Last Twelve Months (LTM)

How to Calculate Last Twelve Months (LTM) Financial Data

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.

LTM financial metrics are frequently calculated after a company reports earnings or in anticipation of a certain corporate event, such as an acquisition.

Using LTM financial data, an equity analyst, like an investor at a hedge fund, can analyze the current 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.

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.

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.

Note that the stub periods in the calculation—the two adjustments to the revenue reported in the most recent fiscal year—must “match” in terms of the timing covered.

LTM Revenue Calculation Example

Suppose an equity analyst is tasked with updating a financial model to reflect the LTM income statement data of Apple (AAPL).

Apple recently reported its Q2-24 earnings on 03/30/2024, thereby the equity analyst must add the YTD financial data to the FY-23 financial data and then deduct the corresponding YTD financial data from the prior period.

The reported revenue data of Apple—obtained from the financial data platform Daloopa—is as follows:

The Q4 revenue data is seldom broken out separately on the income statement—and thus, the more practical approach to compute LTM revenue is to add the YTD revenue to the latest fiscal year revenue, and then subtract the prior YTD revenue.

To complicate matters further, Apple’s fiscal year ends around 09/30 rather than the standard 12/31.

Given the quarterly and annual revenue data pulled from Apple’s income statement, we’ll insert the reported revenue figures into the LTM formula.

Upon inserting Apple’s reported net sales figures into the formula, we arrive at $381,623 in LTM revenue as of Q2-2024.

• LTM Revenue = $383,285 million + ($119,575 million + $90,753 million ) – ($117,154 million + $94,836 million) = $381,623 million

^{AAPL LTM Income Statement Financial Data (Source: Daloopa)}

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.