MSP Datto Holding Corp

Fourth quarter subscription revenue grew 19 percent year-over-year to $153.2 million

ARR grew 21 percent year-over-year to $658.4 million

Datto Holding Corp. (Datto) (NYSE: MSP), the leading global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs), today announced its financial results for the fourth quarter and full year ended December 31, 2021.

“We finished 2021 on a strong note with another quarter of accelerating growth,” said Tim Weller, Datto’s Chief Executive Officer. “The fourth quarter capped an exceptional year for Datto and our MSP partners. We exceeded all of our targets in our first full year as a public company and launched several new, highly differentiated products that help our MSP partners better secure digital assets on behalf of their SMB clients. MSPs now find themselves squarely in the security business, and Datto is right there with them. We further solidified Datto’s leading position in security solutions with the early 2022 acquisition of cybersecurity firm Infocyte. 2022 is shaping up to be another exciting year for Datto as we continue to help our MSP partners on their security journey with our new products ramping and more on the way.”

Fourth Quarter and Full Year 2021 Financial Results

 

(In Millions)

 

Q4 2021

 

Q4 2020

 

Y/Y Change

 

FY 2021

 

FY 2020

 

Y/Y Change

Subscription Revenue(1)

 

$153.2

 

$129.0

 

19%

 

$577.3

 

$485.3

 

19%

Total Revenue(1)

 

$164.3

 

$139.0

 

18%

 

$618.7

 

$518.8

 

19%

ARR(2)

 

$658.4

 

$542.8

 

21%

 

$658.4

 

$542.8

 

21%

Gross Margin

 

70%

 

69%

 

88 bps

 

71%

 

71%

 

45 bps

Non-GAAP Gross Margin(3)

 

72%

 

74%

 

(108 bps)

 

74%

 

73%

 

74 bps

Net Income

 

$5.7

 

$(7.2)

 

N/M

 

$51.4

 

$22.5

 

129%

Adjusted EBITDA(3)

 

$39.8

 

$40.8

 

(3)%

 

$175.4

 

$150.5

 

17%

Net Cash Provided by Operating Activities

 

$26.3

 

$34.6

 

(24)%

 

$125.4

 

$108.7

 

15%

Free Cash Flow(3)

 

$11.2

 

$22.7

 

(51)%

 

$78.1

 

$68.2

 

15%

1

Subscription and Total Revenue Y/Y percentage change includes benefits from favorable foreign exchange rates of approximately 25 basis points for the fourth quarter and 200 basis points for the full year.

2

Annual run-rate revenue (ARR) is the annualized value of all subscription agreements as of the end of a period. We calculate ARR by multiplying the monthly run-rate revenue for the last month of a period by 12.

3

A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

Recent Highlights

• Ended the quarter with more than 18,500 MSP partners, a net increase of 1,500 (+9%) from the previous year.
• Ended the quarter with average ARR per MSP of approximately $35,600, an increase of approximately $3,600 (+11%) from the previous year.
• Expanded the number of MSPs contributing over $100,000 ARR to 1,400, a 27% increase from 1,100 at December 31, 2020.
• Acquired cybersecurity company Infocyte, an innovator in Endpoint Detection and Response (EDR) technologies and Managed Detection and Response (MDR) services. The Infocyte team and technology augment Datto’s capabilities within the critical Protect, Detect, and Respond stages of the NIST security framework, and add to the Company’s rapidly expanding set of MSP-delivered security offerings.
• Released a tool for MSPs to combat the Apache Log4j vulnerability. This endpoint assessment software works with any Remote Monitoring and Management (RMM) solution and can uniquely enumerate potentially vulnerable systems, detect intrusion attempts, and inoculate Windows systems against Log4j attacks.
• In support of Datto’s growth strategy and commitment to the DACH region (Germany, Austria, and Switzerland), the Company announced a partnership with Infinigate, a leading Value-Added Distributor of cybersecurity solutions in Europe. Infinigate has a large customer base in DACH and will strengthen our sales efforts in the region and help attract new MSPs to Datto through a proven selling model.
• Announced that Brooke Cunningham has joined the Company as Datto’s Chief Marketing Officer and Emily Tabak Epstein has joined as General Counsel.

