Conference Season
Industry conferences sponsored by the sell side are an integral part of companies’ investor relations efforts that can serve to both foster new relationships with potential investors and nurture existing relationships with shareholders, while also providing other benefits such as a platform to proactively manage expectations.
As we all are experiencing, September brings with it “conference season”. Indeed, of the 333 U.S. conferences occurring in 2023, September is the most popular month in the second half of the year.
Setting the Stage
Corbin’s Proprietary Research
While our research shows that 39% of buy-side professionals, the majority of whom are fundamental, long-term investors, do not utilize the sell side, up from 21% a decade ago, research analysts remain an integral part of the capital markets ecosystem. Indeed, the sell side continues to be a leading source of information for investors when trying to learn more about a new company.
Continuing, according to our research, most companies attend 5 to 9 investor conferences per year, with larger companies skewing toward 10+.
Our work also finds that 88% of companies send both their CEO and CFO to conferences throughout the year, while 13% also include the COO and 14% involve other executives (e.g., CMO, CTO, segment / business heads), which is a best practice and also provides professional development for leaders.
In terms of investor perspectives, 58% point to sell-side conferences as one of the most utilized sources to learn about new investment opportunities. In fact, over 90% of investors will go to at least one conference during the year, with the majority attending as many as six conferences annually. At these events, investors most appreciate the ability to gain exposure to multiple companies at once while also conducting their one-on-one meetings with corporate executives. For this reason, sell side conferences are generally more beneficial for investors than corporates at face value, as the latter is racked and stacked against direct peers and must cut through that static and differentiate themselves to capture mindshare.
While it may be intuited that sell-side conferences are a “better bang for the buck” based on attendance size , non-deal roadshows offer more impactful one- on-one time with investors and often result in access to decision makers, such as CIOs and portfolio managers, who frequent conferences less often than their research analyst counterparts.
Amidst peak conference season for 2H’23, we aimed to uncover the top questions being posed to executives, as well as how companies are strategizing the remainder of the calendar year. We analyzed 25 company transcripts from a diverse range of market caps and sectors across five prominent investor conferences that have occurred thus far. Below are our findings:
Prominent Q&A Topics
What are the signals, how will it play out in a stressed environment, and what will a recovery look like?
- Mid-cap Industrial: “What are you seeing in the demand environment in the last quarter or two? What are some signals that you’re seeing on that front?”
- Mid-cap Tech: “In a more stressed macro environment, what are the puts and takes in terms of demand?”
- Large-cap Tech: “How do you see the demand profile and the recovery of business ‘X’ playing out over the near-term and into next year?”
Is the consumer showing signs of slowing, how are they handling price increases, and are credit conditions expected to worsen in the second half?
- Mid-cap Financial Services: “Credit quality has been an afterthought at this conference, which is Can you talk to your outlook there? Are you beginning to see any signs of deterioration, and how do you expect that to perform in the back- half of the year?”
- Large-cap Healthcare: “You mentioned price increases, how receptive are consumers to these price increases, especially in this environment?”
- Large-cap Tech: “You talked about the broader strength in the consumer, but is there anything different you’re seeing in terms of consumer demand on one side of the business versus the other?”
Where do capital priorities stand with strengthened balance sheets and valuation opportunities in the market?
- Mid-cap Industrial: “Seems like the chunkier, bigger M&A activities have occurred more towards downturn areas, where I assume there’s a lot more valuation opportunities. But as we think about M&A going forward, are there opportunities? To focus on year-end, is it capabilities, is it scale, is it adjacencies? What are some of the areas of interest?”
- Large-cap Healthcare: “Given the strength of the company’s balance sheet, how are you thinking about capital allocation priorities right now?”
- Large-cap Tech: “You have a balance sheet with a lot of cash on it; you’ve got equity stakes in some businesses; you’re increasingly generating free cash How should investors be thinking about your capital allocation priorities and how they might evolve in the years ahead?”
How are you prioritizing margins versus growth? How are you finding new sources of growth?
- Mid-cap Technology: “How do you think about growth versus profitability? You’ve gotten really good leverage, and that’s been showing in the model. How do you view the balance of putting more dollars to work versus letting some of that flow down to the bottom line at this point?”
- Large-cap Basic Materials: “You have a substantial organic growth pipeline, including projects in the U.S. Can you talk about the cadence of that growth and the capital requirements for that growth? How are you thinking about investing in growth in that versus capital returns?”
- Large-cap Healthcare: “What are the next steps in terms of finding other new sources of growth but also building upon some of those recent M&As. Is it smaller deals that you’re looking at from here on out? What are you looking at from M&A?”
Is there more optimism or concern in the economic outlook? How has the macro influenced buying patterns?
- Small-cap Communications: “When you’re talking to your large enterprise customers right now, how much is the macro environment influencing the decisions they’re making about what they want to spend? If you listen to our economists who have been pretty spot-on, it’s way better, and the outlook is way better than a lot of people have feared. I’m wondering if that’s starting to trickle into the minds of CIOs?“
- Large-cap Financial Services: “Regarding the high-level macro-overview, I thought your comments in the July earnings call were more constructive and you were more on the bearish side before that. What’s your latest view on the macro backdrop and operating environment?”
