Year-Over-Year

What Does YoY Mean?

YoY, short for "year-over-year", is a key financial metric used to compare a company’s performance during a specific period with the same period from the previous year. This comparison helps investors and analysts uncover trends in growth or decline while minimizing the impact of seasonal variations.

In simple terms, if a company’s revenue and earnings are higher than they were during the same period last year, it suggests the business is growing. Conversely, if these numbers are falling, it could indicate that the company is facing challenges.

You might also see this abbreviated as Y/Y.

Real-World Examples

Consider a company that generated $150 million in revenue in Q1 2024, up from $135 million in Q1 2023. This increase represents an approximate YoY growth of 11.1%.

In another scenario, a firm’s Q2 net income dropped from $120 million in 2023 to $100 million in 2024, marking a YoY decline of about 16.7%.

Below is an illustrative table showing the YoY financial performance of a fictional tech giant, TechCorp, comparing 2024 to 2023:

It’s also common to compare quarterly financials on a YoY basis. This method helps to smooth out seasonal impacts, offering a clearer picture of a company’s actual performance.

For instance, Tesla’s (TSLA) revenue grew from $8,000 million in Q4 2022 to $8,200 million in Q4 2023, reflecting a modest YoY increase of about 2.5%.

By comparing the same quarter year-over-year, you avoid misinterpreting seasonal peaks—like those during the holidays—that could otherwise distort the performance trends.

How to Calculate YoY: The Formula

Calculating YoY growth or decline is straightforward. Divide the current period’s figure by the previous period’s figure to form a ratio. Then, subtract 1 and multiply by 100 to convert that ratio into a percentage.

Here’s the formula:

Formula: % Growth or Decline = ((Current Year / Previous Year) - 1) * 100

What About QoQ?

QoQ, or quarter-over-quarter, operates much like YoY but compares one quarter with the immediately preceding quarter. For example, if a company’s subscriber base increases from 10 million in Q3 to 12 million in Q4, that represents a QoQ growth of 20%.

Why YoY is Crucial

YoY analysis is one of the simplest yet most powerful tools for assessing a company’s growth trajectory. It allows investors to quickly identify whether a company is consistently expanding its revenue and earnings—key indicators of long-term success.

Companies that demonstrate steady YoY growth are generally viewed as healthier investments, often translating into rising stock prices. Conversely, persistent YoY declines can signal underlying issues, making them a red flag for investors.