MSP Datto Holding Corp

Second quarter subscription revenue grew 21 percent year-over-year to $141.7 million ARR grew 18 percent year-over-year to $597.9 million

Datto Holding Corp. (Datto) (NYSE: MSP), the leading global provider of cloud-based software and security solutions purpose-built for delivery by managed service providers (MSPs), today announced its financial results for the second quarter ended June 30, 2021.

“Our second quarter results mark one of the strongest quarters in our history and are a clear indication of the power of the MSP model,” said Tim Weller, Datto’s Chief Executive Officer. “Our subscription revenue growth accelerated to 21% year-over-year and we added 500 net new partners in the quarter, both representing new highs since the onset of the pandemic in early 2020. Looking ahead, we continue to see strong momentum across our business and are excited about the new product launches in cloud and security planned for the second half of 2021. We remain well positioned to capitalize on the large opportunity to help our MSP partners manage, protect, and connect their SMB clients’ data in an increasingly digital world.”

Second Quarter 2021 Financial Results

(In Millions)

 

Q2 2021

 

Q2 2020

 

Y/Y Change

 

Subscription Revenue(1)

 

$141.7

 

$117.6

 

21%

 

Total Revenue(1)

 

$151.6

 

$124.5

 

22%

 

ARR(2)

 

$597.9

 

$506.8

 

18%

 

Gross Margin

 

72%

 

73%

 

-89 bps

 

Non-GAAP Gross Margin(3)

 

74%

 

74%

 

10 bps

 

Net Income

 

$16.9

 

$8.8

 

93%

 

Adjusted EBITDA(3)

 

$44.9

 

$38.9

 

16%

 

Net Cash Provided by Operating Activities

 

$31.9

 

$25.3

 

26%

 

Free Cash Flow(3)

 

$22.2

 

$17.2

 

29%

 

1

 

Subscription and Total Revenues Y/Y percentage change includes benefits from favorable foreign exchange rates of approximately 4%.

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 17,800 MSP partners, a net sequential increase of 500 in the quarter, up from an increase of 300 in the previous quarter.
• Expanded the number of MSPs contributing over $100,000 ARR to 1,250, up from 1,000 at June 30, 2020.
• Increased the number of endpoints enabled with Datto RMM Ransomware Detection to over one million globally, nearly doubling the number since May 2021.
• Hosted a Partner Security Forum attended by over two thousand MSP Partners focused on security best practices.
• Announced that DattoCon21 will be held October 11-13, 2021. The three day event will feature world-class speakers and sessions designed to help MSPs grow.
• Reintroduced Virtual SIRIS, a software-only version of Datto’s industry-leading continuity solution that provides MSPs with the flexibility to meet the diverse data protection requirements of their small and medium business (SMB) clients with fully integrated software running on their existing virtual machines.

Third Quarter and Full Year 2021 Financial Outlook

Datto is providing the following guidance for the third quarter and full-year 2021:

 

 

Q3 2021 Outlook

 

FY 2021 Outlook

Revenue

 

$153 - $155 million

 

$608 - $612 million

Adjusted EBITDA

 

$32 - $33 million

 

$151 - $154 million

Datto Second Quarter 2021 Results Conference Call

When: Wednesday, August 11, 2021 Time: 5:00 pm ET Conference ID: 9731029 Live Call: 1-833-312-1358 (US/Canada Toll-Free) or 1-236-712-2458 (International) Replay: 1-800-585-8367 (US/Canada Toll-Free) or 1- 416-621-4642 (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 world’s leading provider of cloud-based software and security solutions purpose-built for delivery by 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, 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

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Subscription

$

141,743

 

 

$

117,600

 

 

$

277,333

 

 

$

233,595

 

 

Device

9,025

 

 

6,053

 

 

17,410

 

 

14,134

 

 

Professional services and other

834

 

 

810

 

 

1,768

 

 

1,397

 

 

Total revenue

151,602

 

 

124,463

 

 

296,511

 

 

249,126

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

21,638

 

 

20,105

 

 

42,568

 

 

41,871

 

 

Device

11,124

 

 

7,258

 

 

20,622

 

 

16,375

 

 

Professional services and other

1,549

 

 

1,529

 

 

3,051

 

 

3,067

 

 