- Large-cap Industrials: “The market seems to be bipolar; one day, soft landing, one day, recession. Do you feel like we’ve done enough to escape any major recession from the consumer standpoint?”
Leading Conference Company Themes
Jefferies Industrial Conference
Broad Industry Shifts Reflect Openness Toward Technology Integration and Innovation Amid ‘New Era of Demand’
- Mid-cap Industrials, $9.2B: “We’ve been focused largely on shifting from a machinery- oriented focus to much more of a technology-enabled focus. We redesigned our strategy two to three years ago, and in there were two to three key elements. The first one was becoming the most farmer-focused company in the industry…Second focus was on smart machine development, machines that can sense their environment and optimize their own performance based on onboard calculations.”
- Large-cap Basic Materials: “There’s a whole new era of demand because it is the new economy, energy transition, artificial intelligence, and data centers. It’s added something new to it.”
Infrastructure Investments Beginning to Yield Results; a Trend Anticipated to Gain Momentum in the Coming Years
- Mid-cap Industrials: “We’ve recently had the new emergence of onshoring or reshoring in the manufacturing space, which has been a tremendous tailwind for us coming into 2023, and we see that over the next three to five years as a continuing growth area of opportunity with electric vehicle plants and electric batteries. We’re doing some solar and we’re working diligently to get involved in some of the CHIPS Act as we go forward.”
- Mid-cap Industrials: “We’re seeing infrastructure spend in a number of areas that have benefited us today, but we also see some areas that are going to benefit us over the next several years. Some of the areas that we’ve seen most impactful today would be on the cooling side and these semiconductor programs. We’ve had very good success with some of the large semiconductor OEMs. And then in the transportation platform, we’ve seen some nice success.”
Citi Global Technology Conference
Executives Acknowledge Potential for Generative AI While Emphasizing Thoughtful, Measured Approach to Implementation
- Mid-cap Industrials: “There are lots of opportunities with generative AI, and I can tell you that, once a week, I, with the rest of the executive committee, spend an hour with some very expensive consultants, making sure that we’re focusing on good projects and making sure we’re prioritizing accordingly. That is something that we do weekly. I do think it’s going to be a bit of a build. I don’t think there’s a silver bullet and we’re going to see a step change tomorrow.”
- Mid-cap Technology: “There is a huge amount of expectation from generative AI in terms of the benefit being much higher than what reality might be and the cost of implementation being much lower than what I think it would be. That hype associated with gen AI is probably going to normalize and get level set at more realistic levels. Second, the adoption of gen AI and the usefulness of gen AI will get established much more clearly. There are certain cases where gen AI is going to be absolutely very helpful, but there are going to be a whole host of use cases that clients will build up where gen AI is not going to be as helpful.”
Barclays Global Financial Services Conference
Banks Warn of the Detrimental Effects Increasing Capital Costs Would Have on the Financial Sector. Is Increased Bank M&A on the Horizon?
- Mid-cap Financial Services: “[In regard to regulatory backdrop] if you’re going to be a $100B organization, you don’t want to be $101B and incur that cost. You need to be $140B, $170B, whatever that number is…call it 18 months to 36 months from now, you will start to see consolidation pick up… you’re better off if you’re an $85B organization doing something, a merger of equals that gets you in that.”
- Large-cap Financial Services: “Basel III is the most significant change to the regulatory rules since the financial crisis and Dodd-Frank. There are three things that I believe based on the proposal that would absolutely be true if it went into place. The first is the cost of credit would go up for big companies all the way down to small businesses. The second is that the U.S. competitiveness in capital markets would decrease. And the third is that more activity would be pushed out of the regulated part of the banking system into the unregulated shadow system. Our view is these capital rules go too far. These rules, if they went in place as put forward, would increase our capital by slightly more than 25%.”
Shrinking Deposits Contribute to Shifting Banking Priorities as Lending Standards Tighten
- Mid-cap Financial Services: “Deposits have really driven the growth in recent years. But even before the crisis in March, as the Fed tightened, deposits were coming down; the Fed had flooded the industry with money, started to pull back, and we are seeing that. Silicon Valley Bank really accelerated that. What I would expect to see going forward is that we’re seeing weak loan demand, securities that probably will run off a little faster than incremental loan growth and…we could see a little smaller balance sheet going forward.”
- Mid-cap Financial Services: “The deposit base globally and in the U.S. for the industry will continue to be tight and probably shrinking margins and lending capability. The natural conditions will continue to tighten. As we think about our balance sheet, we’re thinking about how we drive the profitability, and we see growing deposits as the key fuel for our ability to support lending activity. We’re looking to drive profitability through our balance sheet by effectively selecting clients and improving profitability.”
