CAGR Calculator

CAGR stands for Compound Annual Growth Rate — the smoothed annualized rate at which something grew from one value to another over a period, as if it grew at a constant rate each year. It's the most common way to describe investment returns, revenue growth, and population changes over multi-year windows.

CAGR = (Ending Value ÷ Starting Value)^(1 ÷ Years) − 1. Example: if $10,000 grew to $25,000 over 5 years, CAGR = (25,000 ÷ 10,000)^(1/5) − 1 = 1.201 − 1 = 20.1%. Multiply by 100 to express as a percent.

Average annual return is the arithmetic mean of yearly percent changes. CAGR is the geometric mean — it accounts for the compounding effect of sequential returns. For volatile series, CAGR is always lower than the arithmetic average. That's why CAGR is more honest: a 50% gain followed by a 50% loss looks like 0% arithmetically but is actually −25% CAGR.

Depends heavily on stage and industry. Early-stage SaaS: 100–300% CAGR is common in the first 2–3 years. Growth-stage SaaS: 40–80%. Mature public software companies: 10–25%. Mature consumer brands: 3–10%. A 'good' CAGR is one that meets or exceeds what your stakeholders and capital providers expect given the risk.

Mathematically yes — a CAGR can be negative. A business that shrank from $10M to $6M over 3 years has a CAGR of about −15.7%. The formula still works, but interpretive care matters — CAGR smooths out everything, so catastrophic single-year crashes can hide inside a less alarming negative CAGR.

When volatility matters more than average outcome — CAGR alone hides the journey. A stock that averaged 10% CAGR might have gone through a 60% drawdown. For risk analysis, pair CAGR with metrics like max drawdown or standard deviation. CAGR also misleads over very short periods (1–2 years) where randomness dominates structural growth.