Depreciation and amortization

8,598

 

 

5,226

 

 

15,223

 

 

10,220

 

 

Total cost of revenue

42,909

 

 

34,118

 

 

81,464

 

 

71,533

 

 

Gross profit

108,693

 

 

90,345

 

 

215,047

 

 

177,593

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

32,135

 

 

27,162

 

 

64,061

 

 

59,119

 

 

Research and development

27,344

 

 

16,010

 

 

49,818

 

 

32,743

 

 

General and administrative

26,485

 

 

20,172

 

 

51,106

 

 

41,956

 

 

Depreciation and amortization

6,453

 

 

6,863

 

 

13,023

 

 

13,780

 

 

Total operating expenses

92,417

 

 

70,207

 

 

178,008

 

 

147,598

 

 

Income from operations

16,276

 

 

20,138

 

 

37,039

 

 

29,995

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

175

 

 

7,519

 

 

277

 

 

16,525

 

 

Other income, net

(95)

 

 

(1,744)

 

 

(114)

 

 

(415)

 

 

Total other expense

80

 

 

5,775

 

 

163

 

 

16,110

 

 

Income before income taxes

16,196

 

 

14,363

 

 

36,876

 

 

13,885

 

 

Benefit from (provision for) income taxes

720

 

 

(5,596)

 

 

(4,674)

 

 

(3,765)

 

 

Net income

$

16,916

 

 

$

8,767

 

 

$

32,202

 

 

$

10,120

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

$

0.10

 

 

$

0.06

 

 

$

0.20

 

 

$

0.07

 

 

Diluted

$

0.10

 

 

$

0.06

 

 

$

0.20

 

 

$

0.07

 

 

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

 

 

 

 

 

 

 

 

Basic

161,466,852

 

 

135,548,740

 

 

161,267,734

 

 

135,468,029

 

 

Diluted

165,452,865

 

 

136,159,449

 

 

165,094,740

 

 

136,214,530

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DATTO HOLDING CORP.

Condensed Consolidated Balance Sheets

(in thousands)

(unaudited)

 

June 30,

 

December 31,

 

 

2021

 

2020

 

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

$

178,605

 

 

$

168,877

 

 

Restricted cash

1,360

 

 

1,536

 

 

Accounts receivable, net

11,198

 

 

13,946

 

 

Inventory

26,773

 

 

13,811

 

 

Prepaid expenses and other current assets

33,312

 

 

28,316

 

 

Total current assets

251,248

 

 

226,486

 

 

Property and equipment, net

97,649

 

 

91,876

 

 

Operating lease assets

31,909

 

 

—

 

 

Goodwill

1,144,327

 

 

1,120,954

 

 

Intangible assets, net

302,217

 

 

287,395

 

 

Other assets

77,812

 

 

66,560

 

 

Total assets

$

1,905,162

 

 

$

1,793,271

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable

$

13,508

 

 

$

7,574

 

 

Accrued expenses and other current liabilities

45,357

 

 

39,461

 

 

Deferred revenue

22,323

 

 

23,763

 

 

Total current liabilities

81,188

 

 

70,798

 

 

Deferred revenue, noncurrent

2,956

 

 

3,322

 

 

Deferred income taxes

29,346

 

 

18,947

 

 

Operating lease liabilities, noncurrent

33,146

 

 

—

 

 

Other long-term liabilities

4,050

 

 

11,736

 

 

Total liabilities

150,686

 

 

104,803

 

 

Commitments and contingencies

 

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

 

Common stock

162

 

 

161

 

 

Additional paid-in capital

1,788,843

 

 

1,755,387

 

 

Treasury stock

(3,621)

 

 

(3,621)

 

 

Accumulated deficit

(33,024)

 

 

(65,226)

 

 

Accumulated other comprehensive income

2,116

 

 

1,767

 

 

Total stockholders’ equity

1,754,476

 

 

1,688,468

 

 

Total liabilities and stockholders’ equity

$

1,905,162

 

 

$

1,793,271

 

 

 

 

 

 

 

DATTO HOLDING CORP.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

Six Months Ended June 30,

 

 

2021

 

2020

 

OPERATING ACTIVITIES

 

 

 

 

Net income

$

32,202

 

 

$

10,120

 

 

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

 

