Quarter-over-Quarter Growth

Beginner

Quarter-over-quarter growth compares a figure for one three-month period with the immediately preceding three-month period, expressed as a percentage change.

Quarter-over-quarter growth, often written as QoQ, shows the most recent change in performance. It is calculated as this quarter's figure minus last quarter's, divided by last quarter's.

For example, if a company's revenue is 5.25 million in the second quarter and 5 million in the first quarter, quarter-over-quarter growth is 5%.

QoQ growth reacts quickly to changes, making it useful for spotting turning points early. A business that sees growth slowing from 6% to 2% to 0% across three quarters may be heading into trouble well before the annual figures show it.

Its weakness is that it is affected by seasonal patterns. A retailer's fourth quarter, including the holiday season, will almost always show strong QoQ growth, and its first quarter will often show a decline. For this reason, QoQ figures are often adjusted for seasonality or read alongside year-over-year growth. Economic statistics, such as GDP, are commonly reported on a seasonally adjusted quarter-over-quarter basis.

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