Earnings Before Interest, Taxes, Depreciation, and Amortization. A proxy for operating cash flow and core profitability.
Why it matters: While early-stage startups rarely focus on EBITDA (as they are usually unprofitable), it is the primary valuation metric for mature, private-equity-backed software companies (Rule of 40).
In practice: A mature SaaS company has $10M in revenue, $6M in operating expenses, and excludes $1M in software amortization, yielding an EBITDA of $4M.