Listen: IR in Focus | Episode 1: Digital Innovation to Drive Investor Engagement

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Carmen Lilly

Hey, everyone. Welcome to our podcast. I'm Carmen Lilly, host of IR in Focus, and this episode will discuss investor engagement and communication strategies with a nice little sprinkle of how to empower your decision-making when it comes to engaging investors. My colleague, Mark Grant, joins me today. Hey, Mark.

Mark Grant

Hey, Carmen, thank you for having me. It's great to be with you.

Carmen Lilly

Yes, no problem. Thank you so much for joining. If you don't mind, I'm just going to give our listeners a quick introduction. Mark Grant is Senior Vice President of Investor Relations here at S&P Global. Previously, Mark held the role of Vice President and Head of Investor Relations at GoDaddy. And prior to his work at GoDaddy, he was an equity research analyst at Goldman Sachs, publishing investment research on nearly 100 different technology companies. So I think it's an understatement to say he knows a thing or 2 about marrying technology with investor communication strategies.

Now with that being said, Mark, we know that one of the key challenges facing IR professionals is the need to effectively communicate complex financial information to a wide range of audiences. Now as an ex sell-side analyst, that, in theory, should be easier for you than others with different backgrounds. So with that, Mark, can you share with us how your experience as a sell-side analyst has prepared you for this role in investor relations?

Mark Grant

Yes. Happy to do it. Honestly, there are a lot of different backgrounds that professionals can have and have a really successful career in investor relations. But as you know, it's fairly common for professionals on the sell side to transition to IR roles, right? A lot of that is because much of the day-to-day work is similar. There's a lot of overlap in the skills required to be successful in both of those roles as well. I would say the sell side is arguably the best training ground in the world for investor communications because you spend so much of your time modeling financials, writing research for investors and then really marketing that research to the investors to reinforce the views you've expressed in your research, right?

So that carries over to IR as well. You know how to help the folks on the other side of the table because you used to sit on the other side of the table. And additionally, you just see a lot of things on the sell side, right? At any given time, you could cover 30 or more stocks, and so you're listening to 120 or more quarterly earnings calls a year analyzing the financials, looking at the guidance, looking at the commentary from management, often very quickly, and then publishing a note that same day. And once the note's out, you're immediately talking to investors and the company management team is not on the call, right, for those conversations.

So you get to hear the unfiltered reaction from investors to a lot of different events, right? How do they react to a beat and raise, how do they react to a miss and a guide down or a beat with a soft outlook? What are the kinds of things that investors hear that make them think of companies being overly conservative or overly optimistic? What can gain or lose credibility from a management team if they say that on an earnings call?

So hearing all that, processing that year in and year out, having those conversations with investors after 1,000-or-so earnings calls, you develop a bit of a gut feel for how to message those things and you get to talk to the Street in a way that accurately conveys the performance and expectations of the business, but you start to learn how to eliminate some of the vague language or in rhetoric that can lead to confusion, too.

Carmen Lilly

Yes, that's great. That's a great point. So that background and experience definitely set you up for success here, which leads me to my next question here. Where do you begin or start to establish and maintain those relationships with investors and analysts?

Mark Grant

Yes, it's a great question, and I think different people are going to approach it different ways. But I think really, it just comes back to fundamental principles of really all relationships, right? First, be a good human being and make sure you're bringing something to the table. Be helpful and respectful, make sure that you understand that every decent relationship is going to work both ways.

As an investor relations professional, often you're looking for feedback from your investors. You're trying to gather information. You're reading and analyzing the research notes that come out on the company and trying to distill that down to principles that you can then take back to the management team and the Board of Directors.

But you have to be able to bring something to the table, too, because one-sided relationships, frankly, just don't work. And so with investors, it's important particularly with them to remember that we all work for them, like they literally own the place. So we've got a responsibility to make sure that investors have what they need to model the business confidently and accurately assess what they think the equity is worth. Sometimes that just means we're making sure we're disclosing the right metrics and the right cadence.

Sometimes it's making sure that your C-suite is available for conversations. But when you're first building those relationships, being responsive, making sure you're available, making sure that you're willing to listen and engage and that you're doing what you can to be helpful is going to be crucial with investors.

With analysts, it's a little different, right? It kind of depends on the shop. Analysts vary in terms of how deeply they want to dive into the business and understand operations and potential performance. Analysts can vary in terms of how much corporate access they want, right? And ultimately, they're working for their clients, too, and having empathy and making sure you understand that they have goals. They have professional metrics that they need to deliver against. And just getting to know the analysts and how they define success for their own franchise is pretty key.

Carmen Lilly

Yes, that's a great point. Your role is very much a great mix between those soft skills, and it's a lot of people management and communication styles as well as hard data. Hard data can speak for itself, but you definitely need those soft skills when dealing with investors and analysts. But focusing in on just the data factor here. So how does data come into play when you think about your investor communication strategies?

Mark Grant

Yes, it's absolutely crucial. And I think you're right, there is a mix. You have to be an effective communicator, but you have to understand the finance. You have to understand the accounting. You need to be able to explain to investors in terms that they understand as well how the business is performing. You need to help them model the business, right?

When you've got a new sell-side analyst that's launching coverage of the company for the first time and building a model for the first time, if you don't know how to do that, it's going to be difficult to help that analyst and help them get up to speed, get up the curve and get their model out the door. So having those hard skills is important.

But when you look at just the data, I always say a number trumps an adjective any day. So if you're trying to communicate something to investors, if you can do that with numbers, it's almost always going to be more effective. And that's particularly true for investor outreach and engagement. For a company like S&P Global, the demand for engagement is so high that it's often all we can do just to keep up with inbounds. And it's easy to let that overwhelm you if you're not careful. So we use a lot of data even within the IR department.

So we use tools like BD Corporate to track our investor interactions, make sure that we're regularly checking in with key stakeholders. We kind of assign scores to the various interactions that we have with investors to make sure that we're being as helpful as we can. And if we have an interaction that doesn't necessarily meet our expectations, we want to make sure we follow up with that investor, get them what they need, right, in order for us to define those interactions as successful.

I'm very fortunate in my seat here at S&P Global that we have a CEO and a CFO who both understand and embrace the importance of regular communication with investors. So we track and plan many months in advance, which conferences we're going to attend, which investors we want to target for those meetings, what cities and countries we need to visit. So tracking those interactions in a platform that's reliable like BD Corporate and routinely reviewing that data is key to making sure that we've got the right frequency and level of engagement, but we also need to make sure we're talking to the right people, right?

And so we leverage another tool, BuysideIQ. That's one of the tools that my team uses regularly to identify key investors with whom we want to develop relationships. We look at objective measures of suitability and quantitative scores to identify potential investors based on their investment strategy, their size, their average holding period, a number of other metrics and make sure that we're a bit more surgical in our approach than, frankly, we even could have been back when I started my career and data plays a big part of that.

Carmen Lilly

I love the idea of just creating more data from data, right? So you have like your outreach, but you were talking a little bit about like assigning scores to them. I get creating data out of data just to help you make these decisions, I love it, and that's why it's just a little plug for S&P. That's why I work at a data company. It's great. I love it.

So just honing in on that aspect of it and kind of thinking about this new world as post COVID-19 with all of this new technology that emerged and data sources, again, talking about creating data from data. What sort of aspects of your IR strategy has evolved given prevalence of new technology, and again, additional data sources?

Mark Grant

Yes. I think this goes back to the importance of having good data as well, right? It's not just about the quantity of data but the quality of data because there is a lot of data out there that, frankly, just isn't going to be helpful. And being able to look at the kinds of metrics that are going to matter when you're assessing the suitability of a potential investor, when you're trying to figure out how many times should I be meeting with this shareholder, that shareholder? What are the types of venues that we could be using, right? How frequently do we need to be on the road with our executive team?

