Free ForeverNo SignupMulti-year GrowthUpdated 2026

CAGR Calculator (Compound Annual Growth Rate)

Calculate the smooth annual growth rate that represents your revenue or ARR trajectory over multiple years.

CAGR (Compound Annual Growth Rate) is the rate at which a value would have grown had it grown at a steady annual rate. If your ARR went from $1M to $8M over 3 years, CAGR = (8/1)^(1/3) − 1 = 100%. CAGR smooths out year-to-year volatility, making it the standard metric for multi-year performance comparisons.

Starting Value

Revenue, ARR, or any metric at the beginning of the period

Ending Value

Revenue, ARR, or any metric at the end of the period

Number of Years

Years between start and end values

years

The Formula

CAGR = (End Value ÷ Start Value)^(1 ÷ Years) − 1

In plain English

Divide ending value by starting value. Raise the result to the power of (1 ÷ number of years). Subtract 1 and multiply by 100.

Worked Example

Start: $1M. End: $8M. Years: 3. CAGR = (8/1)^(1/3) − 1 = 2^1 − 1 = 100% CAGR. ARR doubled each year for 3 years.

CAGR vs Simple Growth Rate

Simple growth rate = (End − Start) ÷ Start. If your ARR went from $1M to $8M in 3 years, simple growth is 700%. CAGR answers a different question: what constant annual rate would produce the same result? The answer is 100% — you doubled each year.

CAGR is more useful for comparing businesses with different time horizons. A company that tripled in 1 year (200% CAGR) and a company that grew 8× in 3 years (100% CAGR) are very different, but simple growth rates (200% vs 700%) make comparison misleading.

The T2D3 Path in CAGR Terms

The "Triple, Triple, Double, Double, Double" SaaS path equates to: 200% CAGR for years 1–2, then 100% CAGR for years 3–5. A company on T2D3 from $1M ARR reaches $72M ARR in 5 years. That's a 5-year CAGR of approximately 130%.

CAGR Benchmarks for SaaS Companies (2026)

CAGR	Assessment	Typical Stage	ARR Multiple
100%+ CAGR	Hypergrowth	Seed–Series A	20–30×
50–100%	Excellent	Series A/B	12–20×
20–50%	Strong	Series B/C	8–12×
10–20%	Moderate	Growth stage	5–8×
< 10%	Slow	Mature	3–5×

Source: Bessemer Cloud Index 2026 · Battery Ventures State of the OpenCloud

Common Mistakes

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Using CAGR to hide bad recent years

CAGR only uses start and end values — it ignores what happened in between. A company that grew 200%, then shrunk 50%, then grew 100% might have a healthy CAGR while actually showing a concerning recent decline. Always show annual figures alongside CAGR.

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Confusing CAGR with average growth rate

Average growth rate = sum of annual growth rates ÷ years. CAGR = the geometric mean. They give different results. CAGR is always ≤ the arithmetic average. For investor presentations, always use CAGR — it is mathematically correct for compound growth.

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Projecting CAGR linearly into the future

Growth rates almost always decelerate as revenue scales. Projecting a 100% CAGR forward 10 years produces a number larger than the global SaaS market. Use CAGR for historical analysis; use explicit growth deceleration models for forecasting.