Closing the Quarter Q4'23

In advance of publishing the 58th issue of our Inside The Buy-Side® Earnings Primer® next week, we analyzed the earnings communication trends of 30 off-cycle companies reporting between March 6 and April 5, 2024, to identify important themes and precedence. These companies span market cap sizes and sectors.

In line with findings from our Inside The Buy-Side® Earnings Primer®, commentary from earnings call thus far reveal a cautiously optimistic tone among executives. Many have progressed from the recessionary woes voiced merely a quarter ago and are now grounding their perspectives in the notion that the economy is gliding toward a soft landing.

There are still mixed signals across the board from management commentaries on inflation depending on where their companies sit within the economy, though many described conditions as improving relative to last year. Companies continue to underscore efforts to enhance margins through process optimization programs and strategic pricing, where possible. Further, AI was mentioned in half of prepared remarks across sectors, specifically regarding AI-driven demand benefits and operational efficiencies.

All of that said, a recent slew of downbeat results from consumer-facing companies implies that the previously steady pillar of market optimism for the past several quarters — the consumer — might be facing increased challenges, at least in the near term. Separately, analysts and corporates spent more airtime this quarter on shipping complications.

These concerns aside, one thing is clear: in general, outlooks thus far are being communicated with more confidence. Empirically, executive mentions of “recession” and “uncertainty” within earnings transcripts declined 70% and 48%, respectively, through the first three months of the year versus 2023, and overall paint a clear downtrend relative to prior quarters. Time will tell if this trend continues, but this shift suggests a growing assurance among executives about their business forecasts and the trajectory of the U.S. economic environment — both the good and the bad.

Key themes from our analysis below: