This is The Takeaway from today’s Morning Brief, which you can sign up to receive in your inbox every morning along with:
Oh, the love-hate relationship with quarterly earnings.
On the one hand, business media loves us some quarterly earnings!
Each quarter, a company releases its financial numbers, providing transparency to its investors. We listen to high-profile executives hop on a webcast and talk about every single positive known to man, from revolutionary new products to how one-time expenses mean nothing. (All of this is said tongue in cheek.)
If you are a CEO of a company kicking butt, how can you not love earnings season? You come out, beat big on earnings estimates, the stock explodes, your wealth increases, year-end bonus prospects go up, you plan out your next 10 hard asset purchases (homes, watches, cars, etc.). It’s as intoxicating as sucking down a fifth Aperol spritz on a Bahamian beach.
As for those companies sucking wind, well, earnings season isn’t your friend. I have nothing to say to you right now except try harder for your investors.
I bring this up because President Trump has stirred up a debate around doing away with quarterly earnings in favor of semiannual reporting.
If we are inclined to build wealth steadily over time, doesn’t that better align with hearing from companies twice a year with a more detailed snapshot of the business? Execs will still update investors on the business at investor conferences and on networks like Yahoo Finance.
So, why not let them drive the business with the long term in mind instead of trying to make a quarterly number through various tactics?
“I think I’d be OK either way,” Okta (OKTA) CEO Todd McKinnon told me on Opening Bid (video above). “I do like the opportunity to talk to investors every quarter about the business and the future and the vision of what we’re trying to do.”
Still, he added, “I do think sometimes the industry gets too obsessed with the quarterly numbers … from a single quarter.”
There are detractors to Trump’s idea, naturally.
“It undermines transparency,” Sen. Elizabeth Warren told Yahoo Finance this week.
Here are three other changes to quarterly earnings — and corporate governance broadly — President Trump should consider. Do you have ideas? Send them to me on X @BrianSozzi or @BrianSozzi on LinkedIn.
As a former analyst, I appreciated it when companies released adjusted earnings numbers. They made my life much easier from a financial modeling perspective. Now that my analyst days are long over, I’ve come to detest non-GAAP-adjusted earnings numbers.
