CONTEXT: December Slowdown Limits Channel’s Q4 YoY Revenue Growth to 1.1%
A poor final few weeks of 2022 led to a below-anticipated Q4 revenue growth of 1.1% for European IT distributors, with value sales driving the quarter, according to CONTEXT, the IT market intelligence company.
Despite strong year-on-year (YoY) revenue growth in October (4.9%) and November (3.8%), December’s figures of -4.3% dragged the quarter’s final total down – influenced in part by comparatives with a high performing December 2021.
The variance between the final revenue figure of 1.1% and CONTEXT’s central assumption of 6% YoY growth for the quarter, can be explained in part by underperformance in specific markets, and in the important personal systems sector.
The three-month period was undoubtedly driven by value sales, which grew 13.1% YoY after an even stronger Q3 (22%), while volume sales declined -7.1% YoY in Q4 following a modest 2.8% growth in Q3.
Small and medium resellers (SMRs) continued their strong performance from Q3 (16.2%) to record a YoY revenue increase of 6.6% in Q4, the only channel to post positive growth.
A comparison of hardware categories shows that Q4 followed previous quarters in the overall market trend – with unit sales declining, ASPs increasing and revenues remaining flat as a result.
Only servers (4%) and disk arrays (6%) posted positive YoY unit growth in Q4, with notebooks (-23%) faring particularly badly – and far worse than CONTEXT’s most pessimistic predictions.
There were big YoY ASP increases for network switches (53%), servers (29%) and wireless access points (38%), with only three categories including headsets (-14%) seeing ASP declines over the period.
This translated into a mixed picture for hardware revenues, with notebooks down -15% YoY and headsets falling by -29%. A previously strong volume growth category, monitors, recorded -10% revenue growth, while large format displays (LFDs) saw revenue decline for the first time in 2022 (-1%) despite posting a 6% increase in ASPs.
“The variance between our Q4 forecast and actual performance can be explained in a large part by the figures for personal systems, a sector which accounts for over a fifth of revenues through distribution”, explained CONTEXT Global Managing Director, Adam Simon. “Some countries also under-performed versus our expectations, with Germany, Poland, the Nordics and Rest of Europe all slowing down considerably. We’ll be undertaking more analysis over the coming weeks to dig into the underlying reasons for these figures.”
Germany posted -2.9% growth, while Poland (1.4%), the Nordics (0.7%) and Rest of Europe (2.7%) were all some way from their predicted Q4 revenue growth figures.