Every Wednesday our team of CONTEXT analysts share their expert insight into the IT trends impacting channel businesses across Europe and further afield. These CONTEXT IT Industry Forum webinars are the place to access the latest market intelligence, for better informed strategic decision making.

Among our highlights for May 2025 are positive news for retail chains, the cybersecurity market and Q2 sales through distribution so far.

Network and infrastructure protection drive cybersecurity growth

The cybersecurity market continues to thrive on the back of European regulations, the AI arms race, SMBs looking to outsource capabilities, and a continued surge in attacks—as illustrated most recently by breaches at UK retailers and major fashion brands. By the end of April, year-to-date (YTD) annual revenue growth stood at 23%, rising even higher in Italy (39%) and Spain (38%). Even the UK turned around negative growth in Q1 to hit 4% year-on-year (YoY) growth YTD. All segments recorded positive YoY growth, led by network security (32%), infrastructure protection (31%) and data security (43%). There will hopefully be more positive news to come, as renewals and new subscriptions come in typically towards the end of the quarter.

Distribution sales growth forecast revised up to 4.4%

CONTEXT recently revised up its forecast for FY 2025—increasing it by just under 1% to 4.4% YoY revenue growth. The current environment is particularly challenging given the uncertainty surrounding US tariff announcements. But our more optimistic predictions are based on strong growth of nearly 5% YoY that we saw in Q1 2025. We’re expecting Q2 to follow a similar trend, with virtualization and cybersecurity driving growth, as well as desktop and notebook refreshes. Telecoms is the only segment we downgraded after weak demand for smartphones thus far in 2025. Rising average sales prices (ASPs) are also playing their part in our upward revision of revenue sales. On a country-by-country basis, the UK is expected to return to positive growth in H2, after two successive quarters of decline in 2025, while Spain, Poland, Nordics, and other countries in Europe are likely to extend strong Q1 growth throughout the remainder of the year.

April kicks off positive start to Q2 with 6.6% annual growth

April got Q2 off to a great start, with adjusted YoY revenue growth hitting 6.6% for sales through European distribution. Software and services (21% YoY) was the main engine of growth for the month, alongside personal systems (10% YoY)—the former driven by virtualisation sales. When it comes to PCs, desktops have recorded impressive performance in recent weeks. The only sector in the red in April was telecoms (-7% YoY), mainly due to tough comparisons with a year ago when big deals on iPhone 13 and 14 spurred a spike in sales. On a country basis, France (5% YoY) did well in April after a subdued start to the year, with Spain (7%) continuing to grow and Poland (16%) and the Nordics (22%) leading the pack—the latter thanks to impressive server and storage sales.

Sales to UK retail chains soar in Q1

It’s been a weak Q1 overall for UK distributors, which recorded a -4% YoY decline in revenue sales. Particularly disappointing were the figures from March (-6% YoY), given the end of the quarter is close to the end of the UK financial year, so one would normally expect excess government and private sector budgets to be spent then. April seems to have taken some of that revenue from March, but overall it was still a poor quarter—especially for SMR resellers (-0.6% YoY) and corporate resellers (-13%). That’s perhaps not surprising given the continued high cost of borrowing and lack of business investment. However, e-tailer businesses are doing much better. They recorded YoY revenue growth of 12.1% in Q1 2025 and 29.1% in Q2 (up to week 17). Sales to retail chains were even higher, at 16.4% YoY in Q1 and 29.5% YoY in Q2 (up to week 17).

For more on these and other IT channel trends, tune into CONTEXT’s weekly IT Industry Forum webinars. Register here.