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Repair common Windows errors and clear accumulated junk for a smoother, more stable PC - no reinstall needed.Free scan · no reinstallTo read a shareholder letter accurately, identify the metric, fiscal period and comparison behind each growth claim, then check the reported amounts and explanation against the company’s SEC filing. Year-over-year growth compares a period with the same period a year earlier; sequential growth compares it with the immediately preceding period. Those comparisons answer different questions, and sequential results can be shaped by seasonality.
Start by identifying what the letter is measuring
A shareholder letter may discuss consolidated revenue, revenue for a segment, or operating measures such as customers, annual recurring revenue (ARR), bookings or revenue per customer. These are not interchangeable. Record the exact measure and any stated definition before interpreting its growth rate.
- Revenue: Check whether the figure is consolidated or segment-level and whether it is reported in dollars or adjusted for currency.
- Operating metrics: Customer counts, revenue per customer and bookings can help explain business activity, but they do not equal recognized revenue.
- Company-defined measures: Read the issuer’s definition and caveats. For example, PTC says its ARR measure should be considered independently of recognized and unearned revenue.
- Non-GAAP measures: Treat adjusted figures as supplementary. Find the closest GAAP comparator, the exclusions and the reconciliation; PTC says its non-GAAP measures are not a substitute for or superior to GAAP results.
Definitions and presentations can differ between companies, so a growth rate is not automatically comparable across issuers.
Tell year-over-year growth from sequential growth
| Comparison | What it compares | What it helps answer | Main caution |
|---|---|---|---|
| Year-over-year (YoY) | A period against the corresponding period one year earlier | How results changed from the same seasonal point in the prior year | Check whether the fiscal periods, business scope and accounting presentation match. |
| Sequential or quarter-over-quarter (QoQ) | A period against the immediately preceding quarter | How results changed from the last reported quarter | Seasonal patterns can make adjacent quarters unlike one another; a change may not indicate a lasting trend. |
Confirm the company’s fiscal calendar rather than assuming its quarters align with calendar quarters. If a letter reports both comparisons, keep them distinct: one describes change from a year earlier, the other from the preceding quarter.
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Why sequential growth needs seasonal context
Revenue can rise or fall from one quarter to the next because of ordinary patterns in a company’s business. Compare a quarter with earlier instances of that same quarter where the information is available, then read the company’s explanation. Etsy, discussing its own sequential revenue and gross merchandise sales (GMS) history in its Form 10-K, wrote: “We believe that it is generally more meaningful to compare year-over-year results than sequential quarter-over-quarter results.” That is Etsy’s view about its results, not a universal rule for every issuer.
Management may attribute a change to demand, pricing, customer mix, acquisitions, foreign exchange or seasonality. Make clear that these are management’s explanations unless independent evidence supports them. Also check whether the claim uses reported currency or constant currency, and whether acquisitions, divestitures or a changed metric definition affect the comparison.
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Verify a growth claim in the filing
- Write down the claim. Note the metric, fiscal quarter or year, geography if stated, and whether the figure is consolidated, segment-level, GAAP, non-GAAP or company-defined.
- Locate the corresponding filing. Use the issuer’s investor-relations archive or the SEC’s company filings search to find the 10-Q or 10-K for that period. An investor-relations archive may group the letter with the filing and earnings materials.
- Check the reported amounts and dates. Find the current and comparison-period revenue on the financial statements, and confirm the fiscal dates. If the letter gives only a percentage or rounds the figure, calculate the change from the reported amounts; small differences may reflect rounding.
- Read the related explanation and notes. Review management’s discussion and analysis (MD&A), revenue-recognition and segment notes, plus any non-GAAP reconciliation relevant to the claim.
- Compare like with like. Check the reporting basis, business scope, currency treatment, accounting presentation and metric definitions for both periods.
- State the result precisely. Give the amount, period, comparison and management’s attributed explanation, along with a material limitation such as seasonality or an adjustment.
The SEC explains how to find company filings through its EDGAR search page. For company-specific presentation and definitions, use the issuer’s filing for the relevant period rather than relying on a letter alone.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.Example: one letter, two revenue comparisons
ZipRecruiter’s Q1 2025 shareholder letter reported revenue of $110.1 million, down 10% year-over-year and down 1% quarter-over-quarter. The company attributed the annual decrease primarily to continued softness in hiring demand and described the sequential decline in relation to hiring seasonality. Those are the company’s dated figures and explanations for that quarter—not current statistics or general conclusions about other businesses.
The letter also reported paid-employer counts, revenue per paid employer, and gross profit and margin separately. Those indicators can add context about customers, revenue mix or profitability, but they answer different questions from total revenue. Verify each metric on its own terms in the relevant filing.
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A practical checklist for comparing claims
- Is the comparison year-over-year or sequential, and which fiscal periods are involved?
- Is the number revenue, segment revenue, an operating metric, ARR or an adjusted measure?
- Are the dollar amounts and percentage change consistent, allowing for rounding?
- Is the figure reported-currency or constant-currency, and did the business scope or metric definition change?
- Could seasonality, acquisitions, divestitures or accounting presentation affect the comparison?
- What does management say drove the change, and which customer, mix, gross-profit or margin measures provide additional context?
- If the figure is non-GAAP, what is the GAAP comparator, what was excluded, and where is the reconciliation?
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