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Datto Announces Fourth Quarter and Full Year 2020 Financial Results

Fourth quarter subscription revenue grew 16 percent year-over-year to $129.0 million

ARR grew 14 percent year-over-year to $542.8 million

NORWALK, Conn.–(BUSINESS WIRE)–Datto Holding Corp. (“Datto”) (NYSE: MSP), the leading global provider of cloud-based software and technology solutions purpose-built for delivery by managed service providers (MSPs), today announced its financial results for the fourth-quarter and full year ended December 31, 2020.

2020 was a milestone year for Datto. We completed our first year as a public company, delivering full year subscription revenue growth of 18%, expanding cash flow margins and deepening our strong, global MSP partner relationships,” said Tim Weller, Datto’s Chief Executive Officer. “Our strong fourth quarter and full year performance is a testament to the power of Datto’s MSP-centric platform and the durability of our recurring revenue subscription model, even during these challenging times. Our sequential quarterly ARR growth of $20 million is continued evidence of the reacceleration of our business and the tailwinds from the digital transformation of small and medium businesses. Looking ahead to 2021 in this increasingly hybrid cloud environment, we remain focused on providing MSPs and their SMB clients with best-in-class security, continuity, and remote monitoring and management solutions for complete cyber resilience. Cloud and security have been at the core of Datto’s mission to protect digital assets since inception. Our recent acquisition of BitDam further advances the value we provide to our network of more than 17,000 MSP partners and we are well positioned take advantage of the large opportunities in front of us.”

Fourth Quarter and Full Year 2020 Financial Results

(In Millions)

 

Q4 2020

 

Q4 2019

 

Y/Y Change

 

FY 2020

 

FY 2019

 

Y/Y Change

Subscription Revenue

 

$129.0

 

$111.1

 

16%

 

$485.3

 

$412.2

 

18%

Total Revenue

 

$139.0

 

$126.1

 

10%

 

$518.8

 

$458.8

 

13%

ARR(1)

 

$542.8

 

$474.8

 

14%

 

$542.8

 

$474.8

 

14%

Gross Margin

 

69%

 

64%

 

+498bps

 

71%

 

66%

 

+534bps

Net Income (Loss)

 

$(7.2)

 

$(8.2)

 

13%

 

$22.5

 

$(31.2)

 

NM

Adjusted EBITDA(2)

 

$40.8

 

$17.1

 

139%

 

$150.5

 

$84.6

 

78%

Net cash provided by operating activities

 

$34.6

 

$4.6

 

NM

 

$108.7

 

$11.2

 

NM

Free Cash Flow(2)

 

$22.7

 

$(5.8)

 

NM

 

$68.2

 

$(27.0)

 

NM

1

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.

2

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

  • Acquired BitDam, an Israel-based cyber security company that protects small and medium businesses (SMBs) against ransomware, malware, and phishing threats. BitDam’s best-in-class technology and team significantly enhance Datto’s cyber resilience solutions for SMBs.
  • Released RMM Ransomware Detection to monitor, prevent and remediate ransomware attacks, giving MSPs an extra layer of security.
  • Joined the Institute for Security and Technology’s Multi-Sector Ransomware Task Force in the fight against cyber crime.
  • Hosted Datto’s third virtual MSP Technology Day dedicated to highlighting operational efficiency and cyber security themes for MSPs.
  • Published the 5th annual State of the Channel Ransomware Report surveying more than 1,000 MSPs, which found that cyber security is MSPs’ number one concern and phishing is the leading attack vector.
  • Ended the quarter with more than 17,000 MSP partners, an increase of 400 year-over-year.

