YoY, QoQ and TTM: how to compare company results without mixing periods
YoY compares a period with a year earlier. QoQ compares consecutive quarters. TTM combines the latest twelve months. Each answers a different question.
A company can report strong year-on-year growth, a fall from the previous quarter and record twelve-month revenue at the same time. Before deciding which headline describes the business, check the dates behind it.
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Start with the question you want answered
| Comparison | What you compare | Useful question | Main limitation |
|---|---|---|---|
| Year on year, or YoY | A period with the equivalent period a year earlier | Is the business larger than at the same point last year? | An unusually weak or strong starting period can distort growth |
| Quarter on quarter, or QoQ | One quarter with the preceding quarter | What changed recently? | Seasonal patterns can dominate the result |
| Trailing twelve months, or TTM | The latest four quarters for a quarterly reporter | What did the business produce over the latest full-year window? | It can hide a recent turn because older quarters remain included |
Keep fiscal dates beside the labels. A company's first quarter need not end in March. A retailer's 53-week year can also make a comparison less straightforward than its heading suggests.
Read one company's results three ways
Imagine a retailer whose financial year matches the calendar year. Its hypothetical revenue record is:
| Reporting period | Revenue |
|---|---|
| Previous year, Q1: January to March | $80.000 million |
| Previous year, Q2: April to June | $110.000 million |
| Previous year, Q3: July to September | $140.000 million |
| Previous year, Q4: October to December | $150.000 million |
| Current year, Q1: January to March | $100.000 million |
The current quarter is the final row. It follows the $150 million holiday quarter and compares with the $80 million Q1 a year earlier.
Year-on-year growth is ($100.000 million ÷ $80.000 million − 1) × 100 = 25%. Quarter-on-quarter growth is ($100.000 million ÷ $150.000 million − 1) × 100 = −33.333%.
Both calculations are correct. The seasonal decline does not erase the year-on-year increase. Equally, the increase does not prove demand is accelerating: you still need comparable earlier quarters, prices, volumes and management's explanation.
At the current Q1 end, TTM includes the previous year's Q2, Q3 and Q4 plus the current Q1: $110 million + $140 million + $150 million + $100 million = $500 million. The older $80 million Q1 has left the window. Keep that order and those labels when comparing the total with a growth headline.
Calculate TTM without counting a quarter twice
If the latest annual report is followed by a half-year update, a useful construction is: latest annual total + current half-year total − prior-year half-year total. The subtraction removes the older months that the new period replaces.
The retailer's previous full-year revenue is $480 million: 80 + 110 + 140 + 150. At the current Q1 end, the same TTM total is $480 million + $100 million − $80 million = $500 million.
Move forward to its next report and suppose current Q2 revenue is $110 million. Current first-half revenue is now $210 million, compared with $190 million in the previous first half. TTM at this later date is $480 million + $210 million − $190 million = $500 million. Directly adding the four included quarters gives the same result: previous Q3 $140 million + previous Q4 $150 million + current Q1 $100 million + current Q2 $110 million.
TTM stayed at $500 million because the new $110 million Q2 replaced an old $110 million Q2. The date moved even though the total did not. Adding the new half-year to the annual figure without removing the old half-year would instead count eighteen months.
This method requires matching definitions and scope. An acquisition, disposal, restatement or change of reporting currency may require further adjustments. Keep an explanation of any adjustment beside the calculation.
Watch cumulative cash-flow statements
A second-quarter cash-flow statement may report six months, while its income statement also shows a standalone three-month column. Do not compare six months of operating cash flow with three months of revenue and call the result a quarterly margin.
Suppose the same retailer reports $12 million of operating cash flow for current Q1 and $30 million for the current first half. With a consistent accounting basis, current Q2 operating cash flow is $30 million minus $12 million, or $18 million. Compare that derived $18 million with Q2's $110 million revenue, not with the full $210 million first-half revenue. Label it as a calculation from the two reports.
The SEC report-reading guide is a useful map to the financial statements and supporting notes. Always read the column headers in the actual report.
Do not add or average every metric
Revenue and operating profit can be summed across non-overlapping periods on a consistent basis. A balance-sheet cash balance is a snapshot: adding four quarter-end cash balances does not produce annual cash.
Margins also need care. Suppose the retailer earned $45 million operating profit on the previous Q4's $150 million revenue, a 30% margin, and $10 million on current Q1's $100 million revenue, a 10% margin. Across those two quarters, profit is $55 million and revenue is $250 million. The combined margin is 22%, not the simple average of 20%. The larger quarter carries more weight.
In Helmbeam's Numbers view, check whether you selected quarterly or trailing figures before comparing revenue, EPS, margins or cash flow. Keep the same basis when you move to the filing. For a wider report review, use the earnings checklist.
Sources
2 referencesFrequently asked questions
Is TTM the same as the last financial year?
Only when the latest twelve-month window ends on the financial year end. After a new quarter, TTM includes newer months and removes the corresponding older months.
Is YoY better than QoQ?
Neither replaces the other. YoY helps compare equivalent seasonal periods; QoQ shows recent changes but may be dominated by seasonality. Read both with their dates.
Can I average quarterly margins to get an annual margin?
A simple average can be misleading when quarterly revenue differs. Add the relevant profit figures and divide by the corresponding total revenue on a consistent basis.
Helmbeam is a research and analysis tool operated by Scydex Ltd. Scydex Ltd is not authorised or regulated by the Financial Conduct Authority. Helmbeam does not provide investment advice, recommendations, or solicitations to buy or sell securities. All data is for informational purposes only. Past performance of any signal, cohort, or classification does not guarantee future results. All investing involves risk, including loss of principal. Always conduct your own research and consult a qualified financial adviser before making investment decisions.
Keep the reporting basis with the question
Open a company in Helmbeam on iPhone or Android, choose a reporting basis in Numbers and check the same period in its filing. Every stock is a research opportunity; active setups are the subset whose current structure qualifies. Follow a company when you have a question worth revisiting.
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