Quarter over Quarter (Q/Q)

What Q/Q measures

Quarter over quarter (Q/Q) measures the percentage change in a metric—commonly revenue or profit—between one fiscal quarter and the previous quarter. It is a short-term growth indicator used by investors, analysts, and policymakers to detect recent trends in company performance or the broader economy.

Key takeaways

• Q/Q shows short-term change from one quarter to the next.
• It is useful for spotting recent momentum but is more volatile than year‑over‑year (YoY) comparisons.
• Quarterly financials are reported to regulators (10‑Q filings) and are often available on company websites.
• When comparing companies, adjust for different fiscal‑quarter start dates and seasonality.

How to calculate Q/Q

Q/Q growth = (Current quarter − Previous quarter) / Previous quarter

Multiply the result by 100 to express it as a percentage.

Uses and examples

• Corporate analysis: Analysts track Q/Q changes in revenue, earnings, margins, and other line items to assess recent performance and momentum.
• Macroeconomic monitoring: GDP and other economic indicators are reported quarterly; consecutive declines in GDP across two quarters often signal a recession.
• Policy and planning: Rapid Q/Q shifts in economic data can prompt policy adjustments or strategic business decisions.

Real‑world illustration

Comparing two consecutive quarters shows short‑term movement but can be misleading if viewed in isolation. For example, in 2018 Intel’s earnings rose about 11% from Q1 to Q2, while IBM’s rose roughly 41% over the same interval. Those single‑quarter jumps require context—multiple quarters of data—to determine whether they reflect a durable trend or temporary/seasonal factors.

Variations and volatility

• Month‑over‑month (M/M): Measures change from one month to the next; typically the most volatile due to short time spans and one‑off events.
• Year‑over‑year (YoY): Compares the same quarter in different years; reduces seasonality and gives a clearer long‑term perspective.
  Q/Q is generally more volatile than YoY but less volatile than M/M.

Practical tips for analysts

• Compare the same fiscal quarters (or adjust for seasonality) when benchmarking different companies.
• Review multiple consecutive quarters to identify trends and filter out one‑time effects.
• Use Q/Q alongside YoY and longer‑term metrics to form a balanced view of performance.

Conclusion

Q/Q is a valuable short‑term metric for detecting recent changes in financial or economic performance. To avoid misleading conclusions, combine Q/Q analysis with YoY comparisons, multiple quarters of data, and adjustments for seasonality and differing fiscal calendars.