How to calculate year-over-year growth w/formulas & steps
Written by Cloom
When it comes to making decisions for your business, hard data is key. Year-over-year (YoY) growth is a data point that shows how a given business metric has grown over time. When combined with other key performance indicators, YoY growth helps business owners make informed decisions, plan ahead, and appeal to potential investors.
What is YoY growth?
Year-over-year growth is a metric that compares a business’s growth from the current year to the previous year. Like month-over-month (MoM) growth, YoY growth is usually expressed as a percentage. For example, a 25% YoY growth from 2024 to 2025 indicates steady growth if consistent.
YoY growth applies to various metrics like revenue, user acquisition, customer churn rate, and website traffic. Positive growth across multiple metrics signals a strong future and attracts investors, while slow or no growth highlights strategic issues.
Year-over-year growth calculation formula
Calculating YoY growth is straightforward but must be accurate to avoid misleading data. Two main formulas are:
1. YoY growth = (current period value / prior period value) – 1
Example: ($30 million / $25 million) – 1 = 20% growth
2. YoY growth = ((current period value – last period value) / last period value) x 100
Example: ((30,000 – 25,000) / 25,000) x 100 = 20% customer acquisition growth
How to calculate year-over-year guide
1. Gather accurate data: Use financial statements, balance sheets, or monthly revenue from secure sources.
2. Calculate MoM growth: Track monthly metrics for a detailed annual view.
3. Calculate YoY growth: Use consistent time periods (e.g., 52 weeks) for accuracy.
4. Double-check calculations: Verify results to ensure reliability.
5. Analyze YoY growth: Combine with other metrics for comprehensive forecasting.
The importance of YoY growth for businesses
YoY growth is a key performance indicator that reflects business health. It supports decision-making, troubleshooting, and growth modeling across sectors like revenue, sales, and customer metrics.
4 practical applications of year-over-year growth
1. Analyze revenue growth: Indicates successful past investments and aids forecasting.
2. Monitor customer growth: Tracks acquisition and retention for marketing insights.
3. Assess market share changes: Evaluates competitive performance for larger companies.
4. Evaluate investment performance: Measures long-term investment impact, accounting for seasonal trends.
How to interpret year-over-year growth
Positive YoY growth varies by business. Established firms may target 15-20% revenue growth, while startups focus on other KPIs. Combine with MoM growth, customer satisfaction, and retention for a complete picture.
Use year-over-year growth for business strategy
YoY growth offers a stable view of financial health, reducing MoM volatility. It supports growth models, investor pitches, and strategic decisions when calculated accurately with reliable data.