Revenue Growth

RECENT NEWS
Wall Street Journal  5 hrs ago  Comment 
21st Century Fox reduced its forecast for a key earnings metric, sending shares lower in after-hours trading. The outlook followed better-than-expected results for the December quarter.
The Times of India  7 hrs ago  Comment 
 The Nasdaq-listed Cognizant Technology beat street estimates with its 6.2% revenue growth of $2.74 billion for its fourth quarter ended December, riding on a push from acquisition of US-based healthcare provider TriZetto and higher tech...
Yahoo  11 hrs ago  Comment 
Shares of the company, which also reported lower-than-expected quarterly revenue and profit, fell as much as 12 percent in early trading. Ralph Lauren, whose brands include Polo Ralph Lauren, Club Monaco, American Living and Chaps, said it...
Forbes  Feb 4  Comment 
In this earnings announcement, growth in the local ads business will be the key focal point, and will give us a fair indication of the expected revenue growth in the coming quarters. We will continue to monitor the monetization rate of its...
Forbes  Feb 4  Comment 
We expect the company to easily beat its initial guidance of 35% revenue growth (at the high-end) in Q4, as the increase in user engagement and number of customers, along with addition of new targeted ad products,likely contintues to push up...
Reuters  Feb 4  Comment 
Luxury fashion house Ralph Lauren Corp cut its full-year revenue growth forecast for the second time in less than four months, blaming a strong dollar and weak consumer spending.
The Economic Times  Feb 4  Comment 
The company's net income rose to $362.9 million in the fourth quarter ended December 31 from $324.3 million a year earlier.
Reuters  Feb 4  Comment 
REUTERS - Cognizant Technology Solutions Corp's fourth-quarter revenue rose more than expected and the IT services provider forecast a pick up in annual revenue growth as healthcare and financial services clients in North America boost spending.
The Economic Times  Feb 4  Comment 
'I would like to recommend KPIT where I can clearly see that Q4 will be very decent because there will be good dollar revenue growth of around 4%.'
Wall Street Journal  Feb 3  Comment 
said its fourth-quarter revenue rose 15% on broad revenue growth across the company’s digital businesses.




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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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