10-Q
The 10-Q is the quarterly filing US public companies submit to the SEC for each of the first three fiscal quarters, with the fourth quarter folded into the annual 10-K. It carries unaudited financial statements, updated risk disclosures, and management’s discussion of the period.
Three of these arrive every year, and each one updates the investment case.
The math
Follow a company through two filings. Quarterly revenue goes from $100M to $95M to $90.25M, a 5% sequential decline twice in a row.
Annualized, the run rate has fallen from $400M to $361M. At 3x sales, the business that was worth $1.2B on the old trajectory supports about $1.08B on the new one, a $117M gap.
| Old trajectory | Two filings later | |
|---|---|---|
| Quarterly revenue | $100M | $90.25M |
| Annualized run rate | $400M | $361M |
| Value at 3x sales | $1.2B | ~$1.08B |
Each quarter looked like a modest miss in isolation; the sequence, visible only to someone tracking the filings side by side, was a trend worth nine figures.
The trap
Earnings season compresses attention into the press release and the call, both published before the 10-Q in many cases. The filing that follows days later often contains the details that reprice the stock on delay: a new legal accrual, a covenant amendment, receivables growing twice as fast as sales.
Investors who stop reading after the headline EPS beat routinely hold through warnings that were public the whole time.
The move
Treat the 10-Q as the quarterly audit of an ongoing thesis rather than news. Compare every key line sequentially and year over year, since seasonality can disguise either direction.
Check the working capital detail against the revenue trend, and scan the updated risk factors and subsequent events note, which is where fresh trouble surfaces first. A quarter of diligence costs an evening; holding a deteriorating position for two extra quarters costs considerably more.
Reference: SEC investor.gov, Form 10-Q