Analysis: Fine margins

Average operating margins for top 100 rise to 4.2 per cent

Since its inaugural edition in 2011, Top VARs has ranked the top 100 players in our industry by revenue, and that continues to be the case today.

But with more emphasis being placed in our industry on the bottom line than ever, we have for the first time listed the operating margin percentage for each of our hot 100, where possible. You can see this just below the revenue figure in each entry*.

Some firms prefer other measures of profit, including net profit and EBITDA. We chose to standardise around operating profit (EBIT) because it is the only figure almost all of the entrants publicly list.

Countless top VARs referenced their efforts to walk away from low-margin tin deals and embrace higher-value services activities in their annual commentaries.

And that trend appears to be in evidence when analysing average operating margins across the 90 firms for which we obtained an operating margin figure for their most two recently reported years.

The average (mean) margin stands at 4.18 per cent for this year, up from 3.41 per cent a year previously.

That arithmetical average is, however, skewed by a number of niche, services-focused firms making margins of close to 20 per cent. The median figure is a shade lower for both years, at 3.2 per cent this year and 2.7 per cent last year.

*In most, but not all, cases, the operating margin listed is for the same period as the revenue figure.

Although we have listed operating margin figures for RM, Capita and Computacenter, they are marked with an * because they are adjusted or underlying figures, and we have excluded them from this analysis.