SSEBITDA: A BETTER PROFIT METRIC FOR SAAS

Summary from the TLDR Founders newsletter

For SaaS companies "spending to grow," SSEBITDA (Steady-State EBITDA) reveals whether your core business model actually works by measuring profitability if you maintained current revenue without growth. The formula—EBITDA + Sales/Marketing - Cost of Cancellation—improves on earlier metrics by accounting for customer churn replacement costs. This shows not just if you're profitable now, but whether you'd be profitable in steady-state. The related "Profitable Growth Rate" calculation tells you exactly how fast you can self-fund growth while staying profitable. Watch this metric directionally rather than obsessing over the absolute number, especially if you're seeing improvement in the component inputs over time.