations team, emphasizes the significance of setting clear expectations and providing thorough insights into a company's operations and prospects.
Overall, these companies exemplify best practices in investor relations, setting a benchmark for others through their commitment to transparency, engagement, and the provision of high-quality information.
Further Reading
5 Features That Make Quartr Pro the Best Software for Investor Relations Departments – November 2023
Quartr IR Awards 2023 – January 2023
The Capital Markets in One Search Engine
Search through millions of slides and transcripts from events such as earnings calls, capital market days, and investor conferences for any keyword.
