Adjusted EBITDA

Adjusted EBITDA means EBITDA modified to exclude certain items that a company considers unusual, non-recurring, or not part of normal operations. In simple terms, adjusted EBITDA is a company’s cleaned-up version of EBITDA. Adjusted EBITDA is important because companies and investors use it to focus on ongoing business performance. However, investors need to check what adjustments were made. For example, a company may remove restructuring costs, stock-based compensation, or one-time legal expenses from adjusted EBITDA. Adjusted EBITDA is not always neutral. Because companies choose the adjustments, it can sometimes make performance look better than standard accounting results.