How to Read a 10-k for Prospecting

If you're delving into the financial details of public companies, the 10-K is your go-to resource. 

Born out of the market crash in 1929 and the resulting reforms of 1934, this detailed annual filing mandated by the SEC is a treasure trove of insights.

In its pages, you’ll find everything from audited financials to strategic narratives about the company’s year.
For anyone in B2B prospecting, a 10-K offers a clear view of a potential client's financial journey, strategic priorities, and market challenges.

Why does this matter? 

Knowing the terrain helps tailor your approach to align closely with a prospect's needs, making your pitch not just a shot in the dark but a targeted proposal.
So, let’s dive in and see how 10-K reports can sharpen your prospecting efforts and help you connect more effectively!

What is a 10-k form?

The short answer is “An annual report filed by publicly traded companies in the U.S. to provide a detailed overview of their financial performance, business operations, and future outlook.”

Never seen one? Here’s an example:

Companies Required to File a 10-K

• Publicly Traded Companies: All companies that are publicly traded on U.S. stock exchanges are required to file a 10-K with the SEC. This requirement ensures transparency and provides investors with the information necessary to make informed decisions.
• Larger Private Companies: While most private companies are not required to file a 10-K, those that have publicly traded debt or securities may need to file similar reports with the SEC.
• Foreign Companies: Foreign companies that are publicly traded in the U.S. are also required to file forms 10-K or their equivalents, depending on specific SEC rules for foreign private issuers.

Key Components of a 10-K Report

Business Summary
The business summary provides an overview of the company's business operations, giving readers a comprehensive understanding of its core activities. It outlines the main products or services offered by the company, highlighting their unique features and benefits. Additionally, the business summary delves into the primary markets the company operates in, shedding light on the competitive environment it faces.

Risk Factors
In the risk factors section, a detailed list of potential risks and uncertainties is presented, ensuring that investors are well-informed about the challenges the company may encounter. These risks encompass a wide range of factors, including economic risks that may arise from fluctuations in the global economy, industry-specific risks that are inherent to the sector the company operates in, and operational risks that may arise from internal processes and procedures.

Selected Financial Data
The selected financial data section provides a summary of key financial figures over several years, allowing readers to quickly reference and analyze financial trends and conditions. This data includes essential metrics such as revenue, net income, and cash flow, providing a comprehensive snapshot of the company's financial performance.

Management's Discussion and Analysis (MD&A)
In the MD&A section (Management's Discussion and Analysis), management offers their perspective on the company's financial results, providing valuable insights into the factors that influenced the company's performance. This analysis goes beyond the numbers and delves into the liquidity, capital resources, and results of operations, giving readers a deeper understanding of the company's financial health. Furthermore, the Management discussion section also discusses market risks and forward-looking statements, providing investors with a glimpse into the company's future prospects.

Financial Statements and Supplementary Data
The company's financial statements and supplementary data section includes the balance sheet, income statement, and cash flow statement, which are essential financial documents that provide a comprehensive overview of the company's financial position. Additionally, this section also includes detailed notes that provide additional context and details for the financial statements, ensuring that readers have a complete understanding of the company's financial performance.

Controls and Procedures
The controls and procedures section describes the internal controls over financial reporting that the company has in place to ensure the accuracy and reliability of its financial statements. It also includes an assessment of the effectiveness of these controls, providing transparency and reassurance to investors. Any changes in internal controls or deficiencies noted are also disclosed in this section, highlighting the company's commitment to maintaining strong financial governance.

Executive Compensation
The executive compensation section provides details of the compensation packages of key executives within the company. This includes information on salaries, bonuses, stock options, and other benefits, ensuring transparency and accountability in the company's compensation practices.

Corporate Governance
The corporate governance section provides information on the board of directors and its committees, giving readers an overview of the company's governance structure. It also outlines the governance policies and practices that the company adheres to, demonstrating its commitment to ethical and responsible business practices.

Legal Proceedings
In this section, information about significant legal actions involving the company is disclosed. It provides an update on the status and implications of ongoing or recent cases, ensuring that investors are aware of any potential legal risks that may impact the company's operations or financial performance.

Exhibits, Financial Statement Schedules
The exhibits and financial statement schedules section includes legal documents and agreements related to the company's business. These documents provide additional insights into the company's operations, partnerships, and contractual obligations. Furthermore, detailed financial schedules are also included, providing deeper insights into the company's financial status and performance.

Using a 10-k report for sales prospecting

Personalizing your emails is key. It shows you really get who you're talking to, not just blasting out a one-size-fits-all message.

Think about it: when someone seems to 'get' you, you're more likely to listen, right? 
That's exactly what happens with personalized emails.

They open doors and conversations because they hit right at what matters to the reader.
Stick around, and I'll show you 4 ways to use a 10-K to tailor your emails like a pro and really stand out from the crowd.

Personalization based on Business Summary

You'll find a breakdown of what the company does, the key products or services they offer, and a glimpse into the core markets they serve.

It also dives into the competitive landscape. This part talks about who else is playing in the same space and what that means for public companies.

It's a handy section if you're looking to get a quick understanding of a company's main operations and its position in the industry.

Here is an example of personalization using the "company's business" description:

Personalization based on Risk Factors

The "Risk Factors" section of a 10-K is all about transparency. It lays out the possible challenges and uncertainties a company might face. These risks could stem from a variety of sources—economic conditions, industry-specific issues, or internal operational hurdles.

You'll find a detailed list of everything that could potentially go sideways, whether it's changing market dynamics, regulatory impacts, or even technological shifts.

It’s crucial for understanding the obstacles the company is up against, giving you a sense of what could influence their future performance.

Here is an example of personalization using it:

Personalization based on Selected Financial Data

The "Selected Financial Data" section of a 10-K provides a concise look at the company's key financial figures from the past several years. 

This part is like a financial dashboard, giving you quick access to essential stats such as revenue, profits, earnings per share, and more.

It's designed to let you see at a glance how the company has been performing financially over time. This helps you spot trends and gauge the company's financial health and stability.

It's a super useful section if you're trying to get a snapshot of the company's financial trajectory without digging through more detailed reports.

Here is an example of personalization using it:

Personalization based on Management's Discussion and Analysis (MD&A)

The "Management's Discussion and Analysis" (MD&A) section of a 10-K offers an insider’s view straight from the company's management. Here, they unpack the financial results, giving you their take on what the numbers really mean.

They delve into specifics like liquidity—how well the company can handle its debts and financial obligations—and capital resources, essentially looking at the funds available for future growth.

Additionally, they discuss operational performance over the past fiscal year and provide insights into potential market risks and opportunities ahead. This section often includes forward-looking statements that speculate on future performance based on current trends and expected market conditions.

It's a rich narrative that complements the raw financial data, providing a deeper understanding of the company's financial health and strategic direction.

Here is an example of personalization using it:

Prospect with a 10-k at scale

Understanding a 10-K can transform how you approach prospecting, turning raw data into strategic insights.

The challenge is to decode this extensive document quickly and effectively.

That’s where a streamlined process comes in. Our method helps you dissect a 10-K, pinpointing crucial elements that align with your sales goals.

Adapt this approach to suit your needs. Refine your techniques until you find patterns that reveal new opportunities.

And when you're ready to automate and personalize your prospecting emails on a larger scale, leveraging 10-K insights as inputs, explore how OneShot.ai can enhance your efficiency and accuracy.