Q1 2025 Ecommerce P&L Benchmarks: Revenue, Margin & EBITDA Insights

Get the inside scoop on how seven-, eight- and nine-figure ecommerce brands really performed in Q1 2025. Geoff (Head of Marketing at A2X) sits down with Sam Hill, Founder of Ecom CFO, to unpack their latest P&L Benchmark Report. We cover year-over-year revenue growth, gross margin targets, contribution margin trends, EBITDA swings, and the hidden impact of fixed G&A costs.

Resources & Links
• Download the full Q1 2025 Benchmark Report
• Connect with Sam Hill & the Ecom CFO team
• Automate your ecommerce accounting with A2X

00:00 Q1 2025 Ecommerce P&L Benchmarks
01:21 Understanding Benchmark Methodology
09:40 Year-over-Year Revenue Growth Analysis
17:41 Gross Margin Insights and Strategies
21:47 Returns and Refunds in the Current Market
23:11 Understanding Refunds and Returns in Business
26:22 Contribution Margin Insights for Top Brands
28:54 Analyzing EBITDA, Overhead, and G&A Costs
33:09 Aligning Business Objectives with Financial Discipline
35:56 The Importance of Benchmarking in Ecommerce

The information in this video is provided for general educational purposes only and should not be taken as accounting, tax or investment advice. Always consult your own professional advisors before acting on any insights shared.

Summary

A2X’s Geoff interviews Sam Hill (Ecom CFO) to unpack a data-rich Q1 2025 P&L Benchmark Report, revealing how real-world ecommerce brands grew, protected margins and managed costs amid tariffs and shaky consumer sentiment.

Methodology – the “Veggies”

• Scope – 20 anonymised clients split into three revenue tiers (< $10 M, $10-50 M, > $50 M) to reflect small, mid-market and enterprise brands.
• Time window – compares Q1 2025 vs. Q1 2024 to neutralise seasonality.
  Transparency push – full methods live on page 25 of the report; knowing formulas and cohorts is mandatory before believing any headline stat.

Benchmarking Fundamentals

• Practical definition – a periodic (not daily) comparison of your brand to your past results and external peers.
• Three mirrors – past performance, private-company peers, public-company leaders (e.g., reading Yeti’s 10-K if you sell coolers).
• Human angle – benchmarking feeds the natural “keeping-up-with-the-Joneses” drive while grounding decisions in data, not screenshots.

Year-over-Year Revenue Growth

• Headline numbers – +6 % (< $10 M), ~0 % ($10-50 M), +30 % (> $50 M) on average.
• Percentile view – only 95th-percentile brands in each tier posted strong gains; middle-of-pack operators were flat or down.
• Growth levers – selective price hikes, wholesale expansion (volume), and smarter product mix offsetting ad-cost pressure.

Gross Margin Insights

• 70 % threshold – data suggests brands below 70 % struggle to scale beyond $10 M revenue.
• Margin-boost tactics – cut low-margin SKUs, raise prices, optimise packaging/landed costs, tighten discount and return policies.
• Tariff context – rising import duties magnify the need for disciplined cost-of-goods control.

Contribution Margin Trends

• 30 % still king – median contribution margin settles near 30 % across all tiers, validating the long-standing “rule of thumb”.
• Why up slightly YoY – ad-spend efficiency gains plus pricing power outweighed shipping and duty headwinds for many brands.

EBITDA, Overhead & G&A – Sam’s “Paprika Take”

• Profit squeeze – < $10 M cohort slid from breakeven to –12 % EBITDA; $10-50 M dipped to 5.5 %.
• Fixed-cost creep – quarterly G&A jumps tied to new hires, agency retainers and in-house content studios.
• Owner alignment gap – unclear personal goals often lead to undisciplined spend that erodes profitability.

Refunds & Returns

• Tariff-driven rethink – higher landed costs make restocking and stricter return windows more economical.
• Best practice bar – > $50 M brands in 95th percentile keep refunds around 4 %, showing what’s possible with process discipline.