First Quarter and Full Year 2021 Financial Outlook

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

 

 

Q1 2021 Outlook

 

FY 2021 Outlook

Revenue

 

$142 – $144 million

 

$582 – $590 million

Adjusted EBITDA

 

$45 – $46 million

 

$130 – $135 million

Datto Fourth Quarter and Full Year 2020 Financial Results Conference Call

When: Thursday, March 11, 2020

Time: 5:00 pm ET

Conference ID: 6343809

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 until 11:59 pm ET on March 18, 2021)

Webcast: https://investors.datto.com

About Datto

As the world’s leading provider of cloud-based software and technology solutions purpose-built for delivery by managed service providers (MSPs), Datto believes there is no limit to what small and medium businesses can achieve with the right technology. Datto offers Unified Continuity, Networking, and Business Management solutions and has created a unique ecosystem of MSP partners. These partners provide Datto solutions to over one million businesses across the globe. Since its founding in 2007, Datto has won awards for its rapid growth, product excellence, superior technical support, and for fostering an outstanding workplace. With headquarters in Norwalk, Connecticut, Datto has global offices in the United Kingdom, the Netherlands, Denmark, Germany, Canada, Australia, China, and Singapore. 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, 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.

Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended

December 31,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Subscription

$

128,978

 

 

 

$

111,060

 

 

 

$

485,326

 

 

 

$

412,167

 

 

Device

9,104

 

 

 

14,470

 

 

 

30,202

 

 

 

44,052

 

 

Professional services and other

910

 

 

 

596

 

 

 

3,257

 

 

 

2,533

 

 

Total revenue

138,992

 

 

 

126,126

 

 

 

518,785

 

 

 

458,752

 

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription

23,677

 

 

 

21,594

 

 

 

84,463

 

 

 

82,066

 

 

Device

11,143

 

 

 

17,342

 

 

 

37,607

 

 

 

53,933

 

 

Professional services and other

1,845

 

 

 

1,689

 

 

 

6,244

 

 

 

5,563

 

 

Depreciation and amortization

6,144

 

 

 

4,489

 

 

 

21,890

 

 

 

15,745

 

 

Total cost of revenue

42,809

 

 

 

45,114

 

 

 

150,204

 

 

 

157,307

 

 

Gross profit

96,183

 

 

 

81,012

 

 

 

368,581

 

 

 

301,445

 

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

31,962

 

 

 

31,269

 

 

 

115,790

 

 

 

110,441

 

 

Research and development

30,932

 

 

 

16,535

 

 

 

78,932

 

 

 

60,459

 

 

General and administrative

26,279

 

 

 

23,348

 

 

 

85,668

 

 

 

73,903

 

 

Depreciation and amortization

6,623

 

 

 

6,911

 

 

 

27,223

 

 

 

27,417

 

 

Total operating expenses

95,796

 

 

 

78,063

 

 

 

307,613

 

 

 

272,220

 

 

Income from operations

387

 

 

 

2,949

 

 

 

60,968

 

 

 

29,225

 

 

Other expense:

 

 

 

 

 

 

 

Interest expense

1,758

 

 

 

9,306

 

 

 

25,348

 

 

 

43,437

 

 

Loss on extinguishment of debt

8,488

 

 

 

 

 

 

8,488

 

 

 

19,231

 

 

Other (income) expense, net

(2,026

)

 

 

254

 

 

 

(3,428

)

 

 

256

 

 

Total other expense

8,220

 

 

 

9,560

 

 

 

30,408

 

 

 

62,924

 

 

Income (loss) before income taxes

(7,833

)

 

 

(6,611

)

 

 

30,560

 

 

 

(33,699

)

 

(Provision for) benefit from income taxes

665

 

 

 

(1,619

)

 

 

(8,062

)

 

 

2,511

 

 

Net income (loss)

$

(7,168

)

 

 

$

(8,230

)

 

 

$

22,498

 

 

 

$

(31,188

)

 

 

 

 

 

 

 

 

 

Net income (loss) per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

(0.05

)

 

 

$

(0.06

)

 

 

$

0.16

 

 

 

$

(0.23

)

 

Diluted

$

(0.05

)

 

 

$

(0.06

)

 

 

$

0.16

 

 

 

$

(0.23

)

 

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

 

 

 

 

 

 

 

Basic

154,968,918

 

 

 

135,262,441

 

 

 

140,404,763

 

 

 

135,212,597

 

 

Diluted

154,968,918

 

 

 

135,262,441

 

 

 

142,514,848

 

 

 

135,212,597

 

 

 

 

 

 

 

 

 

 

DATTO HOLDING CORP.

