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EBITDA Margin

Earnings Before Interest, Taxes, Depreciation, and Amortisation as a percentage of revenue — a measure of operating profitability before capital structure and non-cash accounting adjustments.

What it shows

EBITDA margin shows the underlying operating efficiency of the business. For SaaS, it is a key input to the Rule of 40 and a primary valuation multiple driver — higher EBITDA margins at scale command premium revenue multiples from acquirers and public market investors.

Formula

EBITDA Margin = EBITDA ÷ Total Revenue × 100. EBITDA = Net Income + Interest Expense + Income Taxes + Depreciation + Amortisation.