It is probably safe to say that most public companies have experienced the difficult situation of needing to issue preliminary financial results after the quarter ends but before the customary date that financial results would otherwise be publicly released.  A number of factors could cause this situation to arise, such as any of the following:

  • A securities offering will be launched during this time period.
  • The most recent quarter is materially different than market expectations (either unusually weak or unusually strong).
  • Management will be participating in a conference and desires to speak about recent results, among other reasons.

In securities offerings, preliminary financial results are often called “flash” numbers or “capsule financial information,” and, outside of offerings, the market may refer to an earnings release containing preliminary financial results as a “pre-release” (i.e., a preliminary earnings release before the actual, final earnings release).

In monitoring Securities and Exchange Commission (SEC) comment letters, we came across a comment letter exchange involving flash numbers in an initial public offering (IPO) registration statement filed by Gambling.com Group Ltd.  In the registration statement under a “Recent Developments” subsection, the registrant included financial ranges for total revenue and operating profit, and then subsequently stated, “[t]his preliminary financial information is not a comprehensive statement of our financial results for this period, and our actual results may differ materially from these estimates due to the completion of our financial closing procedures, final adjustments, and other developments that may arise between now and the time the closing procedures for the fiscal quarter are completed.”

As you will see in the comment below, the SEC Staff objected to this disclaimer explaining that the registrant should be able to assert that the actual results are not expected to differ materially from that reflected in the preliminary results.

Recent Developments, page 9

    1. We note your statement in your disclosure that your “actual results may differ materially from these estimates due…” If you choose to disclose preliminary results, you should be able to assert that the actual results are not expected to differ materially from that reflected in the preliminary results. Accordingly, please remove this statement, as it implies that investors should not rely on the information presented.

Response: The Company respectfully acknowledges the Staff’s comment and has revised disclosures on page 9 of the Registration Statement.

Takeaways for Public Companies

This comment letter exchange serves as a reminder that the SEC Staff generally disfavors disclaimer language aimed at limiting investors from relying on the information being provided. (As another example, see the Titan Section 21(a) Report related to whether investors could rely on the reps and warranties in a merger agreement.)  As such, companies that are faced with issuing preliminary financial results, whether in a ’33 Act or ’34 Act setting, should ensure that they are comfortable with investors relying on the information presented, even if the results are only preliminary and unaudited.

If you have any questions regarding any of the topics covered in this blog post, please feel free to email the authors directly or, if applicable, contact your primary Bass, Berry & Sims relationship attorney.

About Bass, Berry & Sims’ Corporate & Securities Practice

Public and private companies of all sizes across a variety of industries turn to Bass, Berry & Sims for counsel on a wide range of corporate matters, including mergers, acquisitions and dispositions; capital markets transactions; special purpose acquisition companies (SPACs) and de-SPAC transactions; executive compensation issues; corporate governance; ESG matters; and shareholder activism. We serve as primary corporate and securities counsel to numerous public companies and have counseled on more than 150 deals ranging in size from $20 million to more than $15 billion over the past two years. Click here to learn more about the Corporate & Securities Practice at Bass, Berry & Sims.