Revenue Growth Rate Calculator

Added

Calculate year-over-year revenue growth rate, multi-year CAGR, and Rule of 40 score for SaaS and business performance tracking.

Growth Rate—
CAGR—
Rule of 40 Score—
Found this useful?

~3 min read

Revenue Growth Rate Formula

Growth Rate = (Current Revenue - Previous Revenue) / Previous Revenue × 100

Growth Rate Benchmarks

Growth Category
100%+ Hypergrowth
50–100% High growth (early-stage SaaS)
20–50% Strong growth
10–20% Moderate growth
0–10% Slow growth / maturing
Negative Declining

CAGR for Multi-Year Analysis

CAGR = (End Revenue / Start Revenue)^1 / n - 1

CAGR normalizes uneven growth across years. A company that grew 30%, then 10%, then 50% had a CAGR of ~27.5% — more informative than any single year.

Rule of 40

The Rule of 40 is the primary SaaS health benchmark:

Rule of 40 = Growth Rate + Net Margin

A score ≥ 40 indicates a balanced, sustainable SaaS business. A company growing at 60% can operate at −20% margin and still score 40. A slow-grower at 10% needs a 30%+ margin to pass.

Intent Pages

↑ Back to calculator

Related tools

You might also need

How to Calculate Revenue Growth Rate

Step-by-step guide to calculating revenue growth rate with formulas, examples, and benchmarks by industry.

Revenue Growth Rate Formula

Revenue Growth Rate = (Current Revenue - Previous Revenue) / Previous Revenue × 100

Example Calculation

A company with $800k in Q1 and $1M in Q2:

\frac{1{,}000{,}000 - 800{,}000}{800{,}000} × 100 = 25%

Growth Rate by Time Period

Use different periods depending on what you're measuring:

  • Month-over-Month (MoM): Early-stage companies tracking rapid growth
  • Quarter-over-Quarter (QoQ): Seasonal businesses; removes noise
  • Year-over-Year (YoY): Standard business performance metric; eliminates seasonality

Benchmarks by Stage

Stage Expected Growth
Pre-seed / seed 20–50%+ MoM
Series A 3–5× YoY
Growth stage 50–100% YoY
Established 10–30% YoY
Mature / public 5–15% YoY

Use the Revenue Growth Rate Calculator to compute growth, CAGR, and Rule of 40 in one step.

↑ Back to calculator

What Is the Rule of 40 for SaaS?

The Rule of 40 explained: formula, benchmarks, how investors use it, and why it matters for SaaS company health.

The Rule of 40

The Rule of 40 is a benchmark for SaaS company health:

Rule of 40 Score = Revenue Growth Rate (%) + Profit Margin (%)

A score of 40 or above is considered healthy.

Why It Matters

The Rule of 40 captures the fundamental SaaS trade-off: growth and profitability. Early-stage companies prioritize growth over margins; mature companies prioritize margins over growth. The Rule of 40 says both are acceptable as long as the sum is 40+.

Examples: - 60% growth, −20% margin = Score: 40 ✓ - 20% growth, 25% margin = Score: 45 ✓ - 15% growth, 5% margin = Score: 20 ✗

Which Profit Margin?

Different practitioners use different profit metrics: - EBITDA margin: Most common for pre-IPO companies - Free cash flow margin: Preferred by public market investors - Net income margin: Most conservative

Limitations

Rule of 40 works best for companies with $10M+ ARR. For very early-stage startups, growth rate alone matters more. For large public companies, free cash flow margin is often the better profitability input.

Use the Revenue Growth Rate Calculator to compute your Rule of 40 score.

↑ Back to calculator