In a more typical accounting system, You would divide the cost of replacement by the lifespan and get that the satellite "costs" 20 million per year, but only earns 1 million the first year, leading to a net loss of 19 million.
With EBITDA, you treat the satellite as a fixed up front cost and then year 1 comes and you made a million dollars! You're in the green! Year 2, you made 1.1 million! Up and to the right we go!
This works great until year 6 when the satellite needs replacement. But with fancy accounting magic, you put the capital costs to replace into a different bucket and can claim that your satellites are money printing machines!
Basically, it is a profit like number that tells you something about the core business, but it isn’t just the straight up raw profit number of having more cash than previously when all said and done. The person you’re responding to was claiming that they used this EBITDA number to claim they were profitable, when they really were not since presumably, once you account for those costs that are excluded from EBITDA, they may have not been profitable.
Excluding depreciation makes sense when you are dealing with assets with an unknown highly variable lifespan - e.g. software - some of which lasts decades without being touched, others of which experiences breaking changes on a monthly basis. Similarly, excluding interest on debt makes sense if you're borrowing heavily to feed your sales funnel, but otherwise making very real profits on your sales.
However - none of these are true for some of these "new-wave" startups, which are trying to justify an (internet-based marketing) hype cycle to juice their valuations via the "dumb money".
