Earnings Call Transcripts Analysis, Q2

FY2017
August 31, 2017
Executive Summary
Hamilton Place Strategies conducted an analysis of quarterly earnings call
transcripts of U.S. public companies to identify key issues influencing the business
communitys decision making. We analyzed earnings call transcripts from the fourth
quarter of fiscal year 2016 to the second quarter of fiscal year 2017, with the goal
of tracking a broad range of topics impacting the U.S. economy from quarter to
quarter.
Key Findings:
Earnings calls mentioning President Trump declined 84 percent between
January and late August.
Mentions of tax reform have declined by 38 percent since the beginning of the
year.
Not surprisingly, healthcare reform saw the largest increase in policy mentions.
Of the total number of all-time earnings calls that mention "artificial intelligence,"
two-thirds of them occurred in the past year.
Discussion of millennials in earnings calls has grown steadily, outpacing
mentions of Baby Boomers in 2014, as their purchasing power has increased.

1
Agenda

Government And Policy Issues

Special Economic Issues
GOVERNMENT AND POLICY OVERVIEW

Combined, Mentions Of Government And Policy Issues

Declined By 61 Percent Over The Last Three Quarters
Total Earnings Call And Mentions Percent Of Earnings Calls Mentioning
Government Or Policy Issues
Total Earnings Calls
Total Govt. Or Policy Mentions
-61%
3,217 41%
3,117
2,956

23%

1,225 16%

751
496

Q4 2016 Q1 2017 Q2 2017 Q4 2016 Q1 2017 Q2 2017

Source: Bloomberg, HPS 3

GOVERNMENT AND POLICY ADMINISTRATION AND CONGRESS

The Percentage Of Companies Mentioning The

Administration Declined Significantly In Q2 2017
Government Mentions In Earnings Calls

25 -79%
Administration
Congress
Percent Of Earnings Calls

20

15

24%
10
14%
5 10% 11%
8%
5%
0
Q4 2016 Q1 2017 Q2 2017

Source: Bloomberg, HPS 4

 GOVERNMENT AND POLICY TRUMP

Direct Mentions Of President Trump In Earnings Call

Transcripts Plunged Between January And Late August
Earnings Calls Mentioning Trump Trump Admin. By The Numbers
-84%
150 144 84% percentage drop in calls
mentioning President Trump by
Number Of Earnings Calls

name from January to August

100
19 calls mentioned the White
House in Q2 2017, down from 49
64
in Q4 2016
50
23
Materials Industry had the
largest percentage of calls
mentioning the Trump
0
Q4 Q1 Q2
Administration in Q2 2017 (10.1%
of industry calls)
Source: Bloomberg, HPS 5
GOVERNMENT AND POLICY SECTOR BREAKDOWN

Earnings Calls By Utilities Had The Highest Rate Of

Government And Policy Issue Mentions In Q2 2017
Percent Of Total Issue Mentions By Industry
Mentions No Mentions

Utilities 37% 63% 76

Count Of Total Earnings Calls By Industry

Financials 23% 77% 428

Real Estate 21% 79% 178

Industrial 18% 82% 412

Telecom 18% 82% 33

Healthcare 17% 83% 498

Materials 17% 83% 139

Energy 11% 89% 249

Consumer
11% 89% 93
Staples
IT 10% 90% 502
Consumer
10% 90% 398
Discretionary

Source: Bloomberg, HPS 6

GOVERNMENT AND POLICY ECONOMIC ISSUES

While Tax Reform Was The Most Discussed Policy

Issue For Q2 2017, It Also Saw The Largest Decline
Select Issues In Earnings Calls Mentioning Policy*
Q4 2016 Q1 2017 Q2 2017 ACA Highlights
May 4, 2017: House
-38% passes measure to
80 repeal and replace
72% Affordable Care Act
Percent Of Earnings Calls

70 July 27, 2017: Senate

60 53% rejects slimmed-down
+100% ACA repeal bill
50 45%
40
32%
30 22% 21%
20% 18% 13% 10%
20 16% 13% 10% 10% 12%
10
2% 3% 2%
0
Tax Reform Healthcare Financial Infrastructure Trade Immigration
Regulation Reform

Policy Issues
*Total number of earnings calls mentioning policy issues in Q4 903, Q1 449, Q2 - 304 7
Source: Bloomberg, HPS
GOVERNMENT AND POLICY TAX REFORM

