Ecommerce P&L Benchmarks | Q1 2026

Geoff: 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. I'm joined today by Sam Hill, Founder of Ecom CFO and author of the DTC P&L Benchmark Report. Sam, thanks so much for joining me today.

Sam: So great to be with you again, Geoff. Another quarter I get to spend with Geoff.

Geoff: Another quarter. It feels like we've been doing this for two years now.

Sam: Now we're publishing the benchmark report monthly, so, crazy times.

Geoff: So let's get right into it. Sam, since we've been doing this for a long time, we can track progress over multiple years. For most of 2025, the story was roughly the same: margins were thinning, ad costs rising, growth getting a lot harder. You called it the end of easy mode, although I'd argue 2024 wasn't that much easier. But Q1 2026 is the first quarter in a while where the metrics actually look good across all the cohorts tracked in the report: the under $10M, the $10M to $50M, and the $50M plus. Everyone grew revenue. Everyone gained EBITDA margin and even improved ROAS. But how each cohort got there feels like a different story, and one cohort is already at risk of giving the gains back. So I'm excited to dig into the data with you.

Geoff: Before we do that, for those of you who've been tracking the report for the last two years, you'll notice there's been an overhaul this quarter. You've introduced some amazing resources: the EBITDA bridge, the monthly trend lines, the expanded dataset. Do you mind talking people through what changed and why? And if you want to follow along, the link is in the description below.

Sam: I'm really passionate about the methodology and how these reports are built, because I see so many other people publishing benchmark reports that don't tell you their definitions, don't give you the underlying data or how it was built. I want to be really transparent and data forward, and give people the data and frankly less of my commentary, because most people are going to download the benchmark report and put it in Claude anyway. And if you're putting a benchmark report in Claude, you want the maximum amount of context and raw data as possible, not just my commentary. So I've tried to be a lot more data forward on the individual metric pages. You'll see three tables instead of one, each telling a very specific thing.

The other part: I had so many questions asking, "Okay, EBITDA changed, why?" Rather than people having to come to me to explain why, or read the commentary, that's why I wanted to include the EBITDA bridge as an explainer. Like you said earlier, all the cohorts got there a very different way. For the under $10M cohort, G&A leverage could have contributed more, while the opposite was true for the over $50M brands. So I really wanted to include that EBITDA bridge. And then we're moving up our cadence from quarterly to monthly, and we simplified the report. There's so much less noise. Of all the ones we've ever published, this is the one I'm most proud of.

Geoff: And the cool thing is, people can still get your perspective by watching these videos.

Sam: Exactly.

Geoff: I'm not here asking you to just recite the numbers. I want your perspective on the numbers, as I'm sure a lot of the people who watch this on a regular basis do. So let's jump into it. As I mentioned, every cohort is up: revenue, EBITDA, ROAS, which is pretty awesome to see.

Geoff: The one thing that struck me: the last time we talked, you told everyone that if they were planning more than 10% year-over-year revenue growth and they didn't have a crazy lever to pull, they should readjust their expectations. And yet it feels like everyone is outperforming that theory. So is this a recovery, or is something distorting the data? What should we take away from this?

Sam: Two things. Number one, let's put ourselves in the mindset of where we were last year, because in our methodology we've maintained consistency every single time we publish: it's always compared to the same quarter last year. So where were we in Q1 of last year, particularly in March? Everyone was very fearful of the tariffs, which inevitably came true, and I think we were in more of a depressed state last year. A lot of the improvement is a function of where we were last year. That's number one. Number two: can I tell you a secret? Can you see my screen?

Geoff: Yeah, I can see it.

Sam: The report we published compares March of last year to March of this year. If I look at the under $10M cohort specifically, you'll see median revenue was positive, up 2.5%. Great. However, if I zoom out to the quarter, the quarterly number still shows I'm 10% down from last quarter. Why? Because if I look at January and February, the trend was down 15% in January, down three and a half percent in February, and then up two and a half percent for March.

Geoff: So it's rebounding.

Sam: Exactly. It's a little better when you look at the $10M to $50M cohort. They're positive in January, February, and March, and positive for the quarter. Same for the over $50M brands, although the over $50M trend was: January up 44%, February up 55%, March up 23%. So still up big, only only.

Geoff: Only.

Sam: Exactly. But the trend is the trend, and the trend is down. So my personal opinion, and the more founders and CFOs I talk to, the more I'm convinced of my thesis: you have to have a step-change growth lever, period. I've talked to brands growing 50%, 40%, 75% year-over-year, and all of them are saying, "Oh, we're launching into Ulta." "We just opened our wholesale channel." "We're crushing it on TikTok Shop." "We just launched two new hero SKUs." Those are all step-change growth levers.