First Quarter and Full Year 2022 Financial Outlook

Datto is providing the following guidance for the first quarter and full-year 2022:

(In Millions)

 

Q1 2022 Outlook

 

FY 2022 Outlook

Total Revenue (1)

 

$168 - $169

 

$720 - $726

Y/Y growth as reported

 

16% - 17%

 

16% - 17%

Y/Y growth constant currency

 

17% - 18%

 

18% - 19%

Subscription Revenue (1)

 

$158 - $159

 

$676 - $682

Y/Y growth as reported

 

17% - 17%

 

17% - 18%

Y/Y growth constant currency

 

18% - 19%

 

18% - 19%

Adjusted EBITDA

 

$37 - $38

 

$163 - $168

Adjusted EBITDA margin

 

22%

 

23%

1

Subscription and Total Revenue guidance include foreign exchange rate assumptions which reduce Y/Y growth rates by approximately 150 basis points for the first quarter and 130 basis points for the full year and which are excluded in the constant currency growth rates.

Datto Fourth Quarter and Full-Year 2021 Results Conference Call     When: Wednesday, February 23, 2022     Time: 5:00 pm ET      Conference ID: 8751783      Live Call: 1-888-660-6179 (US/Canada Toll-Free) or 1-929-203-1946 (International)      Replay: 1-800-770-2030 (US/Canada Toll-Free) or 1-647-362-9199 (International)      (The replay will be available approximately two hours after the completion of the live call)      Webcast: https://investors.datto.com

About Datto

As the leading global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs), Datto believes there is no limit to what small and medium businesses (SMBs) can achieve with the right technology. Datto’s proven Unified Continuity, Networking, Endpoint Management, and Business Management solutions drive cyber resilience, efficiency, and growth for MSPs. Delivered via an integrated platform, Datto’s solutions help its global ecosystem of MSP partners serve over one million businesses around the world. From proactive dynamic detection and prevention to fast, flexible recovery from cyber incidents, Datto’s solutions defend against costly downtime and data loss in servers, virtual machines, cloud applications, or anywhere data resides. Since its founding in 2007, Datto has won numerous awards for its product excellence, superior technical support, rapid growth, and for fostering an outstanding workplace. With headquarters in Norwalk, Connecticut, Datto has global offices in Australia, Canada, China, Denmark, Germany, Israel, the Netherlands, Singapore, and the United Kingdom.

Learn more at datto.com.

Forward-Looking Statements

This press release contains forward-looking statements that reflect Datto’s current expectations and projections with respect to, among other things, its financial condition, results of operations, plans, objectives, future performance, and business. These statements may be preceded by, followed by or include the words ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘believe,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘can have,’’ ‘‘likely’’ and the negatives thereof and other words and terms of similar meaning. Further information on potential factors that could affect our results is included in our Annual Report on Form 10-K.

Forward-looking statements include all statements that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. Datto undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we believe that the non-GAAP financial measures of Non-GAAP Subscription Cost of Revenue, Non-GAAP Device Cost of Revenue, Non-GAAP Professional Services and Other Cost of Revenue, Non-GAAP Depreciation and Amortization in Cost of Revenue, Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Sales and Marketing expense, Non-GAAP Research and Development expense, Non-GAAP General and Administrative expense, Non-GAAP Depreciation and Amortization in Operating Expenses, Non-GAAP Operating Expenses, Non-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Net Income Per Share, Adjusted EBITDA, and Free Cash Flow are useful in evaluating our operating performance. Certain of these measures exclude interest and other (income) expense, net, loss on extinguishment of debt, depreciation and amortization, stock-based compensation expense, restructuring expense and transaction related and other expense. In addition, for Non-GAAP Net Income we utilize a non-GAAP tax rate of 25%, which we believe reflects our normalized effective tax rate. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

Reconciliation tables of the most directly comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this press release.

