The Investor's Lexicon

A business that generates high returns without owning the underlying physical assets — platforms and marketplaces.

A business that can grow revenue without proportional increases in fixed assets or capital expenditure.

The dominant player in a market category — enjoying the strongest brand, best economics, and most durable moat.

The percentage of customers or revenue lost in a period — the most important metric for any subscription business.

Tracking behaviour of customers acquired in the same period — the best way to assess business quality over time.

The geometric annual growth rate over a multi-year period — the single number that summarises how fast a business, market, or investment has grown.

Peter Lynch

The process by which returns generate further returns over time, causing wealth to grow at an accelerating rate — the central mechanism through which long-term investment creates extraordinary value.

Nick Sleep

The total sales and marketing cost to acquire one new customer — a measure of growth efficiency and the sustainability of the business model.

Peter Lynch

Clayton Christensen's theory that new entrants initially serve overlooked market segments with simpler, cheaper products, then progressively move upmarket to displace incumbents.

Philip Fisher

Enterprise value divided by trailing or forward revenue — the primary valuation multiple for high-growth companies without meaningful profits.

Peter Lynch

The rate at which a company's earnings per share grow year-over-year — the foundation of Lynch's PEG ratio and growth stock valuation.

Peter Lynch

Companies still led by their original founder — with greater skin-in-the-game and longer time horizons.

The percentage of net income that converts to free cash flow — a measure of earnings quality and capital efficiency.

A hybrid strategy seeking growth companies trading at valuations not extreme relative to their growth rate.

Revenue minus cost of goods sold, divided by revenue — the percentage of each rupee of revenue that remains after direct production costs.

Philip Fisher

Gross profit retained from an existing customer cohort over time — a measure of customer lifetime value.

The percentage of recurring revenue retained from existing customers over a period, excluding any expansion revenue — measures pure customer retention before upselling.

Philip Fisher

The first sale of a company's shares to the public — transitioning from private to public ownership and raising capital by offering new or existing shares on a stock exchange.

Peter Lynch

Brands, patents, regulatory licences, and proprietary data that create durable competitive advantages.

Lifetime value divided by customer acquisition cost — the return earned on customer acquisition investment, the fundamental unit economics test for subscription businesses.

Philip Fisher

A growth strategy where a company wins initial small contracts to establish a foothold with a customer, then expands the relationship over time through additional products or seats.

Philip Fisher

The total revenue (or profit) a business expects to earn from a single customer over the entire duration of the relationship.

Peter Lynch

The improvement in profitability margins as a business scales — a powerful earnings multiplier on top of revenue growth.

A company's percentage of total industry revenue — a measure of competitive strength and growth potential.

The percentage of revenue retained from existing customers in the current period vs the prior period, including expansion revenue and net of churn.

Philip Fisher

A business becomes more valuable as more users join — creating a self-reinforcing competitive moat.

The degree to which a business's fixed cost structure causes profits to grow faster than revenue as scale increases.

Peter Lynch

Price-to-Earnings divided by the expected earnings growth rate — a valuation shortcut that adjusts the P/E ratio for a company's growth, making high-P/E growth stocks comparable.

Peter Lynch

The time required to recover the cost of acquiring a customer from the gross profit generated by that customer — a measure of how capital-efficient a growth business is.

Peter Lynch

A business that creates value by facilitating interactions between two or more user groups.

The degree to which a product satisfies a strong market demand — the point at which customers actively seek the product, adoption accelerates, and retention is high.

Philip Fisher

The degree to which reported earnings reflect the true, sustainable cash-generating power of a business — distinguishing genuine profit from accounting adjustments and one-off items.

Terry Smith

Whether earnings growth comes from genuine operating leverage or financial engineering and one-offs.

Revenue that automatically renews — subscriptions, SaaS, maintenance contracts — providing predictability and compounding.

A business that can deploy incremental capital at 20%+ returns for long periods — the rarest and most valuable quality.

The proportion of earnings a business retains and reinvests at high rates of return — the key driver of long-run compounding beyond simply earning high returns today.

Terry Smith

The profit a company generates relative to shareholder equity — a measure of how efficiently management converts equity capital into earnings.

Philip Fisher

The percentage change in revenue year-over-year — the most direct measure of whether a business is expanding its commercial footprint.

Philip Fisher

An annualised revenue projection based on the most recent period's performance — current monthly or quarterly revenue multiplied to produce a full-year estimate.

Philip Fisher

A benchmark for software and technology company health: the sum of the revenue growth rate and the profit margin (FCF or EBITDA) should exceed 40%.

Peter Lynch

The pattern of technology adoption: slow early, explosive in the middle, then maturing — the growth investor's roadmap.

The ability to grow revenue significantly without a proportional increase in costs — the engine of margin expansion.

A business model in which cost savings from scale are passed to customers as lower prices rather than captured as margin — creating a self-reinforcing flywheel of loyalty, volume, and competitive advantage.

Nick Sleep

Philip Fisher's term for competitive intelligence gathered from customers, competitors, suppliers, and former employees — used to assess the qualitative dimensions of business quality that financial statements cannot capture.

Philip Fisher

Philip Fisher's research method of gathering qualitative intelligence about a company from customers, competitors, suppliers, and former employees.

Philip Fisher

The portion of the TAM a company can realistically target given its current business model, geographic reach, and go-to-market capabilities.

Philip Fisher

The financial, operational, or psychological costs a customer incurs when moving from one product to a competitor.

The total revenue opportunity available to a product or service if it achieved 100% market share — used to assess a growth company's long-term ceiling.

Peter Lynch

The revenues and costs associated with a single unit of a business — one customer, one transaction, or one subscription — revealing whether the core business model creates or destroys value at the atomic level.

Peter Lynch