ITAD industry leaders have voiced concerns regarding client layoffs and the industry’s business environment as a whole, but a recent survey by E-Scrap News reveals that those in the industry believe they have hit the bottom of secondary market pricing. Consulting firm Compliance Standards, with E-Scrap News, surveyed anonymous participants about IT refresh cycles, competition, used device pricing, hiring, and capital investments for the second quarter of 2023 and have opened their survey for the third quarter of 2023.
The first quarter report showed optimistic outlooks for August, and according to an anonymous survey participant, “Q2 started off strong but was negatively impacted by continued variability in the reuse markets. This volatility continues to be our biggest challenge, although we believe it is largely driven by sentiment rather than the actual strength or weakness of the market.”
Takeaways from the Q2 report include worse business conditions, client layoffs, increased used device sales, significant capital investments, and favorable secondary market pricing.
- Respondents to the survey said business conditions were worse than prior years, with 63 percent saying Q2 business conditions were worse than the same quarter last year, and 56 percent said they were worse year over year. According to E-Scrap News, a similar general takeaway resulted from questions asking whether the number of IT refresh projects was up, down, or flat year over year and sequentially.
- Survey participants also reported that their clients were experiencing layoffs, which resulted in slow business. One participant wrote, “Companies are being forced to take this action.” Another wrote, “Many companies that initiated ITAD services RFPs, evaluations, etc., have let the individuals go who were leading the project.”
- When asked about their sources of revenue for Q2, participants reported as a whole that 40 percent came from the sale of used devices, 16 percent from sales of scrap and commodities, 14 percent from enterprise services such as premium data destruction, 12 percent from sales of harvested parts and components, and 19 percent from other sources.
- Up from the 11 percent of the first-quarter survey, 33 percent of participants in Q2 said they plan to spend between $1 million and $5 million in capital investments over the next year, and the rest reported that they were looking at smaller expenditures or were undecided.
- The survey also asked about secondary market pricing, considering the importance of used device sales to the ITAD industry. In Q2, 33 percent of respondents said secondary market prices were flat or up year over year, up from 5 percent in Q1. Fifty-four percent reported stable or higher than the previous quarter in Q2, up from 20 percent in the first quarter survey.
Respondents anticipate continued volatility in ITAD market pricing but are hopeful that they have hit bottom and will be able to start an upward trend, according to a survey participant.