What is a fiscal quarter? (2024)

What is a fiscal quarter?

In the financial world, a quarter refers to a three-month period used for reporting and recording financial performance. It typically represents one-fourth of a company's fiscal year.

Companies usually release their financial results every quarter to comply with economic laws and regulations. The quarterly reports are market-moving highlights of the fiscal year, revealing crucial financial details for investors.

The most common quarters are the standard calendar quarters:

Q1: 1 January to 31 March

Q2: 1 April to 30 June

Q3: 1 July to 30 September

Q4: 1 October to 31 December

That's the most straightforward reporting schedule and by far the most popular.

Why quarterly reports are so important

A quarterly report is a document companies use to provide regular updates on their financial performance, typically covering a three-month period. They come in the form of regulatory filings and press releases.

Quarterly reports are released for the benefit of investors, analysts, and regulatory bodies. They include key financial metrics such as revenue, earnings, and expenses. The information in a quarterly report helps stakeholders assess a company's financial health and future prospects and provides transparency into its operations and financial decisions.

Quarterly reports are an essential tool for investors and analysts to evaluate a company's financial performance and make informed investment decisions. In most countries, companies are often legally required to file reports with regulatory bodies such as the Australian Securities and Investments Commission(ASIC)or the US Securities and Exchange Commission (SEC), providing a publicly available record of their financial performance.

Serious investors often take deep dives into quarterly filings, reading through every management comment while analysing important financial figures.

Famous investor Warren Buffett likes to relax by reading quarterly reports (but skipping the sections where management provides forward-looking guidance). He recommends reading 500 pages of annual reports every day to build your knowledge and understanding of business practices and financial analysis.

The rhythm of fiscal quarters

Due to the terms of the relevant reporting rules and regulations, these reports typically hit the news wires and financial reporting systems between three and six weeks after the end of each quarter, often with a slightly longer delay following a wrap-up report at the end of the fourth quarter. This steady reporting rhythm results in so-called earnings seasons, where a flood of quarterly (or annual) reports is published during a few intense weeks.

Some businesses choose to operate on a fiscal calendar that doesn't match the wall calendar in an office. A different 12-month period that better suits their specific business needs and operations may allow companies to better manage and plan their financial results and activities, such as seasonal trends, product cycles, and major expenditures.

By aligning their fiscal year with a period reflecting their business operations, companies can give investors and analysts a more accurate picture of their financial performance. Additionally, having a fiscal year that differs from the calendar year can offer tax benefits and simplify financial reporting by reducing the need to adjust or reconcile results between different accounting periods.

Australia's big four banks are an example. National Australia Bank (ASX: NAB), Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ) all end their fiscal year on 30 September, while Australia's largest bank, Commonwealth Bank of Australia (ASX: CBA), reports its full-year earnings for the 12 months ended 30 June.

Power of tradition

In the US, tech giant Apple (NASDAQ: AAPL) ends its fiscal year on the last Saturday of September. After its custom year-end dates, its fiscal quarters follow in three-month periods.

The choice of fiscal year periods isn't always completely logical. For example, Apple has operated under this off-kilter fiscal calendar for decades (although it moved the quarterly endpoints from Fridays to Saturdays in 1999). The iPhone maker and App Store operator you see today is very different from the Mac builder of 1994, even as Apple's unusual fiscal year has stayed almost the same for all those years.

Inertia and tradition can be powerful forces, preserving certain business practices long after their original purpose has been lost. Of course, changing also results in additional paperwork and uncertainty, so there are practical reasons to stay in the lane the company chose many years ago.

You can set your clock with these quarterly updates

As you continue to follow your favourite companies over time, you'll soon become intimately familiar with their reporting quirks. There are exceptions to every rule, but many industries see peers and rivals stick to similar reporting schedules.

After the end of another earnings season, you can curl up on the couch with a fresh stack of reports and your phone set to "do not disturb". It's time to get to know your favourite businesses better.