The Wild West of EBITDA Adjustments
A deep dive into the dark arts of EBITDA adjustments
The Wild West of EBITDA Adjustments
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
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
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.