As the second quarter earnings season draws to a close, I realize that there is a whole host of MB readers who have joined over the past few months who may not know what this means when someone uses weird terms like “y/y”, “q/q”, and “Q2” and “H1”.
These are examples of financial shortcuts that make it easier to read/use financial news (once you understand what it means).
These terms are not intentionally hard to type, but rather are optimized to give as much information as possible in the least amount of space/text.
The terms “Q”/”H”/”9M”/”FY” tell us the time period the author is referring to; Q for quarter (Q1/Q2/Q3/Q4), H for semester (H1/H2), 9M for the first 9 months of the year and FY for the whole year.
The “y/y” and “q/q” tell us what period the author is comparing the current period to. When you see “y/y”, it means that the author is comparing the period of the current year with the same period last year.
When you see “q/q”, it means the author is comparing the current quarter with the quarter immediately preceding this one. For example, if you see “Second quarter revenue up 5% year-on-year,” it means that this year’s second quarter revenue increased by 5% compared to this company’s second quarter revenue compared to Last year.
If you see “Q2 revenue up 5% q/q,” that means Q2 revenue this year is up 5% from this company’s performance in Q1.
If you see something like “Q2 revenue up 50% YoY, down 5% QQ”, that means the company’s revenue is up 50% from Q2. year, but down 5% from Q1 this year.
You don’t need to use “y/y” when comparing 9M and fiscal year results, as it just assumes the increase is relative to the prior year period.
I try to translate financial jargon as much as possible in my writing, but these are very useful terms to learn, and becoming familiar with them will increase your understanding of the financial news you read and help you see through the headlines to get a better idea of what the data really says.
For readers who are already familiar with these terms, I hope you give your fellow Barkadans the chance to get some of the basics and level up.
There is always an opportunity to gain finance XP, but the more people we include in the tutorial levels, the better it will be for all of us!
The more we all know, the better the market.