July 28, 2023 SL Announces Annual Industry Profitability Report

The report states that MSPs are continuing to show unprecedented growth rates for third straight year.

The Service Leadership Index® is the leading source of empirical data on IT solution providers (TSPs) performance worldwide. 2023 marks the 18th year of benchmarking to objectively identify best practices and set the bar for TSP owners and executives, including in 102 countries. It also provides an unequaled depth of insight and analysis to companies seeking to maximize growth, profitability, and stock value.

Having spent the last 12 months continually evaluating the performance of TSPs, the report reveals another impressive year of revenue and profitability growth with average approximate valuations being the highest on record. This is the third consecutive year that best-in-class managed service providers (MSPs) had over 20% adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization) which is unprecedented and speaks to the high performance of the industry since 2020. This was also the sixth consecutive year that best-in-class VARs improved their profit performance (16.1% adjusted EBITDA).

“2022 was an impressive year for TSPs across all Predominant Business Models™ continuing the trend for the third straight year with record revenue and profitability growth,” said Peter Kujawa, VP & GM, Service Leadership, Inc. “Both best-in-class MSPs and VARs have continuously improved their profitability for three or more years. The TSP industry is healthy, despite recessionary fears.”

The report also includes three new special sections:

• Financial performance for three geographic regions – APAC, EMEA and North America
• Profitability correlation of five key Operational Maturity Level™ Traits
• Declining services gross margin trend and recommendations for improvement

These special sections, and the report overall, will help TSPs worldwide understand how to drive better financial performance.

To receive a complimentary executive summary and learn how to purchase a full copy of the report, click here.

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