Why quarter on quarter (QoQ) matters to a first-time founder
QoQ shows recent acceleration or slowdown in revenue, costs, customers or other measures. It gives founders a quicker signal than an annual comparison, but consecutive quarters may differ because of seasonality, billing schedules or one-off transactions rather than underlying performance.
Examples of quarter on quarter (QoQ)
Monthly recurring revenue is $90,000 at the end of Q1 and $99,000 at the end of Q2. The QoQ growth rate is ($99,000 minus $90,000) divided by $90,000, or 10%. A large annual prepayment could still distort cash comparisons.
Common misunderstanding
QoQ is not year on year, which compares the same quarter across different years. It is also not QTD, which measures activity from a quarter’s start to the current date. QoQ and Q/Q are alternative labels for the same comparison.
When to use it
Use QoQ in investor updates, forecasts and operating reviews when the latest direction matters. Show the underlying numbers, calculation and relevant seasonal context. Use a longer trend as well when one unusually strong or weak quarter could dominate the percentage.