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Guide · SEC filings · 6 min read

What is a 10-Q filing and how to read it?

The 10-Q is the quarterly financial report that publicly traded U.S. companies are required to file with the SEC, the country's stock market regulator. It is the official snapshot of the quarter: what the company has sold, how much it has earned, how much debt it has, and how much cash it has generated.

What a 10-Q contains

The document is organized into two parts. The first contains the financial information; the second, the qualitative information and management statements.

• Income statement: sales, gross profit, operating income, and net income for the quarter, compared with the same quarter of the prior year.
• Balance (balance sheet): cash, inventories, debt and total assets at quarter-end.
• Cash Flow (cash flow statement): how much cash comes in and goes out from operating, investing, and financing activities.
• Notes and accounting policy: details of segments, leases, litigation, or relevant accounting changes.
• Risk factors and management's discussion and analysis (MD&A): what has changed compared to the previous quarter and what risks the company acknowledges.

When it is published

The SEC sets the deadline based on company size: large listed companies (accelerated filers) have 40 days from quarter-end; smaller ones, 45. That means first-quarter results (January-March) typically appear in April or early May. The last quarter of the year has no 10-Q: instead, the annual report 10-K.

How to read it step by step

1. Start with the income statement: compare the quarter's sales with the same quarter of the prior year (not with the previous quarter, because consumption is seasonal).
2. Look at the margins: gross profit and operating income over sales. A steadily declining margin is the first sign of pricing or cost problems.
3. Go to cash flow: profit can be dressed up; cash generated by operating activities cannot. Compare free cash flow (operating cash minus investment, CAPEX) with net income.
4. Review the debt: total and net debt, upcoming maturities, and financial cost.
5. Read the MD&A: management's own explanation of the figures, including the forecasts it confirms or modifies.

Why it matters to investors

The 10-Q is the first official look at how the company evolves between two annual reports. For companies of defensive consumer —food, beverages, tobacco, household products— the pattern of interest is stability: recurring revenue, sustainable margins, and cash flow that consistently funds dividends and buybacks. The guidance from free cash flow explains how it is calculated.

How Cifra's AI analyzes a 10-Q report

Cifra processes quarterly 10-Q reports filed with the SEC through a specialized multi-agent system that extracts official XBRL data and audits the company's health by removing accounting noise in three structured phases:

1. Two mandatory time horizons (in Q2 and Q3)

To neutralize the seasonality inherent in consumption and detect margin losses or sales slowdowns in time, the AI splits the analysis into two independent perspectives:

• LAST 3 MONTHS: Isolates exclusively the performance of the closed fiscal quarter, allowing detection of recent acceleration or operational deterioration in the last 13 weeks.
• FOR THE WHOLE YEAR (YTD Accumulated): Evaluates the year-to-date accumulated (6 months in Q2, 9 months in Q3) to check whether the company remains on track to meet its annual guidance. In Q1, a single 3-month horizon is analyzed.

