Financial Modelling - Revenue Drivers

One of the essential steps in the valuation of a company is to forecast the revenue for the company. While forecasting the revenue of any Company, it is essential to know what the revenue drivers of the company are. Drivers play a major role in forecasting and projecting company income and revenue. Hence it is very essential for most professionals to learn about drivers.

What are drivers?

Drivers are the factors which directly affect the revenue of a Company and hence are important for revenue forecasting. We know that Revenue is Volume*price. Hence Volume and Price are the drivers

Let us take the example of a gaming Company like Zynga. For a gaming company the drivers can be the Monthly Active Users (MAU) and the average revenue generated per User. Generally the information about the drivers of the revenue of a company is available from the S-1 form, analysts report or from sources like yahoo finance, Google finance etc

Some of the major industries world-wide along with their revenue drivers is explained in the table given below



Drivers of Revenue


Oil Prices ↑

Interest Rates ↓

Economic Conditions ↑

Capacity * Utilization * Sales Price


Regulatory Changes ↑

Per Capita Income ↑

Economic Conditions ↑

Interest Income= Loans* Yield on interest

Investment Income= Investment* Interest yield


R and D, innovation ↑

Age of technology ↓

Corporate spending budgets ↑

Manpower* Average bill rate*utilization* Total billable hours per person


Deregulation ↑

Technological Advances ↑

Competition ↓

User base * Average units per user* ARPU


Emerging Market growths ↑

Rising Commodity costs ↓

Average Sales Price * Volumes sold

Capital Goods

Industrial activity ↑

GDP growth ↑

Government Regulations ↓

Installed capacity * capacity utilization * Average Sales price

↑ - means that it is positively linked to the industry ↓- means that it is negatively linked with the industry


As part of the learning of Edupristine’s Financial Modelling course, you will come to learn how to understand the revenue drivers from the Management discussion and the historical financial statements

Let’s say we are trying to know the drivers of a company like LinkedIn that is prominent in the internet space.

LinkedIn revenues will depend on factors like

· Average revenue preregistered users

· Number of registered users

· No of Corporate customers

· Average revenue per corporate customers

Indirect factors which affect the revenue drivers of LinkedIn are

· Innovation by linked in will affect the number of registered members

· Marketing efforts by linked in to increase the user base

· Number of Competitors that come up in subsequent years will affect the number of users and revenue charged per user

The image below shows the drivers of our LinkedIn model. To see the complete model download here


You can download and see the complete model in Action and understand drivers better from LinkedIn Model. EduPristine’s extensive Financial Modeling course covers drivers in detail. To know more, quickly write an email to Also, you can download the financial models for LinkedIN , Groupon and Zyanga.

Revenue Drivers

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