Discussion Of Tax Policy Issues On Earnings Calls

Declined In The Absence Of Concrete Action
Earnings Calls Mentioning Tax Policy Issues

February 2: Day after Senate Finance Committee advances Treasury

Secretary Mnuchin nomination, tax reform mentions peak
55 52
50 April 26: Mnuchin & Cohn release tax plan, and mentions
45 spike in the days after

40
Count Of Earning Calls

36
35 July 27: Admin & GOP leaders
announce BAT is dead
30
25
21
22
20
17
15
10
5
0
January February March April May June July August

Source: Bloomberg, HPS 8

Agenda

Government And Policy Issues

Special Economic Issues
SPECIAL TOPICS MILLENNIALS

Discussion Of Millennials In Earnings Calls Has Risen

Steadily As Their Purchasing Power Has Increased
Number Of Company Earnings Calls Mentioning Millennials

1982 First millennials born 2000 Last millennials born

Millennials Boomers

300
2007: First group of millennials
250 turn 25, becoming established in
Count Of Earnings Calls

the workforce and as consumers

200 +174

150

100

50

0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
*Mentions through Aug. 23, 2017 10
SPECIAL TOPICS ARTIFICIAL INTELLIGENCE, AUTOMATION, ROBOTS

Two-Thirds Of All Earnings Calls That Mention Artificial

Intelligence Occurred In The Past Year
AI, Automation, and Robots By The Numbers All Earnings Calls Mentioning Terms
541 2,600 10,400

360 calls mentioned artificial

intelligence in the past year, out of 541
total all-time

56% of total artificial intelligence 67%

mentions came from companies in the IT
sector
15% 13%
2.35x annualized increase in Artificial Robots Automation
mentions of AI in the IT sector alone from Intelligence
2016 to 2017 Jan. 2002 - Aug. 2016
Aug. 2016 - Aug. 2017
Source: Bloomberg, HPS 11
SPECIAL TOPICS ARTIFICIAL INTELLIGENCE, AUTOMATION, ROBOTS

Earnings Calls Of Techs Big Five Have Increasingly

Included Mentions Of AI, Automation And Robots
Earnings Calls Mentioning Automation, AI, Or Robots, By Company

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Alphabet
Amazon 3

Apple
Facebook* 2
8
Microsoft
2 2

2
4 3
1 1
2
2 2
1 1 1 1 1 1 3
1 1 1

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017**
*Facebook did not conduct public earnings calls before their 2012 IPO
**Mentions through Aug. 23, 2017
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SPECIAL TOPICS BLOCKCHAIN

Mentions Of Blockchain Have Grown Modestly Since

Its First Appearance In Earnings Transcripts In 2013
Number Of Earnings Calls Mentioning Blockchain Key Findings
Since the first mention in
101 2013, only 101 earnings call
Q1 transcripts total have
Q2 mentioned blockchain
Q3 technologies or
Q4 cryptocurrencies.
Only two of the ten largest
U.S. banks by assets, U.S.
Bancorp and PNC Financial
Services Group, have
38*
32 mentioned blockchain during
earnings calls.
Overstock.com accounts for
14 14 15% of all-time blockchain
3 mentions, with Nasdaq and
IBM rounding out the top 3
2013 2014 2015 2016 2017 Total with 8% and 5%, respectively
*Mentions through Aug. 23, 2017
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Source: Bloomberg, HPS
METHODOLOGY

Methodology
Our analysis examined earnings call transcripts to determine the quantity
of earnings calls mentioning key topics and sub-topics. The transcripts we
examined roughly corresponded to a given quarter. To conduct our
analysis we:
Reviewed roughly 3,000 earnings call transcripts of U.S. domiciled
companies per quarter.
Earnings calls analyzed for Q2 were held between July 1, 2017
August 23, 2017 (3117 total calls).
Earnings calls analyzed for Q1 were held between April 1, 2017
May 31, 2017 (3217 total calls).
Earnings calls analyzed for Q4 2016 were held between January 1,
2017 February 28, 2017 (2956 total calls).

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This Analysis Was Developed By The Following
Members Of The HPS Team:

Matt McDonald, Partner

Rob Terra, Managing Director
Jim David, Managing Director
Brai Odion-Esene, Senior Director
Michael Adams, Senior Associate
Kayla Cross, Project Associate
Josh Price, Associate

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