Key Takeaways & Mindset

• Anti-fragile ethos – expect headwinds and design operations to thrive regardless.
• Reliable books → smart moves – automated, sku-level accounting (e.g., A2X) turns raw data into actionable benchmarks.
• Historical lens – like J.P. Morgan adapting across eras, ecommerce brands must reinvent products, channels and cost structures to stay profitable.

Note: All insights are general in nature – consult your own advisors before acting.

Transcript

Geoffrey (00:00)

Hey everyone, I’m Geoff Head of Marketing here at A2X, ecommerce accounting automation software for the world’s leading Shopify, Amazon, eBay, Etsy, and Walmart sellers, as well as their accounting partners. And speaking of accounting partners, I’m joined today by Sam Hill, founder of Ecom CFO. one of North America’s top ecommerce accounting and CFO practices, servicing seven, eight, and nine figure brands.

Sam is very generous with this expertise and is actually going to be here talking to us today about their Q1 2025 P&L benchmark report. Sam, thanks so much for joining us.

Sam Hill (00:38)

you so much for having me, Geoff. And I’m incredibly jealous that I don’t have as pretty of monsters, behind me on a, on a whiteboard. I really need to upgrade.

Geoffrey (00:44)

You

Yeah, you’ll get there. You’ll get there. You

just need to have a few monsters to get that outcome.

So Sam, there’s a ton of amazing insights in this benchmark report, so let’s get into it. Specifically, We’re going to dive into year-over-year revenue growth, gross margin, contribution margin, then EBITDA overhead and G&A But before we do that, I’d love for you to talk to us a little bit about the methodology behind the report and how brands can get maximum value from consuming this content.

Sam Hill (01:20)

Perfect. We talked before we started hitting record how we were going to present the data and we think of the data as the candy. But before we get to the candy, we really need to make sure we eat our veggies first and our veggies are how was the report constructed? How do we think about benchmarking? What is benchmarking? Who

should we be benchmarking against? what do we benchmark? How often do we benchmark all those types of questions? So before you pick up any sort of benchmark report, before you take the screenshot that’s on X seriously, or the screenshot that you see on LinkedIn about how someone’s crushing it, we should always be asking the question of how is this data constructed?

What is the formula by which this data is being aggregated? For us, we have an entire methods section in our report. Unfortunately, fewer and fewer people get to the methods section because it’s on page 25. But there’s an argument that it should be really page one. So we took a subset of our total client base. It’s about 20 companies total.

And there’s a breakout between the less than $10 million revenue companies, the company’s doing 10 to 50 million in revenue and the company’s doing larger than 50 million in revenue. So that’s, that’s about the sampling that we did. And then what’s also important is the date range or a fancier word dimension. And what, so what is the time interval? So we’re specifically looking at.

Q1 2025 compared to Q1 2024. So we’re trying to get as close to apples to apples as possible. So let’s think about what has happened after Q1 this year, all the tariffs, uncertainty, trade war stuff. So yes, we saw some of that happen towards like the very end of Q1, but a lot of that happened in…

Q2 and starting in Q3 as well. We just need to add all of that context as we have this conversation and as you have any sort of conversation about benchmarking and looking at data and comparing yourself to it.

Geoffrey (03:44)

Which I think is amazing because typically this type of information lives in kind of a black box, right? It’s not readily available. To your point, like it’s captured in a random snapshot on X. It’s one of the benefits. I think it’s also one of the reasons why Ecom CFO put this together, right? Like you guys have unfiltered access to some incredible information and you’re just trying to level up the industry as a whole by sharing the learnings that are coming from it.

