What does Compound Annual Growth Rate (CAGR) mean?

Compound Annual Growth Rate (CAGR) is a business and investing-specific term for the geometric progression ratio that provides a constant rate of return over a time period. CAGR is not an accounting term, but it is often used to describe some elements of the business, for example, revenue, units delivered, registered users, etc. CAGR dampens the effect of the volatility of periodic returns that can render arithmetic means irrelevant. It is particularly useful to compare growth rates from various data sets of a common domain such as the revenue growth of companies in the same industry or sector.