SEC filings are filled with useful investing information
but finding the data you need can be a huge challenge especially if you're a new investor
in this video we'll show you the step-by-step process to go straight to the most useful part
of a company's quarterly and annual filings my name is Brian Feroldi and my name is Brian Stoffel
Thanks to Quartr for sponsoring today's video so brian what is this most useful part that we
are talking about well brian this section has a really fun name to say out loud it's
management's discussion and analysis of financial condition and results of operations that's a
mouthful to make it easier we just call it md&a management's discussion and analysis the branding
on this section is awful but this section is filled with incredibly useful information that
investors can use let's first go to how to find this information the first place head on over
to the sec's free website and go to their edgar database then click on the company search section
and put in the ticker symbol of the company you're searching up in this example we're going to use
hubspot which is ticker h-u-b-s once that search is complete you're going to be looking for the
most recent 10-q or 10k in some cases that's right in the latest filing section if it's not there
click the section that says 10k annual reports and 10q credit reports open that up and click the most
recent one once you're in there head on down to the table of contents and click those words
management's discussion and analysis of financial conditions and results of operations so why
include the mdna well according to the sec the reason to include this is to provide
a narrative explanation of a company's financial statements the best way of thinking about this
is its management taking data and turning that data into a coherent story it also has
a chance for management to go over the company's financial results in detail and show you the key
metrics that the management team is focused on we believe that if you know where to look in the md
a you can find the pot of gold the secret that will help you become a better investor now to
show you this we're going to go over examples of three different companies that are in three
different industries we're going to talk about a software as a service company we're going to
talk about an e-commerce company and we're going to talk about a fintech importantly managements
get a lot of leeway with the results that they present in this section and every company is
going to have metrics that they focus on so let's first start by talking about unity software which
is a software as a service company that we did a deep dive video on click the link that you see
on your screen if you're interested in watching that now if you're looking into unity software
two of the things that you'd like to find out about is one what's their customer count how
many people are building things on their platform and two what's the dollar based net retention or
expansion either one can be used and you need to look at the definitions to see that you know what
they're talking about but those are two useful pieces of information you won't find anywhere
else in the filing let's start with customer count if you scroll down to the md a you'll notice that
there's a section called customers contributing more than a hundred thousand dollars in revenue
sounds like an important metric for us investors to know what you find out in the
company's most recent filing is that the number of customers spending 100k each year went from 739
to 973. that's a wonderful sign and shows you the value of digging into the details
of this section next you might want to find out about the company's dollar based net expansion
which really lets you know how much existing customers are spending from year to year if you
scroll down a little more you find the section and you can easily see that it says that what was 144
last year at the same time is now 142 well that means it's gone down a little bit this still
means that existing customers are spending 40 more every year which is a great sign for business the
company also does a great job of showing you the trends over time now this isn't something they're
required to do but some companies give better visuals than others and we can see how unity is
performed on this metric over time now let's pivot to talking about a completely different company
a completely different industry airbnb which we would say is an e-commerce company of sorts what
are the key metrics here for investors to look at well how about the number of customers that
are on the platform how about gross merchandising volume which is the total dollar volume that's
flowing through airbnb's network and in some cases some companies will even tell you the number of
items that are bought that's not applicable in this case but it's really helpful for some other
e-commerce sites now as brian pointed out every company is different so instead of a customer
count or items bought airbnb focuses on nights and experiences that are purchased because remember
you don't just find a place to stay you can buy an experience and when you read down you see
that the company had roughly 62 million nights and experiences last year but in this quarter
they had almost 80 million an incredible growth rate another category in airbnb's management
discussion analysts look for is gross bookings value some other e-commerce companies will call
this gross merchandising volume or gmv if you look at airbnb's recent results you see
that in the year ago period they had eight billion dollars in total value flowing through the network
and in the most recent quarter that figured jumped to nearly 12 billion dollars again this is a key
metric for investors to look at the final example that we're going to look at is mercado libre
and they have many businesses but we're going to look specifically for the company's financial
technology or fintech solution which is called mercado pago now if you're looking at a fintech
company there are a couple of variables that you're going to want to check on the first
is a customer count how many people are using the product the second are the number of transactions
that occur using this tool the last is the total payment volume which is very similar to gross
booking volume or gross merchandise volume the point being this is how much money exchanged hands
using this tool now where can you find this key information in mercato libre's case you have to
scroll down to the section mdna that says other data if you zoom in on that you can get exactly
that information that brian just mentioned you can see that total payment volume in the most
recent quarter jumped from 14.5 billion to almost 21 billion and you can see that the number of
transactions that the company recorded jumped from 560 million to 865 million huge increase
we hope that this data shows you the value of digging into the sec filings and looking at that
key section management's discussion and analysis of financial conditions and results of operations
it's a mouthful it's really poorly branded and can be hard to find but it is filled with useful
information for investors if you enjoyed watching this video then it's clear that you want to learn
more about the companies that you invest in another great tool that you can use to
do just that is quarter which is the sponsor of today's video with quarter you get frictionless
access to conference calls investor presentations transcripts and earnings reports from markets all
around the world straight to your pocket for no cost quarter's mission is to change the way that
people look at investor relations and to create a completely new bridge between companies and their
stakeholders the first step in this journey is to let users interact with the company's content
while they're listening live if you're interested in getting quarter for free and supporting our
channel head on over to the app store of your choice and search for quarter that's q-u-a-r-t-r
thanks quarter for sponsoring today's video we hope that you use this information to dig deeper
into the company's financial statements and invest better yourself brian's out