Geoff: Do you think your report is biased, in that the people you're talking to are the types who have these step-change growth levers, and that's why everyone is outperforming the 10% year-over-year baseline you told everyone not to project above?

Sam: I would like to say yes. I'd like to say the median brand not working with a finance and accounting professional is down. It's an unknowable answer, because if you're not working with one, you don't know your numbers anyway, so there's probably nothing to compare. But I'd like to think our client base is generally better off than the average. Andrew Youderian put out his 2026 survey from the eCommerceFuel community, and I wrote about this in my newsletter a few weeks ago: higher financial literacy leads to better financial outcomes generally. I know we're here to talk about the benchmark report, but I do think that's a theme.

Geoff: Let me play that back. Q1 is outperforming expectations, but you'd said if you're not planning a massive lever for a step change, don't anticipate a lot of growth. You're saying it turns out most people actually had a lever to pull. Am I getting that right?

Sam: A lot of people are pulling more significant levers, because they had such a difficult time last year and were put under so much pressure. Now everybody's working three times as hard and getting maybe 50% or 75% of the results. They had to completely rethink their businesses. I went to Commerce Roundtable here in Austin and heard the founder of Cuts talk.

Sam: When all the tariffs hit, first of all they cut 50% of their team. And second, they did the opposite of what most people did: instead of raising prices, they lowered prices to stimulate demand, increasing their AOV, and they believed they could make it up in customer acquisition and retention.

Geoff: Is cutting half your team a step-change growth lever? Maybe.

Sam: His argument is that it's worked out. My point is that a lot of brands really went back to the drawing board, because everything was so difficult last year, and said, "We have to do something dramatically different."

Geoff: This leads me to something else that surprised me in the report. You rewind to Q1 2025, there was a lot of fear and FUD around tariffs. But when you look at gross margin in Q1 2026, it's pretty much flat across all cohorts, maybe some slight variation depending on which one. After two years of tariff anxiety and an "everyone is coming after your margins" narrative, with margins not really moving one way or the other, what's going on here?

Sam: A couple of things. Number one, I don't know how many of these brands actually decreased prices in March of last year, trying to sell through inventory because they thought tariffs were coming. I also think a lot of brands were very crafty in how they navigated tariffs. The impact was very scattered, very much on a spectrum, and I think a lot of our clients did raise prices and responded fairly well. They probably also killed, paused, or didn't reorder the products that were hit the hardest, or they successfully negotiated with suppliers so the supplier takes part of the hit, the customer takes part, and the brand takes part. And another element, which wouldn't necessarily impact Q1 but will impact this year, is tariff refunds. We wouldn't see that in the data today, but that is coming.

Geoff: You talked about discipline, people making tough decisions back then that they're reaping the rewards of today. Speaking of discipline, that's a good segue into contribution margin and ROAS. On the under $10M cohort, what was interesting is they cut ad spend by roughly 10%, but still grew, and contribution margin grew by about 3.7 points. They didn't spend their way out, they cut their way out. There's a discipline story here. And I'll tease the next question: did AI have a part to play in this?

Sam: Let me start with return on ad spend, which is a function of contribution margin. This was one of the most interesting stories. If you go back and read Meta's earnings report, guess what? Price increase, price increase. They're financially incentivized to, especially with all the larger AI companies advertising more and entering the same auctions for a lot of the same attention. You'd expect return on ad spend to get worse, prices go up. But it actually improved. My guess is this is where AI is actually having an impact, and new ad channels coming online, like AppLovin, or TV for example. We have some examples of clients doing really well in those channels, particularly TV. We just had a client get a really cool product placement on a Netflix show that they didn't pay for, they got it organically.

What I'm hearing from all my marketing friends is that as the Meta algorithm changes, it's a lot more about creative: how much creative can you put into the platform, less about tweaking this little thing and that little thing. The algorithm has gotten so much better. That's good news for a lot of reasons, it makes brands' lives a little simpler, and it makes it more conducive to AI. We can debate whether those ads are any good or if they're just slop, but the data supports that something is clearly working. Brands could have also redeployed that spend across different channels. At the same Commerce Roundtable event, a separate speaker talked about how to do influencer marketing well, building these UGC armies and nurturing a community of influencers specifically on TikTok, and their return on ad spend is increasing as a function of that. It's a lot of work and a whole different strategy than classic Meta, but it's absolutely working for them.

Geoff: I want to get into a new component of the report, the EBITDA bridge. The new bridge chart is super useful. You've got your three cohorts, three completely different paths to the same EBITDA gain. Walk us through what each cohort did in Q1 2026.

