Generic AI gives generic answers. Ask ChatGPT why gross margin declined, and you'll get a textbook definition. Ask Fathom's Commentary Writer the same question, and it tells you whether that decline threatens your exit valuation, delays your funding timeline, or is perfectly normal for a seasonal business heading into Q1.
The difference? Context.
Commentary Writer uses two layers of context to generate insights that actually matter: Business Context (the long-term picture of who you are) and Report Context (what happened this specific period). Together, they turn raw numbers into narrative that sounds like it came from someone who knows the business inside out.
Here's how to set them up and why it matters.
Business Context: The Long-Term Picture
Business Context captures information that stays relatively stable over time. It's the strategic backdrop against which every number should be interpreted. Set it once, refine it occasionally, and it shapes every piece of commentary going forward.
There are five categories, each serving a different purpose.
1. Goals: What Are You Working Toward?
Your goals determine what "good" looks like. A 10% revenue increase might be cause for celebration or concern — it depends entirely on what you're trying to achieve.
Example contexts:
| Goal Type |
Example |
How It Shapes Commentary |
| Exit planning |
"The owners wish to exit by 2030 with a valuation of £10m based on a multiple of 10x EBITDA" |
| Funding |
"The business intends to secure Series A funding of £3–5m by Q4 2026 to accelerate product development and expand the sales team from 8 to 25 people" |
| Lifestyle |
"The business owner wants to earn enough profit to take a regular salary and go on holiday each year. This should be around $80k per year profit before salary or dividend deduction" |
| Margin improvement |
"The company plans to increase EBITDA margin from 12% to 22% by 2028" |
| International expansion |
"Management aims to establish operations in Germany and France by 2029" |
| Acquisitions |
"The business targets three strategic acquisitions of competitors or complementary service providers between 2026–2029" |
Why it matters: Without goal context, AI commentary treats every business the same. With it, you get insights that actually connect to what you're trying to achieve.
2. Strategy: How Are You Getting There?
Strategy context tells Commentary Writer about the approach you're taking. Two businesses with identical financials might be executing completely different playbooks, and their commentary should reflect that.
Example contexts:
| Strategy Type |
Example |
| Revenue model transition |
"The business will transition from a project-based to a subscription-based revenue model to improve cash flow predictability and increase customer lifetime value" |
| Customer diversification |
"The business will diversify its customer concentration by implementing a structured approach to winning mid-sized accounts, reducing dependency on its three largest clients which currently represent 65% of revenue" |
| Market repositioning |
"The company intends to reposition from a low-cost provider to a premium brand by improving product quality and targeting less price-sensitive customer demographics" |
| Partnership growth |
"The company plans to establish strategic partnerships with complementary service providers to offer bundled solutions and access new customer segments" |
| Product expansion |
"The company plans to increase revenue by adding new products to its portfolio which will expand its total addressable market" |
| Mature market focus |
"The business operates in a mature, slow-growth market with stable demand patterns and established customer relationships" |
Why it matters: Declining project revenue looks alarming without context. With the subscription transition strategy in place, it might be exactly what you planned.
3. Market Conditions: What's Happening Around You?
Market context helps Commentary Writer interpret your results against external forces. The same margin compression tells a very different story in a high-growth market versus one facing regulatory upheaval.
Example contexts:
| Market Type |
Example |
| High growth |
"The company operates in a high-growth market expanding at 15-20% annually, driven by demographic shifts and increasing consumer awareness, attracting new entrants and venture capital investment into the sector" |
| Tech disruption |
"The market is experiencing technological disruption from AI and automation that is fundamentally changing customer expectations and service delivery models, requiring significant ongoing investment to remain competitive" |
| Regulatory change |
"The market is undergoing significant regulatory change that will require substantial compliance investment" |
| Fragmented competition |
"The market is highly fragmented with over 200 regional providers and no single competitor holding more than 5% market share" |
| Moderate competition |
"The company is operating in a moderately competitive environment. There are around 5 direct competitors to the main product offerings" |
Why it matters: When Commentary Writer knows you're in a market expanding 15-20% annually, it can flag if your growth is keeping pace or falling behind despite good absolute numbers.
4.Current Position: Where Are You Now?
Position context describes your business stage and structure. A pre-revenue startup and a seven-year-old multi-location operation need fundamentally different commentary.
