Month Over Month (MoM)

Month Over Month (MoM): Tracking Your Business Pulse

Definition: Month Over Month (MoM) analysis compares financial metrics from one month to the immediately preceding month, providing a short-term view of business performance trends and momentum.

Why MoM Matters:

• Provides early warning signals of business trajectory changes
• Particularly valuable for subscription-based businesses and evolving startups
• Offers more immediate insights than quarterly or annual reviews
• Helps management make timely operational adjustments

Think of MoM tracking as your business navigation system—while annual reports tell you if you've reached your destination, monthly comparisons ensure you're still on the right path. For subscription businesses, MoM changes in metrics like Monthly Recurring Revenue (MRR) can signal expansion opportunities or potential churn issues before they significantly impact annual figures.

Calculating MoM Growth:

To determine MoM growth as a percentage, use this formula:

• ‍MoM Growth = ((Current Month Value - Previous Month Value) ÷ Previous Month Value) × 100

MoM Growth Example:

If your January MRR was $250,000 and February MRR reached $262,500:

MoM Growth = (($262,500 - $250,000) ÷ $250,000) × 100 = 5%

Beyond Basic MoM:

• Balance MoM with Compounded Monthly Growth Rate (CMGR) for longer-term perspective
• Be cautious of seasonal fluctuations that can distort MoM comparisons
• Track specific MoM sub-metrics like expansion revenue, customer acquisition cost, and churn

While MoM metrics provide valuable real-time insights, they should complement—not replace—your quarterly and annual performance analysis for comprehensive business intelligence.