Sam Hill (04:12)

Yeah, it was honestly more selfish to start because I just kept getting the same question over and over and over again from all of our clients of what are you seeing in the market and how do I compare myself to others? How is my business performing versus other clients? And so we said, okay, well, instead of me just and all of our CFOs keeping all that information in their brains and saying anecdotally what’s happening,

Geoffrey (04:15)

you

Sam Hill (04:39)

Now we have something that we can quantitatively present to both our clients and the public at large, just to help everybody level up, understand where they are, ⁓ and ideally become bigger, better, more profitable.

Geoffrey (04:56)

Okay, so Sam, before we dive into the benchmark report, I think it would probably be useful to provide a primer on the concept of benchmarking, what it means in this context, how people can get maximum value from it. The reality is like when you use the word benchmark, it could totally mean different things to different people. What does it mean to us as it relates to a P&L benchmark for ecommerce brands?

Sam Hill (05:23)

Yeah. I

I had to do a lot of reflection and thought about this and ⁓ come up with what does the definition really mean for our clients and me. And because You hear the word benchmark and it seems fancier than it is, and then like, what’s the difference between benchmarking and just looking at my daily revenue or looking at my return on ad spend or whatever.

So the definition that I’ve put forth is it’s the periodic comparison of yourself

to yourself and others and I emphasize yourself because yes we should as much as I love our benchmark report and encourage everyone to read it, the most important benchmark is yourself and you’re gonna get a lot more happiness and meaning in your life if you’re comparing yourself to yourself first and others second. And to give a little bit more meat to what that really

means. Like, why do we benchmark? It’s, it’s really one of three things or all of them get better, get bigger, get better or get bought. Just some synonyms of benchmarking is a fancy way to say compare, reference and measure. And then the last point is probably the biggest differentiator for benchmarking is it’s periodic, not continuous. So

We had a more development friendly client recently tell me that he built his own app to be able to send him a daily notification of revenue. That ain’t benchmarking. ⁓ And I would argue that that’s really probably bad for your mental health, but that’s not benchmarking. I think of benchmarking as a more periodic.

process by which you are going to follow the same methodology to again compare yourself to yourself and to others.

Geoffrey (07:27)

Can I add a fourth, psychological one? Human nature, Keeping up with the Joneses. It’s just a part of who we are. It’s the human condition.

Sam Hill (07:30)

Please.

Yeah.

Yeah, we’re comparison machines.

Geoffrey (07:38)

Yeah, 100%. Everyday life.

Sam Hill (07:40)

Yeah.

Geoffrey (07:41)

Okay, love the definition, total alignment. So as it relates to this benchmark, because this is the others, Who are the others?

Sam Hill (07:50)

Yeah, so I think to build our framework here, When we’re talking about who I should benchmark against, it’s really three things. Again, as we’ve mentioned, past performance number one. Number two is.

other private peers, so as close to apples to apples to your company as possible. And then the last one is, I think doesn’t get a lot of love, but I think is super interesting and important is public companies. If I come anywhere close to selling anything,

remotely related to Yeti, I need to go read Yeti’s annual reports, their 10 Ks, their 10 Qs, listening to an earnings call here and there, or just download the transcript from ChatGPT and get it to summarize it for you. There’s so much gold in just benchmarks, but a bunch of other stuff that I think is super interesting. But yeah, really,

these three are the trifecta.

Geoffrey (08:48)

Okay, so as it relates to private peers, this benchmark report, I know, includes quite a bit of those. Do you mind talking to me a little bit about who’s included in the actual Q1 2025 P&L benchmark report?

Sam Hill (09:01)

Yeah, absolutely. mean, it’s a shameless plug for our own benchmark report and we wouldn’t be having this podcast episode if we weren’t. But to my knowledge, we are the only company publishing anything close to this. If there are others, I really want to know about it. And we’re trying to do a better better job in publishing more and more data. But our report includes a subset

of our entire client base that we think is the most indicative of the market. And it includes seven figure, eight figure and nine figure businesses and all of the relevant P&L benchmarks.

Geoffrey (09:39)

Fantastic.

