What is 'Quarter On Quarter - QOQ'?

Quarter on quarter (QOQ) is a measuring technique that calculates the change between one financial quarter and the previous financial quarter. This is similar to the year-over-year (YOY) measure, which compares the quarter of one year (such as the first quarter of 2018) to the same quarter of the previous year (the first quarter of 2017). The measure gives investors and analysts an idea of how a company is growing over each quarter.

BREAKING DOWN 'Quarter On Quarter - QOQ'

For example, the QOQ measure can be used to compare the earnings between quarters. For example, ABC Company's first-quarter earnings were $1.50 per share, and its second-quarter earnings were $1.75 per share. This means that the company has grown its earnings by 16.6% QOQ ($1.75-$1.50/$1.50), which is a positive indicator for investors.

QOQ allows a business to monitor shorter-term changes and to progress towards goals or benchmarks that have been set for the year. It can provide valuable information as to how a company is performing and allow the company to respond and make process changes if required.

Understanding a Quarter

When used in reference to financial or accounting principles, a quarter (Q) is a consecutive three-month period within the year. Traditionally, the first quarter (Q1) refers to the months of January, February and March. Each subsequent three-month period represents Q2, Q3 and Q4.

When used as part of a QOQ analysis, a business would compare financials from Q2 (April, May, June) to Q1 (January, February, March). This varies from a YOY comparison where the same quarter would be compared from one year to the next. For example, Q1 of 2018 would be compared to Q1 of 2017 in a YOY review.

Challenges with QOQ Analysis

There are circumstances where QOQ analysis may not provide a holistic view of the health of an organization. For example, if an industry experiences seasonal sales variances, such as landscapers or seasonal sellers, what may appear to be a downward trend may be an industry norm. The same can apply if a business experiences higher earnings during a peak season that may reflect abnormally high growth from one quarter to the next. To compensate for normal shifts in business, an organization may choose to adjust the figures seasonally. This can create a more accurate picture throughout the year. Since YOY analysis involves the examination of the same quarter from one year to the next, it does not typically require a seasonal adjustment to provide valuable data.

RELATED TERMS
  1. Year Over Year - YOY

    Year over year describes how investors can see a difference in ...
  2. Quarter - Q1, Q2, Q3, Q4

    A quarter is a three-month period on a company's financial calendar ...
  3. Quarterly Revenue Growth

    An increase of a company's sales when compared to a previous ...
  4. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. ...
  5. Rolling EPS

    A measure of a company's earnings per share based on the previous ...
  6. Quarter-To-Date (QTD)

    Quarter-to-date is a time interval that captures all relevant ...
Related Articles
  1. Investing

    HPE Plummets on Steep Revenue Miss, Weak Outlook

    Since 2015, HPE's shares have seen a 10% sales decline YOY while HP Inc.'s stock surges.
  2. Investing

    Fundamentally Speaking, Starbucks Looks Good

    Starbucks disappointed inflated expectations and the shares of falling today. But a closer look suggests the business is pretty solid.
  3. Managing Wealth

    How to Use Earnings Season to Make Better Decisions

    Earnings season reflects the state of the stock market, but also demonstrates how the overall economy is performing.
  4. Investing

    Trump's First 100 Days Lifted These Dow Stocks

    The Dow gained an impressive 5.6% over Trump's first 100 days while 10 Dow stocks soared
  5. Insights

    Is It Time To End Quarterly Earnings Reporting?

    The chorus for removing the quarterly earnings requirement for companies is growing louder. We examine the pros and cons of the issue.
  6. Investing

    GM: General Motors Dividend Analysis

    General Motors offered attractive dividend yields during the first half of 2016 and has a healthy dividend based on its earnings and payout ratio.
  7. Investing

    Smartphone Markets Are Maturing: Should You Still Own QQQ?

    Explore the ramifications of maturing smartphone and PC markets for the PowerShares QQQ ETF, as well as a fund risk greater than Apple's declining revenues.
  8. Insights

    U.S. GDP Growth in Q1 Disappoints at 0.5%

    US GDP Report for First Quarter 2016
  9. Investing

    Facebook, Twitter See User Growth in March Quarter

    Done reporting Q1 earnings, the pair enjoyed a blowout quarter while Snap struggles.
  10. Investing

    Starbucks Stock: Capital Structure Analysis

    Discover the capital structure analysis for Starbucks Corporation, and learn how it generated a 47% increase in enterprise value in 2015.
RELATED FAQS
  1. When is earnings season?

    Earnings season is the period of time during which a large number of publicly traded companies release their quarterly earning ... Read Answer >>
  2. What is the first day of the quarter?

    Learn when the first day of the quarter is. Explore why investors and analysts prefer to compare results year-over-year due ... Read Answer >>
  3. When should I use seasonally adjusted data from the consumer price index (CPI)?

    Learn what seasonally adjusted data is, how it is determined and when it should be used to evaluate the information gathered ... Read Answer >>
  4. What is a quarterly report?

    Learn about quarterly reports and why they are important to investors. Explore street consensus estimates and how reported ... Read Answer >>
  5. When does Q4 start and finish?

    Learn about different financial years used by various companies. Explore when the fourth quarter begins on October 1st and ... Read Answer >>
Hot Definitions
  1. Return on Assets - ROA

    Return on assets (ROA) is an indicator of how profitable a company is relative to its total assets.
  2. Fibonacci Retracement

    A term used in technical analysis that refers to areas of support (price stops going lower) or resistance (price stops going ...
  3. Ethereum

    Ethereum is a decentralized software platform that enables SmartContracts and Distributed Applications (ĐApps) to be built ...
  4. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  5. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  6. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
Trading Center