How to Read a 10-Q

📌 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:

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).
Management’s Discussion & Analysis (MD&A):Narrative from management explaining results, trends, risks, and outlook. Useful for spotting future growth drivers or warning signs.
Risk Factors & Legal Proceedings:Updates on lawsuits, regulatory issues, or new risks not previously disclosed.
Controls & Procedures:Notes on whether management believes the financial reporting systems are solid.

🔑 How to Read a 10-Q (Step-by-Step)

Start with the Income Statement: Look at revenue growth, margins (gross, operating, net), and compare to prior quarters/years.
Check the Balance Sheet: Focus on cash reserves, debt levels, and working capital (current assets – current liabilities).
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.
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).
Scan Risk Factors: Sometimes companies quietly introduce new risks here (e.g., lawsuits, regulatory changes, supply chain issues).
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.”