Datto is not providing a quantitative reconciliation of forward-looking guidance of Adjusted EBITDA to its most directly comparable GAAP measure because certain items are out of Datto’s control or cannot be reasonably predicted, as the items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. Accordingly, a reconciliation for forward-looking Adjusted EBITDA is not available without unreasonable effort.

For more information about Datto, including supplemental financial information, please visit the investor relations website at investors.datto.com.

 

DATTO HOLDING CORP.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Revenue:

 

 

 

 

 

 

 

 

Subscription

$

153,224

 

 

$

128,978

 

 

$

577,321

 

 

$

485,326

 

 

Device

 

10,180

 

 

 

9,104

 

 

 

37,832

 

 

 

30,202

 

 

Professional services and other

 

850

 

 

 

910

 

 

 

3,504

 

 

 

3,257

 

 

Total revenue

 

164,254

 

 

 

138,992

 

 

 

618,657

 

 

 

518,785

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

 

24,818

 

 

 

23,677

 

 

 

90,162

 

 

 

84,463

 

 

Device

 

13,863

 

 

 

11,143

 

 

 

47,415

 

 

 

37,607

 

 

Professional services and other

 

1,538

 

 

 

1,845

 

 

 

6,059

 

 

 

6,244

 

 

Depreciation and amortization

 

8,917

 

 

 

6,144

 

 

 

32,712

 

 

 

21,890

 

 

Total cost of revenue

 

49,136

 

 

 

42,809

 

 

 

176,348

 

 

 

150,204

 

 

Gross profit

 

115,118

 

 

 

96,183

 

 

 

442,309

 

 

 

368,581

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

40,023

 

 

 

31,962

 

 

 

139,257

 

 

 

115,790

 

 

Research and development

 

31,209

 

 

 

30,932

 

 

 

107,899

 

 

 

78,932

 

 

General and administrative

 

27,570

 

 

 

26,279

 

 

 

106,478

 

 

 

85,668

 

 

Depreciation and amortization

 

6,917

 

 

 

6,623

 

 

 

26,471

 

 

 

27,223

 

 

Total operating expenses

 

105,719

 

 

 

95,796

 

 

 

380,105

 

 

 

307,613

 

 

Income from operations

 

9,399

 

 

 

387

 

 

 

62,204

 

 

 

60,968

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

22

 

 

 

1,758

 

 

 

455

 

 

 

25,348

 

 

Loss on extinguishment of debt

 

—

 

 

 

8,488

 

 

 

—

 

 

 

8,488

 

 

Other expense (income), net

 

163

 

 

 

(2,026

)

 

 

387

 

 

 

(3,428

)

 

Total other expense

 

185

 

 

 

8,220

 

 

 

842

 

 

 

30,408

 

 

Income (loss) before income taxes

 

9,214

 

 

 

(7,833

)

 

 

61,362

 

 

 

30,560

 

 

Provision for income taxes

 

(3,467

)

 

 

665

 

 

 

(9,928

)

 

 

(8,062

)

 

Net income (loss)

$

5,747

 

 

$

(7,168

)

 

$

51,434

 

 

$

22,498

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

$

0.04

 

 

$

(0.05

)

 

$

0.32

 

 

$

0.16

 

 

Diluted

$

0.03

 

 

$

(0.05

)

 

$

0.31

 

 

$

0.16

 

 

Weighted-average shares used in computing net income per share:

 

 

 

 

 

 

 

 

Basic

 

163,210,116

 

 

 

154,968,918

 

 

 

162,048,828

 

 

 

140,404,763

 

 

Diluted

 

166,574,607

 

 

 

154,968,918

 

 

 

165,759,624

 

 

 

142,514,848

 

 

 

DATTO HOLDING CORP.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

December 31,

 

 

 

2021

 

 

 

2020

 

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

221,421

 

 

$

168,877

 

 

Restricted cash

 

1,319

 

 

 

1,536

 

 

Accounts receivable, net

 

12,870

 

 

 

13,946

 

 

Inventory

 

34,901

 

 

 

13,811

 

 

Prepaid expenses and other current assets

 

