This year, investor relations (IR) teams have needed to work hard to keep investors on their side amid market volatility and heightened geopolitical risk while continuing to focus on environmental, social & governance (ESG) issues. The next 12 months look to bring a similar mix of headwinds, possibly requiring companies to tell a honed investment story and use their IR resources effectively if they are to succeed in the fierce competition for capital.
In this Q&A, Foli Pontillo, Global Head of Investor Engagement & Perception at Nasdaq, explains her takeaways from the last year and her take on what key areas IR teams should focus on to help navigate 2023.
What have been the biggest challenges of the last year for IR teams?
When I reflect on 2022, first and foremost, we couldn’t have anticipated the level of market volatility that we have experienced to date. As such, issuers have focused on best articulating their equity story to the investment community in the context of an uncertain macro landscape.
Secondly, heading into this year, we anticipated that IR would play a larger role in ESG - and that has absolutely been the case. We’ve seen it manifested in the uptick in ESG-related inquiries from our issuer clients, and IR professionals play a central role in shaping internal and external narratives, defining disclosure priorities, and creating market engagement strategies.
Lastly, there is IR’s eternal balancing act - investor outreach and engagement. In 2022, we saw the return to in-person conferences, roadshows and other events. As investment appetites shift and companies evolve, IR professionals continue to focus on which markets and investors to prioritize, how to best engage, and ways to measure ROI.
What is a trend you have seen in the way companies are interacting with investors?
We have seen IR digging deeper within their organizations. While the C-Suite and operational leaders will continue to accompany IR on the road, we’re seeing other company representatives make their mark on the marketing trail. Notably, Financial Planning & Analysis (FP&A) leaders, Business Development teams, General Counsels, Chief Sustainability Officers, and Board Directors are actively engaging with investors - issuers want to have the appropriate company representatives in the room to provide unique perspectives on strategy, ESG, growth opportunities, risk management, and the longer-term outlook for the business. By welcoming additional folks into the room, leaders can discuss new, emerging challenges and come up with diverse strategies to help IROs be more successful and measure results. IROs are broadening their reach and influence across their organizations, and it’s a rather exciting aspect of the evolution of IR.
Turning to 2023, how are companies thinking about their engagement calendar?
Issuers are focused on the optimal mix of engagements with the buy side. We have found that many companies, particularly with mid to large market capitalizations, are more selective about which broker and industry conferences to attend as concerns arise around the quality of such events. To that end, we continue to partner with a growing number of our issuer clients on identifying high-quality conferences, planning non-deal roadshows, and optimizing sell-side resources. Elsewhere, holding hybrid (in-person and virtual) analyst days is back in focus. After a hiatus during the peak Covid period, companies are keen to reengage with the financial community on a broader scale.
What makes for an impactful analyst day?
Given the increased sense of comfort in connecting virtually, the buy-side is only willing to travel if companies offer a compelling experience. While investors and analysts certainly appreciate when companies reiterate the fundamentals of their story at such events, providing a fresh outlook to latch onto is essential as well. Another valuable element to consider is a site tour or demo where investors can interact with a product or development pipeline. Providing formal and informal touchpoints with the extended leadership bench that may not have an opportunity to interact regularly with the market would also be well-received. Other aspects to consider incorporating are live customer panels or pre-recorded video testimonials.
What key area of opportunity can IR teams take advantage of next year?
It is challenging to manage all the moving pieces that impact a company’s ability to attract investment capital. The opportunity is to focus on what really is in IR’s control - telling your best story. It’s important to be transparent and honest with the stakeholder community, even when facing business setbacks. Walking investors through strategic plans, operational milestones, and timelines can provide investors and analysts with the inputs they need to model companies appropriately. Such efforts help to protect credibility with the market, which can create a healthy buffer in sustained periods of uncertainty.
How can a data-driven approach help with targeting?
Having access to real-time, trend-based, and predictive data sets focused on investor behaviors and sentiment can be game-changing when targeting new investors and nurturing relationships with existing shareholders. Such data sets are foundational to our approach to advising our clients. Our aim is to get our clients in front of the right people with the right messaging at opportune times. To that end, issuers with advisory tools that account for shifts in the broader market and industry dynamics and company-specific changes will be well-positioned in their ongoing investor engagement efforts.
What topics do investors want to hear companies talking about in 2023?
Investors are looking at how companies will sustain growth and margins in an inflationary environment, and issuers are working to articulate how they plan to strike a balance between the two. Additionally, capital allocation frameworks are being more heavily scrutinized by investment professionals; investors are looking for solid balance sheets, returns-driven capital deployment, and shareholder-friendly actions.
Nasdaq’s suite of IR Intelligence solutions offers proprietary datapoints and analytical tools that aid issuers in crafting narratives and solidifying messaging. The recently launched Q&A analyzer and all-new search engine are two investments designed to help companies find and contextualize the critical information they need to take immediate action. Effective storytelling better positions corporates and investors for what’s to come.