Consolidated Balance Sheets

(in thousands)

(unaudited)

 

 

December 31,

 

2020

 

2019

ASSETS

 

 

 

Current assets

 

 

 

Cash

$

168,877

 

 

 

$

27,597

 

 

Restricted cash

1,536

 

 

 

1,469

 

 

Accounts receivable, net

13,946

 

 

 

20,841

 

 

Inventory

13,811

 

 

 

12,415

 

 

Prepaid expenses and other current assets

28,316

 

 

 

20,385

 

 

Total current assets

226,486

 

 

 

82,707

 

 

Property and equipment, net

91,876

 

 

 

80,746

 

 

Goodwill

1,120,954

 

 

 

1,118,856

 

 

Intangible assets, net

287,395

 

 

 

306,685

 

 

Other assets

66,560

 

 

 

53,298

 

 

Total assets

$

1,793,271

 

 

 

$

1,642,292

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

Current liabilities

 

 

 

Accounts payable

$

7,574

 

 

 

$

16,049

 

 

Accrued expenses and other current liabilities

39,461

 

 

 

33,909

 

 

Long-term debt, current portion

 

 

 

5,500

 

 

Deferred revenue

23,763

 

 

 

24,254

 

 

Total current liabilities

70,798

 

 

 

79,712

 

 

Long-term debt

 

 

 

546,499

 

 

Deferred revenue, noncurrent

3,322

 

 

 

3,798

 

 

Deferred income taxes

18,947

 

 

 

10,120

 

 

Other long-term liabilities

11,736

 

 

 

9,860

 

 

Total liabilities

104,803

 

 

 

649,989

 

 

Commitments and contingencies

 

 

 

STOCKHOLDERS’ EQUITY

 

 

 

Common stock

136

 

 

 

136

 

 

Additional paid-in capital

1,755,412

 

 

 

1,083,082

 

 

Treasury stock

(3,621

)

 

 

(3,621

)

 

Accumulated deficit

(65,226

)

 

 

(87,724

)

 

Accumulated other comprehensive income

1,767

 

 

 

430

 

 

Total stockholders’ equity

1,688,468

 

 

 

992,303

 

 

Total liabilities and stockholders’ equity

$

1,793,271

 

 

 

$

1,642,292

 

 

 

 

 

 

DATTO HOLDING CORP.

Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

Years Ended December 31

 

2020

 

2019

OPERATING ACTIVITIES

 

 

 

Net income (loss)

$

22,498

 

 

 

$

(31,188

)

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation

26,434

 

 

 

20,562

 

 

Amortization of acquired intangible assets

22,679

 

 

 

22,600

 

 

Loss on extinguishment of debt

8,488

 

 

 

19,231

 

 

Amortization of debt issuance costs

1,428

 

 

 

1,879

 

 

Reserve for inventory obsolescence

1,517

 

 

 

3,168

 

 

Stock-based compensation

33,460

 

 

 

12,215

 

 

Provision for bad debt

6,217

 

 

 

6,634

 

 

Deferred income taxes

7,770

 

 

 

(6,071

)

 

Unrealized foreign exchange

(1,204

)

 

 

(18

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

769

 

 

 

(10,837

)

 

Inventory

(2,826

)

 

 

(3,538

)

 

Prepaid expenses and other current assets

(7,498

)

 

 

(6,073

)

 

Other assets

(12,952

)

 

 

(24,172

)

 

Accounts payable, accrued expenses and other

3,073

 

 

 

14,786

 

 

Deferred revenue

(1,155

)

 

 

(7,943

)

 

Net cash provided by operating activities

108,698

 

 

 

11,235

 

 

INVESTING ACTIVITIES

 

 

 

