Revenue Growth
Formula
(Current Period Revenue ÷ Prior-Year Period Revenue) - 1
Definition
Revenue Growth measures the percentage change in revenue relative to a comparable prior period. Year-over-year growth compares a period with the same period one year earlier, reducing the effect of seasonality.
Trailing-twelve-month growth compares revenue generated over the latest twelve months with the preceding twelve-month period, providing a smoother view of the underlying growth trend.
Interpretation
Higher Revenue Growth indicates faster expansion, while declining growth can indicate that the business is decelerating as it scales or that demand is weakening.
Growth should be evaluated alongside profitability and capital efficiency. The same growth rate can have very different economic value depending on the margin and investment required to produce it.
In MetricFrame
MetricFrame calculates both year-over-year and TTM year-over-year Revenue Growth.