There's all sorts of benchmark data that's out there and available. Some of it's incredibly helpful. Some of it isn't, right? Because you're going to get classifications and companies that are going to get lumped into your industry and say this is part of your benchmark. Your peers are doing X, Y and Z when, frankly, we've got 0 overlap with some of those companies.

So making sure that you scrub data is really important, that you understand the source for the data before you start using it to make your decisions. But I think that's where having the right platform really comes into play. And this is to your earlier point, right, this is a shameless plug for some of our own products. But when I first got to S&P Global, it was prior to our merger with IHS Markit. And I was actually really disappointed that I wasn't going to have access to BD Corporate and BuysideIQ because those were IHS Markit products, S&P Global didn't use them historically, but I had come to rely on them almost exclusively in my prior role at GoDaddy as the Head of IR there.

But once the merger closed, I got all those tools back. And so having platforms that I knew and trusted, I knew the data was good in those platforms. It had already been vetted. I knew that there was reliable source data, reliable metadata. I could leverage the tools to assign scores where I needed to, take notes where I needed to, set goals, put in plans directly there in the platforms, right? Having a platform that you know and trust can take an awful lot of grunt work out of your day.

Carmen Lilly

Yes, exactly. I can totally see how that would be beneficial. And I'm glad that this merger has worked out very well for you. Okay. So you've got the right tools, but let's just dig a little bit further ahead here. How do you kind of keep a pulse on that, new tools, new data sources or any sort of technological trends or changes that investor relations professional should be aware of?

Mark Grant

Yes. It's -- this one is a little bit easier for me just because I'm a technologist at heart. And I spent my whole career on the sell side covering technology companies and writing research on things like machine learning and artificial intelligence and blockchain and specialized services and software. So that doesn't feel like work for me to keep up with that stuff because it's interesting, right? Like I read that the way some people might read People magazine. It's just interesting for me.

But it's -- I think it's really important that people balance their education on technology and platforms with staying up to date on regulatory reform, risk and compliance policies and all those things as well because you've got a number of things going on in the world right now. When you look at the different channels of communication and the potential risk for Reg FD and compliance rules from the SEC and other regulatory bodies where you might have a phenomenal platform for communication, but it doesn't meet the qualifications for a public disclosure.

And so if you're using that to communicate with investors, you can't disclose anything there and just assume that it becomes public knowledge the way you can with a press release, right? And we've seen regulatory changes with how Twitter is used to communicate with investors just in the last several years. So keeping up on the technology is certainly important to keeping up on the regulatory aspect of it and how the rules and your risk thresholds relate to that technology is important, too.

One huge one that -- I mean, this is a foregone conclusion at this point, but think about Zoom. We're all very, very familiar with Zoom now. Five years ago, we were not. And 2022 was interesting because it really felt like that was the year of getting back in front of people in person, right? We saw a lot of investor conferences return to in person for the first time last year. We saw even some of our own internal conferences here at S&P Global like CERAWeek return to in person in 2022.

And there is finding that balance of how much do you leverage traditional communication platforms like in-person meetings at conferences with the things that you can do so easily now with technology. And in this kind of a business environment with the economic circumstances of the world now and people looking at potential recessions this year, I think you're going to see a more balanced approach and a lot of corporates and investors could start leaning back into virtual formats as a way of maintaining all of those touch points with investors, but doing it in a way that manages and optimizes their expenses too.

Carmen Lilly

Yes. That's interesting because I remember -- and it's funny that you bring up Zoom as an example there of just the prevalence and like how people leveraged Zoom when pandemic started. I remember a lot of us were using Zoom just like company happy hours, like, oh, let's just keep in touch over Zoom. But then it turned into like this essential tool in a way to communicate across groups, again, that have been scattered all across the U.S. or even a whole across the globe. So it's interesting to see kind of the evolvement of those tools there.