Purchase of property and equipment

(40,466

)

 

 

(38,226

)

 

Acquisition of business, net of cash acquired

(4,371

)

 

 

 

 

Net cash used in investing activities

(44,837

)

 

 

(38,226

)

 

FINANCING ACTIVITIES

 

 

 

Proceeds from debt

32,100

 

 

 

562,250

 

 

Repayments of debt

(594,727

)

 

 

(523,523

)

 

Debt issuance costs

(1,178

)

 

 

(8,775

)

 

Prepayment penalty on debt

 

 

 

(10,400

)

 

Proceeds from initial public offering, net of underwriting costs

641,643

 

 

 

 

 

Capitalized transaction costs

(5,256

)

 

 

 

 

Proceeds from stock option exercises

3,150

 

 

 

291

 

 

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

(53

)

 

 

(1,338

)

 

Net cash provided by financing activities

75,679

 

 

 

18,505

 

 

Effect of exchange rate changes on cash

1,807

 

 

 

294

 

 

Net increase (decrease) in cash

141,347

 

 

 

(8,192

)

 

Cash and restricted cash, beginning of year

29,066

 

 

 

37,258

 

 

Cash and restricted cash, end of period

$

170,413

 

 

 

$

29,066

 

 

Reconciliation of cash and restricted cash:

 

 

 

Cash

$

168,877

 

 

 

$

27,597

 

 

Restricted cash

$

1,536

 

 

 

$

1,469

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

 

 

 

Cash paid for income taxes

$

890

 

 

 

$

2,333

 

 

Cash paid for interest

$

24,037

 

 

 

$

43,624

 

 

NON-CASH INVESTING AND FINANCING ACTIVITIES

 

 

 

Purchase of property and equipment included in accounts payable

$

17

 

 

 

$

3,051

 

 

Deferred initial public offering costs in accounts payable and accrued liabilities

$

684

 

 

 

$

1,885

 

 

 

 

 

 

DATTO HOLDING CORP.

Non-GAAP Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

Three Months Ended

December 31,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Revenue:

 

 

 

 

 

 

 

Subscription

$

128,978

 

 

 

$

111,060

 

 

 

$

485,326

 

 

 

$

412,167

 

 

Device

9,104

 

 

 

14,470

 

 

 

30,202

 

 

 

44,052

 

 

Professional services and other

910

 

 

 

596

 

 

 

3,257

 

 

 

2,533

 

 

Total revenue

138,992

 

 

 

126,126

 

 

 

518,785

 

 

 

458,752

 

 

Cost of revenue:

 

 

 

 

 

 

 

Subscription

19,703

 

 

 

21,573

 

 

 

79,909

 

 

 

81,968

 

 

Device

10,940

 

 

 

17,342

 

 

 

37,404

 

 

 

53,933

 

 

Professional services and other

1,427

 

 

 

1,689

 

 

 

5,687

 

 

 

5,563

 

 

Depreciation and amortization

4,646

 

 

 

3,314

 

 

 

16,867

 

 

 

11,045

 

 

Total cost of revenue

36,716

 

 

 

43,918

 

 

 

139,867

 

 

 

152,509

 

 

Gross profit

102,276

 

 

 

82,208

 

 

 

378,918

 

 

 

306,243

 

 

Operating expenses:

 

 

 

 

 

 

 

Sales and marketing

27,151

 

 

 

30,582

 

 

 

107,255

 

 

 

107,495

 

 

Research and development

18,457

 

 

 

16,076

 

 

 

64,393

 

 

 

56,949

 

 

General and administrative

20,478

 

 

 

21,754

 

 

 

73,649

 

 

 

68,242

 

 

Depreciation and amortization

2,173

 

 

 

2,509

 

 

 

9,567

 

 

 

9,517

 

 

Total operating expenses

68,259

 

 

 

70,921

 

 

 

254,864

 

 

 

242,203

 

 

Income from operations

34,017

 

 

 

11,287

 

 

 

124,054

 

 

 

64,040

 