39,456

 

 

 

28,316

 

 

Total current assets

 

309,967

 

 

 

226,486

 

 

Property and equipment, net

 

106,577

 

 

 

91,876

 

 

Operating lease assets

 

31,003

 

 

 

—

 

 

Goodwill

 

1,141,726

 

 

 

1,120,954

 

 

Intangible assets, net

 

287,605

 

 

 

287,395

 

 

Other assets

 

85,313

 

 

 

66,560

 

 

Total assets

$

1,962,191

 

 

$

1,793,271

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

9,997

 

 

$

7,574

 

 

Accrued expenses and other current liabilities

 

59,553

 

 

 

39,461

 

 

Deferred revenue

 

20,356

 

 

 

23,763

 

 

Total current liabilities

 

89,906

 

 

 

70,798

 

 

Deferred revenue, noncurrent

 

3,341

 

 

 

3,322

 

 

Deferred income taxes

 

24,955

 

 

 

18,947

 

 

Operating lease liabilities, noncurrent

 

31,332

 

 

 

—

 

 

Other long-term liabilities

 

715

 

 

 

11,736

 

 

Total liabilities

 

150,249

 

 

 

104,803

 

 

Commitments and contingencies

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common stock

 

164

 

 

 

161

 

 

Additional paid-in capital

 

1,829,957

 

 

 

1,755,387

 

 

Treasury stock

 

(3,621

)

 

 

(3,621

)

 

Accumulated deficit

 

(13,792

)

 

 

(65,226

)

 

Accumulated other comprehensive income

 

(766

)

 

 

1,767

 

 

Total stockholders’ equity

 

1,811,942

 

 

 

1,688,468

 

 

Total liabilities and stockholders’ equity

$

1,962,191

 

 

$

1,793,271

 

 

 

DATTO HOLDING CORP.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

OPERATING ACTIVITIES

 

 

 

 

Net income

$

51,434

 

 

$

22,498

 

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

Depreciation

 

32,044

 

 

 

26,434

 

 

Amortization of acquired intangible assets

 

27,139

 

 

 

22,679

 

 

Loss on extinguishment of debt

 

—

 

 

 

8,488

 

 

Amortization of debt issuance costs

 

341

 

 

 

1,428

 

 

Reserve for inventory obsolescence

 

57

 

 

 

1,517

 

 

Non-cash operating lease expense

 

7,292

 

 

 

—

 

 

Stock-based compensation

 

48,909

 

 

 

33,460

 

 

Allowance for expected credit losses

 

367

 

 

 

6,217

 

 

Deferred income taxes

 

4,922

 

 

 

7,770

 

 

Unrealized foreign exchange

 

(1,303

)

 

 

(1,204

)

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

 

1,598

 

 

 

769

 

 

Inventory

 

(21,186

)

 

 

(2,826

)

 

Prepaid expenses and other current assets

 

(11,487

)

 

 

(7,498

)

 

Other assets

 

(19,641

)

 

 

(12,952

)

 

Accounts payable, accrued expenses and other

 

8,391

 

 

 

3,073

 

 

Deferred revenue

 

(3,511

)

 

 

(1,155

)

 

Net cash provided by operating activities

 

125,366

 

 

 

108,698

 

 

INVESTING ACTIVITIES

 

 

 

 

Purchase of property and equipment

 

(47,237

)

 

 

(40,466

)

 

Acquisition of business, net of cash acquired

 

(45,486

)

 

 

(4,371

)

 

Net cash used in investing activities

 

(92,723

)

 

 

(44,837

)

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from debt

 

—

 

 

 

32,100

 

 

Repayments of debt and capital leases

 

(101

)

 

 

(594,727

)

 

Debt issuance costs

 

—

 

 

 

(1,178

)

 

Proceeds from initial public offering, net of underwriting costs

 

—

 

 

 

641,643

 

 

Capitalized transaction costs

 

(684

)

 

 

(5,256

)

 

Proceeds from stock option exercises

 

22,510

 

 

 

3,150

 

 

