Service Leadership, Inc. has released its 2025 Annual IT Solution Provider Industry Profitability Report, revealing a record fifth consecutive year of over 19% adjusted profit margins for top-performing IT solution providers. The report highlights that while revenue growth for managed service providers slowed to 7.1% in 2024, adjusted earnings before interest, taxes, depreciation, and amortization grew at a stronger rate of 13%. Peter Kujawa, Executive Vice President and General Manager of Service Leadership, noted that despite a slowdown in revenue growth, the profitability of IT solution providers demonstrates the industry’s maturation. The report assesses trends across 104 countries, showing that valuation multiples for best-in-class providers reached near-record highs in 2024, reflecting a 22% increase from the previous year.
Why do we care?
Efficiency is the new growth engine. With only 7.1% revenue growth but 13% EBITDA growth, the data shows that smart cost control, process maturity, and service optimization are driving profit. For MSPs, this is a reminder call to invest in operational maturity rather than chasing top-line growth at all costs.
Sustained high profit margins (19%+) point to a disciplined, scalable business model. This isn’t a one-time fluke—it’s the fifth consecutive year. That type of performance attracts investment, strengthens valuations, and creates a clear playbook for smaller or mid-tier providers trying to level up. Valuations are rising—selectively. A 22% increase in valuation multiples for top performers is significant. This is evidence that investors are paying a premium for quality, especially for firms that demonstrate high EBITDA and mature, repeatable processes. Providers not in the top quartile? They’re likely seeing flat or compressed multiples—raising the stakes for standardization and scale.