CAGR shows the average yearly growth rate needed to go from a starting value to an ending value over a number of years. It smooths out volatility and gives you a single comparable annual growth figure.
This makes CAGR useful for revenue growth, investing performance, subscriber growth, pricing history, and any long-term trend where you want a cleaner comparison than raw totals alone. Rather than looking only at the final gain, CAGR helps you understand the average annual pace of growth.
Formula: ((End ÷ Start)^(1 ÷ Years) − 1) × 100.
CAGR is the annual growth rate that would take your starting value to your ending value if growth happened at a steady compounded rate each year. In real life, growth may go up and down, but CAGR gives you a single clean number for comparison.
That makes it especially useful when comparing investments, products, business lines, or growth periods of different lengths. It helps answer the question: “What average yearly rate would produce this final result?”
The calculator first divides the ending value by the starting value to find the total growth multiple. It then converts that total growth into an annualised rate by raising it to the power of 1 ÷ years. Finally, it subtracts 1 and converts the figure into a percentage.
This differs from a simple average because CAGR assumes compounding. That is why it is often used in finance, investment reporting, SaaS metrics, and revenue analysis.
Question: Revenue grows from £80,000 to £120,000 over 4 years.
This means the business grew at roughly 10.67% per year on a compounded basis.
Question: £2,000 grows to £2,700 over 3 years.
This is a more useful comparison figure than just saying the investment gained £700 overall.
Use this page when you want to compare long-term growth more fairly. For simple start-versus-end return without annualising, use the Investment Return Calculator. For projecting forward future growth instead of measuring past performance, use the Compound Interest Calculator.