Sam: If you don't mind, it would be cool to explain the chart. I generally don't like to explain how a chart works because people can figure it out, but this bridge deserves maybe 60 seconds. A margin bridge sounds more fancy and sophisticated than it really is, and you can build bridges with many different metrics and parts of the P&L. For example, you can build a revenue bridge, another way to describe a price-volume-mix analysis: if I bridge the change in revenue from one period to the other across a couple of dimensions, I can see how my prices changed, how my volume changed, and how the mix of products changed. I could bridge gross margin too, it's just less interesting.

What I thought was interesting is bridging EBITDA, across G&A leverage, selling costs, gross margin, and G&A dollars specifically. If I'm going to read a bridge, the endpoints are the left side and the right side. The right side for the under $10M cohort: the net change was 6.8 percentage points. The green stuff is what helped, the red stuff is what hurt, and the net is the number on the far right. For the under $10M cohort, you'll see "Sell 69%, 4.9 percentage points." That looks more sophisticated than it is. It means the improvement I got in my selling cost accounted for about 70% of the positive change, and that contribution was about five percentage points to EBITDA, which is really strong. Selling cost here is just another way to say contribution margin. If you notice, that's the under $10M cohort, but in the $10M to $50M and over $50M cohorts you won't see selling costs as a positive or negative contributor.

Geoff: So why?

Sam: Because each cohort improved EBITDA in a very different way. This is the story, this is the narrative. If I look at the $10M to $50M and at G&A leverage, what does G&A leverage mean? It means my G&A as a percentage of revenue went down, period. Either G&A costs stayed flat and I grew revenue on the same fixed cost base, or I cut G&A and revenue stayed flat or grew. The $10M to $50M brands improved that metric by almost seven percentage points of change. And so did the over $50M. But notice the G&A dollars line: that's straight G&A dollars, did my fixed cost go up or down? For both of those cohorts the answer is it hurt, but they made up for it in revenue. That's why I think it's so important to have a bridge like this to explain it.

Sam: In my newsletter a few issues ago, I included a prompt for LLMs: "Hey, build me a bridge for myself." You dump your P&L in, define the period, and you can do all this yourself. You can ask a million questions of it. If you didn't understand anything I just said, just prompt your LLM for it. I'll put the prompt in the description below.

Geoff: It's really cool. I highly recommend this for someone who feels they have a decent grasp of their numbers but wants to really understand the change from one period to the next.

Sam: I'm really glad we included it this quarter, and we'll continue to include it for months to come.

Geoff: Not only did you do an overview, you also answered my question through the overview. Masterful work.

Geoff: I want to wrap up and take all the lessons from the Q1 P&L benchmark report and get your perspective on how folks should use this data looking ahead to Q2 and beyond.

Sam: Number one, don't take my word for it, take the data. Make sure you at least theoretically understand it, but put it into your LLM of choice with your own data and benchmark yourself. How do I stack up? Where are the gaps? Where should I go look for more data? How can I actually apply this in my business and where can I improve? That's the best advice I can give, because everything is so much more nuanced with your data, your business, and how you performed. All of that information is now at our fingertips. I set up the reports like that on purpose, for you to be able to do that.

Geoff: If you want access to the report, the link is in the description, and I'll add in Sam's prompt so you can benchmark yourself against your peers. Sam, I always love chatting with you every quarter. One final question. Last time we spoke, you said if you're planning above 10% year-over-year growth, have a really solid reason. Q1 outperformed the 10% year-over-year growth. Looking ahead, do you change that advice, or is it roughly the same?

Sam: It's roughly the same for me. When I zoom out and look at the macroeconomic factors, the US macro factors are not great. It's definitely not a tailwind for ecommerce founders. You still have high interest rates, you still have inflation, you still have consumer sentiment at all-time lows. Yes, there are absolutely some positive signals, and some brands are absolutely crushing it, we have the data to prove it. But by and large, this is still more headwinds than tailwinds from a macro perspective. The risk of trying to push and be more risk-on at this point is not in your business's best long-term interest. Stay the course, be prudent.

Geoff: That advice is always going to win, to stay prudent.

Sam: I just don't see a lot of incentive, unless you have a proven step-change growth lever or you're inherently riskier with this business in particular. The nature of a lot of our clients is that they're bootstrapped. They didn't raise institutional capital, so the business's balance sheet is the owner's balance sheet. If I go to zero, I go bust, and that's coming out of my own pocket. If I've raised VC money and go to zero, okay, I can go on to the next business, but that's not the case for the vast majority of our clients. It takes me back to one of the first conversations we had years ago about investor-ready financials. You said the most important investor is you, the owner. The idea that this is tied to your personal net worth is really strong, so taking a prudent approach is solid, unless you're selling a GLP-1 or a supplement, in which case none of this advice applies.

Geoff: Spend all the money in the world, you're good.

Sam: Infinite TAM. It's a gold mine.

Geoff: Thanks so much everyone for watching, and we hope to see you at the next one. Thanks so much, Sam.