I don’t know if this is common knowledge or not (which in my case usually means it is), but Rowan Simpson gives a concise lesson detailing the three ways companies report their results, and how misleading each can be.
- Size “We made a net profit of $15 million.”
- Growth “Revenues increased by 9%.”
- Acceleration “We added 100,000 new customers in the last year, 70,000 of these in the last two months.”
To further illustrate this point, Rowan looks at other ways to interpret Skype’s Q1 2008 results than GigaOm’s acceleration-based interpretation of “Skype’s growth starts to slow“.
- Size “Skype reports record revenue of $145m.”
- Growth “Skype increases revenue by 26% compared to the same period last year.”