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Financial metrics glossary

Revenue growth rate: definition, formula and example

Revenue growth rate is the percentage change in a company's revenue from one period to another. It is the change in revenue divided by the earlier period's revenue, usually measured month on month or year on year.

Updated

Formula

  • Growth rate = (Revenue this period − Revenue in the earlier period) ÷ Revenue in the earlier period × 100%
  • Month on month: this month against the month before
  • Year on year: this month against the same month a year earlier

Worked example

Sample

SAMPLE · Northbridge Analytics, September 2026

Northbridge Analytics, the fictional software company in the Financial Analyst's public sample, from its P&L: revenue for September 2026, the prior month and the same month last year:

Line Sep 26 Aug 26 Sep 25
Revenue $163,156 $144,547 $117,890
  1. Month on month = ($163,156 − $144,547) ÷ $144,547 × 100% = +12.9%
  2. Year on year = ($163,156 − $117,890) ÷ $117,890 × 100% = +38.4%

Revenue growth, September 2026, month on month: +12.9%

Month-on-month growth is uneven: across the 12 months of the sample's history, revenue fell from one month to the next 5 times out of 11 — which is why growth is also read year on year.

How to read it

  • Month-on-month growth is noisy: invoicing dates, the number of working days and one large order all move it. Year-on-year growth compares the same month a year apart, which takes out seasonality.
  • Growth rates compound. Growth of 2% a month is about 27% over a year, not 24%, so a monthly rate cannot simply be multiplied by 12.
  • Growth says nothing about profit or cash. Revenue bought with discounts or costly acquisition can raise the burn rate, so read growth next to gross margin and net burn.
  • Find what drove it — new customers, price, existing customers buying more — before projecting it forward. A one-off contract does not repeat.

How small US public companies compare (FY2025 10-Ks)

Median
5.8%
Middle half
−12.2% to 40.2%
Companies
695

All industries, from Ataski's study of the fiscal 2025 annual reports (Form 10-K) that non-accelerated filers with revenue of $1 million to $250 million filed with the SEC: half the companies are above the median and half below, and the middle half fall within the range shown. These are small public companies, not private businesses, so read the figures as a reference point rather than a target.

Revenue growth by industry, with the method →

Source: Ataski analysis of SEC Financial Statement Data Sets (FY2025 10-K filings).

Where it shows up in the monthly management report

The report's P&L summary sets the month's revenue against the prior month, the same month last year and the plan, so growth on each comparison is on the page.

Its “Actual results by month” table prints each month's revenue with its change on the prior month.

  • Open the sample workspace — a fictional company's books, worked by the Financial Analyst, with its monthly report. No signup.
  • The Financial Analyst — what it reads from your accounting system, what the report contains and what it costs.

Frequently asked questions

How do you calculate revenue growth rate?

Subtract the earlier period's revenue from this period's, divide by the earlier period's revenue and multiply by 100. Revenue of $110,000 against $100,000 a year earlier is 10% year-on-year growth.

What is the difference between month-on-month and year-on-year growth?

Month on month compares consecutive months: it reacts quickly but swings with seasons and timing. Year on year compares the same month a year apart, which removes seasonality but reacts more slowly.

What is a compound monthly growth rate?

The constant monthly rate that would take revenue from its starting level to its ending level: (ending ÷ starting) to the power of (1 ÷ number of months), minus 1. It makes growth over periods of different length comparable.

Can revenue growth be negative?

Yes. A negative rate means revenue fell against the earlier period.