Quarter (Q1, Q2, Q3, and Q4)

What is a fiscal quarter?

A fiscal quarter is a three‑month period used by businesses and governments to organize financial reporting, pay dividends, and evaluate performance. Companies typically produce four quarterly reports per fiscal year, commonly referred to as Q1, Q2, Q3, and Q4.

Standard calendar quarters

When a company follows the calendar year, quarters are:
* Q1: January–March
* Q2: April–June
* Q3: July–September
* Q4: October–December

Quarters are often paired with the year (e.g., Q1 2025 or Q1’25) to indicate the period being reported.

Fiscal vs. calendar quarters

A company’s fiscal year can begin and end on dates that differ from January–December. If so, its quarters shift accordingly (for example, a fiscal year beginning in February would make Q1 = February–April). Companies choose non‑calendar fiscal years to align reporting with seasonal sales, product launch cycles, or quieter accounting periods.

Uses of quarters

• Quarterly financial reports: Public companies file Form 10‑Q (unaudited) for the first three fiscal quarters and Form 10‑K (audited) annually. Quarterly earnings and management guidance influence investor expectations and stock prices.
• Dividends: Many U.S. companies pay dividends quarterly; other jurisdictions may split or pay annual dividends differently. Dividend ex‑dates can cause short‑term price moves.
• Tax and payroll: Tax authorities require quarterly estimated tax payments for certain taxpayers. Employers remit payroll taxes periodically (e.g., Form 941 in the U.S.).
• Internal planning and benchmarking: Quarters provide regular checkpoints to track trends, set targets, and compare performance year‑over‑year.

Seasonality and analysis

Many businesses are seasonal, so sequential quarter comparisons can be misleading. Common practices to address seasonality:
* Compare the same quarter across different years (e.g., Q1 this year vs. Q1 last year).
* Use trailing twelve months (TTM) or trailing four quarters to smooth short‑term fluctuations.
* Evaluate off‑season performance: growth in slow quarters can signal improving fundamentals.

Nonstandard fiscal years: why and examples

Companies sometimes choose fiscal years that better capture peak activity or align reporting with business cycles. Examples:
* Apple: fiscal year ends on the last Saturday of September, aligning with September product launches.
* NVIDIA: fiscal year ends on the last Sunday of January, capturing holiday sales.
* Walmart: fiscal year ends January 31 to include the full holiday shopping season in year‑end results.
* Costco: fiscal year ends in August; its Q4 therefore covers June–August.
* H&R Block: shifted its fiscal year to end June 30 to align tax‑season results in comparable periods.
Other companies adopt 52–53 week fiscal years instead of strict calendar dates for similar reasons.

Criticisms and mitigations

Criticisms:
* Quarterly reporting can incentivize short‑term decision‑making and pressure management to meet near‑term targets.
* Quarterly snapshots (unaudited) may be less informative than annual audited results.

Mitigations:
* Use longer‑term measures such as TTM, multi‑year trends, or strategic KPIs.
* Focus on fundamentals and cash flow rather than single‑quarter earnings beats or misses.

Key takeaways

• A fiscal quarter is a three‑month reporting unit; there are four quarters per fiscal year.
• Quarters can follow the calendar year or a company’s customized fiscal calendar.
• Quarterly reports, dividends, and tax obligations make quarters central to corporate finance and investor analysis.
• Seasonality and short‑term incentives mean analysts often supplement quarterly data with TTM figures and year‑over‑year comparisons.

Bottom line

Quarters organize financial information into regular, comparable intervals that help companies, investors, and regulators monitor performance. While useful for early detection of trends, quarterly focus should be balanced with longer‑term analysis to avoid overemphasizing short‑term results.