CRN Channel Benchmarks, Week of August 7

CRN compared financial measures from the week of August 7 with those from the week of July 10 to develop the most recent data on four-week trends. In general, this was a period of weakening financial health for many of the 11 categories CRN covers. Six categories showed deterioration in financial strength while only three categories showed stronger financial results.

IT direct marketers and enterprise applications were the two categories that saw the biggest gains in overall financial strength. IT direct marketers, for example, saw revenue growth (on an annualized basis) rise to 12.2 percent compared to 11.2 percent in the preceding four-week period. Gross margins rose to 12.9 percent from 12.7 percent. Profits also rose, as measured by EBITDA (defined as earnings before interest, taxes, depreciation and amortization), which edged up to 2.5 percent from 2.4 percent. Finally, the debt-to-asset ratio (defined as total debt divided by total assets, converted to percentage terms) declined to 5.6 percent from 5.9 percent. A decline in this percentage implies that IT direct marketers as a group are becoming less financially leveraged and less vulnerable to creditors.

Only one other category, commercial IT professional services, saw an increase in financial health during this period.

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As mentioned above, a number of sectors saw their financial health weaken over the period, with IT management software (for the second straight period) and financial IT services registering the biggest declines. Revenue growth in the financial IT services sector, for example, dropped to 10.4 percent from 10.9 percent in the previous four week period, and gross margins dipped to 50.6 percent from 53.1 percent. These declines led to weaker profit growth, with EBITDA declining to 21.3 percent compared to 22.4 percent in the previous period.