Skip to content
GetProfitable
Search
Dictionary

Organic growth

Growth from the existing business, excluding revenue added by acquisitions and removed by disposals, and often excluding currency effects too.

Buying revenue is not the same as earning it. Organic growth is the measure that separates the two, and it is the number a management team is genuinely accountable for. Companies disclose a bridge from reported to organic growth in the release.

Definitions vary in how long an acquisition stays excluded, usually twelve months. Watch for a company that quietly shortens the exclusion window in a year when acquisitions were large.

Example: Northwind Tools reports 8.0% growth. The September distributor acquisition contributed 2.6 points and currency cost 0.4 points, so organic constant-currency growth was 5.8%.

Related: year-over-year, constant-currency, pro-forma, revenue, segment-reporting

Educational only, not advice. Spotted an error? Post in Site Feedback.