EDGAR Online Is Running with the Elephants

XBRL Cloud has just released its "XBRL Cloud EDGAR Dashboard," an objective third-party study of XBRL filers' compliance with the new SEC mandate (pdf file). Using data-mining tools, the Cloud captures all sorts of filing details and competitive information. This report is exactly what the SEC wants - transparency of financial reporting by SEC-filing companies and timely public access to comparative standards-based financial reports. The SEC has mandated that all SEC-reporting companies start filing in XBRL between now and 2011.

The XBRL Cloud report provides information regarding the competitive landscape. Here is a breakdown of the companies mentioned in the report:

Cos. Share Filing Company
136 36.6% EDGAR Online, Inc. (EDGR), joint with RR Donnelley (RRD)
79 21.2 Bowne Co. (BNE)
57 15.3 Fujitsu (FJTSY.PK)
49 13.2 EDGARfilings (a unit of Thomson Reuters (TRI)
45 12.1 Rivet Software (private)
4 1.1 Clarity Systems (private)
2 .5 Business Wire (a unit of Berkshire Hathaway (BRK.A)
372 100%

The XBRL Cloud was the first organization to publish the names of companies that have filed their June 30th 10-Q in Extensible Business Reporting Language. The report is close to real-time and may in fact be real-time now. In the past I have referred to projected share data, so consider this an update to those forecasts.

The SEC mandate's phase-in schedule anticipates around 12,000 companies filing SEC reports in XBRL for the June 2011 quarter. In 2009, just 500 of the largest companies file, then 1,800 in 2010 of the remaining "accelerated filers", and the balance of around 10,000 companies in summer of 2011.

EDGAR Online's [EDGR 2.00, market cap. $53 million, 52-week range: .60 - 2.49] high market share will no doubt decline as new agents and systems are developed to file that data accurately and on time. However, since 2010 is the first time that footnotes must be filed (not block-style as now required), it is likely that EDGR's leadership position will remain healthy during this period when other companies are just now developing their filing procedures. And in the very long term, a larger percentage of companies will likely file themselves.

With revenue now about $20 million per year, the impact on EDGR's revenue may well be significant over the next few years. Looking at just the first 372 company filers, EDGAR Online's revenue on 136 clients should be around $2.0 million annually, or 10% of current total revenue. If they are able to win 20% of this market long-term, EDGAR Online could well increase its revenue by around $35-40 million over the next few years. Since they have converted all US companies already to XBRL for their own database operations, the margins become very good on filings after the initial filing for a client company. Gross margin overall is now around 75%, they are EBITDA-positive, and have over $35 million of NOLs. The cost of building the XBRL database over the last 6 years or so - as well as analytic programs that use that database - has severely impacted their shareholders' equity.

One of the competitive tests it seems, which EDGR has passed with flying colors, is having converted some of the largest and complex companies in the US to XBRL SEC filing. Here are a few of the clients that have selected the RR Donnelley and EDGAR Online partnership to file their XBRL financial reports to the SEC:

Alcoa, Amazon, Amgen, Apple, BankAmerica, Boeing, Comcast, Ebay, Exxon, General Dynamics, Google, Lockeed Martin, McDonald's, Moody's, NYSE, Morgan Stanley, Raytheon, State Street, Verizon, Visa, Disney, and Yahoo.

The XBRL conversion business is not one that is easily entered by companies not conversant with the XBRL standard. EDGR's process is highly automated and the validation checks and conversion methods have been extensively tested. After all, they have already converted 10-Qs and 10-Ks to the XBRL standard for about 10,000 US companies. And, their database is far deeper than the minimum SEC current requirements. Most investors know of EDGAR Online as the provider of fundamental financial data for Yahoo, Google, MSN, MarketWatch, etc. The XBRL filings market potential is not really on the radar screen yet. But, as 12,000 new filers are required to file, I suspect more attention will be paid to a company built around the validity of the XBRL standard for financial reporting.

EDGAR Online is running with the elephants - giant financial information providers like Thomson Reuters, McGraw Hill (MHP), Moody's (MCO), FactSet (FDS), MSCI (MXB) and Bloomberg. They compete with EDGAR Online on various financial analytic web-based programs and financial information services. But, unlike EDGAR Online, none of these providers controls their own XBRL interactive financial database for US companies and mutual funds. And EDGR streams Chinese, Japanese, and Korean XBRL too for specialized applications.

EDGAR Online has found a little running space of its own.

Disclosure: I am long EDGAR Online and my company uses their XBRL data-set.

Comments

[Dominic Jones_:]

For all the money Business Wire is spending advertising their XBRL services, that .5% share looks rather dismal.

Aug 26 06:28 AM

[Tom Becktol...:]

Just an fyi, filing agents are not always listed, so that market share breakdown isn't necessarily accurate...Certainly for Business Wire it isn't.