 

Other expense:

 

 

 

 

 

 

 

Interest expense

1,758

 

 

 

9,306

 

 

 

25,348

 

 

 

43,437

 

 

Other (income) expense, net

(2,026

)

 

 

254

 

 

 

(3,428

)

 

 

256

 

 

Total other expense

(268

)

 

 

9,560

 

 

 

21,920

 

 

 

43,693

 

 

Income (loss) before income taxes

34,285

 

 

 

1,727

 

 

 

102,134

 

 

 

20,347

 

 

(Provision for) benefit from income taxes

(8,571

)

 

 

(432

)

 

 

(25,534

)

 

 

(5,088

)

 

Net income (loss)

$

25,714

 

 

 

$

1,295

 

 

 

$

76,600

 

 

 

$

15,259

 

 

 

 

 

 

 

 

 

 

Net income per share attributable to common stockholders:

 

 

 

 

 

 

 

Basic

$

0.17

 

 

 

$

0.01

 

 

 

$

0.55

 

 

 

$

0.11

 

 

Diluted

$

0.16

 

 

 

$

0.01

 

 

 

$

0.54

 

 

 

$

0.11

 

 

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

 

 

 

 

 

 

 

Basic

154,968,918

 

 

 

135,262,441

 

 

 

140,404,763

 

 

 

135,212,597

 

 

Diluted

158,856,958

 

 

 

135,710,319

 

 

 

142,514,848

 

 

 

135,647,284

 

 

 

 

 

 

 

 

 

 

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,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Non-GAAP Subscription Cost of Revenue

 

 

 

 

 

 

 

GAAP subscription cost of revenue

$

 

23,677

 

 

 

$

 

21,594

 

 

 

$

 

84,463

 

 

 

$

 

82,066

 

 

Stock-based compensation expense

 

(3,974

)

 

 

 

(21

)

 

 

 

(4,092

)

 

 

 

(98

)

 

Restructuring expense

 

 

 

 

 

 

 

 

 

(462

)

 

 

 

 

 

Non-GAAP subscription cost of revenue

$

 

19,703

 

 

 

$

 

21,573

 

 

 

$

 

79,909

 

 

 

$

 

81,968

 

 

 

 

 

 

 

 

 

 

Non-GAAP Device Cost of Revenue

 

 

 

 

 

 

 

GAAP device cost of revenue

$

 

11,143

 

 

 

$

 

17,342

 

 

 

$

37,607

 

 

 

$

 

53,933

 

 

Stock-based compensation expense

 

(203

)

 

 

 

 

 

 

 

(203

)

 

 

 

 

 

Non-GAAP device gross cost of revenue

$

10,940

 

 

 

$

17,342

 

 

 

$

37,404

 

 

 

$

53,933

 

 

 

 

 

 

 

 

 

 

Non-GAAP Professional Services and Other Cost of Revenue

 

 

 

 

 

 

 

GAAP professional services and other cost of revenue

$

1,845

 

 

 

$

1,689

 

 

 

$

6,244

 

 

 

$

5,563

 

 

Stock-based compensation expense

 

(418

)

 

 

 

 

 

 

 

(418

)

 

 

 

 

 

Restructuring expense

 

 

 

 

 

 

 

 

 

(139

)

 

 

 

 

 

Non-GAAP professional services and other cost of revenue

$

1,427

 

 

 

$

1,689

 

 

 

$

5,687

 

 

 

$

5,563

 

 

 

 

 

 

 

 

 

 

Non-GAAP Depreciation and Amortization in Cost of Revenue

 

 

 

 

 

 

 

GAAP depreciation and amortization in cost of revenue

$

6,144

 

 

 

$

4,489

 

 

 

$

21,890

 

 

 

$

15,745

 

 

Amortization of acquired intangible assets

 

(1,498

)

 

 

 

(1,175

)

 

 

 

(5,023

)

 

 

 

(4,700

)

 

Non-GAAP depreciation and amortization in cost of revenue

$

4,646

 

 

 

$

3,314

 

 

 

$

16,867

 

 

 

$

11,045

 

 

 

 

 

 

 

 

 

 

Non-GAAP Cost of Revenue

 

 

 

 

 

 

 

GAAP cost of revenue

$

 

42,809

 

 

 

$

 

45,114

 

 

 

$

 

150,204

 

 

 

$

 

157,307

 

 

Amortization of acquired intangible assets

 

(1,498

)

 

 

 

(1,175

)

 

 

 

(5,023

)

 

 

 

(4,700

)

 

Stock-based compensation expense

 

(4,595

)

 

 

 

(21

)

 

 

 

(4,713

)

 

 

 

(98

)

 

Restructuring expense

 

 

 

 

 

 

 

 

 

(601

)

 

 

 

 

 

Non-GAAP cost of revenue

$

 

36,716

 

 

 

$

 

43,918

 

 

 

$

 

139,867

 

 

 

$

 

152,509

 

 

 

 

 

 

 

 

 

 

Non-GAAP Gross Profit

 

 

 

 

 

 

 

GAAP gross profit

$

 

96,183

 

 

 

$

 

81,012

 

 

 

$

 

368,581

 

 

 

$

 

301,445

 

 

Amortization of acquired intangible assets

 

1,498

 

 

 

 

1,175

 

 

 

 

5,023

 

 

 

 

4,700

 

 

Stock-based compensation expense

 

4,595

 

 

 

 

21

 

 

 

 

4,713

 

 

 

 

98

 

 

Restructuring expense

 

 

 

 

 

 

 

 

 

601

 

 

 

 

 

 

Non-GAAP gross profit

$

 

102,276

 

 

 

$

 

82,208

 

 

 

$

 

378,918

 

 

 

$

 

306,243

 

 

Non-GAAP gross margin

 

73.6

 

%

 

 

65.2

 

%

 

 

73.0

 

%

 

 

66.8

 

%

 

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,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Non-GAAP Sales and Marketing

 

 

 

 

 

 

 

GAAP sales and marketing expense

$

31,962

 

 

 

$

31,269

 

 

 

$

115,790

 

 

 

$

110,441

 

 

Stock-based compensation expense

(4,811

)

 

 

(687

)

 

 

(6,614

)

 

 

(2,946

)

 

Restructuring expense

 

 

 

 

 

 

(1,921

)

 

 

 

 

Non-GAAP sales and marketing expense

$

27,151

 

 

 

$

30,582

 

 

 

$

107,255

 

 

 

$

107,495

 

 

Non-GAAP sales and marketing as a % of revenue

19.5

 

%

 

24.2

 

%

 

20.7

 

%

 

23.4

 

%

Non-GAAP Research and Development

 

 

 

 

 

 

 

GAAP research and development expense

$

30,932

 

 

 

$

16,535

 

 

 

$

78,932

 

 

 

$

60,459

 

 

Stock-based compensation expense

(12,475

)

 

 

(459

)

 

 

(13,590

)

 

 

(3,510

)

 

Restructuring expense

 

 

 

 

 

 

(949

)

 

 

 

 

Non-GAAP research and development expense

$

18,457

 

 

 

$

16,076

 

 

 

$

64,393

 

 

 

$

56,949

 

 

Non-GAAP research and development as a % of revenue

13.3

 

%

 

12.7

 

%

 

12.4

 

%

 

12.4

 

%

Non-GAAP General and Administrative

 

 

 

 

 

 

 

GAAP general and administrative expense

$

26,279

 

 

 

$

23,348

 

 

 

$

85,668

 

 

 

$

73,903

 

 

Stock-based compensation expense

(5,018

)

 

 

(1,594

)

 

 

(8,543

)

 

 

(5,661

)

 

Restructuring expense

 

 

 

 

 

 

(364

)

 

 

 

 

Transaction related and other expense

(783

)

 

 

 

 

 

(3,112

)

 

 

 

 

Non-GAAP general and administrative expense

$

20,478

 

