What is Revenue Growth Rate?
Revenue growth rate is the percentage change in a company’s revenue between two periods (month-over-month, quarter-over-quarter, or year-over-year). It shows how quickly the business is expanding its revenue base and is a core input into assessing top-line momentum, scalability, and long-term value creation alongside profitability metrics like gross margin, EBITDA margin, and ROIC.
Formula
Example
A software company reports $1,000,000 in revenue last year and $1,200,000 this year. Using the formula: (($1,200,000 – $1,000,000) ÷ $1,000,000) × 100 = 20%, so the company’s revenue growth rate is 20%, which would typically be viewed as strong growth if supported by healthy unit economics (sustainable CAC, low churn, and solid margins).