Glossary term
Year-Over-Year (YOY)
Year-over-year compares a result with the same period one year earlier, helping show growth or decline without as much seasonal distortion.
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What Is Year-Over-Year?
Year-over-year, often shortened to YOY, compares a result with the same period one year earlier. It is commonly used for revenue, earnings, sales, expenses, users, prices, and other metrics that may change over time.
YOY comparisons are useful because they can reduce seasonal distortion. Comparing December sales with November sales may say more about holiday timing than business quality. Comparing this December with last December can be more meaningful.
Key Takeaways
- YOY compares one period with the same period from the prior year.
- It is often used to measure growth or decline.
- YOY can help control for seasonal patterns.
- It can still be distorted by one-time events, acquisitions, inflation, currency changes, or unusual base-year results.
- Investors should pair YOY growth with margin, cash flow, and valuation context.
Year-Over-Year Formula
A simple YOY growth formula is:
For example, if revenue was $120 million this quarter and $100 million in the same quarter last year, YOY growth is 20 percent.
How YOY Comparisons Work
YOY comparisons are common in company earnings reports and economic data releases. A company may report that revenue grew 12 percent year over year, meaning revenue was 12 percent higher than in the same period one year earlier.
The number is only a starting point. Strong YOY growth can be less impressive if profit margins fell, share count increased, or the company bought revenue through acquisitions. Weak YOY growth can be less concerning if the prior-year period was unusually strong.
YOY Versus Sequential Growth
Comparison | What it compares | Best use |
|---|---|---|
Year-over-year | This period versus the same period last year | Seasonal businesses and annual trend checks |
Sequential | This period versus the immediately prior period | Near-term momentum and turning points |
The Bottom Line
Year-over-year compares a metric with the same period one year earlier. It is helpful for spotting growth trends, but it should be interpreted alongside profitability, cash flow, seasonality, and one-time factors.