What it is
Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a non-GAAP financial metric that takes the standard EBITDA calculation and further adjusts it by removing certain expenses or income items. These adjustments typically include one-time charges, stock-based compensation, legal settlements, or other non-recurring events that management believes do not reflect the company's ongoing operational performance.
Companies often present Adjusted EBITDA in their earnings reports and investor presentations, particularly in industries with significant non-cash expenses or volatile one-time items. While it aims to provide a clearer view of a company's core operating profitability and cash-generating ability, investors should scrutinize the adjustments made, as they can vary between companies and potentially inflate perceived performance. It's a management-defined metric.
Why it matters
Adjusted EBITDA can highlight a company's core operational profitability by removing unusual costs, but always examine the adjustments made, as they can be subjective.
Reviewed under editorial standardsUpdated September 26, 2026Not investment advice