 

 

 

Depreciation

15,389

 

 

12,846

 

 

Amortization of acquired intangible assets

12,857

 

 

11,154

 

 

Amortization of debt issuance costs

169

 

 

841

 

 

Reserve for inventory obsolescence

51

 

 

89

 

 

Non-cash operating lease expense

3,850

 

 

—

 

 

Stock-based compensation

23,752

 

 

3,772

 

 

Provision for bad debt

2,343

 

 

4,280

 

 

Deferred income taxes

3,570

 

 

2,771

 

 

Unrealized foreign exchange

(331)

 

 

551

 

 

Changes in operating assets and liabilities:

 

 

 

 

Accounts receivable

444

 

 

(1,155)

 

 

Inventory

(13,023)

 

 

(11,617)

 

 

Prepaid expenses and other current assets

(4,034)

 

 

(762)

 

 

Other assets

(11,381)

 

 

(2,759)

 

 

Accounts payable, accrued expenses and other

3,272

 

 

(4,520)

 

 

Deferred revenue

(2,033)

 

 

(1,636)

 

 

Net cash provided by operating activities

67,097

 

 

23,975

 

 

INVESTING ACTIVITIES

 

 

 

 

Purchase of property and equipment

(20,438)

 

 

(22,000)

 

 

Acquisition of business, net of cash acquired

(45,486)

 

 

—

 

 

Net cash used in investing activities

(65,924)

 

 

(22,000)

 

 

FINANCING ACTIVITIES

 

 

 

 

Proceeds from debt

—

 

 

32,100

 

 

Repayments of debt and capital leases

(46)

 

 

(3,029)

 

 

Capitalized transaction costs

(414)

 

 

(942)

 

 

Proceeds from stock option exercises

8,765

 

 

2,500

 

 

Net cash provided by financing activities

8,305

 

 

30,629

 

 

Effect of exchange rate changes on cash

74

 

 

(676)

 

 

Net increase in cash

9,552

 

 

31,928

 

 

Cash and cash equivalents and restricted cash, beginning of year

170,413

 

 

29,066

 

 

Cash and cash equivalents and restricted cash, end of period

$

179,965

 

 

$

60,994

 

 

Reconciliation of cash and cash equivalents and restricted cash:

 

 

 

 

Cash and cash equivalents

$

178,605

 

 

$

59,550

 

 

Restricted cash

$

1,360

 

 

$

1,444

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

 

Cash paid for income taxes

$

1,150

 

 

$

88

 

 

Cash paid for interest

$

—

 

 

$

15,704

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

 

Purchase of property and equipment included in accounts payable

$

708

 

 

$

729

 

 

Unpaid initial public offering costs in total current liabilities

$

—

 

 

$

1,589

 

 

 

 

 

 

 

DATTO HOLDING CORP.

Non-GAAP Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

Three Months Ended

June 30,

 

Six Months Ended

June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Revenue:

 

 

 

 

 

 

 

 

Subscription

$

141,743

 

 

$

117,600

 

 

$

277,333

 

 

$

233,595

 

 

Device

9,025

 

 

6,053

 

 

17,410

 

 

14,134

 

 

Professional services and other

834

 

 

810

 

 

1,768

 

 

1,397

 

 

Total revenue

151,602

 

 

124,463

 

 

296,511

 

 

249,126

 

 

Cost of revenue:

 

 

 

 

 

 

 

 

Subscription

20,753

 

 

19,622

 

 

40,455

 

 

41,368

 

 

Device

11,079

 

 

7,258

 

 

20,515

 

 

16,375

 

 

Professional services and other

1,486

 

 

1,390

 

 

2,885

 

 

2,928

 

 

Depreciation and amortization

5,898

 

 

4,051

 

 

11,211

 

 

7,870

 

 

Total cost of revenue

39,216

 

 

32,321

 

 

75,066

 

 

68,541

 

 

Gross profit

112,386

 

 

92,142

 

 

221,445

 

 

180,585

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Sales and marketing

30,293

 

 

24,591

 

 

59,924

 

 

55,904

 

 

Research and development

20,286

 

 

14,750

 

 

37,886

 

 

31,173

 

 

General and administrative

22,777

 

 

17,984

 

 

43,010

 

 

37,527

 

