A blog series exploring stock market life from a listed company CEO’s perspective.
What are the most frustrating — or perhaps more accurately, the most difficult — aspects of life as a listed company? For me, guiding the market on earnings easily ranks near the top. The topic is tightly regulated and the responsibility is enormous, yet there’s no single universal model or playbook to follow. And the cost of getting it wrong can be heavy.
During my 12 years as an equity analyst, I firmly believed that listed companies should guide on their financial development for the fiscal year with a range for both revenue and earnings. It’s the clearest, most unambiguous way to manage short-term market expectations and increase transparency for investors. And analysts love it, naturally.
Moving to the other side of the table as CEO of a listed company has brought new perspective. Precise guidance serves investors well, but is it actually the right concept for managing a business over the long term and keeping focus where it belongs? Would it be better to give very loose guidance, or none at all, as Gofore has done in Finland? I understand perfectly well the companies that have chosen that other extreme. Here’s an example that got me thinking.
Going into 2025, Inderes issued the following guidance: revenue to grow year-on-year, and adjusted EBITA margin to improve from the previous year’s 11.6%. In the autumn, looking at the order books for year-end project sales, it started to look like crossing the profitability threshold was no longer probable unless we temporarily pulled the handbrake on costs and growth investments. Kick every kickable cost into January. Not even a difficult operation: ten grand here, ten grand there, and we’d be safely above 11.6%. The price of that operation, of course, would be that we’d start doing operationally the exact opposite of what we’d just said we’d do in our freshly published strategy. Getting dragged into that kind of tail-wagging-the-dog scenario is precisely what listed companies should avoid.
For a moment I thought about what it would be like to be a private company. I’d have signed off with the CFO on a marginal change in the year’s rolling forecast for the board, and it wouldn’t have needed to take up another second of my headspace. But we had painted ourselves into this corner with the guidance we set at the start of the year. There’s absolutely no point blaming the stock market or anyone external. The rules are completely clear, and the wording of the guidance we gave at the start of the year was our own choice. And when the outlook weakens, investors have a right to hear about it. In the autumn we issued a profit warning and kept our operational plans for the rest of the year unchanged. The final result for the fiscal year: 4% revenue growth and an adjusted EBITA margin of 11.4%. Profitability missed the original threshold by 0.2 percentage points, around €50,000.
Yet the confidence hit from a profit warning, even a small one, is real. It carries a potentially big price tag for the company too, if investor sentiment is already sour. Everyone remembers the profit warning. Almost no one actually cares how narrowly you missed.
Every listed company needs to find the guidance model that fits its own business, accounting for the predictability of its business model and its stage of development. You can choose not to guide at all, but even that doesn’t get you off the hook for profit warnings. The warning must be issued if market expectations appear to be materially off.
The communication challenge is also this: you need to keep investors’ eyes trained further out than just the current fiscal year. Discipline in near-term execution is absolutely critical, but over-emphasising a single fiscal year, internally and externally, easily leads to a vicious cycle of short-termism. Credible long-term strategy communication to investors, through regular capital markets days for example, becomes more important. But it has to be acknowledged that short-term disappointments in the market often undermine the very credibility of the long-term strategy. The cycle runs in the other direction too, and when a company has the market’s trust, investors are more willing to absorb the occasional quarterly disappointment.
Going into 2026, Inderes issued guidance with a relatively wide 3-percentage-point profitability range. The wider range has felt more workable, but we’ll continue to have an intensive discussion on the topic with the board every year. I believe every listed company needs to iterate a few times to find the model that works for them, one that serves both investors’ needs and the management of the business. Their interests, in the end, are entirely aligned.
