What is Revenue Growth Rate?
Revenue growth rate measures the percentage increase or decrease in a company's revenue between two periods: quarter-over-quarter, year-over-year, or over multiple years. It is one of the most fundamental indicators of business momentum. Analysts typically focus on year-over-year (YoY) growth to strip out seasonality, and look for acceleration or deceleration trends. Consistent double-digit revenue growth is the hallmark of a high-quality growth company; decelerating growth is often a leading indicator of multiple compression. Revenue growth rate should be read alongside gross margin trends, as revenue growth with margin erosion may indicate unsustainable discounting or cost pressure.
Formula
Revenue Growth Rate = (Current Revenue − Prior Revenue) / Prior Revenue × 100%
Calculator
How to Use
- 1Choose the periods: Most commonly Q vs prior-year Q (YoY), or full fiscal year vs prior year.
- 2Get revenue figures: From the income statement top line. Use the same line item for both periods.
- 3Apply the formula: (New − Old) / Old × 100. Positive = growth; negative = decline.
- 4Look for trends: Plot 4-8 quarters of YoY growth to spot acceleration or deceleration. Deceleration is often more important than the current rate.
Worked Example
Example: SaaS company quarterly revenue
Q4 This Year
$420M
Q4 Last Year
$350M
Growth = (420 − 350) / 350 × 100 = 20.0% YoY. Strong growth, but if last year's comparable was 35% and the year before was 50%, this deceleration from 50% → 35% → 20% would likely pressure the valuation multiple despite still-strong absolute growth.
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Figures from the most recent annual filing (10-K / 20-F), sourced directly from SEC EDGAR.