All right, Sam, great overview of the vegetables. Now let’s get into the candies. You talked a little bit about some of the headwinds the macro headwinds that ecommerce brands are facing today. Tariffs, potentially declining consumer confidence, impacting the amount of buyers that are out in the market today. How is that sentiment reflected in the numbers as far as year-over-year revenue growth goes?

Sam Hill (10:04)

Yeah, so again, we try and take a more comprehensive holistic approach to our benchmarking data. So actually a lot of the sentiment and trade war tariff stuff is not reflected in this data, which again is kind of the whole point. My perspective is that if you’re running a company, it doesn’t matter if it’s

an ecommerce brand or a professional services firm or a construction business, if you’re going to build a company that is sustainable over a number of years or a number of decades, you’re always going to experience headwinds at some point and you’re always going to experience a lot of pain and uncertainty. We just don’t know in the form of what that is going to be. So whether it’s

tariffs, whether it’s your ad account getting shut down, whether you have a personal health scare or, you know, a senior leader has a health scare or, know, whatever it may be. What I want us to stand for and put out into the world, into the market is that we know that, that things are going to continue to change.

Even amidst all the change, what is actually happening and how can I build my business and triangulate myself against my peers, public companies and myself to be able to build a better business, whatever the headwinds may be. So that is more vegetables. So let’s get into. ⁓

Geoffrey (11:43)

An anti-fragile business, so to speak, one that continues

to perform regardless of external factors.

Sam Hill (11:50)

Absolutely, I love Nassim Taleb’s anti-fragile book. But let’s actually look at the numbers themselves. If we, again, we’re separating our data between less than 10 million in revenue, 10 to 50 and 50 plus, and so that’s all summarized here. The Q1 2025 average, the Q1 2024 average,

ABS and this fancy triangle is a nice way of saying the absolute change. So it’s literally 935 divided or

minus 886 gets you the 49 and that’s important for a number of reasons. And then also the percentage change. So how you read this is for, If you’re an under $10 million business, on average, the companies in this cohort,

actually grew revenue by 6%. If you’re in the 10 to $50 million range, those companies were actually flat. And then if you were over 50 million, you actually grew on average by 30%. Now, the next chart is really a double click into that. And this is something that I’m very proud of that we put together is the percentiles within each of the cohorts.

Because again, our clients were asking the same questions of, okay, not only how do I compare, but how well do I compare? Am I in the 50th percentile? Am I in the 95th percentile? Am I really struggling? And how does that stack up? If you’re under 10 million, the 95th percentile, those businesses are still growing. If you look in the 95th percentile of every revenue cohort,

all of those companies are still improving, are still growing or growing pretty dramatically. It’s worse news if you’re not in the 95th percentile. All of them are negative except for the over 50 million cohort. Just not as bad. So if you’re in the 50th percentile, your average, you’re flat basically.

Geoffrey (13:47)

Mm.

Sam Hill (13:56)

This is interesting that regardless if you’re ⁓ under 10 or 10 to 50 they’ve the 50th percentile is performing about the same Also the fifth percentile performing about the same and there’s a little bit of difference in the the 30th percentile but relatively small. So I mean yeah and and how I would use this is the the other question that you haven’t asked me but I think is

is really important because that’s the other question I get is like, okay, so what do I do with this? As you’re forecasting revenue for the rest of the year, I want to know if I’ve originally planned on growing 100 % this year, well, where does that rank me amongst my peers? And so therefore, how likely is it that that’s gonna happen?

And you better have a damn good reason why you’re going to outpace all of your peers at the 95th percentile. If you’re forecasted to grow at that 75, 100, 200 % clip.

Geoffrey (15:06)

That wasn’t the question that I was going to ask, but I’m glad that you answered it. My question was actually a little bit more tactical in that Where are you seeing the revenue coming from? Obviously the 95th percentile are going to continue. It’s good to be big, right? But for everybody else, where’s the revenue coming from?

Sam Hill (15:24)

Yeah. And so for every section, in our benchmark report, we’ve tried to provide a CFO analysis, if you will, that CFO, mostly being me, this is mostly what, what I’m seeing across our entire company. But you know, I break this down between price volume and mix, because these are, these are the primary, components of revenue. So

a lot of the revenue growth, ⁓ I believe is coming from price increases that is more anecdotal. don’t actually publish data, at least not yet about, price increases versus volume versus mix. this is a little bit more anecdotal. On the volume. This is actually, I think other than the G&A discussion that I would love to have later, in the episode.

but The the volume story, particularly around wholesale, I think is one of the most interesting and not talked about subjects at all, how big of a story wholesale is becoming for a lot of our clients. And then the last one is, is mix. So some companies I think are doing a good job at launching, more higher margin products.

But on the whole, like we’re just still not seeing a lot of clients have the discipline and the process for launching new products that are higher margin. And I think because last year everybody was, I saw again more anecdotally, but I saw a lot of clients say, okay, cool, we’re gonna really laser in on ad spend.

try and make that as efficient as possible, or we’re gonna test out new channels, and we’re basically gonna try to sell more of the same, or the same amount, but more efficiently. And over the long term, that can really hurt you because you’re not launching anything new. If you’re competing in the apparel space, for example,

We know that you have to continue to come out with new stuff, period. But it goes for almost every vertical. So I mean, those are the big key themes in revenue.

Geoffrey (17:41)

So it’s a good segue into gross margin, because you talked about people launching products with better margins, and so on and so forth.

What are we seeing in Q1 2025 as far as gross margin is concerned?

Sam Hill (17:55)

Yeah, I’ll try and speed it up because I could talk about this all day. But the most important thing that I took away that really jumped off the page for me is If you look

the 10 to $50 million businesses and the over $50 million businesses, even if you are in the fifth percentile,

gross margins are still 70%. If you look in the under 10 million cohort, between the fifth and the 50th percentile, their gross margins are less than 70%. So I have this kind of working thesis in my head that you arguably have to get to that 70% gross margin rate

to get to eight figures. Like it’s very difficult if you’re, you know, if you’re a, let’s say $5 million business right now with 50% gross margins to break into that next level. And you know, we can talk about the reasons why, et cetera, et cetera, but I just, I found that very, very interesting in the data. And this is why we actually have to put the data together.

We can’t just look at a sample of one. We need to aggregate it all look at it objectively.

Geoffrey (19:19)

Can I put you on the spot for a second. I love the working thesis, especially as it relates to what it takes to getting into the eight figure arena. For brands that aren’t there yet that don’t have the 70% gross margin, but that want to work their way towards it.

Tactically speaking, I know this is an impossible question because it’s very contextual, but tactically speaking, how have you seen brands approach that challenge?

Sam Hill (19:47)

Hmm. It’s not an impossible question. It’s a necessary question. And, and it’s obviously very timely with the tariffs because everyone is, is reworking their unit economics. I think the real answer is that we view our businesses as our babies and the products and services that we launch in the world as also our babies. And it’s very difficult, to take those away.

Geoffrey (19:50)

Mm.

Sam Hill (20:13)

And it’s, it’s difficult to look at them more objectively. And I think as we’ve published this data, people have set seen, okay. I need to, I need to really work on this. And so If you have, let’s say, you know, 10 SKUs and three of them, unless you’re doing like some intentional loss leading stuff, then okay, fine.

But if they’re in the 40, 50% gross margin range and your other products are 70, 80%, we may need to take a hard look and cut those SKUs that just aren’t there. And then also think about the ones that are almost there, the ones that may be in the 55, 60% range, how do we get them over the hump? Do we just

raise prices, is it something about the product that we can tweak? Is it something about the rest of the offer that we can tweak in terms of discounting or refunds and returns? Especially like in the apparel space, implementing a restocking fee or, we just started with a client that they’re in the apparel space and they don’t accept refunds, period, or they don’t accept product back.

