That turbulence in tariffs, the labor market, interest rates and the stock market have left more businesses uncertain about their next move—and many customers have delayed purchases and investments—is hardly news to anyone these days. Analysis of our monthly CEO Confidence Index finds “uncertainty” and related topics were mentioned 21 percent of the time in 2025, compared to only 5 percent of the time in 2024.
Less well understood: the hit business margins have taken as a result. New data from Chief Executive Research 2025-26 Financial Performance Benchmarks Report reveals just how much business’ EBITDA margins were affected. It has been substantial.
A survey of 1030 different companies between June and September of this year revealed that one third of companies decided to reforecast their profitability numbers before the second half of the year. In fact, every quartile measure was downgraded, with the median expected EBITDA margin for 2025 shifting from 12 percent to 11.3 percent. Their profit is likely to come in 6 percent short while the average company is 13 percent short.
The difference post-reforecast is even more striking when examining by quartile. The top quartile projection fell by 12.5 percent, while companies in the bottom quartile saw a 64 percent reduction in profitability, from a 7 percent forecasted EBITDA margin to 2.5 percent. On average, profitability expectations dropped 13.7 percent.
OPTIMISM IN THE NEW YEAR
While 2025 has been impacted by uncertainty, most CEOs are more optimistic about improving profit margins in 2026. Looking at the year-over-year change in EBITDA margin at U.S. companies, from 2024 to 2025, the data shows a median change of 0 percent (compared to 4.8 percent increase in 2024) while the average year-over-year change was up 3.6 percent. Projections for 2026 show the median change in EBITDA as a percent of net revenues is expected to increase 9.4 percent.
But there is a caveat: In 2026, the bottom quartile change in profit margin is projected to be down 2.4 percent, compared to 0 percent in 2025. This means that while some firms are improving profit margins, others continue to see deteriorating margins, highlighting how important strategy, cost control and sector exposure are in profitability.
The largest expected profitability increases are among smaller companies, with those sized $5-$9.9 million expecting a median increase of 50 percent to their EBIDTA margins into next year. That’s a significant turnaround for a segment that, just one year earlier, experienced some of the sharpest profitability declines—down nearly 30 percent between 2024 and 2025. In contrast, very small companies under $5 million in revenue expect further declines (down 13.9 percent), while the largest enterprises (above $1 billion) anticipate growth of 14.8 percent to their bottom line, after flat margins in 2025.
Several factors are driving the improving profit margins for all but the smallest companies. “We have seen many companies trim overhead costs and marginal products over the past year. They will benefit from volume increases as their customers get used to the new environment and move forward with planned purchases,” said Wayne Cooper, CEO of the Chief Executive Network and a co-author of the report. “Most companies have held back on hiring and are leveraging AI and other technologies to support growth vs. adding personnel. This is giving them more agility and flexibility.”
After absorbing the shocks of inflation, supply strain and policy volatility, all but the smallest companies appear to be on track for recovery in 2026. Their growth, however, may hinge on broader conditions like those seen earlier this year.
For a detailed breakdown of profitability trends by company size, industry and ownership type, and to benchmark your own business performance, refer to the 2025–26 Financial Benchmarks Report for U.S. Companies from Chief Executive Group.
