EBITDA as a percentage of revenue, measuring operating profitability.
ebitda_marginAlso: EBITDA %EBITDA Margin measures operating profitability before the effects of financing decisions, accounting choices, and tax jurisdictions. It is the most commonly used margin metric in valuation because it enables comparison across companies with different capital structures and depreciation policies.
EBITDA margin is a proxy for cash operating profitability and is the denominator in EV/EBITDA multiples. Target margins vary significantly by industry but improving margins are generally a positive signal.
EBITDA divided by revenue.
Compare to industry peers for context. Should generally be stable or improving at scale. Significant forecast margin expansion requires strong justification.
EBITDA margin shows how much of each revenue dollar becomes operating profit before accounting for interest, taxes, and depreciation.
Be careful with EBITDA adjustments. "Adjusted EBITDA" can exclude very real costs. Always understand what's being added back.
Model operating leverage explicitly: which costs are fixed vs variable? This gives you a defensible path to margin expansion (or contraction).
This variable is a key driver in the following financial models: