In the second quarter of 2025, roughly 1,400 venture-backed companies reported positive Adjusted EBITDA to their investors. Fewer than 310 of them were profitable by any definition a bank would recognize. The gap between those two numbers is not fraud, exactly. It is something more durable: a shared language for describing losses as though they were gains, practiced so widely that questioning it feels like poor manners.
We reviewed 500 pitch decks submitted to Series A through Series C investors over the past eighteen months. What we found was not surprising, but the specifics are worth documenting, if only because the creativity on display deserves to be studied on its own terms.
The Anatomy of an Adjustment
Standard EBITDA already strips out interest, taxes, depreciation, and amortization. This is reasonable. These are real costs, but they can obscure operating performance across companies with different capital structures. The concept was designed for comparing leveraged buyouts in the 1980s, and for that narrow purpose, it works.
Adjusted EBITDA goes further. In the decks we reviewed, the median company made seven adjustments to reach their preferred number. The most common: stock-based compensation (excluded by 94% of companies), restructuring charges (81%), "non-recurring" legal and settlement costs (67%), and office relocation expenses (43%). So far, defensible enough. These are standard add-backs that most analysts expect.
Then it gets interesting. Thirty-one percent of companies excluded some portion of their marketing spend, typically categorized as "investment in growth" or "market development costs." Eighteen percent excluded the cost of a product line they had decided to sunset, reasoning that since it would not exist in the future, its current losses were philosophically irrelevant. One company excluded the salary of its entire executive team on the grounds that leadership was a "strategic investment, not an operating expense."
The One-Time Charge That Wasn't
The most revealing pattern involved charges described as "one-time" or "non-recurring." In our dataset, 73% of companies that reported non-recurring charges in one quarter reported them again within two quarters. The average company classified something as non-recurring in five out of eight quarters studied.
The vocabulary rotates to maintain the fiction. Q1 brings a "workforce optimization" charge. Q2 features "strategic realignment costs." Q3 includes a "platform migration investment." Q4 rounds out the year with "organizational restructuring." Each is unique in the same way that every snowflake is unique: technically true, but you still need to shovel the driveway.
One CFO we spoke with, who asked not to be named, put it plainly: "If I showed the board GAAP numbers, they'd fire me. Not because the numbers are bad. Because showing them is a signal that you don't understand how the game works."
Pro-Forma Revenue and the Art of the Forward Look
Revenue adjustments are rarer than expense adjustments, but they exist and they are bolder. Fourteen percent of decks included "pro-forma revenue" figures that counted contracted but not yet recognized revenue, pipeline revenue with greater than 70% close probability, or revenue from features that had not shipped but had been "validated by customer interviews."
The most common technique is the annualized run rate taken from the company's single best month. A company that did $400K in December and $180K in every other month will present a "$4.8M ARR" figure with a straight face and a footnote in nine-point type. The footnote, if you find it, reads something like "based on monthly performance as of December 31." Technically accurate. Functionally misleading. Absolutely standard practice.
Analysts on the receiving end of these decks are not fooled. They build their own models, apply their own assumptions, and arrive at numbers that are typically 30 to 40 percent below the company's self-reported metrics. But the adjusted figures set the anchor. That is the point. Negotiation theory suggests the first number spoken shapes the outcome, and founders have internalized this completely.
The Analysts Who Model the Fog
Junior analysts at venture firms spend a meaningful portion of their careers reverse-engineering adjusted metrics back into something resembling reality. They have developed their own shorthand. "Two turns of adjustment" means the company's real losses are roughly double what the deck suggests. "Creative top line" means the revenue number requires more than one asterisk to decode.
These analysts build elaborate spreadsheets with tabs labeled things like "Mgmt Case," "Base Case," and "Reality Case." The distance between the first and the last can be remarkable. One analyst described reviewing a deck where the company's Adjusted EBITDA was positive $2.1 million, and her Reality Case showed negative $6.4 million. The difference was not error. Every individual adjustment had a justification. They just happened to all point in the same direction.
Nobody involved considers this dishonest. The founders believe in their adjustments. The investors understand the conventions. The analysts do the translation. It is a functioning system, in the way that a language nobody speaks literally can still facilitate communication.
What the Numbers Are Actually For
The pitch deck is not a financial document. It is a narrative document that uses financial notation. The numbers serve the same function as stage directions in a screenplay: they tell you where to look and how to feel, but they are not the story itself. The story is the founder's conviction, the market's size, the team's pedigree. The numbers dress that story in the costume of rigor.
This works until it doesn't. When capital is cheap, the distance between adjusted and actual metrics is a rounding error against future growth. When capital tightens, that distance becomes the gap companies fall into. The adjustments don't change. The willingness to accept them does.
Somewhere tonight, a founder is building a slide titled "Path to Profitability." The path is real. The profitability requires eleven adjustments, a favorable ruling from the IRS, and a definition of "profit" that would make an accountant pause. But the slide is clean, the font is modern, and the trajectory line points up and to the right. It always points up and to the right.