Repurchase of common stock and settlement of stock-based payment awards

 

—

 

 

 

(53

)

 

Net cash provided by financing activities

 

21,725

 

 

 

75,679

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(2,041

)

 

 

1,807

 

 

Net increase in cash and cash equivalents

 

52,327

 

 

 

141,347

 

 

Cash and cash equivalents and restricted cash, beginning of year

 

170,413

 

 

 

29,066

 

 

Cash and cash equivalents and restricted cash, end of period

$

222,740

 

 

$

170,413

 

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

Cash and cash equivalents

$

221,421

 

 

$

168,877

 

 

Restricted cash

$

1,319

 

 

$

1,536

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

Cash paid for income taxes

$

6,380

 

 

$

890

 

 

Cash paid for interest

$

133

 

 

$

24,037

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

Purchase of property and equipment included in accounts payable

$

—

 

 

$

17

 

 

Unpaid initial public offering costs in total current liabilities

$

—

 

 

$

684

 

 

 

DATTO HOLDING CORP.

Non-GAAP Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Revenue:

 

 

 

 

 

 

 

 

Subscription

$

153,224

 

 

$

128,978

 

 

$

577,321

 

 

$

485,326

 

 

Device

 

10,180

 

 

 

9,104

 

 

 

37,832

 

 

 

30,202

 

 

Professional services and other

 

850

 

 

 

910

 

 

 

3,504

 

 

 

3,257

 

 

Total revenue

 

164,254

 

 

 

138,992

 

 

 

618,657

 

 

 

518,785

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

 

23,681

 

 

 

19,703

 

 

 

85,860

 

 

 

79,909

 

 

Device

 

13,820

 

 

 

10,940

 

 

 

47,222

 

 

 

37,404

 

 

Professional services and other

 

1,489

 

 

 

1,427

 

 

 

5,859

 

 

 

5,687

 

 

Depreciation and amortization

 

6,180

 

 

 

4,646

 

 

 

23,261

 

 

 

16,867

 

 

Total cost of revenue

 

45,170

 

 

 

36,716

 

 

 

162,202

 

 

 

139,867

 

 

Gross profit

 

119,084

 

 

 

102,276

 

 

 

456,455

 

 

 

378,918

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

 

37,047

 

 

 

27,151

 

 

 

129,790

 

 

 

107,255

 

 

Research and development

 

25,047

 

 

 

18,457

 

 

 

84,480

 

 

 

64,393

 

 

General and administrative

 

23,367

 

 

 

20,478

 

 

 

89,997

 

 

 

73,649

 

 

Depreciation and amortization

 

2,496

 

 

 

2,173

 

 

 

8,783

 

 

 

9,567

 

 

Total operating expenses

 

87,957

 

 

 

68,259

 

 

 

313,050

 

 

 

254,864

 

 

Income from operations

 

31,127

 

 

 

34,017

 

 

 

143,405

 

 

 

124,054

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

22

 

 

 

1,758

 

 

 

455

 

 

 

25,348

 

 

Other expense (income), net

 

163

 

 

 

(2,026

)

 

 

387

 

 

 

(3,428

)

 

Total other expense (income)

 

185

 

 

 

(268

)

 

 

842

 

 

 

21,920

 

 

Income before income taxes

 

30,942

 

 

 

34,285

 

 

 

142,563

 

 

 

102,134

 

 

Provision for income taxes

 

(7,736

)

 

 

(8,571

)

 

 

(35,641

)

 

 

(25,534

)

 

Net income

$

23,206

 

 

$

25,714

 

 

$

106,922

 

 

$

76,600

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.17

 

 

$

0.66

 

 

$

0.55

 

 

Diluted

$

0.14

 

 

$

0.16

 

 

$

0.65

 

 

$

0.54

 

 

Weighted-average shares used in computing net income per share:

 

 

 

 

 

 

 

 

Basic

 

163,210,116

 

 

 

154,968,918

 

 

 

162,048,828

 

 

 

140,404,763

 

 

Diluted

 

166,574,607

 

 

 

158,856,958

 

 

 

