Charlie Munger calls EBITDA earnings “bullshit earnings”

Because they are, as is clear to anyone not on the tech sauce. It’s the “I’m a loyal and faithful partner; minus the cheating, lying, deceiving, and gaslighting” of financials.

I always took EBIDTA to be "theoretical best case" earnings, i.e. our business model could theoretically be profitable if we could just magically pay off all our debt and upgrade all of our equipment for free

Sure that doesn't mean much, but it's better than losing more money on every additional dollar of revenue which seems to be some company's model

They should have IPO'd when they had the chance.

How could a company like Stripe not be profitable with $12B revenue?

Then why mention EBIDTA? It exists to basically say "we are bullshit artists and we are using creative accounting to LOOK profitable".

If you apply "creative" accounting to your EBITDA, you in the same group of companies like Enron.

Never forget that WeWork used “community adjusted” ebitda. So it can still get worse

That, and "Cash flow including funding" are my two favorite bullshit financial metrics!

I am also confused how Stripe, who collects fees on billions and billions of transactions, could somehow not be a very very wealthy company.

However Block, Inc (formerly square) is also not profitable!

https://finance.yahoo.com/quote/SQ with EPS of -0.17

Considering they are in the same segment, Adyen seems to be doing fine. EPS of 17.64 https://finance.yahoo.com/quote/ADYEN.AS/

Could be a result of smaller product suite and headcount of Adyen.

The vast majority of those fees flow through to payment networks and issuing banks.

I don't think it's the vast majority. Stripe charges ~2.9% + $0.30, and seems like Mastercard / Visa are probably taking around 1.15% + $0.05. So the vast majority should still be going to Stripe.

It’s as easy as one, two, steal all the earnings and indebt the company before running away

Because most of that revenue actually gets passed straight through to the payment networks and issuing banks.

Volume != profit. Time to start learning some basic math for the CFOs after the fat years

that’s not revenue that’s GMV

There’s using EBITDA because you want to (Malone using it to market Liberty) and then there’s using EBITDA because you have to (many tech industry darlings).

we’d all love to tell a bank I’m good for 10 million considering my EBITDA

Who cares if they are or aren't EBITDA profitable.

It's pretty clear they could cut growth expenses dramatically at at point if they chose.

To the downvoters: what exactly do you think profitability shows and why is it important?

The general answer is "the company is default alive". But actually looking at cashflow and which expenses can be cut gives a much better idea of that.

Since the era of free money has probably come to an end , the ability to be profitable is maybe necessary now.

If the only funding you can get is a 7% loan then suddenly your math will look very different since you have to pay that interest

As my comment says, cashflow is an even better source of money.

You're right, because competitors like Adyen can make a 7% net profit while being very competitive with Stripe fees.