Aug 27 06:05 PM

[Miles P. Je...:]

Tom-

The total number of filings is correct since it is sourced from the SEC feed. I am guessing that BW is the agent for some of the companies listed under the Fujitsu, Clarity or Rivet filings, since BW might use their XBRL tools to file. Similarly, I am confident that the reason why Merrill Corp. is not listed at all is probably they too might use Fujitsu, Rivet, or Clarity tools as well to make their filings.

I think this data is the only comprehensive listing of filers and their agents. Hopefully, agents will add their names in future reports.

Miles


So, the numbers given will be the minimum filings by each company except for Fujitsu, Clarity, and Rivet.

Aug 28 03:01 PM

[Dominic Jones_:]

Since Business Wire's XBRL partner is Core Filing, I doubt very much that they'd be suing Fujitsu, Clarity or Rivet.

They should come clean and state exactly how many filings they did in this report instead of just calling it "inaccurate."

They've made the accusation, now back it up.

Aug 29 03:51 AM

[Dominic Jones_:]

That should be "using" not "suing" Fujitsu, Clarity or Rivet.

Aug 29 03:55 AM

[Dominic Jones_:]

Some additional info. Rivet doesn't list Business Wire as a partner. (see www.rivetsoftware.com/...)

Fujitsu does not list Business Wire as a partner (Merrill Corp. is one of theirs) see: www.fujitsu.com/global...

Clarity Systems does not either www.claritysystems.com...

So, it doesn't look like Business Wire's claim that it was the agent for more than 2 filings can be accounted for by any of the above.

I look forward to Tom Becktold of Business Wire providing us with the true numbers. He claims the author has his facts wrong, but hasn't provided anything to back up his claim.

Aug 29 04:32 AM

[Miles P. Je...:]

If you consult the source document definition (the last column on the right at xbrlcloud.com/edgar/ed...), you will see that the column heading is labeled, "Creation Software." So technically, the filing agents simply enter the software tool they used. That is why, for instance, Business Wire or Merrill might not enter their name in the filing.

However, a company like EDGAR Online has their own XBRL rendering tool and also files the SEC reports. The purpose of my report was to determine which filing companies are garnering the major filings business market share. When Fujitsu is listed, it is not possible for me to know which company used that equipment to file. So the Cloud Data is accurate for the information now available.

If companies like Business Wire and Merrill Corp. note their names in future reports, it will be possible to get a better fix on the market share data. Although we are missing the names of the filing companies on 29.5% of the data, this is the first time we have had information on 70.5% of the companies as to the names of the filers.

As of last night here is a current update:
Clarity 5, Rivet 51, Fujitsu 60
BW 2, EDGARizer 52, Bowne 83, EOL 139
Other 1

Also, from a competitive standpoint, some filing companies may prefer to state just the tool used.


On Aug 29 04:32 AM Dominic Jones wrote:

> Some additional info. Rivet doesn't list Business Wire as a partner.
> (see www.rivetsoftware.com/...)
>
>
> Fujitsu does not list Business Wire as a partner (Merrill Corp. is
> one of theirs) see: www.fujitsu.com/global...
>
>
> Clarity Systems does not either http://claritysystems....
>
>
> So, it doesn't look like Business Wire's claim that it was the agent
> for more than 2 filings can be accounted for by any of the above.
>
>
> I look forward to Tom Becktold of Business Wire providing us with
> the true numbers. He claims the author has his facts wrong, but hasn't
> provided anything to back up his claim.

Aug 29 10:10 AM

[secdataguy:]

To avoid future confusion, all you have to do is talk about who created the data, not who filed it. XBRLCloud provides information on the source of the data. The filing agent is not explicitly a part of that report.

The information on who filed the data is already included in the meta data of the submission and will show different numbers and all kinds of combinations. For instance, I don't think Rivet actually filed any data but haven't absolutely checked that yet. Business Wire did in fact file more than two (but I don't believe many more). And I've seen one submission where a filing agent submitted data created by another filing agent.

Keep creation and filing separate and all is well.

Sep 01 07:21 AM

[Miles P. Je...:]

I like the Cloud approach of noting the "Creation Software" used in the filing. For EDGAR Online, Bowne, and EDGARfilings, we know that they are also the filers since that is their business. EDGAR Online and Donnelley have an exclusive deal, and Bowne's business is directed at the financial publishing business. And of course EDGARfilings has traditionally filed the SEC reports.

As to the other filing agents for Fujitsu, Rivet, and Clarity, that seems to be an open issue. However, following the competition between Fujitsu and Rivet is better than the Yankees and Red Sox.

Like most businesses---including financial printing, I suspect the XBRL filings business will have a few large market leaders with large market shares and then a large cluster of smaller filing agents. The Cloud report seems to be an excellent proxy for tracking the early leaders.

Sep 01 10:00 AM

[Tom Becktol...:]

From our perspective, XBRL assistance with companies can be in the form of background consulting as well as actual filings. We did change our XBRL landing page to remove reference to market share as we shifted focus from voluntary filers to mandatory filers.

We're quite pleased that we are hitting our defined targets within this field.

Sep 28 02:19 PM