How it works
Growth rate measures how much revenue changed from one period to another as a percentage of the starting value. With one period between the figures, that is your year-over-year (or month-over-month) growth.
Across several periods, compound growth (CAGR) gives the steady rate that would turn the starting value into the ending value. It smooths out uneven years and is the fairest way to compare growth over different time spans.
Total growth of 25% over three years is about 7.7% a year compounded, not 8.3%, because each year builds on the last.
Formula
Growth = (End − Start) ÷ Start. CAGR = (End ÷ Start)^(1 ÷ periods) − 1.
Questions people ask
What is the difference between growth rate and CAGR?
Growth rate is the total change from start to end. CAGR is the constant per-period rate that produces that total change when compounded.
How do I count periods?
Count the gaps, not the data points. Revenue for 2023 and 2026 is 3 years apart, so use 3 periods.
What is a good revenue growth rate?
Mature companies often grow in the single digits. Early-stage startups may aim for 2–3 times revenue a year, and the "T2D3" path for software startups means tripling twice and then doubling three times.