An earnings report is a financial document issued by publicly-traded companies on a quarterly basis to explain their financial performance for the preceding three months. The report is distributed to investors, stock analysts and other interested parties. It provides details on a company’s financial results such as profits, losses, revenues, expenses, and cash flows.

The report contains several sections including a statement of operations, a balance sheet and statement of cash flows. The statement of operations details earnings performance and outlines the changes in net income attributable to revenue and expenses. The balance sheet provides a snapshot of a company's assets and liabilities, while the statement of cash flows oulines how cash flows into and out of the business associated with operating, investing and financing activities.

Analysts use the data from a company’s earnings report to assess its financial performance, a process known as fundamental analysis. They look for certain indicators to evaluate the company’s performance, such as “earnings per share”, which measures profits configured for each outstanding share, or “free cash flow”, which is the cash a company generates after deducting capital expenditure from its operating cash flow.

Earnings reports can have a profound effect on a company’s stock performance. An earnings report that surpasses the market’s expectations may elicit a positive response from investors, driving up the company's share price. On the other hand, if a company falls short of expectations, investors may flock to sell their shares in anticipation of a future decline, pushing the share price lower.

A company’s stock performance may even cascade beyond its own share price. If investors are disappointed by the performance of one particular company, it could set off a ripple effect across the entire market. This could cause a selling frenzy and an overall market downturn, affecting the performance of many companies.

For these reasons, earnings reports are closely watched by analysts and investors, and their impact is felt far beyond the company that issued them. Earnings reports can provide a window into the financial realities of a company, and can cause dramatic changes to the company’s stock price, as well as other companies’ share prices and the market at large.