December figures ensure 2024 ends on a high FY

Non-day adjusted distribution revenue sales stood at an impressive 5% year-on-year (YoY) growth in December, following a decline the previous month. That included great results of around 8% YoY growth or more in Spain, Italy and Poland, with the Baltics also doing well. Even Germany finished with over 5% YoY revenue growth in December. Q4 sales growth also finished in positive territory (2.1% YoY) after a strong Q3 (4.4% YoY), helping to offset a poor start to the year, when Q1 sales declined -6.4%. Value (2% YoY) trumped volume (1% YoY) sales in Q4. And in terms of channels, retail chain (11.2% YoY) had the best quarter, although corporate resellers fared poorly, with sales declining -5.4% YoY.

CONTEXT forecast close to actual FY 2024 results

Revenue sales through the European distribution channel finished at 0.5% YoY growth for 2024 (including telecoms) and 0.7% (excluding telecoms). That’s not far away from our slightly more optimistic forecast in January 2024, of 2.3% and 2.6% YoY growth respectively. After a poor start, we thought we’d see more recovery during the year. And although the catch-up happened, it didn’t kick in quite early enough. Our forecast accuracy was even better on a country-by-country basis. The variance between forecast and actual figures for the UK, Italy, France and Spain was all around 1% or less. The two outliers were Germany, where political instability may have impacted sales, and Poland, where expected EU recovery funds were released later than we expected.

Reseller count falls across major markets

Reseller count continued to fall in December, continuing a trend we’ve seen most of the year. Although we expect to see seasonal fluctuation around the summer break, a broader trend of reseller consolidation is emerging across Europe. That’s especially true of the small and medium reseller (SMR) channel. Italy experienced the biggest decline in December with reseller count dropping over 6% YoY. However, while reseller counts have decreased, the average revenues per reseller are increasing in most regions, suggesting that the remaining businesses are performing well, to mitigate any overall revenue losses. In December, average revenue per reseller remained highest in the UK (€162,849), followed by Spain (€113,291), France (€95,842) and then Italy (€76,615).

Opportunity knocks for Brazilian cybersecurity players

Brazil may be struggling with high interest rates and inflation, and declining foreign direct investment, but there are opportunities to be had in the cybersecurity market in 2025. With over 150 million internet users, the country is the biggest target for cybercriminals in South America, with recorded attacks surging by around 70% in 2024. However, that may be good news for Brazilian distributors, which have around 70-80% of the cybersecurity market, versus 40% across all IT categories. The market for cybersecurity is expected to generate over $3.2bn in 2025, with security services predicted to perform particularly well ($1.7bn). We expect a CAGR of close to 8.5% in 2025-2029.

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