Morgan Stanley Global Healthcare Conference
Pharma Expresses Worry Over Shortened Patent Life and Reduced Incentives for Innovation
- Large-cap Healthcare: “The Inflation Reduction Act is not good news for patients and it won’t prove to be good news for innovation…the nature of that legislation conspires to cut the number of years that are available to innovators for a return on the innovation. And without the benefit of a full patent life, it’s going to be very difficult for companies to earn an attractive return. It’s very unfortunate for patients that it comes in the form of price control by the US government. We still think we can innovate prosperously, but let’s not lose sight of the fact that the Inflation Reduction Act is a fundamental change for the industry.”
- Mega-cap Healthcare: “In relation to the Inflation Reduction Act, I would emphasize that I worry that there’s some unintended consequences…I look at small molecules and I said, ‘If you want to affect the broadest patient population, not just within the U.S. but throughout the world, it’s small molecule.’ Why would you want the disadvantage of that [shortened patent life], especially when small molecules, when they come offpatent, they come off patent fast.”
Vaccination Utilization Trends Remain Low Following Prolonged Post- COVID Fatigue
- Large-cap Healthcare: “What is very hard for me to believe is that one in three Americans are going to walk into a pharmacy or a doctor saying, ‘I want a flu shot, but please don’t give me a COVID shot.’ So, do I believe we’re going to be as low as last year? I don’t. I think last year, there was a lot of confusion. There was a lot of fatigue…we’re investing a lot of our marketing efforts in how we increase the vaccination rate in the U.S. in people at risk.”
- Large-cap Healthcare: “We had seen a certain level of utilization pressure in the first half of 2023. We largely assumed that that would persist for the balance of this year. And then for 2024, we carried that pressure through and added an incremental amount of pressure potentially for 2024… I would say a couple of months into the quarter, we have continued to see those pressures persist and not abate in the quarter. And it remains to be seen again how the rest of the year plays out and because we’re seeing it in many of the same categories that we saw in the first half of the year that there’s nothing new there, but it is persisting at high levels.”
Goldman Sachs Communacopia & Technology Conference
Companies Rise with the Tide of Data Consumption Driven by Demand for Artificial Intelligence, Augmented Reality, and Virtual Reality Technologies
- Small-cap Communications: “As you look at where the market is going and you look at the need for a massive increase in data consumption as we move down the path of AI, AR, VR, it’s coming. And when you talk to hyperscalers, that’s their primary concern. They see it coming. They’re building for the future. And they were a big reason why we built ExaSwitch which has the ability, through NaaS, to effectively move workloads at very high speeds from point to point. And it allows hyperscalers and customers to increase their capacity by being able to move workloads around the broader network very efficiently, very seamlessly. It’s very powerful.”
- Mid-cap Tech: “Generative AI is a whole other tailwind that hasn’t even fully shown up in the revenue yet. We have hundreds of paying customers at this point, but those implementations in workloads are in the early stages of production. And because we are consumption-driven, we recognize revenue when more queries happen and when more data comes in into those workloads. So, that will take its natural ramp in time. We haven’t factored any of that for FY 2024, but more for FY 2025.”
As you continue to participate in conferences this month and prepare for earnings season next (didn’t we just get through earnings season?!), consider the following best practices and recommended strategies.
Identify relevant conferences and proactively shape your attendance card
- Evaluate conferences that provide a high return on your time and that align with your investor relations goals. There can be advantages to attending both bulge-bracket and boutique events to broaden your investor reach.
- Always request the meeting agenda ahead of time and provide suggestions on investors with whom you’re interested in meeting. Manage executive time and weigh in on who gets a one-on-one versus group meeting.
- Research your targeted audience, and ensure executives are aligned on messaging if more than one is attending. Having clear objectives and messaging architecture heading into the event puts you on your front foot.
- Every interaction with a qualified investor is an opportunity.
Update and leverage the investor presentation
- With 88% of investors reporting that the investor presentation is a lasting source of company-generated information, we strongly encourage companies to use it to its fullest potential. While some conference formats are not suited for a presentation (e.g., fireside chats), we recommend companies offer a QR code for investors to scan and quickly download the presentation during one-on-one and group meetings. A well-prepared executive can then answer questions while also referencing content from the presentation, which leaves a stronger imprint as investors both see and hear the information.
- For webcasted events, be sure to announce the date and timing in a press release well in advance and be aware that non-webcasted events pose risks from a Reg FD standpoint.
Harness the momentum of the event
- After the event, follow up with those you met with a thank you, additional helpful / requested investor materials, and offer to answer any follow-up questions. Add them to the IR distribution and create a cultivation strategy if they are a prospect.
- More broadly, follow up with the IR distribution outlining key highlights from the event with the website link to the presentation. After all, investor relations is part sales. While the iron is hot, offer follow-up meetings with one or more members of management.
In Closing
Getting the most out of sell side conferences boils down to good preparation and clear communication. In our experience, more can be done leading up to, during, and following these events to maximize the ROI. As we head into the busiest part of the second half, it’s a prime opportunity for companies to connect with the Street, share achievements, and outline future plans. It’s about striking the right balance — sharing the right amount of information, listening to existing and potential investors, and building relationships that are both meaningful and beneficial.
As you get ready for upcoming events, remember that a successful conference is one where dialogue is encouraged, questions are welcomed, and everyone leaves with a clearer understanding of your story.