YoY and QoQ

Year over year (YoY) compares a figure in the current period to the same period one year earlier. It strips out seasonal effects, since comparing a company's holiday quarter to the prior holiday quarter is far more meaningful than comparing it to the quarter right before it. A company reporting revenue up 12% year over year means revenue this period was 12% higher than the same period last year, not 12% higher than last quarter.

Quarter over quarter (QoQ) compares a figure in the current quarter to the immediately preceding quarter instead. It captures a more current read on momentum, but on its own it can be misleading for seasonal businesses, the quarter right after the holidays will usually look weak next to the strong holiday quarter before it, even if nothing about the business changed.

Both are calculated the same way, just with a different prior period. The formula is:

Neither measure is inherently better, they answer different questions. Year over year is the more reliable long-run growth signal since it cancels out seasonality. Quarter over quarter is more sensitive to recent shifts, useful for spotting an inflection point early, but it's best read alongside year over year, not on its own.