Zillow Takes Questions via Twitter in Real-Time During Earnings Call
Seattle online real estate company Zillow took a new, more open approach to its first quarter earnings conference call Tuesday, accepting and answering questions via social media side-by-side with those of professional analysts on the phone.
Michael Graham, managing director and senior equity analyst at Canaccord Genuity, who was covering Internet stocks in the late 1990s—when the fax machine was a crucial part of the toolkit—submitted the first question via Twitter that Zillow CEO Spencer Rascoff answered during the call.
“I’ve been doing this a long time, and the typical earnings call is a pretty productive thing, but also can get old and boring sometimes, so it’s nice to be able to try something new and leverage such a cool, pervasive platform like Twitter to ask a question of Zillow’s management team,” Graham said in a phone interview afterwards.
Rascoff also selected questions from beyond the crew of professional analysts covering the company, reading out and answering enquiries from stock strategists, journalists, and others who are usually resigned to “listen-only mode” during corporate earnings conference calls. (It wasn’t clear if any of the questions were from individual investors, though that potential exists.)
“By using Twitter or Facebook as a channel for investors to submit questions, Zillow is democratizing their earnings calls and improving the transparency around them,” Dominic Jones, editor of IR Web Report, which follows the ways technology is used by investor relations professionals, says in an email. “Zillow now has less control over who can ask questions and what people can ask, and by following the Twitter hashtag (#zearnings in this case) everyone can see which questions management chose to ignore.”
One that wasn’t answered: “will redfin going public and trulia having strong growth affect your bottom line? [sic]”
Outside of the room where executives held the call, a Zillow social media manager monitored incoming tweets, dropping them into a queue that an investor relations associate showed to Rascoff. He chose the questions to answer live during the conference call, says Zillow communications director Katie Curnutte.
Rascoff answered nine of 23 questions submitted via social media. Curnutte says the company is working on a blog post to answer questions that weren’t addressed on the call.
All the questions came via Twitter except one submitted on the company’s Facebook page. There were 175 tweets with the hashtag #Zearnings on Tuesday, providing the company with a real-time look at not just the type of questions being asked, but instant commentary, on its quarterly earnings report.
That’s potentially valuable to analysts, too, particularly of consumer Internet stocks, Graham says.
“A lot of times, retail investors have really good insights, and they’re super smart and they’re making great points. And a lot of times they’re not,” he says. “Being able to quickly scan through a lot of questions could definitely be a source of added value, gauging what people are thinking, how they’re reacting to it.”
Curnutte says recent Securities and Exchange Commission guidance on social media communications got Zillow’s leaders thinking about new ways to connect with investors.
Early last month, the SEC confirmed that Regulation Fair Disclosure (Reg FD)—which requires companies disseminate material information “broadly and non-exclusively”— applies to social media just as it does to corporate Web sites. The SEC said companies can use Twitter and Facebook for major announcements “so long as investors have been alerted about which social media will be used to disseminate such information.”
The SEC began investigating social media use by public companies after Netflix CEO Reed Hastings posted material information about monthly viewership to a personal Facebook page, without having done so before, and without an accompanying press release or SEC filing. The SEC took no action against Hastings or Netflix, which has also been an innovator on its earnings calls, answering e-mailed questions prior to taking questions over the phone from analysts. (On its most recent earnings call in April, Netflix executives answered about three dozen e-mailed questions before taking one from analysts on the phone.)
Jones calls Zillow’s approach “evolutionary rather than revolutionary,” noting the practices of Netflix, and Dell, which solicits questions before its earnings releases from StockTwits and Twitter, and others. And it’s not just technology companies. Ford CFO Robert Shanks took to StockTwits last Friday—two days after the company’s first quarter earnings were released—to answer questions from individuals.
Zillow appears to have distinguished itself by taking questions in real time, during a live conference call.
Curnutte says the transparency of social media fits Zillow’s broader purpose of opening access to information about real estate. She says Zillow also hopes its Twitter Q&A will be “a catalyst for more people to participate in social media in the investment community.”
At Canaccord Genuity, a new Twitter account—@CG_Internet—was created for the purposes of asking the question, says Graham.
“We have to make sure that any communication that I have that’s public—whether it’s writing a research note, or sending an e-mail to clients, speaking on a conference call or submitting a question on Twitter—complies with the letter and spirit of securities regulations,” he says.
Remembering the days when equities analysts waited around the fax machine to get earnings reports, Graham thinks new approaches such as Zillow’s are more fair.
“The more you can get information out to everyone who has a stake in that security, in a democratic way, the better it is,” he says, adding, “I’d be surprised if we didn’t see this start to become a lot more commonplace.”