Form 10Q: Definition, How to Interpret

• A Form 10-Q is a required document that public companies must file periodically with the SEC. 
• The 10-Q contains important information and updates on financial performance.
• All 10-Qs are accessible for free and in full through the SEC’s EDGAR database.

The US Securities and Exchange Commission (SEC) requires publicly traded companies to provide investors with regular updates on their business and financial standing. The idea is to ensure that shareholders have all the details needed to make informed investment decisions.

Among the most important ones to keep up with are the quarterly earnings reports companies submit following the outline provided on the SEC’s Form 10-Q. 

What is Form 10-Q? 

The Form 10-Q is a financial report that publicly traded companies are required to file after each of the first three quarters of the year. After the final quarter of the year, they submit a more comprehensive report known as a

10-K

that covers their annual performance.

When companies announce their quarterly earnings results, they generally refer to the 10-Q as the main source document and may hold an earnings call to discuss the highlights as well as release a summarized version of the key points found in the 10-Q. 

While not as detailed as an annual report, the 10-Q contains valuable information for shareholders including the company’s financial statements, management’s notes on performance, and company highlights.

“The 10-Q tells everyone, including investors, how the company is doing,” says Jeff Hoopes, associate professor and Harold Q. Langenderfer Scholar of Accounting at the University of North Carolina at Chapel Hill. “It tells its earnings from that quarter, its assets and liabilities as of that quarter, and is basically a more timely and more frequent version of the annual report, with less information.”

The 10-Q also discusses risk factors that may threaten the company, as well as any legal proceedings.

What’s in the Form 10-Q?

The 10-Q is organized into two parts. Part I is financial information including unaudited financial statements and notes from the management team. Part II is “other information,” which includes any legal proceedings, risk factors, and other required disclosures. 

Part I – Financial information 

• Income statement:  The income statement details the revenue and expenses of the company during the quarter. 
• Balance sheet: The balance sheet tells you the value of the company’s assets, liabilities and shareholder equity.
• Cash flow statement: The cash flow statement provides details about all the cash coming into and moving out of the company during the period. The cash flow statement is different from the income statement because it only takes into account true cash transactions, while the income statement considers factors such as depreciation. 
• Management discussion of results and financial condition: This section of the report details what the company does, its strategy, and key trends that managers see as helping the business grow.
  

Part II – Other Information 

• Legal proceedings: If there are any current proceedings involving the company, there will be a short summary describing the issue here. 
• Risk factors: The list of risk factors for the company will be listed here and will generally include new economic factors like a change in consumer habits, high costs, or a significant change in leadership. If there are no material changes in risk from the previous report, this will be stated. 

When is earnings season?

Most companies follow a calendar year cycle from Jan. 1 to Dec. 31 for accounting purposes. That means quarters end in March, June, September, and December. Earnings season begins a couple of weeks after the end of each quarter and can last for several weeks. For example, the earning season for the fourth quarter of 2022 would begin in mid-January of 2023.

During earnings season, companies release their quarterly results and host conference calls to discuss them with investors, analysts, and the media. The stock market can also be volatile during these periods if the reported results are above or below what investors and analysts expect.

How to find out when companies report their earnings

The SEC requires 10-Qs to be filed between 40 and 45 days from the end of the quarter, depending on the size of the company. For 10-Ks, it’s between 60 and 90 days.

Keep in mind that while most companies follow the calendar year for accounting purposes, with the fourth quarter ending on Dec. 31, others do not. Apple, for example, ends its fiscal year in September.

If you want to know when a particular company is expected to announce earnings, one of the easiest ways to do so is by checking a searchable earnings calendar, such as the ones provided by Insider and Nadsaq. Most brokerage apps and websites also include features to display major corporate events like earnings and stock splits on a calendar and will send you a notification when that event approaches.

Where to get corporate earnings reports

There are several places to obtain an earnings report.

You can get them by visiting the investor relations section on the company’s website. Many will include not only 10-Qs and other SEC filings but also the associated press releases and presentations given during discussions of the results with analysts and investors.

You can also search the SEC’s EDGAR database. The 10-Q and other required filings can be found using this database. Nasdaq also makes these earnings documents available

Keep in mind that no matter where you access these filings, the reports will be identical, it is just a matter of preference as to what website or database is easiest to navigate. 

To find a company’s earnings reports via EDGAR  follow these steps:

1. Go to the EDGAR database.
2. Type in the ticker symbol for a company and press enter. 
3. Navigate to the 10-K and 10-Q under the ‘Selected Filings’ section to view each of the reports.