Last Twelve Months (LTM) Revenue Template
What is Last Twelve Months (LTM) Revenue?
LTM Revenue is a calculation that combines the most recent quarterly financial data with the previous year’s annual report to provide a comprehensive picture of a company’s Revenue performance over the last twelve months. LTM can also be known as Trailing or Rolling twelve months data.
This approach ensures that analysts have access to the most up-to-date information on sales performance. This is particularly important when conducting trading comparables analysis or valuations.
Download the Last Twelve Months (LTM) Revenue Template from the free resources section.
Key Learning Points
- Last twelve months calculations provide the most recent financial statement data from the latest available company filings
- The data is calculated using information from the 10Q (or quarterly reports) and the 10K reports or most recent company reports
- In trading comps, it is important to use the latest available information for accurate valuation and to allow fair comparisons
- LTM revenues can capture the most recent peaks and troughs in sales over the 12-month period, and allow for year-over-year comparison before the annual results are released
- LTM data allows accurate comparison of companies in the same sector but with different fiscal year-ends
Steps for Using the LTM Revenue Template
- Download the free LTM Revenue Template
- Replace the example numbers in the blue font color cells with your own figures from your company’s financial statements, including data from the annual report (10-K), the latest quarterly report (10-Q) or any recent trading updates
- If quarterly data is not available it is possible to take semi-annual revenue figures and either select 50% as a quarter, or if more seasonal, make an estimate or best guess given the data available to derive a quarterly figure
- Verify that the formulas in the black font color cells correctly capture all line items, including any new ones you’ve added
- Add and subtract the appropriate prior and current period figures to arrive at the Last Twelve Months (LTM) calculations
- Utilize these LTM Revenue figures in your financial analysis, valuations, or trading comparables, ensuring you have the most accurate and current information
What is Last Twelve Months (LTM)?
Last Twelve Months (LTM) calculations help analysts to produce rolling yearly financial statements. LTM preparation involves using the latest available company figures by taking information from the 10K and the latest 10Q reports (or other recent reports) to create rolling 12-month data.
For trading comparables analysis, taking the most recent 12-month data available provides better visibility on current performance. The historic (or trailing) value driver should be the latest available and it can be used for multiples such LTM EV/Sales figures (4.5x EV/Sales). These data points capture any recent change in the operating environment since annual figures were released.
If we were calculating EV/Revenues for a company in October 2020, with a fiscal year end of 31st December 2019, we need to find the most recent data available. This could be taken from the quarterly reported figures for Q1, Q2 & Q3 2020. Using the data from these quarterly statements, you can create an LTM Income Statement and derive an LTM Revenue. LTM trading multiples are particularly valuable when comparing companies with different fiscal year-ends as it creates a set time frame to then analyze performance.
Why is LTM Revenue Data Important?
Rolling LTM revenue figures provide color on the past 12 months sales performance and takes into account any seasonal peaks and troughs that may occur during the period. Sales breakdown and detail is provided by companies in quarterly (or half year in Europe) trading updates so this information can be used to form the basis for future growth forecasts.
Sectors such as Retail can be very cyclical, so being able to use the most recent figures for important high-volume months such as ‘Back-to-School’ for some retailers or Holiday periods can be very helpful for company valuations.
Company sales information can then be compared to externally published economic data or other statistics such as footfall or customer traffic to further analyze company performance and overall market trends. Analysts will want to see if economic indicators are correctly predicting customer sales patterns.
In times of price volatility, such as raw material price changes or regulatory or taxation charges, LTM revenue data will be used to see the impact on company sales as consumers adjust to new pricing or charges. These can then be compared to historical performance over the prior LTM period or used for fine-tune forecasting for the upcoming period.
LTM data is also important as it allows for comparison of companies with different fiscal year-ends over a fixed time period. This is particularly important when using trading multiples and ratios. Collecting near term data allows analysts to see if companies are on track for their full-year guidance as well.
Conclusion
LTM Revenue data allows for up-to-date analysis of sales performance which would otherwise rely on data from annual reports. By taking the most recent 12-month period, company sales performance can be compared across a sector over a fixed time frame, despite having different fiscal-year ends. This is particularly useful when looking at trading multiples as it can capture a fixed 12-month period.
It also allows analysts to look at annual sales in light of recent events, seasonal or cyclical peaks and troughs in a timely fashion. It will assist an analyst in determining whether a company is on track to meet its annual revenue guidance.
Trailing or LTM revenue figures can also form the basis for detailed sales forecasts and can be refined and compared to ensure all the relevant up-to-date information is included in analyst’s models and valuations. The next time-period is known as Next Twelve Months which is the period of near-term sales forecasts.