Channel Profitability Remains Strong: Nearly 3 in 4 Report Gains

The biggest question that has always surrounded the channel is around profitability. Everyone wants to understand just how profitable the MSP business is because of its recurring revenue foundation and margin potential.

The Channel Futures MSP survey found that 2022 profit outlook was at its highest level since the survey began, with 23% of the respondents reporting profit gains of more than 20%, compared to only 13% reporting the same range of gains in 2021. MSP profitability last year breaks down this way: Twenty-four percent reported their profits grew 11-20%, with one-quarter posting gains of between 1% and 10% on their bottom line. In total, 72% reported that profitability was expected to grow significantly in 2022.

Still, last year was not all roses for the overall MSP community, as 11% reported that profits remained unchanged year over year. While 10% said profits fell between 1% and 10%, a small percentage expected profitability to plunge by at least 11%. Those declines could be the result of investments in new initiatives, competitive pressures, or the overall rise in talent costs among other factors will rocked the channel last year.