It’s all sales are final. Does that impact conversion rate? You bet it does. But they have really high gross margins. And so then when you have those high gross margins, you have a lot of, you have a lot more room to play and you have a lot more room to fail as well.

Geoffrey (21:47)

Can I?

Yeah, can I ask you to actually double click on the refund and returns piece? Cause I know that it’s highlighted in the report. And you know, it feels like the name of the game has kind of changed a little bit, or at least the conversation has changed. Whereas in the past, you know, a return would potentially just kind of be discarded, but things are changing.

The tariff environment is changing the conversation around this. What are your thoughts? What’s your high level of review?

Sam Hill (22:20)

Yeah. mean, the, I mean the history, like everybody knows this, but the history was customer initiates, initiates a return. You throw in the garbage can, or you don’t even, you don’t ask for it back. But if my cost for the product are now 30 % more, 40 % more, 50 % more, there’s the inflection point of this does make sense to, to restock or

maybe I take a harder look at when I’m issuing a refund or a return. Do I need to inspect that product before I actually issue the return or is everything just, you know, no questions asked, you know, well, customer’s always right. And so I think that that’s changing. Se you won’t necessarily find that in the data, but the data is

very interesting to understand what puts you again in the larger percentiles and the best performing companies. I mean, if we’re looking at the over 50 million companies, for example, even if you’re in the fifth percentile, their refunds on average are 4%. Some people can’t fathom 4 % refunds and returns. And in the under 10 million,

it was 1%. And that’s very, very few returns. And then we can, we can talk about, you know, issuing gift cards, instead of cash, you know, et cetera, et cetera. But again, I would just put your company in the context of this data and understand, do I need to actually deploy resources and looking into this issue further?

Or there are other parts of the business that I need to actually prioritize first.

Geoffrey (24:08)

One of the things that I really enjoy about you going over this information is it really does highlight the importance of accurate having accurate financials, right? Which comes from having a good accounting process and an accurate accounting process. I know it’s a little bit of a plug, but it’s intentional, right? Like we talk about, you know, accurate financials help you make good business decisions and sounds so fluffy, right? In high level, but

Sam Hill (24:21)

Gotta get that A2X plug in there, baby. Yeah, I love it.

Geoffrey (24:38)

What you’re talking about right now is actually these are the types of decisions that it enables, that it allows people to make to achieve their gross margin objectives of 70%, which helps them get to the eight figure arena, right? Anyways, it occurs to me as you’re going through this, like this is the, to use another food analogy, like we’re going into the candy, but like it’s the meat and potatoes.

Sam Hill (25:04)

Yeah, it is. It definitely is. Even things like refunds and returns, mean, we see clients struggle with this within their accounting in numerous ways. I mean, one is due to our canceled orders coming through as refunds and returns. My refunds may look inflated, but…

And in reality, they may just be canceled orders. Also, how am I viewing a refund versus a return, especially if I’m issuing a gift card and what is my gift card liability? Like what is the dollar amount of the total gift cards that I have floating around the world? I mean, most people, most people don’t know or you know, it’s buried in a Shopify report and not represented on the financials anywhere. That is a liability to you period.

So yeah, there’s all those different nuances that we certainly find when we see clients’ books and then optimize over time and making sure that they can derive this information and be able to compare themselves in a matter of minutes, not in a matter of months, to be able to pull all the data, so yeah.

Geoffrey (26:22)

Awesome. So Let’s dive into our next metric, is contribution margin. What have you been seeing for the top performing brands in Q1 and then those that haven’t been performing so well?

Sam Hill (26:36)

Yeah, the biggest takeaway for me for contribution margin is that we have consistently told our clients and the world to generally target 30% for contribution margin. And if we look at the 50th percentile for both the under 10 and the 10 to 50 million cohort and even the over 50, it’s right at

that 30%, you know, plus or minus a couple points, even the over 50, even though that they’re lower, because they’re driving so many contribution margin dollars, they can afford to have a lower percentage. So I think in the aggregate, that’s one of the biggest takeaways.