165,759,624

 

 

 

142,514,848

 

 

 

DATTO HOLDING CORP.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics

(in thousands, except percentages and share and per share amounts)

(unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Non-GAAP Subscription Cost of Revenue

 

 

 

 

 

 

 

 

GAAP subscription cost of revenue

$

24,818

 

 

$

23,677

 

 

$

90,162

 

 

$

84,463

 

 

Stock-based compensation expense

 

(1,137

)

 

 

(3,974

)

 

 

(4,302

)

 

 

(4,092

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(462

)

 

Non-GAAP subscription cost of revenue

$

23,681

 

 

$

19,703

 

 

$

85,860

 

 

$

79,909

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Device Cost of Revenue

 

 

 

 

 

 

 

 

GAAP device cost of revenue

$

13,863

 

 

$

11,143

 

 

$

47,415

 

 

$

37,607

 

 

Stock-based compensation expense

 

(43

)

 

 

(203

)

 

 

(193

)

 

 

(203

)

 

Non-GAAP device gross cost of revenue

$

13,820

 

 

$

10,940

 

 

$

47,222

 

 

$

37,404

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Professional Services and Other Cost of Revenue

 

 

 

 

 

 

 

 

GAAP professional services and other cost of revenue

$

1,538

 

 

$

1,845

 

 

$

6,059

 

 

$

6,244

 

 

Stock-based compensation expense

 

(49

)

 

 

(418

)

 

 

(200

)

 

 

(418

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(139

)

 

Non-GAAP professional services and other cost of revenue

$

1,489

 

 

$

1,427

 

 

$

5,859

 

 

$

5,687

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Depreciation and Amortization in Cost of Revenue

 

 

 

 

 

 

 

 

GAAP depreciation and amortization in cost of revenue

$

8,917

 

 

$

6,144

 

 

$

32,712

 

 

$

21,890

 

 

Amortization of acquired intangible assets

 

(2,737

)

 

 

(1,498

)

 

 

(9,451

)

 

 

(5,023

)

 

Non-GAAP depreciation and amortization in cost of revenue

$

6,180

 

 

$

4,646

 

 

$

23,261

 

 

$

16,867

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Cost of Revenue

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

49,136

 

 

$

42,809

 

 

$

176,348

 

 

$

150,204

 

 

Amortization of acquired intangible assets

 

(2,737

)

 

 

(1,498

)

 

 

(9,451

)

 

 

(5,023

)

 

Stock-based compensation expense

 

(1,229

)

 

 

(4,595

)

 

 

(4,695

)

 

 

(4,713

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(601

)

 

Non-GAAP cost of revenue

$

45,170

 

 

$

36,716

 

 

$

162,202

 

 

$

139,867

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Profit

 

 

 

 

 

 

 

 

GAAP gross profit

$

115,118

 

 

$

96,183

 

 

$

442,309

 

 

$

368,581

 

 

Amortization of acquired intangible assets

 

2,737

 

 

 

1,498

 

 

 

9,451

 

 

 

5,023

 

 

Stock-based compensation expense

 

1,229

 

 

 

4,595

 

 

 

4,695

 

 

 

4,713

 

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

601

 

 

Non-GAAP gross profit

$

119,084

 

 

$

102,276

 

 

$

456,455

 

 

$

378,918

 

 

Non-GAAP gross margin

 

72.5

%

 

 

73.6

%

 

 

73.8

%

 

 

73.0

%

 

 

DATTO HOLDING CORP.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics

(in thousands, except percentages and share and per share amounts)

(unaudited)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Non-GAAP Sales and Marketing

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

$

40,023

 

 

$

31,962

 

 

$

139,257

 

 

$

115,790

 

 

Stock-based compensation expense

 

(2,976

)

 

 

(4,811

)

 

 

(9,467

)

 

 

(6,614

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(1,921

)

 

Non-GAAP sales and marketing expense

$

37,047

 

 

$

27,151

 

 

$

129,790

 

 

$

107,255

 

 

Non-GAAP sales and marketing as a % of revenue

 

