What is typically not included in the calculation of Adjusted EBITDA?

Adjusted EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) is a metric that is widely used to assess a company's operating performance by removing certain non-recurring or non-operational items that may distort the true earnings picture.

Typically, recurring subscription fees represent a stable and consistent source of revenue that a business generates from its ongoing operations. These fees reflect the core business activities and are expected to recur in the future. Including them in the Adjusted EBITDA calculation provides a more accurate representation of the company’s continuous operating performance.

In contrast, one-time legal expenses, non-cash stock compensation expenses, and gains or losses from asset sales are usually excluded from Adjusted EBITDA calculations because they can vary significantly and do not reflect the ongoing earnings from the company's core operations. One-time legal expenses may not recur and thus do not contribute to an accurate depiction of ongoing profitability. Non-cash expenses, like stock compensation, do not involve an actual cash outlay and are often adjusted out to provide a clearer cash earnings picture. Gains or losses from asset sales do not pertain to routine operational performance and can introduce volatility into earnings assessments.

Overall, including recurring subscription fees is essential for a comprehensive view of a company’s financial health,