Year-over-year growth, commonly shortened to YOY, measures how a value changed compared with the same period one year earlier. It is useful for revenue, profit, expenses, customer counts, website traffic, and economic statistics because it reduces the distortion caused by predictable seasonality.
Year-over-year growth formula
YOY growth = (Current-period value − Prior-year value) ÷ Prior-year value × 100
Revenue example
A business reports revenue of $625,000 in the second quarter of 2026 and $500,000 in the second quarter of 2025:
($625,000 − $500,000) ÷ $500,000 × 100 = 25%
Revenue grew 25% year over year. The comparison is Q2 to Q2—not Q2 to Q1—so the result is less affected by normal seasonal changes.
How to calculate YOY change step by step
- Choose one clearly defined metric.
- Use the same accounting definition in both periods.
- Match equivalent periods: month to same month, quarter to same quarter, or year to year.
- Subtract the earlier value from the current value.
- Divide by the earlier value.
- Multiply by 100 and label the result as an increase or decrease.
| Metric | 2025 | 2026 | YOY result |
|---|---|---|---|
| Revenue | $500,000 | $625,000 | +25.0% |
| Operating costs | $310,000 | $341,000 | +10.0% |
| Net income | $70,000 | $98,000 | +40.0% |
| Customers | 2,400 | 2,640 | +10.0% |
This table tells a more useful story than revenue alone: sales increased faster than operating costs, which helped net income grow more quickly.
Excel and Google Sheets formulas
If the prior-year value is in cell B2 and the current value is in C2, use:
=(C2-B2)/B2
Format the result as a percentage. To avoid an error when the prior value is zero:
=IF(B2=0,NA(),(C2-B2)/B2)
Do not automatically replace a zero-base result with 0%. A move from zero to a positive number is real growth, but the standard percentage is mathematically undefined.
How to handle negative values
YOY percentages become difficult to interpret when the prior period is negative. For example, net income improving from −$100,000 to +$50,000 is a $150,000 improvement, but a standard percentage can produce a misleading negative result.
When either period is negative, report:
- the dollar change;
- whether the metric moved from loss to profit or profit to loss;
- margin percentage, when appropriate; and
- the underlying operational reason.
YOY vs. MOM, QOQ, YTD, and CAGR
| Measure | Comparison | Best use |
|---|---|---|
| YOY | Same period one year apart | Seasonal businesses and annual trends |
| MOM | Current month vs. previous month | Fast operational changes |
| QOQ | Current quarter vs. previous quarter | Recent quarterly momentum |
| YTD | Start of year through current date | Progress against annual plan |
| CAGR | Smoothed annual rate over several years | Long-term growth comparison |
Why YOY results can mislead
- Base effect: An unusually weak prior year can make current growth appear exceptional.
- Definition changes: Reclassifying revenue or expenses breaks comparability.
- Acquisitions: Purchased revenue is not the same as organic growth.
- Inflation: Nominal sales can rise while unit volume falls.
- Calendar differences: A 53-week fiscal year or different number of selling days can distort results.
- One-time events: Settlements, shutdowns, or large customers may dominate one period.
Build a useful YOY dashboard
A small business dashboard should connect growth to working capital and profitability. Consider including revenue, gross margin, operating expense, net income, cash, accounts receivable, customer count, and average order value. Compare the same metric definitions and add a short note explaining material changes.
For equity analysis, compare the change in retained earnings with net income and dividends rather than looking at the ending balance alone.
Frequently asked questions
Is YOY the same as annual growth?
Often, but not always. YOY can compare any equivalent periods one year apart, such as March 2026 with March 2025. “Annual growth” may refer only to full fiscal years.
Is a higher YOY percentage always better?
No. Rapid revenue growth can be unprofitable, and rapid expense growth can be harmful. Interpret the direction based on the metric and business context.
What is a good YOY growth rate?
There is no universal target. Compare the company with its plan, prior years, industry economics, capacity, margins, and cash needs.
Source reviewed: U.S. Bureau of Labor Statistics Consumer Price Index for an official example of year-over-year reporting. Last reviewed August 15, 2026. Calculations use standard percentage-change methodology.
This article is educational and does not constitute financial, accounting, or investment advice.