Expected annual percentage increase in revenue.
revenue_growth_rateAlso: Rev GrowthRevenue Growth Rate represents the expected year-over-year increase in topline revenue driven by volume expansion, pricing changes, or market growth. It is typically the most important driver in any financial model as it cascades through the entire P&L and balance sheet.
Revenue growth drives nearly every other line item in the model. Overly aggressive growth assumptions are one of the most common errors in financial modeling and can lead to significant valuation distortions.
Year-over-year percentage change in revenue.
= (Revenue_end / Revenue_start)^(1/n) - 1Calculating compound annual growth rate over multiple periods
= Organic_Growth + Acquisition_ContributionSeparating M&A impact from organic performance
Should reflect realistic market growth and company maturity. Avoid using aggressive growth beyond forecast horizon. Consider separating volume and price drivers for transparency.
Revenue growth is the "engine" of your model. Everything else follows from how fast the company is growing. Be conservative - it's better to be pleasantly surprised than to build a model on fantasy growth.
Separate your growth into components: volume growth, price growth, mix shift. This gives you levers to adjust and makes the model more defensible.
Build a market model: TAM × market share × penetration. This constrains growth and forces you to think about competitive dynamics and market saturation.
Consider cohort analysis for subscription businesses, S-curve adoption for new products, and competitive response modeling for aggressive growth scenarios.
This variable is a key driver in the following financial models: