NTM EBITDA: Meaning, Formula, and How to Use It

What is NTM EBITDA?

NTM EBITDA (Next Twelve Months Earnings Before Interest, Taxes, Depreciation, and Amortization) estimates a company’s operating performance over the next 12 months. 

Financial analysts use NTM EBITDA in several forward-looking multiples when evaluating comparable peers, potential M&A targets, and leveraged buyouts (LBO) deals. This metric is especially useful when assessing a business that is undergoing major changes or a growth company that has not yet posted steady profits.

How to Calculate NTM EBITDA

NTM EBITDA must be built from projections rather than historical performance data. That means you’ll need to rely on forward-looking inputs from company guidance, analyst estimates, or your own model.

Here’s how to approach the calculation:

Step 1: Forecast NTM Revenue

Start with the best available data. If you have quarterly revenue estimates from analysts, sum the next four quarters. If it is mid-year and only annual estimates are available, blend the remaining part of this year with the start of next year. Be sure to adjust for seasonality, upcoming product launches, or business shifts.

Step 2: Estimate NTM EBITDA Margin (%)

Look at recent EBITDA margins as a starting point, but don’t stop there. Factor in expectations for changes in operating leverage, input costs, or economies of scale. Margin projections should reflect the business environment as well as internal developments.

Want to practice calculating EBITDA margin? Download CFI’s free EBITDA margin template!

Step 3: Prepare for the Final Calculation

Once you’ve forecasted revenue and EBITDA margin, you’re ready to calculate NTM EBITDA using a straightforward formula.

NTM EBITDA Formula

The formula for NTM EBITDA is:

NTM EBITDA = NTM EBITDA Margin (%) × NTM Revenue

Let’s walk through a quick example calculation.

A growing SaaS company projects $50 million in revenue over the next 12 months and assumes a 20% EBITDA margin during that period. 

Using the formula above, you calculate NTM EBITDA as follows:

NTM EBITDA = 20% × $50mm = $10mm

That $10 million becomes your EBITDA projection for the company in the next 12 months. 

Why Should You Use NTM EBITDA in Valuation?

While LTM EBITDA (last twelve months) provides historical EBITDA data, NTM EBITDA provides a forward-looking estimate that reflects expected changes in earnings potential. This perspective is especially important when valuing businesses that are preparing to scale or restructure.

In practical terms, NTM EBITDA is often used in valuation multiples, such as EV/EBITDA, to compare companies across peers or time periods. Using NTM EBITDA allows analysts to normalize for timing differences and better reflect expected performance. 

EV/EBITDA is widely used because EBITDA gives a rough estimate of operating cash flow before capital spending. That makes it a useful, though imperfect, stand-in for unlevered free cash flow.

NTM EBITDA allows for more apples-to-apples comparisons since it smooths out timing differences in fiscal years and accounts for expected performance. 

Analysts typically use NTM EBITDA in:

• M&A and leveraged buyout (LBO) models
• Sell-side research reports
• Internal performance forecasts

Common Mistakes to Avoid with NTM EBITDA

NTM EBITDA relies on forward-looking inputs, so even small assumptions or changes can make a big impact. Before you finalize your analysis, ask yourself:

• Are your revenue and margin projections based on reasonable inputs, like a company’s earnings guidance or research analyst estimates, or are they skewed by bias or wishful thinking?
• Have you factored in seasonality, major product launches, or one-time events?
• Did you adjust for non-recurring expenses to reflect core operating performance?

These questions help stress-test your inputs. The more disciplined your approach, the more reliable your valuation will be.

NTM EBITDA for Valuation: Applying What You’ve Learned

As you refine your valuation skills, NTM EBITDA will become a go-to metric in your toolkit. It brings the future into focus and helps you value companies based on projected future performance. Whether you’re comparing peers or building a discounted cash flow model, learning how to forecast and interpret NTM EBITDA will make your analysis stronger and more reliable.

Building strong expertise in forward-looking metrics can set you apart in valuation work and deal analysis.

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Additional Resources

LTM vs. NTM Valuation Multiples

EBITDA Margin Template

EV/EBITDA

See all Valuation resources