The Evolution of EBITDA Margins in the Software Industry

There is a growing appreciation for EBITDA positive businesses in recent months./nInvestors are willing to pay a premium for businesses with consistent track records of strong EBITDA margins./nCompanies that can deliver expanding EBITDA margins are expected to be well-positioned in the public markets./nTrading at a higher revenue multiple without any EBITDA requires substantial growth in EBITDA to drive enterprise value./nTrading at a lower revenue multiple with reasonable EBITDA can lead to higher valuation based on EBITDA multiples./nThe transition towards valuing companies based on 10% growth and 30% EBITDA margins is becoming more prevalent./nThere is a minimal difference in trading multiples between unprofitable high-growth companies and profitable lower-growth companies./nEBITDA margin has been tracked over 20 years to assess its stability and fluctuations in the market.