Revenue Growth

RECENT NEWS
The Hindu Business Line  Jun 13  Comment 
Targeting retail revenue growth of 30-40% this fiscal, says Jaivinder Gill, MD
MarketWatch  Jun 13  Comment 
Shares of Alibaba Holdings Group LTD. were climbing 2% in premarket trade Tuesday after the stock's price target was raised to $190 from $160 at Raymond James. The analysts increased their price target after increasing their fiscal year 2018...
Mondo Visione  Jun 12  Comment 
London Stock Exchange Group plc will today host a planned investor update event. The event will provide investors with an overview of the market landscape for Information Services, including FTSE Russell, LCH and Capital Markets.  It will...
Motley Fool  Jun 10  Comment 
Blue Apron is spending more money on marketing, but it's not increasing revenue per user.
Benzinga  Jun 8  Comment 
Alibaba Group Holding Ltd (NYSE: BABA) shares are trading higher by $15.00 (11.6 percent) at $140.64 in Thursday's session. Before the open, CFO Maggie Wu announced that revenue growth in 2018 will be in the 45-49 percent range. After much...
The Times of India  Jun 8  Comment 
IT services giant Infosys today said it remains "committed" to its guidance of 6.5-8.5 per cent revenue growth this year even as some clients ask for projects to be carried out at 30-40 per cent lower costs than before.
Reuters  Jun 8  Comment 
Alibaba Group Holding Ltd expects revenue growth of 45-49 percent in the 2018 fiscal year, said CFO Maggie Wu on Thursday during an investor conference in Hangzhou, China.
MarketWatch  Jun 7  Comment 
Shares of Okta rose in Wednesday's extended session after the software company posted a strong growth in subscription revenue in its first quarter as a public company. Okta reported a loss of $28.9 million, or 73 cents a share, compared with a...




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Revenue Growth is the percent increase (or decrease) in a company's revenue between two or more equivalent fiscal periods

Revenue Growth is used to measure how fast a company's business is expanding. The figure shows the annual rate of increase/decrease in a company's revenue or sales growth. The figures give analysts, investors and participants an idea of how much a company's sales are increasing over time.

While revenue growth tends to fluctuate from fiscal year to fiscal year and fiscal quarter to fiscal quarter, investors look for trends in revenue growth as a means of gauging the company's growth over proscribed periods of time. All other things being equal, a company that is able to continually grow its revenue should see equivalent increases in net income.

Rate of Revenue Growth

Taking the derivative of the revenue growth gives you the rate of revenue growth, which tells you how much the rate of revenue growth is changing. Investors look at this figure to gauge a potential forthcoming change in earnings growth. If a company that has been able to consistently grow its revenues at some pace begins to see smaller revenue growth over one or more fiscal periods, it may be an indicator that the growth itself will continue to decrease over time, or that it has plateaued.

Example

Company ABC generated $100 billion in revenue during its third quarter of 2005 and $120 billion in the fourth quarter that year, the company saw quarterly revenue growth of 20% sequentially.

If Company ABC generated $150 billion in the fourth quarter of 2004, the company would have seen its revenue increase 50% on a year-over-year basis

Revenue Growth Calculation on Wikinvest

Wikinvest calculates revenue growth as the growth of trailing twelve months of revenue. The treatment is different from Yahoo! Finance which calculates quarterly year-over-year growth. The following example will illustrate the difference:

' 2006 2007 2008
Q1$100m$104m$144m
Q2$120m$142m$120m
Q3$130m$140m
Q4$140m$170m

Q2 2008 is the most recent quarter. In this case, Yahoo! Finance would calculate revenue growth as -15.5% [(120-142)/142].

Wikinvest, on the other hand would calculate the growth as 11.2%. This is because wikinvest calculates the growth based on the revenue generated in the last twelve months. In this case, Q3 07, Q4 07, Q1 08 and Q2 08. Specially, it is calculated as:

Revenue growth = ((120+144+170+140)-(142+104+140+130))/(142+104+140+130) = 11.2%

Taking the growth based on trailing twelve months of revenue mitigates undue fluctuations that may affect a single quarter.

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