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Last Twelve Months (LTM)

Step-by-Step Guide to Understanding LTM Revenue (Last Twelve Months)

Last Updated November 27, 2023

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Last Twelve Months (LTM)

What is the Definition of Last Twelve Months (LTM)?

In finance, last twelve-month (LTM) metrics – often used interchangeably with “trailing twelve months” (TTM) – are used to measure a company’s most recent financial state.

Typically, LTM financial metrics are calculated for a certain event such as an acquisition, or an investor seeking to evaluate the operating performance of a company in the prior twelve months.

The LTM income statement of a company is ordinarily compiled in full, but the two critical financial metrics in M&A tend to be:

  • LTM Revenue → The net sales generated from the operations of the company over the most recent four quarters.
  • LTM EBITDA → The EBITDA, a proxy for the operating income of the company, is expressed on a trailing twelve-month basis.

In particular, many transaction offer prices are based on a purchase multiple of EBITDA – hence, the widespread usage of the LTM EBITDA metric in M&A.

But to ensure the LTM EBITDA or LTM revenue of a company reflects past performance and not an anomaly regarding its financial state, the EBITDA margin (%) can be compared across historical periods and the compound annual growth rate (CAGR) can annualize the growth rate across multiple periods.

How to Calculate LTM Revenue?

The following steps are used to calculate a company’s LTM revenue:

  1. Find the Last Annual Filing Financial Data (and Quarterly Filings)
  2. Add the Most Recent Year-to-Date (YTD) Data
  3. Subtract the Prior Year YTD Data Corresponding to the Prior Step

The process is virtually identical to calculating LTM EBITDA, with the only distinction being switching out “Revenue” with “EBITDA”.

LTM Formula

The formula for calculating a company’s last twelve months financials (LTM) is as follows.

Last Twelve Months (LTM) = Last Fiscal Year Financial Data + Recent Year-to-Date DataPrior YTD Data

The process of adding the period beyond the fiscal year ending date (and subtracting the matching period) is called the “stub period” adjustment.

If the company is publicly traded, the latest annual filing data can be found in its 10-K filings, whereas the most recent YTD and corresponding YTD financial metrics to deduct can be found in the 10-Q filings.

LTM Revenue Formula

The formula used to calculate LTM revenue is as follows.

Last Twelve Months (LTM) = Last Fiscal Year Revenue + Recent Year-to-Date Revenue – Prior YTD Revenue

Note that the stub periods in the calculation – the two adjustments to the last fiscal year revenue – must “match” in terms of the timing covered.

LTM Revenue Calculation Example

Suppose a company has reported $10 billion in revenue in fiscal year 2021. But in Q-1 of 2022, it reported quarterly revenue of $4 billion.

The subsequent step is to source the corresponding quarterly revenue – i.e. revenue from Q-1 of 2020 – which we’ll assume was $2 billion.

  • Fiscal Year 2021 Revenue = $10 billion
  • Q1 2022 Revenue = $4 million
  • Q1 2021 Revenue = $2 billion

Here, in our illustrative example, the LTM revenue of the company is $12 billion.

  • LTM Revenue = $10 billion + $4 billion – $2 billion = $12 billion

The $12 billion in revenue is the amount of revenue generated in the preceding twelve months.

LTM vs. NTM Revenue: What is the Difference?

In short, LTM revenue is a backward-looking measure of a company’s revenue performance, while the NTM revenue is a pro-forma, forward-looking measure of revenue performance.

  • Historical vs. Pro Forma Performance → In contrast to historical financials, NTM financials – i.e. “next twelve months” – are more insightful for expected future performance.
  • Scrubbed Financials → Both metrics are “scrubbed” to remove any distorting impacts from non-recurring or non-core items. More specifically, in the M&A context, the LTM/NTM EBITDA of a company is typically adjusted for non-recurring items and does NOT align directly with U.S. GAAP, but the financials are more representative of the actual performance of the company.
  • M&A Purchase Multiple → The purchase multiple in M&A can be based on either the historical or projected basis (NTM EBITDA), but there must be a specific rationale as to why one was chosen. For example, a high-growth software company could potentially focus on its NTM financials if its projected performance and growth trajectory are substantially distinct from its LTM financials.
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