 

Depreciation and amortization

2,030

 

 

2,461

 

 

4,178

 

 

4,976

 

 

Total operating expenses

75,386

 

 

59,786

 

 

144,998

 

 

129,580

 

 

Income from operations

37,000

 

 

32,356

 

 

76,447

 

 

51,005

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

175

 

 

7,519

 

 

277

 

 

16,525

 

 

Other income, net

(95)

 

 

(1,744)

 

 

(114)

 

 

(415)

 

 

Total other expense

80

 

 

5,775

 

 

163

 

 

16,110

 

 

Income before income taxes

36,920

 

 

26,581

 

 

76,284

 

 

34,895

 

 

Provision for income taxes

(9,230)

 

 

(6,645)

 

 

(19,071)

 

 

(8,724)

 

 

Net income

$

27,690

 

 

$

19,936

 

 

$

57,213

 

 

$

26,171

 

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

 

Basic

$

0.17

 

 

$

0.15

 

 

$

0.35

 

 

$

0.19

 

 

Diluted

$

0.17

 

 

$

0.15

 

 

$

0.35

 

 

$

0.19

 

 

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

 

 

 

 

 

 

 

 

Basic

161,466,852

 

 

135,548,740

 

 

161,267,734

 

 

135,468,029

 

 

Diluted

165,452,865

 

 

136,159,449

 

 

165,094,740

 

 

136,214,530

 

 

 

 

 

 

 

 

 

 

 

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 June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Non-GAAP Subscription Cost of Revenue

 

 

 

 

 

 

 

 

GAAP subscription cost of revenue

$

21,638

 

 

$

20,105

 

 

$

42,568

 

 

$

41,871

 

 

Stock-based compensation expense

(885)

 

 

(21)

 

 

(2,113)

 

 

(41)

 

 

Restructuring expense

—

 

 

(462)

 

 

—

 

 

(462)

 

 

Non-GAAP subscription cost of revenue

$

20,753

 

 

$

19,622

 

 

$

40,455

 

 

$

41,368

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Device Cost of Revenue

 

 

 

 

 

 

 

 

GAAP device cost of revenue

$

11,124

 

 

$

7,258

 

 

$

20,622

 

 

$

16,375

 

 

Stock-based compensation expense

(45)

 

 

—

 

 

(107)

 

 

—

 

 

Non-GAAP device gross cost of revenue

$

11,079

 

 

$

7,258

 

 

$

20,515

 

 

$

16,375

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Professional Services and Other Cost of Revenue

 

 

 

 

 

 

 

 

GAAP professional services and other cost of revenue

$

1,549

 

 

$

1,529

 

 

$

3,051

 

 

$

3,067

 

 

Stock-based compensation expense

(63)

 

 

—

 

 

(166)

 

 

—

 

 

Restructuring expense

—

 

 

(139)

 

 

—

 

 

(139)

 

 

Non-GAAP professional services and other cost of revenue

$

1,486

 

 

$

1,390

 

 

$

2,885

 

 

$

2,928

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Depreciation and Amortization in Cost of Revenue

 

 

 

 

 

 

 

 

GAAP depreciation and amortization in cost of revenue

$

8,598

 

 

$

5,226

 

 

$

15,223

 

 

$

10,220

 

 

Amortization of acquired intangible assets

(2,700)

 

 

(1,175)

 

 

(4,012)

 

 

(2,350)

 

 

Non-GAAP depreciation and amortization in cost of revenue

$

5,898

 

 

$

4,051

 

 

$

11,211

 

 

$

7,870

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Cost of Revenue

 

 

 

 

 

 

 

 

GAAP cost of revenue

$

42,909

 

 

$

34,118

 

 

$

81,464

 

 

$

71,533

 

 

Amortization of acquired intangible assets

(2,700)

 

 

(1,175)

 

 

(4,012)

 

 

(2,350)

 

 

Stock-based compensation expense

(993)

 

 

(21)

 

 

(2,386)

 

 

(41)

 

 

Restructuring expense

—

 

 

(601)

 

 

—

 

 

(601)

 

 

Non-GAAP cost of revenue

$

39,216

 

 

$

32,321

 

 

$

75,066

 

 

$

68,541

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Profit

 

 

 

 

 

 