Example contexts:
| Position Type |
Example |
| VC-backed startup |
"The venture-backed start-up is pre-revenue but has secured £7M across two funding rounds. They're 14 months into development of their flagship product with a targeted commercial launch in Q4" |
| Bootstrapped growth |
"The company has been bootstrapped since inception 5 years ago and is now cash-flow positive. They're experiencing 40% year-on-year growth and reinvesting all profits back into product development" |
| Post-Series A |
"Following a successful Series A round 18 months ago, the business is in rapid expansion mode. We've doubled our customer base in the last year and are on track to reach breakeven by Q3" |
| Acquired subsidiary |
"Following an acquisition by a larger group 2 years ago, the business operates as an autonomous subsidiary" |
| Established multi-location |
"The business operates across 4 locations with 85 full-time staff and 12 contractors. Having launched 7 years ago, they now serve over 2,500 active clients" |
| Early stage |
"The company has 3 products in market, and 20 full time employees. They have been operating for just over 4 years" |
Why it matters: Burn rate commentary is essential for a VC-backed startup. For a bootstrapped profitable company, it's irrelevant. Position context makes sure Commentary Writer focuses on what matters for your stage.
5. Other: The Details That Change Everything
The "Other" category captures business-specific factors that don't fit neatly elsewhere but fundamentally affect how results should be interpreted.
Example contexts:
| Factor |
Example |
| Seasonal cash flow |
"The business faces significant cash flow volatility due to seasonal demand patterns, with two thirds of annual revenue concentrated in Q4. We maintain an overdraft facility to manage working capital through leaner months" |
| Client concentration |
"We have a highly concentrated customer base of 8 enterprise clients, each on multi-year contracts. This provides revenue stability but creates significant key client dependency risk" |
| Franchise model |
"The business is a franchise, and pays 6% royalties on revenue. The corporate team provides brand, systems, and training whilst the franchisee handles local operations and customer relationships" |
| Strong working capital |
"Favorable credit terms from suppliers and advance payments from customers mean that in general the company has no concerns around cash flow" |
| Board-level scrutiny |
"Our stakeholders are the board. Focus on risk exposure, forecast credibility, covenant headroom, and assumptions behind variances. Highlight what they are most likely to question." |
Why it matters: When Commentary Writer knows you're a seasonal business with Q4 concentration, it won't raise alarms about Q1 cash flow dips. When it knows you're a franchise paying 6% royalties, it interprets cost of sales correctly.
And when it knows your audience is the board, it won't just generate commentary — it will surface the questions they're most likely to grill you on.
Report Context: What Happened This Period
While Business Context is relatively stable, Report Context captures what's different about this specific reporting period. It's the "here's what you need to know" that explains unusual movements before the AI even starts analyzing.
Example report contexts:
| Event |
Example Context |
| System change |
"We implemented a new inventory management system this month, which should improve our ordering efficiency and reduce the number of days inventory sits on shelves" |
| Cost reduction |
"This month the business switched to a new payment processor, offering lower transaction fees" |
| Staffing disruption |
"Three senior staff members were on extended leave during this period, resulting in higher than usual contractor costs and some project delays" |
| Growth investment |
"We hired four new team members this month, increasing our payroll costs before they reach full productivity" |
| Supplier pressure |
"Our main supplier increased prices by 8% from the start of the month, which has impacted our gross margin on products purchased after this date" |
| Promotional activity |
"We ran a seasonal promotional campaign offering 20% discounts across our entire product range, which boosted sales volume but compressed our gross profit margins" |
Why it matters: Without report context, the AI might flag the margin decline as concerning. With it, the commentary can explain that the 20% promotional discount was a deliberate trade-off that boosted volume — and assess whether the trade-off was worthwhile.
How Context Shapes Output: A Real Example
Consider this scenario: gross profit margin declined from 29.84% to 29.63%.
Without context, generic AI might say:
"Gross profit margin declined by 0.21 percentage points. This could indicate rising costs or pricing pressure."
With context (exit goal at 10x EBITDA, subscription transition strategy, promotional campaign this period), Commentary Writer might say:
"Gross profit margin moved from 29.84% to 29.63%, a change of -0.2 percentage points. Cost of sales rose to £1,590,250 from £1,466,350, indicating margin pressure despite higher subscription revenue. Given the owners' exit target of £10m at a 10x EBITDA multiple, improving gross margin—either by reducing cost of sales or shifting mix toward higher-margin products— offers the clearest lever to support the valuation goal. The promotional campaign this period contributed to the margin compression but drove volume growth that supports the subscription transition strategy."
Same numbers. Completely different insight.
Getting Started
Settingup context takes less than ten minutes and shapes every piece of commentary going forward.
· Start with Goals. What's the business actually trying to achieve? An exit? Funding? Lifestyle income? This single piece of context has the biggest impact on relevance.
· Add Position next. Is this a startup burning runway or an established business protecting margins? Stage determines what metrics matter most.
· Layer in Strategy and Market as you refine. These add nuance that makes commentary increasingly specific.
· Use Report Context for exceptions. Anything unusual this period, one-off costs, promotional activity, staffing changes go here.
The more context you provide, the more your commentary sounds like it came from someone who actually knows the business. Because, in a meaningful sense, it does.
See Commentary Writer in action
Want to see how Business Context shapes real financial commentary? Explore Fathom's Commentary Writer and try it with your own data.
[Try Fathom Free] [Explore Commentary Writer]
