What's the best way to see a company's growth momentum? With the expectation that there's usually momentum that carries through to the next year (for example, they launched a product that will bear fruit for at least a year or two).

For example, here's Facebook's Monthly Active User (MAU) growth:

Facebook's Monthly Active User (MAU) growth

MAU YoY is, e.g., D6 = C6-C2

MAU YoY Growth Rate is, e.g., E6 =(C6-C2)/C2 -- This compares growth year-over-year to mitigate seasonality effects.

MAU YoY Growth Rate Change is, e.g., F10 =(D10-D6)/D6 -- This shows how much a given quarter's YoY growth rate has changed, giving a sense of growth momentum.

If you plot this out, MAU YoY Growth Rate Change shows momentum behind growth which gives some idea of what future growth may look like in the coming year or two.

Here's MAU YoY Growth Rate (green, left axis) and MAU Growth Rate (blue, right axis) plotted:


Based on this, you can see the YoY growth rate is recovering starting in 2014 Q4 (possibly due to new products being release that help growth) and this shifts YoY growth to being positive starting in 2015 Q2.

Is this the right way to think about it?

  • $\begingroup$ Shouldn't MAU Growth rate be F6=(C6-C2)/C2 ? $\endgroup$ – Alex C Mar 4 '18 at 2:46
  • $\begingroup$ Good catch, I've updated with that change. Thanks $\endgroup$ – Mike Smith Mar 4 '18 at 5:03

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