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Metric · Growth

How to Calculate Revenue Growth

Revenue growth shows how much a company's sales have increased compared to the prior year. It's one of the most fundamental metrics for growth strategies and an early indicator of demand for products and services.

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Updated 20266 min read
Formula
Revenue growth = (Revenue current − Revenue prior year) ÷ Revenue prior year × 100
> 15%Strong growth
5–15%Moderate growth
< 5%Weak growth
Guideline values, industry-dependent, illustrative

The formula in detail

The components of the formula at a glance.

Current
Revenue current year
Revenue for the most recent reporting period.
Comparison
Revenue prior year
Revenue for the same period one year earlier.

Calculator

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Result revenue growth
Strong growth
15.0 %
1
Growth above 15% is considered strong and typical for companies in an expansive growth phase or with structural tailwinds.
2
Growth below 5% is often normal for mature, established companies, but can also signal emerging market saturation.
3
Growth alone says nothing about profitability. That's why revenue growth is often viewed alongside margin (the Rule-of-40 idea: growth plus margin together should clear a healthy threshold).
4
Growth achieved through acquisitions rather than organically should be mentally separated from organic growth.

Used in these strategies

High-Growth / Rule of 40Growth and profitability combined: no loss-makers.Growth Momentum (CAN SLIM principle)Explosive earnings growth with technical confirmation: buy strength, not weakness.

Frequently asked questions

As a rough guide, above 15% counts as strong and below 5% as weak. But for mature companies, lower growth is often normal and not a warning sign.
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Not investment advice. This explanation is for informational purposes only and does not constitute a recommendation to buy or sell securities.

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