Lesson Summary

Revenue Growth Year Over Year (YoY)

This KPI measures the percentage increase or decrease in revenue by comparing year-to-date sales at the same point in time across two consecutive years.

Example Calculation:

• Assume it is May 2020, and the year-to-date sales are $7 million.
• Look at the year-to-date sales by the end of May 2019, which were $6 million.
• Formula for revenue growth YoY: (Current Year Sales - Previous Year Sales) / Previous Year Sales
• Calculation: (7 million - 6 million) / 6 million = 1 million / 6 million = 0.17 or 17% growth YoY.

Key Points to Remember:

• The comparison should be done for the same period each year (e.g., May to May, June to June).
• The denominator is the base sales from the previous year.
• Measuring this KPI monthly allows tracking trends over time.

Usage and Insights:

• Plotting the growth on a graph month by month helps visualize business performance dynamics.
• Example: Growth might have started at 15% in January, peaked at 40% in April, and then eased to 17% in May.
• A deviation from targets (e.g., a company aiming for 80% YoY growth but only achieving 17%) signals the need for deeper analysis to identify issues.
• This KPI provides an early alert system to management about the health and trajectory of revenue trends.