sequential growth
Sequential growth is how much a company's numbers moved from the last quarter to this one, not from a year ago.
In plain English
Why does everyone suddenly care what happened last quarter instead of last year? If you have ever read a company's results and seen the phrase 'grew 8% quarter on quarter', that is sequential growth, and it exists because sometimes you want to know how a business is doing right now, not twelve months ago.
Sequential growth compares one period to the period immediately before it. Quarter two against quarter one. This month against last month. It is the short memory version of tracking performance, and it is useful precisely because it is short. A business can look wonderful year on year and still be calmly losing steam right now, and sequential growth is the number that catches that.
Take a Nigerian telecoms company. If their data revenue in Q2 was ₦120 billion and it rose to ₦130 billion in Q3, that is sequential growth of about 8.3%. Compare that to year on year growth, which might compare Q3 this year to Q3 last year, a much longer stretch that can hide a recent slowdown or a recent burst of energy.
A Nigerian in London running a small import business might watch this monthly rather than quarterly. If sales moved from ₦2 million in January to ₦2.4 million in February, that 20% sequential jump tells her something happened right now, perhaps a new customer or a seasonal push, and she can act on it immediately instead of waiting a whole year to notice a pattern.
The catch is that sequential growth can be jumpy. Retailers naturally sell more in December than November, so a huge sequential jump after festive season is not necessarily brilliance, just the calendar doing its usual thing. That is why analysts often look at both sequential and year on year growth together, one for the immediate pulse, the other for the honest, seasonally fair comparison.
A Lagos fintech earns ₦450 million in transaction revenue in Q1 and ₦510 million in Q2. Sequential growth is (510 minus 450) divided by 450, which is about 13.3% quarter on quarter.
Questions people ask
Is sequential growth the same as year on year growth?
No. Sequential growth compares consecutive periods, like this quarter to last quarter. Year on year compares the same period across two different years, which smooths out seasonal noise that sequential growth cannot avoid.
Why would a company highlight sequential growth in its results?
Because it shows momentum right now. A company might have flat year on year numbers but strong sequential growth, which suggests things are picking up, and management likes investors to notice that early signal.
Can sequential growth be misleading?
Yes, especially in seasonal businesses. A jump from a slow month to a naturally busy month, like from November to December in retail, can look impressive without reflecting any real improvement in the business.
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