EBITDA Margin Calculator

What is EBITDA Margin?

EBITDA margin is EBITDA divided by revenue, expressed as a percent. Boards use it as the profitability leg of Rule of 40 and as a standalone operating-efficiency signal, but only when finance pins one EBITDA definition for the period.

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Formula

Version v1. See methodology and the public formula repo for sources and change history.

Worked example

Using the default example inputs (Revenue: $1,000,000; EBITDA: $120,000), EBITDA Margin equals 12% (EBITDA margin). Pin one EBITDA definition for this period (GAAP, adjusted, or board-normalized) and reuse it on Rule of 40, changing definitions moves the score without a real business change.

What good looks like

Public SaaS EBITDA margins span a wide range by stage. Early companies often run negative; mature operators target positive and improving margins. The critical habit is consistency: GAAP EBITDA, adjusted EBITDA, and board-normalized EBITDA are not interchangeable period to period.

Directional guidance only, not a cohort benchmark claim. Premium cohort bands appear when sample thresholds are met for your profile.

FAQ

What is EBITDA Margin?

EBITDA margin is EBITDA divided by revenue, expressed as a percent. Boards use it as the profitability leg of Rule of 40 and as a standalone operating-efficiency signal, but only when finance pins one EBITDA definition for the period.

What is the EBITDA Margin formula?

EBITDA margin % = EBITDA / Revenue × 100

Which EBITDA definition should I use?

Pick the definition your finance team reports to the board for this period, GAAP, adjusted (excluding stock comp or one-offs), or another documented basis, and use it on both this calculator and Rule of 40. Changing definitions moves the margin without a real business change.

EBITDA margin vs gross margin?

Gross margin is revenue minus COGS only. EBITDA margin reflects operating profitability after S&M, R&D, and G&A (before interest, taxes, D&A). Rule of 40 uses EBITDA margin, not gross margin.

Why does the calculator show EBITDA dollars too?

EBITDA is both an input and surfaced as a secondary value so board slides can show the dollar numerator behind the percent, useful when directors ask how much operating profit the margin represents.