TTM

What it means

TTM is the trailing twelve months — the most recent twelve months of revenue and profit, counted backwards from today rather than from the start of a calendar or fiscal year. It is the standard basis for valuing small online businesses because it captures a full seasonal cycle while staying current, which a calendar-year figure does not once you are several months into a new year.

Why twelve months specifically

Twelve months is long enough to include one of everything — the strong quarter and the weak one, the annual renewal, the seasonal peak — and short enough to reflect the business as it is now. A shorter window over-weights whatever happened recently. A longer one drags in conditions that no longer apply. Neither is wrong in principle, but twelve months is what buyers and brokers quote, so quoting anything else invites suspicion.

When a shorter window is used

Buyers sometimes value on the trailing three or six months, and they do it for a reason worth understanding. If a business is growing quickly, a recent window flatters it and sellers push for it. If it is declining, a recent window is more honest about what the buyer is inheriting and buyers push for it. A seller quoting trailing three months on a rising chart is making an argument, not stating a fact, and should expect to defend it.

How the figure gets manipulated

The common methods are all variations on choosing the window. Quoting a partial year that excludes a bad quarter. Quoting an annualised figure from a strong month, so a $2,000 month becomes a $24,000 year that never happened. Or presenting trailing twelve months while quietly excluding a revenue source that has since disappeared. All three are visible the moment you ask for a monthly breakdown, which is why buyers ask for one.

What to ask for

Twenty-four monthly figures, not twelve, and not an annual total. Two years of monthly data shows the seasonal pattern, makes any trend obvious, and reveals whether the trailing twelve months are representative or an unusually good stretch. If a seller can only produce a single annual number, that is itself information about how the business has been run.