Year-over-year growth (YoY): definition, formula, and examples

Definition

Year-over-Year Growth (YoY Growth) measures the percentage change in a specific metric-such as revenue, users, ARR, profit, or sales, when compared to the same period in the previous year.

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Simply put, it answers: “How are we doing now versus exactly one year ago?”

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It’s a time-normalized metric, often used in financial reporting, investor decks, SaaS dashboards, and board meetings-because it neutralizes seasonality and short-term noise.

Why YoY matters

Removes seasonal bias: Comparing Q4 to Q3 is misleading in retail (festive season skews numbers) or SaaS (when product sales include seasonality, say edtech SaaS)
Tracks sustainable momentum: Tells if a business is compounding or stagnating
Helps investors & execs benchmark health: Consistent YoY growth signals operational excellence
Useful in macro or industry comparisons: E.g., “Indian SaaS grew 18% YoY in 2024” vs “you grew 5%”

YoY growth formula

YoY Growth (%) = ((This Year’s Value - Last Year’s Value) ÷ Last Year’s Value) × 100

Example:

You made $1.44 million in revenue in FY2025, up from $1.08 million in FY2024.

YoY Growth = ((1.44–1.08)/1.08)×100((1.44 – 1.08) / 1.08) × 100((1.44–1.08)/1.08)×100 = 33.3%

Your business grew 33.3% year-over-year.

YoY growth can apply to…

Metric	Use Case
Revenue	Most common (monthly, quarterly, annual)
Active Users (DAU, MAU)	Tracks user base growth
Profit or EBITDA	Measures financial health & efficiency
Customer Count	Useful in PLG or SMB-heavy models
Bookings or ARR	Especially in SaaS and subscription models
Spend categories	“Marketing spend grew 25% YoY”, helpful for budgeting conversations

How investors and operators use YoY growth

VCs & private equity firms: Look for 30-50% YoY revenue growth in high-growth SaaS or tech companies
Public markets: Valuation multiples often tied to forward YoY growth rate
RevOps teams: Track YoY pipeline growth, sales velocity, and quota attainment
Marketing: Monitor YoY lead generation, CAC, and conversion rate improvements

Red flags behind a good-looking YoY number

Signal	Potential Risk
High YoY growth, low MoM growth	Stagnation setting in – momentum slowing
YoY growth driven by one-time deal	Unsustainable unless repeated
YoY revenue up, but churn is also up	Leaky bucket growth
High YoY growth after a small base	Common in early-stage – requires context (“law of small numbers”)

Best practices

Always pair YoY with MoM or QoQ for a complete trend picture
Explain drivers (e.g. new product, pricing change, geo expansion)
Contextualize against benchmarks or industry norms
Normalize for currency fluctuation, if comparing globally

Final takeaway

Year-over-Year Growth is the investor’s heartbeat metric. It captures trajectory, not just output. But like any number, it’s only as valuable as the context behind it. Use YoY to tell stories of momentum, risk, and strategic clarity-not just vanity.

In growth-stage businesses, YoY tells you whether you’re compounding or simply coasting.

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