YoY vs. QoQ Revenue Growth: How to Read Conflicting Signals
YoY compares revenue with the same period last year; QoQ compares it with the previous quarter. Learn the calculations, year-to-date conversions, and effects of seasonality and fiscal periods.
YoY is the percentage change from the same period a year earlier, while QoQ is the change from the immediately preceding quarter. A company can be larger than a year ago but smaller than in the preceding peak quarter, producing positive YoY and negative QoQ growth. The measures are not interchangeable.
Start with a standalone quarter in the numerator
Comparing first-half cumulative revenue with first-quarter revenue compares periods of different lengths. Calculate standalone second-quarter revenue by subtracting the first quarter from the first-half total. Similarly, subtract the first-half total from the nine-month total to obtain the third quarter. If restated comparative figures are available, use the new basis consistently. A foreign company's fiscal quarter may cover different calendar months from a Korean company's if its fiscal year differs from the calendar year, so record the actual start and end dates.
Separate growth momentum from seasonal peaks and troughs
YoY has the advantage of comparing quarters with similar seasonality, but it is affected by unusual circumstances a year earlier. QoQ reveals recent trends sooner, but is sensitive to holidays, days off, and product-launch schedules. First look at each quarter's absolute revenue and put growth rates alongside it. If the two measures diverge, do not select one as the true signal; identify the portions explained by the prior-year base and unusual factors in the preceding quarter.
Check changes in period length and business scope
Even matching quarters can have different numbers of business days or accounting weeks, and revenue from an acquired company may be newly included. This is why a simple growth rate should not immediately be interpreted as organic demand growth. Connect comparative information in quarterly reports with explanations of revenue structure in annual reports. If you calculate average daily revenue as a supplementary measure, record the implicit assumption that weekdays and holidays generate revenue equally.
For a small new business, just a few contracts can cause growth rates to fluctuate sharply. Record the absolute increase and its share of total revenue alongside the percentage. A high growth rate may still have little effect on consolidated results, while a small change in a large core business can have a greater effect even at a low growth rate.
Worked example
Hypothetical example: If standalone second-quarter revenue is KRW 12 billion this year, KRW 10 billion a year earlier, and first-quarter revenue this year was KRW 15 billion, YoY growth is 20% and QoQ growth is -20%. First-half cumulative revenue is KRW 27 billion, so it would be wrong to compare that total with KRW 15 billion and call the resulting 80% second-quarter growth. If large deliveries were concentrated in the first quarter, total first-half deliveries and a comparison with the previous first half may be more useful than the second-quarter decline.
What to check
- Have you distinguished standalone quarterly figures from cumulative amounts?
- Have you recorded both the prior-year quarter and the preceding quarter?
- Have you checked the actual length of the fiscal period?
- Have you separated newly consolidated revenue from existing-business growth?
Sources and primary materials
This is educational material about research methods. For an actual company decision, verify the filings and primary sources for the relevant period.