Revenue Growth

Revenue Growth

Revenue growth might well be the king of all SaaS metric monsters, the Godzilla of the balance sheet. And what works for the beast from the deep works for revenue growth: to master it, you must first understand it. The high-frequency emitter is optional.

Though you can calculate revenue growth with a simple formula, found below, that’s only half the battle. From there, you need to understand how the metric speaks to other aspects of your company’s accounting (particularly churn) and how your company’s structures and processes are (or aren’t) contributing positively to it.

Revenue growth is the increase, or decrease, in a company’s sales between two periods. Communicated as a percentage, revenue growth demonstrates the degree to which your company’s revenue has grown (or shrunk) over time.

For example, if a company generated $50 million in revenue during one business year and $75 million in revenue the next, it saw a 50% revenue growth. If the same company generated $50 million in annual revenue one year but only $42 million the next, then it saw a 16% reduction in revenue growth (and might need to think about a new approach to how they coach their sales team!)

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