Quarterly Revenue Growth

Quarterly Revenue Growth: What it Is and How to Use It

Quarterly revenue growth measures how a company’s sales change from one quarter to another. It helps investors and analysts assess whether a company is expanding, slowing, or maintaining its sales momentum over short time frames.

How it’s calculated

• Quarter-over-quarter (QoQ): compares a quarter to the immediately preceding quarter.
• QoQ growth (%) = (Current quarter revenue − Prior quarter revenue) / Prior quarter revenue × 100
• Year-over-year (YoY): compares a quarter to the same quarter in the prior year to control for seasonality.
• YoY growth (%) = (Current quarter revenue − Same quarter last year revenue) / Same quarter last year revenue × 100

Use QoQ to see recent momentum and YoY to account for seasonal patterns.

Example

If XYZ Corp. reported:
– Q1 revenue = $58.7 billion
– Q2 revenue = $66.2 billion

QoQ growth = (66.2 − 58.7) / 58.7 = 0.1278 → 12.78% growth from Q1 to Q2.

Zooming out to calculate growth across multiple quarters or years gives a clearer picture of sustained performance.

Limitations and cautions

• Short time frame: Quarter-to-quarter results can fluctuate due to business cycles, seasonality, economic shocks, or one-time events.
• Volatility: A strong one- or two-quarter surge doesn’t guarantee long-term growth; conversely, a couple of weak quarters may be temporary.
• Seasonality: Some industries (tourism, retail, etc.) have predictable high and low quarters—YoY comparisons are often more meaningful.
• Focus on trend: Relying solely on a single quarterly figure can be misleading. Look for consistent trends across several quarters.

Negative quarterly revenue growth simply means sales declined versus the comparison period; it doesn’t necessarily imply the company is unprofitable.

How investors use quarterly revenue growth

• Validate growth expectations and management guidance.
• Identify turning points (acceleration or deceleration) in sales momentum.
• Combine with other metrics (profitability, margins, cash flow) to form investment decisions.
• Use YoY growth to filter out seasonal effects and QoQ to spot recent changes.

Key takeaways

• Quarterly revenue growth shows sales change over a quarter and is calculated as QoQ or YoY percentage change.
• Use multiple quarters and YoY comparisons to account for seasonality and short-term noise.
• Treat single-quarter movements cautiously; focus on consistent trends and corroborating financial indicators when evaluating a company.