 

 

GAAP gross profit

$

108,693

 

 

$

90,345

 

 

$

215,047

 

 

$

177,593

 

 

Amortization of acquired intangible assets

2,700

 

 

1,175

 

 

4,012

 

 

2,350

 

 

Stock-based compensation expense

993

 

 

21

 

 

2,386

 

 

41

 

 

Restructuring expense

—

 

 

601

 

 

—

 

 

601

 

 

Non-GAAP gross profit

$

112,386

 

 

$

92,142

 

 

$

221,445

 

 

$

180,585

 

 

Non-GAAP gross margin

74.1

%

 

74.0

%

 

74.7

%

 

72.5

%

 

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 June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Non-GAAP Sales and Marketing

 

 

 

 

 

 

 

 

GAAP sales and marketing expense

$

32,135

 

 

$

27,162

 

 

$

64,061

 

 

$

59,119

 

 

Stock-based compensation expense

(1,842)

 

 

(635)

 

 

(4,137)

 

 

(1,279)

 

 

Restructuring expense

—

 

 

(1,936)

 

 

—

 

 

(1,936)

 

 

Non-GAAP sales and marketing expense

$

30,293

 

 

$

24,591

 

 

$

59,924

 

 

$

55,904

 

 

Non-GAAP sales and marketing as a % of revenue

20.0

%

 

19.8

%

 

20.2

%

 

22.4

%

 

Non-GAAP Research and Development

 

 

 

 

 

 

 

 

GAAP research and development expense

$

27,344

 

 

$

16,010

 

 

$

49,818

 

 

$

32,743

 

 

Stock-based compensation expense

(7,058)

 

 

(311)

 

 

(11,932)

 

 

(621)

 

 

Restructuring expense

—

 

 

(949)

 

 

—

 

 

(949)

 

 

Non-GAAP research and development expense

$

20,286

 

 

$

14,750

 

 

$

37,886

 

 

$

31,173

 

 

Non-GAAP research and development as a % of revenue

13.4

%

 

11.9

%

 

12.8

%

 

12.5

%

 

Non-GAAP General and Administrative

 

 

 

 

 

 

 

 

GAAP general and administrative expense

$

26,485

 

 

$

20,172

 

 

$

51,106

 

 

$

41,956

 

 

Stock-based compensation expense

(2,348)

 

 

(891)

 

 

(5,297)

 

 

(1,831)

 

 

Restructuring expense

—

 

 

(364)

 

 

—

 

 

(364)

 

 

Transaction related and other expense

(1,360)

 

 

(933)

 

 

(2,799)

 

 

(2,234)

 

 

Non-GAAP general and administrative expense

$

22,777

 

 

$

17,984

 

 

$

43,010

 

 

$

37,527

 

 

Non-GAAP general and administrative as a % of revenue

15.0

%

 

14.4

%

 

14.5

%

 

15.1

%

 

Non-GAAP Depreciation and Amortization in Operating Expenses

 

 

 

 

 

 

 

 

GAAP depreciation and amortization in operating expenses

$

6,453

 

 

$

6,863

 

 

$

13,023

 

 

$

13,780

 

 

Amortization of acquired intangible assets

(4,423)

 

 

(4,402)

 

 

(8,845)

 

 

(8,804)

 

 

Non-GAAP depreciation and amortization in operating expense

$

2,030

 

 

$

2,461

 

 

$

4,178

 

 

$

4,976

 

 

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

1.3

%

 

2.0

%

 

1.4

%

 

2.0

%

 

Non-GAAP Operating Expenses

 

 

 

 

 

 

 

 

GAAP operating expenses

$

92,417

 

 

$

70,207

 

 

$

178,008

 

 

$

147,598

 

 

Amortization of acquired intangible assets

(4,423)

 

 

(4,402)

 

 

(8,845)

 

 

(8,804)

 

 

Stock-based compensation expense

(11,248)

 

 

(1,837)

 

 

(21,366)

 

 

(3,731)

 

 

Restructuring expense

—

 

 

(3,249)

 

 

—

 

 

(3,249)

 

 

Transaction related and other expense

(1,360)

 

 

(933)

 

 

(2,799)

 

 

(2,234)

 

 

Non-GAAP operating expenses

$

75,386

 

