Translating the market lingo
The stock market can be a bewildering place. It is full of conventions that have developed over the years. None more so than in the language brokers and company management use to communicate with shareholders. Never fear! I am here to (slightly cynically) translate the market lingo into plain English for you!
Translating trading updates
Broadly in line = not in line
Expectations moderated = expectations missed
Below expectations = at least a 10% miss
Materially below expectations = at least a 20% miss
Robust performance = sales are down
A focus on margins = sales have plummeted
Resilient performance = sales have collapsed
Adjusted Earnings = Earnings excluding everything that’s gone wrong
Adjusted EBITDA = a made-up positive number
Adjusted EBITDAR = things must be really bad
Adjusted LBITDA = trading is so bad we couldn’t even make up a positive number
Strong Balance Sheet = Weak Balance Sheet
As we said in our last… = As we tried to hide in our last…
Providing a solid foundation = surely things can’t go lower, can they?
Unusually strong H2-weighting = it'll take a miracle to avoid a profits warning
Translating company results
IFRS16 = all of our money is going to the landlord
IFRS19 = all of our money is going to the elderly
Banking covenant waiver = the bank manager is the boss now
Non-recurring costs = recurring costs we wished didn’t keep happening
Exceptional costs = costs associated with previous mistakes, especially if they can be blamed on former management.
One-off costs = One of many costs that make the results look better if we ignore them
Careful cost management = only the board received a bonus this year
Customer acquisition costs = discounting
Margin erosion = discounting
Investing in our customer proposition = discounting
Becoming price-competitive = discounting
Promotional activity = discounting
Mentions “stakeholders” = the equity has no value
Positive operational free cash flow = free cash flow is negative
Annually Recurring Revenue (ARR) = we are hoping to be valued on something other than our negligible profits or cash flow
GAAP earnings (US companies) = reality
Non-GAAP earnings (US companies) = make-believe
Translating management buzzwords
Quantum = size, but more pretentious
Teach-in = presentation, but more pretentious
Onboarding = hiring, but more pretentious
Over-index = above average, but more pretentious
Routes to market = sales channels, but more pretentious
Thought leadership – research, but more pretentious
Pipeline = hope, lightly quantified
Brand positioning = has anyone ever heard of us?
Profitable growth = meaningless but nice-sounding phrase to include where we have nothing else to say
Aspirations = forecasts, but ones we will deny are forecasts when we miss them
Signed a MOU/LOI = We haven’t been able to sign a contract yet
Translating Strategy Updates
Synergies = job losses
Business simplification = job losses
Efficiency = job losses
Cost-saving initiatives = job losses
Strategic actions = job losses
Aligning the overhead cost base with activity levels = job losses
Conducting an in-depth business review = job losses
Right-sizing = job losses
Roll-up = Roll up, roll up, you could win some shares (if you pay for them in repeated placings.) For carpet companies, a roll-up is where the bodies are hidden.
ERP = Expect Reduced Profits
Strategic Review = we’ve run out of ideas, so we’ll get the consultants in
Medium and long-term ambitions = buckle up; the short-term outlook is terrible
Longer-term growth trajectory = adopt the brace position; the short and medium-term outlook is terrible
We look to the future with optimism = may day, may day; the plane is going down
Disruptive technology = no current commercial market
Exciting opportunities = capital-intensive opportunities
A renewed focus on the core business = our diversification efforts have failed
Strategic collaboration with Microsoft = we’ve just bought Office 365
A pivot to blockchain technologies = we hired someone who says they own some bitcoin
AI – please bid up our shares; we’ve got options that expire soon
Translating Broker Recommendations
Strong Buy = A placing is on the way
Buy = We think we’ll get some good fees out of this one
Market Outperform = Sell
Hold = Sell
Market Perform = Sell
Market underperform = Sell, but doesn’t sound as bad
Sell = close to insolvency
Strong Sell = probably a fraud
House Stock = they pay us to write whatever they want
Forecasts withdrawn = no one has any idea what’s going on, especially the management
Happy Christmas!
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34 comments
Excellent article.
Excellent
Very, very good indeed mark . Very funny.
But also quite concerning, as most of these are pretty spot on.
Lots of talk about why UK markets are so weak and unfavored, but not many commentators refer to the fact that investors simply have to view management with a high degree of cynicism and of questionable reliability as a starting point.
When I first became an FD in the late eighties it was drilled into me to be “whiter than white”, “tell it as it is”, “bad news is acceptable but shocks and surprises are not “ etc etc
And it astonishes me nowadays that accounting rules seem to actively encourage companies to almost choose whichever profit measures they wish to suit them. And dont get me started on “exceptionals” !! Highly frowned upon back then and like a red rag to the auditor. And yet unbelievably proliferate nowadays.
Yes, a great article Mark.
One I liked was from a contract firm we used in India and when giving us updates would often come up with this gem: "we're making excellent progress towards making excellent progress"
Were you previously an estate agent Mark? You know the sort of thing:
Deceptively spacious = ...
Brilliant Mark, as I discover every year investing , one needs a sense of humour!
Great article - but could we also do a serious one on this for us newbies who don’t understand management speak
A brilliant piece, Mark. Brightens up winter and depressing market.
I have another.
Not in th best interests of shareholders = not in the best interests of management,
Richard
love this!
Very worrying, as it is so true. Great writing
Superb Mark.
Excellent gallows humour. British are best at this, at least!! Happy Christmas all x
Love it Mark this is about th eonly good thing at the moment, UK mkt I near give up 3-5 lost yrs and I bet I'm not the only one. I did well out of 2020 but Vistry ffs, then ZTF canning of ReZorce etc etc etc
It looks the most black before dawn.
I've never understood that one. I've always found it to be most black in the middle of the night. :)
Fantastic!
"ERP = Expect Reduced Profits" is my favourite
Brilliant !
Very funny
So good
Excellent - so true!
Only half way through and laughing so much i need a lie down before carrying on
What about this one: "Best in Class".
When the only one worth joining is unlikely to pay for our predictions!
;)
Brilliant!! was laughing from the first: Broadly in line = not in line
Identification of irregularities = CEO now in the Bahamas
Potential mis-statement of accounts = CFO in the Bahamas
Uncertainty over previous bookings = Head of sales now in the Bahamas.
Due to institutional demand = bullshit.
Pillars of growth = see above
Unseasonal weather = weather
Doesn't align with our values = Wibble
Because it's total crap = truth, tho might knock £500m off company value.
Great additions, thanks WoSS!
Love this. Another one is:
Omnichannel = we sell from the internet and shops
Thanks, Chris.
I almost went for:
Omnichannel = after 30 years of being behind the times, we've created a website,
Except these days:
Omnichannel = our web traffic is so low, we've opened a shop to see if our footfall will be higher than that! ;-)
Love it!!
Fantastic thanks, burst out laughing at '...we’ve just bought Office 365'
Mark. This is great. Thank you. I found this to be a very humorous read. Nevertheless it is actually very useful and thought provoking.
Thanks WarrantStar. Just for the avoidance of doubt, this is intended to be a humourous article, not a serious guide to RNS. However, as they say, the best comedy is based on truth!
The jargon is getting a major airing these days
No doubt a pretty accuate resume