If we look at the actual, the averages and the percentage change, I was very surprised honestly to see contribution margins up. If even slightly, I really expected to see them further down.

My sense is that last year, you know, a lot of people focused on return on ad spend and marketing efficiency and they probably achieved some of that and they pulled back.

on some of that ad spend, but those dollars went somewhere and maybe this is a good segue into G&A and overhead because I think the common story was instead of giving Meta and Google all of your money, they decided to do more organic and in-house marketing and all of that cost went to fixed marketing.

that was creating your own content studio. We had several companies do that, hire a CMO, marketing director, more in-house team, or just more agencies to put out content or other marketing initiatives. So I think those two things to me were the biggest things that jumped out for Contribution Margin.

Geoffrey (28:37)

Awesome. And then you kind of skipped ahead here, but let’s get into it. So EBITDA, overhead and G&A. What were some of the themes here? And I know that, you know, I don’t want to put you on the spot, but I know that you have like a mildly spicy take as it relates to this metric.

Sam Hill (28:54)

Well, before air, We decided that this was my “paprika take”. It wasn’t, wasn’t a “cayenne take”. It’s a little spicy. but this was, you know, sorry, quick accounting lesson that, you know, all of your fixed costs live below contribution margin, obviously. And within that is all of your also fixed marketing spend.

Geoffrey (28:59)

You

Sam Hill (29:19)

And, this was the thing that’s probably like.

makes me a little sad to see EBITDA down so much for a lot of our clients and companies in our space in general. mean, if we look at the actual numbers and look at a quarter over quarter in the under 10 million category,

you went from effectively break even or flat last quarter or let’s call it down 2% to being down 12%. And the, the hole that you have dug for yourself just makes it more and more difficult to get out of it later. Um, I mean, the, the, absolute change is 9 % as I mentioned, the percent change looks insane because the, numbers are fairly small. So kind of disregard that.

Even the 10 to $50 million businesses, they went from 7%. So, okay, not great, but okay. And now they’re down to five and a half. Um, Now the, big boys, uh, the larger companies, they, they got even more profitable, took more market share and because they’re, they’re just growing so fast and have so many more contribution margin dollars it

way exceeded their fixed costs and actually made them more profitable. Looking at the actual percentiles, like again, just the 50th percentile are on average, companies that are under 10 and 10 to 50 are either break even or let’s call it barely profitable. And then EBITDA, again, is before interest.

And so if you have a line of credit, if you took that SBA loan, then if you were to layer in the interest, these numbers would also look worse. And The analysis is, again, as we kind of touched on, is the G&A. So I think this was the biggest proponent here. On average, the less than $10 million businesses spent a total

$245,000 in Q1 last year. This year they spent $281. So that’s a difference of $36K. So they added in a quarter’s three months. So they added about $12,000 of fixed cost per month from last quarter to this quarter. What is $12,000? That’s a new hire or two. You know, that’s a couple different agencies.

the 10 to $50 million businesses, added $170K of fixed costs. So divided by three, know, $60,000-ish, $50 to $60K per month of fixed costs. That’s a lot of fixed costs. And then the over 50 is also large.

Geoffrey (32:09)

Yeah.

Can I just pause for a second because one thing in the report that really struck me as relates to this metric and it was that like these costs are going up and it’s resulting in

environment from a profitability standpoint

the reason these costs are going up is because there may or may not be like a lack of clear understanding in terms of what the owner’s objective is, right? And as a result, are making, I don’t want to use

Sam Hill (32:40)

Hmm.

Geoffrey (32:46)

Undisciplined is a word because it’s not necessarily a question of discipline like obviously everyone always thinks that they need whatever the thing they’re buying is right But it’s leading to decisions that are at odds with what their objectives May or may not be because they haven’t kind of set them out Do you mind talking a little bit about that because I think like these two things go kind of hand-in-hand?

