How to Read a 10-Q

Two Minutes Reading for business analysis

📌 What is a 10-Q?

• Definition: A 10-Q is a quarterly report that all U.S. public companies must file with the SEC (Securities and Exchange Commission).
• Purpose: It provides an update on the company’s financial performance and condition between annual reports (10-K).
• Frequency: Filed three times a year (the 4th quarter is covered in the 10-K).
• Audience: Investors, analysts, regulators — essentially anyone who needs a transparent view of the company’s financial health.

🗂 Structure of a 10-Q

Here are the main parts you’ll see:

1. Financial Statements (Unaudited):
   • Income Statement (P&L): Revenue, expenses, net income.
   • Balance Sheet: Assets, liabilities, and shareholder equity.
   • Cash Flow Statement: How money moves in/out (operations, investing, financing).
2. Management’s Discussion & Analysis (MD&A):
   • Narrative from management explaining results, trends, risks, and outlook.
   • Useful for spotting future growth drivers or warning signs.
3. Risk Factors & Legal Proceedings:
   • Updates on lawsuits, regulatory issues, or new risks not previously disclosed.
4. Controls & Procedures:
   • Notes on whether management believes the financial reporting systems are solid.

🔑 How to Read a 10-Q (Step-by-Step)

1. Start with the Income Statement:
   Look at revenue growth, margins (gross, operating, net), and compare to prior quarters/years.
2. Check the Balance Sheet:
   Focus on cash reserves, debt levels, and working capital (current assets – current liabilities).
3. Follow the Cash Flow:
   Strong companies usually show positive operating cash flow.
   Check if cash is being burned on operations or raised through debt/equity.
4. Read MD&A Carefully:
   • What explanations do executives give for changes?
   • Are they confident or cautious about the next quarter?
   • Look for “between the lines” signals (like blaming external factors vs admitting internal challenges).
5. Scan Risk Factors:
   Sometimes companies quietly introduce new risks here (e.g., lawsuits, regulatory changes, supply chain issues).
6. Compare to Expectations:
   Cross-check with analyst consensus, guidance, or your own investment thesis.

🎯 Why It Matters for Investors

• Timeliness: Gives you the latest financial health snapshot.
• Transparency: Shows not just numbers, but management’s tone.
• Opportunities/Risks: Helps you spot undervalued stocks or avoid hidden dangers.

As Warren Buffett says: “You have to read the reports. You have to read not only what they print, but also what they don’t print.”

💡 Application Example

Tomorrow (8/27/2025), NVIDIA will release its Q2 earnings report. This is the perfect chance to put these steps into practice. By analyzing NVIDIA’s income statement, balance sheet, cash flow, and MD&A, we can evaluate whether its AI-driven growth momentum is translating into sustainable profitability — or if risks like high capital spending and regulatory headwinds are starting to weigh on results. Stay tuned — we’ll walk through NVIDIA’s Q2 filing as a real case study using this exact framework.

🧘 R2R Takeaway

A 10-Q is your quarterly health check on a business. Don’t just scan the numbers — read between the lines. As Buffett says: “You have to read not only what they print, but also what they don’t print.”