22.6

%

 

 

19.5

%

 

 

21.0

%

 

 

20.7

%

 

Non-GAAP Research and Development

 

 

 

 

 

 

 

 

GAAP research and development expense

$

31,209

 

 

$

30,932

 

 

$

107,899

 

 

$

78,932

 

 

Stock-based compensation expense

 

(6,162

)

 

 

(12,475

)

 

 

(23,419

)

 

 

(13,590

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(949

)

 

Non-GAAP research and development expense

$

25,047

 

 

$

18,457

 

 

$

84,480

 

 

$

64,393

 

 

Non-GAAP research and development as a % of revenue

 

15.2

%

 

 

13.3

%

 

 

13.7

%

 

 

12.4

%

 

Non-GAAP General and Administrative

 

 

 

 

 

 

 

 

GAAP general and administrative expense

$

27,570

 

 

$

26,279

 

 

$

106,478

 

 

$

85,668

 

 

Stock-based compensation expense

 

(3,187

)

 

 

(5,018

)

 

 

(11,328

)

 

 

(8,543

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(364

)

 

Transaction related and other expense

 

(1,016

)

 

 

(783

)

 

 

(5,153

)

 

 

(3,112

)

 

Non-GAAP general and administrative expense

$

23,367

 

 

$

20,478

 

 

$

89,997

 

 

$

73,649

 

 

Non-GAAP general and administrative as a % of revenue

 

14.2

%

 

 

14.7

%

 

 

14.5

%

 

 

14.2

%

 

Non-GAAP Depreciation and Amortization in Operating Expenses

 

 

 

 

 

 

 

 

GAAP depreciation and amortization in operating expenses

$

6,917

 

 

$

6,623

 

 

$

26,471

 

 

$

27,223

 

 

Amortization of acquired intangible assets

 

(4,421

)

 

 

(4,450

)

 

 

(17,688

)

 

 

(17,656

)

 

Non-GAAP depreciation and amortization in operating expense

$

2,496

 

 

$

2,173

 

 

$

8,783

 

 

$

9,567

 

 

Non-GAAP depreciation and amortization in operating expense as a % of revenue

 

1.5

%

 

 

1.6

%

 

 

1.4

%

 

 

1.8

%

 

Non-GAAP Operating Expenses

 

 

 

 

 

 

 

 

GAAP operating expenses

$

105,719

 

 

$

95,796

 

 

$

380,105

 

 

$

307,613

 

 

Amortization of acquired intangible assets

 

(4,421

)

 

 

(4,450

)

 

 

(17,688

)

 

 

(17,656

)

 

Stock-based compensation expense

 

(12,325

)

 

 

(22,304

)

 

 

(44,214

)

 

 

(28,747

)

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

(3,234

)

 

Transaction related and other expense

 

(1,016

)

 

 

(783

)

 

 

(5,153

)

 

 

(3,112

)

 

Non-GAAP operating expenses

$

87,957

 

 

$

68,259

 

 

$

313,050

 

 

$

254,864

 

 

Non-GAAP operating expenses as a % of revenue

 

53.5

%

 

 

49.1

%

 

 

50.6

%

 

 

49.1

%

 

Non-GAAP Income From Operations

 

 

 

 

 

 

 

 

GAAP income from operations

$

9,399

 

 

$

387

 

 

$

62,204

 

 

$

60,968

 

 

Amortization of acquired intangible assets

 

7,158

 

 

 

5,948

 

 

 

27,139

 

 

 

22,679

 

 

Stock-based compensation expense

 

13,554

 

 

 

26,899

 

 

 

48,909

 

 

 

33,460

 

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

3,835

 

 

Transaction related and other expense

 

1,016

 

 

 

783

 

 

 

5,153

 

 

 

3,112

 

 

Non-GAAP income from operations

$

31,127

 

 

$

34,017

 

 

$

143,405

 

 

$

124,054

 

 

Non-GAAP operating margin

 

19.0

%

 

 

24.5

%

 

 

23.2

%

 

 

23.9

%

 

 

DATTO HOLDING CORP.

GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics

(in thousands, except percentages and share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

 

 

2021

 

 

 

2020

 

 

 

2021

 

 

 

2020

 

 

Non-GAAP Net Income and Net Income Per Share

 

 

 

 

 

 

 

 

GAAP net income

$

5,747

 

 

$

(7,168

)

 

$

51,434

 

 

$

22,498

 

 

GAAP provision for income taxes

 

3,467

 

 

 

(665

)

 

 

9,928

 

 

 

8,062

 

 

GAAP income before income taxes

 

9,214

 

 

 

(7,833

)

 

 

61,362

 

 

 

30,560

 

 

Loss on extinguishment of debt

 

—

 

 

 

8,488

 

 

 

—

 

 

 

8,488

 

 

Amortization of acquired intangible assets

 

7,158

 

 

 

5,948

 

 

 

27,139

 

 

 

22,679

 

 

Stock-based compensation expense

 

13,554

 

 

 

26,899

 

 

 

48,909

 

 

 

33,460

 

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

3,835

 

 

Transaction related and other expense

 

1,016

 

 

 

783

 

 

 

5,153

 

 

 

3,112

 

 

Non-GAAP provision for income taxes

 

(7,736

)

 

 

(8,571

)

 

 

(35,641

)

 

 

(25,534

)

 

Non-GAAP net income

$

23,206

 

 

$

25,714

 

 

$

106,922

 

 

$

76,600

 

 

Non-GAAP net income per share attributable to common shareholders:

 

 

 

 

 

 

 

 

Basic

$

0.14

 

 

$

0.17

 

 

$

0.66

 

 

$

0.55

 

 

Diluted

$

0.14

 

 

$

0.16

 

 

$

0.65

 

 

$

0.54

 

 

Weighted-Average Shares used in computing Non-GAAP Net Income per Share:

 

 

 

 

 

 

 

 

Non-GAAP weighted-average shares used in computing net income per share, basic

 

163,210,116

 

 

 

154,968,918

 

 

 

162,048,828

 

 

 

140,404,763

 

 

Non-GAAP weighted-average shares used in computing net income per share, diluted

 

166,574,607

 

 

 

158,856,958

 

 

 

165,759,624

 

 

 

142,514,848

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net income

$

5,747

 

 

$

(7,168

)

 

$

51,434

 

 

$

22,498

 

 

Interest and other expense, net

 

185

 

 

 

(268

)

 

 

842

 

 

 

21,920

 

 

Loss on extinguishment of debt

 

—

 

 

 

8,488

 

 

 

—

 

 

 

8,488

 

 

Depreciation and amortization

 

15,834

 

 

 

12,767

 

 

 

59,183

 

 

 

49,113

 

 

Provision for income tax

 

3,467

 

 

 

(665

)

 

 

9,928

 

 

 

8,062

 

 

Stock-based compensation expense

 

13,554

 

 

 

26,899

 

 

 

48,909

 

 

 

33,460

 

 

Restructuring expense

 

—

 

 

 

—

 

 

 

—

 

 

 

3,835

 

 

Transaction related and other expense

 

1,016

 

 

 

783

 

 

 

5,153

 

 

 

3,112

 

 

Adjusted EBITDA

$

39,803

 

 

$

40,836

 

 

$

175,449

 

 

$

150,488

 

 

Adjusted EBITDA margin

 

24.2

%

 

 

29.4

%

 

 

28.4

%

 

 

29.0

%

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

26,257

 

 

$

34,643

 

 

$

125,366

 

 

$

108,698

 

 

Less: Purchases of property and equipment

 

(15,067

)

 

 

(11,947

)

 

 

(47,237

)

 

 

(40,466

)

 

Free cash flow

$

11,190

 

 

$

22,696

 

 

$

78,129

 

 

$

68,232

 

 

MSP-F

View source version on businesswire.com: https://www.businesswire.com/news/home/20220223005960/en/

Media Contact: Shoba V. Lemoine communications@datto.com Investor Contact: Ryan Burkart ir@datto.com