2. The three quantitative blocks of the analysis

1. Sales and Profitability (Normalized Income Statement): Canonical 6-column table that audits Sales, Gross Profit, Operating Income (EBIT), EBT and Net Income, along with shares outstanding and EPS. Applies strict normalization rules:
   • Reversal of impairments (Impairments): Non-cash depreciation of brands or goodwill is added back to Operating Income and EBT to compare clean operating profitability (*apples to apples*) against the prior year.
   • Tax normalization at 23%: If the reported tax rate deviates more than ±20% from the standard due to extraordinary credits or regularizations, taxes are recalculated at 23% on adjusted EBT (Adjusted Net Income = Adjusted EBT × 0.77).
   • Inheritance in Prev. Adjusted: If the prior year had no adjustments, the reported value is forcibly taken to calculate the real percentage variation.
2. Cash Flow and Free Cash Flow (Quarterly Deduction & Working Capital): Evaluates the conversion of profit into real liquidity across 6 metrics (Cash Flow, CAPEX, FCF, FCF/Share, Dividends and Free Capital). In the normalized column, three things are mainly corrected: working capital, stock option compensation and taxes.
   • Quarterly mathematical deduction: Since the SEC only requires reporting the cumulative amount in the 10-Q, the AI derives the exclusive 3-month flow by subtracting the prior cumulative amount: 3M Flow = YTD Flow(Qn) - YTD Flow(Qn-1).
   • Working capital normalization: Compares the reported working capital with what the business should have needed and discounts the difference. Estimates the historical weight of working capital on operating cash flow excluding working capital (average of the last 10 fiscal years) and applies it to the period's cash flow; in quarterly reports the annual theoretical figure is prorated (Q1 1/4, Q2 2/4, Q3 3/4). It is not an exact science: it is our own approximation to measure how much working capital should have consumed or released.
   • Stock options (SBC): The company adds back stock-based compensation because no cash goes out, but it dilutes the shareholder and is granted at a discount. That is why the full amount of that line is deducted from Free Cash Flow: by neutralizing the non-cash entry, the full cost of dilution to the shareholder is charged.
   • Cash tax reconciliation: The taxes actually paid are extracted from the cash flow statement and compared with 23% of normalized EBT: if it underpaid, the difference is deducted from operating cash flow. Real example (TAP, 10-K 2025): it should have paid 322.6M and only paid 131.4M, so 191.2M is subtracted from normalized Cash Flow.
3. Capital Allocation (Rigorous Reconciliation of Sources and Uses): Answers where the money came from in the quarter and what it was spent on:
   • Part of the row Free (FCF - Dividends) and reconciles balance sheet changes: Cash (with inverted sign), Balance Sheet Debt (long term + short term financial), Share Buybacks, Short-term investments, Acquisitions (M&A) and Divestitures (filter ≥ 50M).
   • Calculate the sum Total and issues an objective verdict: reasonable reconciliation or alert from significant discrepancy that requires in-depth analysis.
   • Include mandatory notes with the exact comparison of balance sheet debt, net debt, and cash balances.

3. Real example: Kraft Heinz (KHC), Q2 2026

A Cifra report is divided into two independent parts: one with the last 3 months and another with year to date (6 months accumulated in a Q2). Each part contains the three blocks in the same order, and the first starts with the income statement:

The table compares the quarter with the same quarter of the prior year, but the decisive column is "Adjusted", because in the reported figure ("Normal") there are items that do not reflect the normality of the business. The two main adjustments in this report are:

• Goodwill impairments (goodwill): goodwill is the premium paid when buying another company above the value of its assets. When that business does not perform as expected, the company "impairs" that premium and the loss sinks accounting profit, although it is not a real expense or a cash outflow: it only corrects an excessive payment from the past. That is why it is added back (Adjusted Operating Income = Normal + Impairments).
• Anomalous taxes: some quarters taxes may come out negative (refunds or tax credits), something that does not reflect reality: the usual thing is to pay taxes between 20% and 25% of pre-tax profit. When the deviation is high, it is normalized to 23% of Adjusted EBT (Adjusted Net Income = Adjusted EBT × 0.77).

In the example: Kraft Heinz recorded 7352M of impairments in the quarter (2441M of goodwill and 4911M of intangibles), so its reported operating income was -6431M and adjusted operating income was 921M. In the same quarter of the prior year there were 9266M of impairments, which are also added back in "Prev. Adj." (-7974M + 9266M = 1292M) to compare apples to apples: the real decline is -28.72%. On taxes, the reported figure was -916M (deviation -508.1%), so the 23% is recalculated on adjusted EBT (976M × 0.23 = 224M) and adjusted net income comes to 752M (-11.13%).

You can view the full report at public analysis of KHC 2026 Q2, see the full methodology and interactive examples in the section on AI Analysis in Cifra's Guides or explore actual quarterly analyses in the company profiles.

Frequently asked questions about the 10-Q

How often is the 10-Q filed?

Three times a year, in the first three quarters of the fiscal year. The fourth quarter is included in the annual 10-K report.

Is the 10-Q audited?

No. Unlike the 10-K, 10-Q financial statements do not require a full external audit and may be adjusted later.

Where can I read a company's 10-Q?

On SEC EDGAR, the SEC's official system, or in the filing history on each company's page in Cifra.

Educational content from Cifra. It does not constitute financial advice or an investment recommendation. The deadlines and requirements cited come from SEC regulations (Regulation S-X and Rule 13a-13).