Mark Grant

Yes. And actually, even before we move on here, right, you think about Zoom, you think about the different technologies. But to your earlier point, Carmen, there's so much data that's out there now that, frankly, wasn't even just several years ago. And so even as IR professionals, investors and analysts need to keep up with the technology that's out there, you need to be aware of what third-party data sources are out there, particularly for things like intra-quarter metrics.

You need to know what your investors or your potential investors might be looking at to measure your performance outside of what you're telling them, right? You need to know what's out there, help investors understand what they can embrace, what might need some interpretation, and frankly, what data sets they can just disregard because the correlation is not high enough for it to be a good predictor. So I would say that's a very big issue for IR professionals right now, is just making sure they stay abreast of what data sources are out there.

Carmen Lilly

Exactly. Yes. That's a great point. I mean -- so how would you recommend folks to kind of wrap their arms around all these various kind of data sources that are popping up or even just managing what I said on some of these other like social media platforms like, you mentioned, Twitter.

Mark Grant

Yes. I think it's really, really important to just keep your ear to the ground and listen to people, right? There are a lot of smart people in the world. And if you just listen to them, frankly, you're just going to find out so much stuff. And as an IR professional, a lot of it is just going to come to your door anyway because people are going to call you and they're going to say, Mark, I saw this data set that says XYZ about your company's performance. How much should I trust this, right? Or what do you know about this data set?

So often, people are going to bring it to you and say this is something that people are talking about, what's your interpretation. And that gives you an opportunity to just say, "Well, look, I don't have an interpretation right now. It's the first time I've heard about it, but let me go and educate myself, right, and then come back to you." As far as different social media platforms or these platforms go, I think it's really, really important to collaborate internally.

So I have great relationships with our internal communications folks and our legal department and our risk and compliance folks and having those really close relationships and making sure that the information flow is vibrant that if I hear something that might matter from a PR perspective, I can flag that to our communications teams or the relevant teams inside the organization and vice versa and maintaining that dual benefit aspect to that relationship because they're going to bring things to my door that I wasn't aware of as well, right? Like I said, there's a lot of smart people in the world and the more of them you know and the more of them that you can get to trust you, the more likely you are to be successful in this seat.

Carmen Lilly

Yes. Yes. I mean, unintentionally, we're kind of going full circle here where we talk about the importance of establishing those relationships, right? You want folks coming to you and saying, "Hey, like you said, I've learned XY and Z, what is your position on this?" And you're like, well, thank you for coming to me with this information because I had no idea that was out there. That's great that, again, like we're thinking about establishing those relationships and contacts, it just makes your job easier.

Mark Grant

Absolutely. Yes, that's absolutely correct.

Carmen Lilly

All right. We're running up against the clock here. So just to close out this podcast, I want a final word from our expert. So Mark, in one sentence, how will digital innovation influence investor engagement going forward?

Mark Grant

Great question. No one has a crystal ball, but I think if I'm looking at the future and I've got to figure out what's the one sentence, I would say it's going to elevate everything. And what I mean by that is it's going to elevate the potential for success, and it's going to elevate the potential for risk, right?

New platforms for communication like we talked about, new data sets that emerge, new tools and platforms that we can use to log interactions and measure the success of those interactions, those can help you to operate more efficiently and more effectively as you communicate with your investors or analyze industry data that's out there. But it's going to be important for us to make sure we do that within the bounds of proper regulatory risk and compliance frameworks, right? Privacy frameworks, data control frameworks, right? So I would say the more innovation you see in every space, the more it's going to elevate everything.

Carmen Lilly

Perfect. Thank you so much, Mark. It was a pleasure having you on our very first podcast and having your insights. I hope our listeners gained actual insights on the data technology. All of this is for you guys in order to better engage and equip yourselves with engagement with your investors. And please join us next month. This will be a monthly podcast. And next month, we're looking at turning our eye to emerging sustainability regulations and all the fun stuff when we talk about ESG. So until next time, we'll talk soon. Thank you.

Mark Grant

Thanks, Carmen.