Study 6: Private Company Revenue and EBITDA Growth Rates

Private companies in the Private Performing Credit Index (PPCI) grew revenue by 10.0% and adjusted EBITDA by 17.0% for the quarter ended June 30, 2024, as compared to the quarter ended June 30, 2023. This marks the fourth straight quarter that revenue and EBITDA growth rates for these companies were higher than those of the of the companies in the S&P 500. The strong performance reflects the continued resilience of the private sector.

The adjusted EBITDA weighted average margin was 32% in Q2 2024 for the PPCI companies. This is consistent with the six-quarter average of 32%.

The YoY measurement compares the aggregate result of the reported quarter with the aggregate result of the quarter 12 months prior. For the PPCI, the results are measured as changes in weighted averages, consistent with the PPCI methodology. The S&P 500 results are calculated from aggregate income statement items provided by S&P Capital IQ for all companies represented in that index.

In an alternative view of the growth rates, this chart illustrates the cumulative growth observed since Q3 2022. Revenues for the companies in the S&P 500 experienced no change, while EBITDA saw a modest 8% growth. On the other hand, PPCI companies demonstrated more robust growth: Their revenues surged by 22%, and their adjusted EBITDAs grew by 34%.

Growth is calculated as the rate of change in a quarter multiplied by the previous quarter index value, beginning with a value of 100. In this way, a downward line illustrates that the change in the metric was negative versus the change in the previous period.

Margins

When comparing margins, public companies exhibited narrower but more consistent margins than their private counterparts within the PPCI. These margins are calculated by dividing adjusted EBITDA by revenue during the specified reporting period (not as Last Twelve Months). Currently, the average margin for public companies stands at 21%, while private companies maintain an average margin of 32%. These figures remain consistent with historical averages.

Cumulative EBITDA Growth Across Industries (Q3 2022 – Q2 2024)

The graph below illustrates cumulative EBITDA growth for PPCI companies across various industries during the past eight quarters, starting from Q3 2022. Notably, business services led the pack with an impressive 58% growth rate. On the other end of the spectrum, real estate showed a decline of 22%. Additionally, financial institutions and the technology, media, and telecom sector demonstrated robust growth at 37% and 43%, respectively.