 

$

59,786

 

 

$

144,998

 

 

$

129,580

 

 

Non-GAAP operating expenses as a % of revenue

49.7

%

 

48.0

%

 

48.9

%

 

52.0

%

 

Non-GAAP Income From Operations

 

 

 

 

 

 

 

 

GAAP income from operations

$

16,276

 

 

$

20,138

 

 

$

37,039

 

 

$

29,995

 

 

Amortization of acquired intangible assets

7,123

 

 

5,577

 

 

12,857

 

 

11,154

 

 

Stock-based compensation expense

12,241

 

 

1,858

 

 

23,752

 

 

3,772

 

 

Restructuring expense

—

 

 

3,850

 

 

—

 

 

3,850

 

 

Transaction related and other expense

1,360

 

 

933

 

 

2,799

 

 

2,234

 

 

Non-GAAP income from operations

$

37,000

 

 

$

32,356

 

 

$

76,447

 

 

$

51,005

 

 

Non-GAAP operating margin

24.4

%

 

26.0

%

 

25.8

%

 

20.5

%

 

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 June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

 

Non-GAAP Net Income and Net Income Per Share

 

 

 

 

 

 

 

 

GAAP net income

$

16,916

 

 

$

8,767

 

 

$

32,202

 

 

$

10,120

 

 

GAAP provision for (benefit from) income taxes

(720)

 

 

5,596

 

 

4,674

 

 

3,765

 

 

GAAP income before income taxes

16,196

 

 

14,363

 

 

36,876

 

 

13,885

 

 

Amortization of acquired intangible assets

7,123

 

 

5,577

 

 

12,857

 

 

11,154

 

 

Stock-based compensation expense

12,241

 

 

1,858

 

 

23,752

 

 

3,772

 

 

Restructuring expense

—

 

 

3,850

 

 

—

 

 

3,850

 

 

Transaction related and other expense

1,360

 

 

933

 

 

2,799

 

 

2,234

 

 

Non-GAAP provision for income taxes

(9,230)

 

 

(6,645)

 

 

(19,071)

 

 

(8,724)

 

 

Non-GAAP net income

$

27,690

 

 

$

19,936

 

 

$

57,213

 

 

$

26,171

 

 

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

 

 

 

 

 

 

 

 

Basic

$

0.17

 

 

$

0.15

 

 

$

0.35

 

 

$

0.19

 

 

Diluted

$

0.17

 

 

$

0.15

 

 

$

0.35

 

 

$

0.19

 

 

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

 

 

 

 

 

 

 

 

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

161,466,852

 

 

135,548,740

 

 

161,267,734

 

 

135,468,029

 

 

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

165,452,865

 

 

136,159,449

 

 

165,094,740

 

 

136,214,530

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

GAAP net income

$

16,916

 

 

$

8,767

 

 

$

32,202

 

 

$

10,120

 

 

Interest and other expense, net

80

 

 

5,775

 

 

163

 

 

16,110

 

 

Depreciation and amortization

15,051

 

 

12,089

 

 

28,246

 

 

24,000

 

 

(Benefit from) provision for income tax

(720)

 

 

5,596

 

 

4,674

 

 

3,765

 

 

Stock-based compensation expense

12,241

 

 

1,858

 

 

23,752

 

 

3,772

 

 

Restructuring expense

—

 

 

3,850

 

 

—

 

 

3,850

 

 

Transaction related and other expense

1,360

 

 

933

 

 

2,799

 

 

2,234

 

 

Adjusted EBITDA

$

44,928

 

 

$

38,868

 

 

$

91,836

 

 

$

63,851

 

 

Adjusted EBITDA margin

29.6

%

 

31.2

%

 

31.0

%

 

25.6

%

 

 

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

31,930

 

 

$

25,252

 

 

$

67,097

 

 

$

23,975

 

 

Less: Purchases of property and equipment

(9,757)

 

 

(8,080)

 

 

(20,438)

 

 

(22,000)

 

 

Free cash flow

$

22,173

 

 

$

17,172

 

 

$

46,659

 

 

$

1,975

 

 

MSP-F

View source version on businesswire.com: https://www.businesswire.com/news/home/20210811005815/en/

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Investor Contact: Ryan Burkart ir@datto.com