If you like what we do here, please click on our sponsor's banner and check out our store. Thanks!

In all, the financial information business is about $50 billion per year. One company that wants a big slice of this amount is EDGAR Online, which is based in South Norwalk, Conn. (The parent of EDGAR Online is Cybernet Data Systems.)

The company was born in late 1995 in Susan and Marc Strausberg's house. They had a fully working site, called EDGAR Online, by January 1996. Basically, EDGAR Online uses the Web to make it easy for people to access financial disclosures of public companies. The source of these filings is the Securities and Exchange Commission (SEC), which was created in 1933 to help prevent abuses in the financial markets. The goal was to require companies to disclose all "material" information to the public.

These disclosures have such technical names as:

1. 10-K: This is a company's annual report, which includes audited financial statements.

2. 10-Q: This is a company's quarterly report (financials are not audited).

3. 8-K: This is filed when there is a "significant" corporate event.

4. DEF 14A: This is provided to shareholders before a vote (called a proxy statement).

5. S-1: This is what companies publish when they do an IPO (called a registration statement).

Unfortunately, for many years, access to this information was not easy for individual investors, because it was very expensive, and, for the most part, only the financial institutions had the resources to pay the fees for the information. However, with the advent of the Internet, SEC filings have become abundant and very cheap -- in many cases, free.

It was in 1984 that the SEC spent $30 million to start EDGAR (Electronic Data Gathering Analysis and Retrieval), a huge database of filings in electronic form. Since 1996, all reporting companies have had to publish their financials in electronic form with the EDGAR database. What EDGAR Online has done is purchase a real-time data feed (called a Level I subscription) to the EDGAR database, thus making the filings available on the Web. Only 10 companies have such a feed. However, most do not post filings on the Web, so as not to risk cannibalizing legacy income.

The EDGAR Online service has free and paid services.

1. Free Services: You can view all the SEC EDGAR filings on a 24-hour delayed basis. You can use the sophisticated searching features (for example, query by city, state, industry, filing type, and so on). Or you can go to certain sections of a filing, such as the Management Discussion or the financials. Moreover, integrated into these pages is third-party content, such as from Zacks Investment Research, Company Link, Hoover's, PC Quote, and Big Charts.

2. Paid Services: You can access all the SEC filings on a real-time basis. The fee is $9.95 per month. What's more, you have the ability to download the documents into Microsoft Word or Excel format. You can also set a watch list, which will give you immediate e-mail notification when certain conditions are met (for example, Amazon.com releases its financials).

One key to the success of EDGAR Online has been its focus on constant innovation. In the past several months, the company has released two new services:

1. EDGAR Online Investor Relations: This is a turn-key solution for public companies to consolidate their SEC filings on a co-branded website.

2. EDGAR Online People: With this service, you can enter the name of an executive and then get a concise backgrounder, such as on prior positions held with other companies and compensation. The service uses sophisticated data-mining technology (developed by IsoQuest) and is based on natural language processing (developed originally for the federal government intelligence community).

Interestingly enough, EDGAR Online has a toll-free number for customer support. You don't have to be a paid subscriber to use it. "We want to encourage the understanding of EDGAR Online as much as possible," says Jay Sears, vice president of marketing and business development. "The phone line has been a tremendous help."

The company has also been smart in finding investors. For example, Bowne & Co., the world's largest financial printer, made a minority equity investment in EDGAR Online. Furthermore, EDGAR Online is a co-owner with Hoover's of IPO Central.

Revenue Model

Besides collecting subscriptions, EDGAR Online also generates advertising revenues. The company uses DoubleClick, an advertising network for high-traffic websites. "So far, we have been very pleased with their service," Sears says.

EDGAR Online has the highest traffic compared with its competitors. This has largely been the result of the company's aggressive efforts to syndicate its content on financial websites. For example, EDGAR Online has signed distribution deals with such top sites as Time Magazine's Money.com, CNet's Snap, Yahoo, PointCast, Hoover's, MSNBC, TheStreet.com, USA Today, Quote.com, and CMPnet's TechInvestor.

"It has a snowball effect," says Sears. "As we sign such big names, we have more and more other sites that want to do a deal with us."

Such traffic has made EDGAR Online a leading brand for financial content. "Our goal is the same as 'Intel Inside' ", says Sears. "When you see 'EDGAR Online,' you know you are getting the best authority in SEC financial disclosures."

Commercial: Readers interested in IPOs may want to check out The Investor's Guide To New Issues: How To Profit From Initial Public Offerings, available in our bookstore.