Sam Hill (33:09)

Are you talking about ⁓ like their objectives in terms of life personally? Yeah.

Geoffrey (33:15)

Yeah, yeah, like the motivations

that a founder has and like the discipline required to meet those objectives.

Sam Hill (33:24)

Yeah, yeah, I mean, this is the nature of the vast majority of companies in our space is that they’re not venture backed. They’re privately funded by mainly the owner and debt financing. And sometimes their stated goals of, we wanna be bigger, we wanna grow, we wanna be more profitable.

don’t align with some of their personal goals that they may have of, I wanna work less or hey, I wanna focus on my family. I want to learn guitar, know, whatever those things are. That has led to some slippage in discipline because

if, because we’re humans, we’re not just machines and robots constantly taking in all this data and then making the most rational decision that can possibly be made. We are very, very irrational. And the things that we should do are,

are not always fun. It’s not fun to cut costs. It’s not fun to tell the team that you’re not gonna do this initiative. And I feel that too as a business owner. I wanna work on fun content and marketing stuff. I don’t wanna go negotiate my Google bill. But.

That’s what it’s going to take in the future. You know, one of the themes is just everyone is coming for your margin, really including yourself. And what are you going to do about it? Because the universe doesn’t care if you want to learn guitar. And if there’s always going to be someone else in our space that’s

⁓ willing to do more and compete against you. And ⁓ we just have to accept that as owners and be more intentional about our actions and how we think about what our real targets are, what are we prepared to do, and then just go execute.

Geoffrey (35:31)

Yeah,

like once you identify what your objectives are and then align them to the objectives of the business, then there’s a question of forecasting and budgeting and staying disciplined to those metrics so that you could come Q1 2026, you and I can have a more positive conversation about EBITDA overhead G&A as an example.

Sam Hill (35:55)

Yeah, absolutely.

Geoffrey (35:56)

Sam, I really appreciate you jumping on this video and sharing your expertise with all of us. I usually, at the end of these videos, kind of recap everything that we’ve discussed, but given that you are the expert, I’d actually like to challenge you to take us home here. I will say, before you do that, if anyone wants to get in touch with Sam or the Ecom CFO team, you can do so. We’re gonna put a link in the description below, so please do reach out.

They are unbelievable. So if you’re a seven or eight figure or nine figure ecommerce brand and you need accounting or CFO services These folks are going to be more than capable to help you take that function to the next level. So without further ado Sam bring it home

Sam Hill (36:41)

Yeah, again, Thanks so much for having me, Geoff. And I think a lot of the data that we’re seeing and all of the potential headwinds in our space, like leaves a lot of companies with less hope and optimism. but I’ve, I’ve been reading more history lately and, particularly one of my now top 10 favorite business books of all time is House of Morgan by Rob Chernow.

And if you look at the history of JP Morgan as an enterprise, they got their start selling Civil War bonds in Europe. And they made a lot of money in the Civil War. And then fast forward, Industrial Revolution comes around, they find a new way to make money and survive and thrive. World War II comes around, they find a new way to

survive and thrive and you keep going down the decades and they have changed their model. They’ve changed the people. They’ve changed the products and services that they provide to the market and that they found a way. And I think whether you’re a service provider like me, a technology company like A2X or a brand owner, You’re going to find a way

to offer either the same product in a different way or a new product and service to the market to take advantage of what the environment is presenting. So if we zoom out longer than two months or one month or one week from the news cycle, I think we can start to see a little bit more hope and how we actually take steps

to either using this data or using what we have to build a better, more profitable business.

Geoffrey (38:34)

I love it and it ties back really well to what you said at the beginning of this conversation which was, you know, the macro seems tough but great brands thrive in any macro environment and you wanted this benchmark report to be able to provide insights so that folks can do that, can use the information regardless of the macro. So, way to bring us home. Great job.

So thanks everyone for watching and we’ll see you again.