The Wild West of EBITDA Adjustments

👋 Hi, it’s CJ Gustafson and welcome to Mostly Metrics, my weekly newsletter where I unpack how the world’s best CFOs and business experts use metrics to make better decisions.

EBITDA—Earnings Before Interest, Taxes, Depreciation, and Amortization—is making a comeback as one of the most scrutinized metrics in finance, driven in part by a rise in IPO and M&A transaction volume. And with this resurgence, we’re seeing a wave of increasingly aggressive EBITDA adjustments that warrant a closer look.

In fact, it feels like if you just add the modifier “Adjusted” to EBITDA you can just do things.

Don’t believe me?

Here are two recent eyebrow-raising examples from S-1 filings:

Klarna reported $181M in Adjusted Operating Profit in 2024, despite a GAAP operating loss of -$121M. The trick? They excluded nearly half a billion dollars in consumer credit losses—the core risk of being a BNPL lender.

They also wrote off $82M in depreciation and impairments and removed restructuring costs, calling them “one-time.” But when cost-cutting happens every year, is it really “one-time”? They’ve been trimming headcount and offboarding software vendors for the past three years.

CoreWeave claims a sky-high 64% Adjusted EBITDA margin—but on a GAAP basis, they’re running at a -45% loss.

The playbook? Strip out $360M in interest on GPU-backed debt, extend useful life depreciation on chips from 5 to 6 years (lowering reported costs by $20M), and ignore $863M in AI hardware depreciation. Yikes.

The result? A financial profile that looks like it rips—until you dig into what’s missing.

For those of us who spend time with CFOs and investors, these stories offer a fascinating glimpse into the evolving dark arts of financial reporting.

Continue reading for a deep dive into the history and application of EBITDA, as well as the craziest adjustments (and memes) I could find.