Revenue Growth

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Definition

Revenue growth illustrates sales increases/decreases over time. It is used to measure how fast a business is expanding. More valuable than a snapshot of revenue, revenue growth helps investors identify trends in order to gauge revenue growth over time.

If a company generated $75 billion in revenue during 2008 and $100 billion in revenue during 2009, the company experienced roughly a ($100 billion/$75 billion)-1 = %33 increase in revenue.

Formula

Revenue Growth = (Revenue this year / Revenue last year) - 1; more generally, from time t - k to t, with t and k denoted in years, compounded annual revenue growth = (Revenuet / Revenuet - k)^(1 / k) - 1

YCharts calculates revenue growth as quarter-by-quarter year on year growth rate. In other words, with t expressed in quarters, we calculate:

Revenue Growth Ratet = Quarterly Revenuet / Quarterly Revenuet-4 - 1

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