 

 

$

21,754

 

 

 

$

73,649

 

 

 

$

68,242

 

 

Non-GAAP general and administrative as a % of revenue

14.7

 

%

 

17.2

 

%

 

14.2

 

%

 

14.9

 

%

Non-GAAP Depreciation and Amortization in Operating Expenses

 

 

 

 

 

 

 

GAAP depreciation and amortization in operating expenses

$

6,623

 

 

 

$

6,911

 

 

 

$

27,223

 

 

 

$

27,417

 

 

Amortization of acquired intangible assets

(4,450

)

 

 

(4,402

)

 

 

(17,656

)

 

 

(17,900

)

 

Non-GAAP depreciation and amortization in operating expense

$

2,173

 

 

 

$

2,509

 

 

 

$

9,567

 

 

 

$

9,517

 

 

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

1.6

 

%

 

2.0

 

%

 

1.8

 

%

 

2.1

 

%

Non-GAAP Operating Expenses

 

 

 

 

 

 

 

GAAP operating expenses

$

95,796

 

 

 

$

78,063

 

 

 

$

307,613

 

 

 

$

272,220

 

 

Amortization of acquired intangible assets

(4,450

)

 

 

(4,402

)

 

 

(17,656

)

 

 

(17,900

)

 

Stock-based compensation expense

(22,304

)

 

 

(2,740

)

 

 

(28,747

)

 

 

(12,117

)

 

Restructuring expense

 

 

 

 

 

 

(3,234

)

 

 

 

 

Transaction related and other expense

(783

)

 

 

 

 

 

(3,112

)

 

 

 

 

Non-GAAP operating expenses

$

68,259

 

 

 

$

70,921

 

 

 

$

254,864

 

 

 

$

242,203

 

 

Non-GAAP operating expenses as a % of revenue

49.1

 

%

 

56.2

 

%

 

49.1

 

%

 

52.8

 

%

Non-GAAP Income From Operations

 

 

 

 

 

 

 

GAAP income from operations

$

387

 

 

 

$

2,949

 

 

 

$

60,968

 

 

 

$

29,225

 

 

Amortization of acquired intangible assets

5,948

 

 

 

5,577

 

 

 

22,679

 

 

 

22,600

 

 

Stock-based compensation expense

26,899

 

 

 

2,761

 

 

 

33,460

 

 

 

12,215

 

 

Restructuring expense

 

 

 

 

 

 

3,835

 

 

 

 

 

Transaction related and other expense

783

 

 

 

 

 

 

3,112

 

 

 

 

 

Non-GAAP income from operations

$

34,017

 

 

 

$

11,287

 

 

 

$

124,054

 

 

 

$

64,040

 

 

Non-GAAP operating margin

24.5

 

%

 

8.9

 

%

 

23.9

 

%

 

14.0

 

%

 

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,

 

Years Ended
December 31,

 

2020

 

2019

 

2020

 

2019

Non-GAAP Net Income and Net Income Per Share

 

 

 

 

 

 

 

GAAP net income (loss)

$

(7,168

)

 

 

$

(8,230

)

 

 

$

22,498

 

 

 

$

(31,188

)

 

GAAP (provision for) benefit from income taxes

665

 

 

 

(1,619

)

 

 

(8,062

)

 

 

2,511

 

 

GAAP income (loss) before income taxes

(7,833

)

 

 

(6,611

)

 

 

30,560

 

 

 

(33,699

)

 

Loss on extinguishment of debt

8,488

 

 

 

 

 

 

8,488

 

 

 

19,231

 

 

Amortization of acquired intangible assets

5,948

 

 

 

5,577

 

 

 

22,679

 

 

 

22,600

 

 

Stock-based compensation expense

26,899

 

 

 

2,761

 

 

 

33,460

 

 

 

12,215

 

 

Restructuring expense

 

 

 

 

 

 

3,835

 

 

 

 

 

Transaction related and other expense

783

 

 

 

 

 

 

3,112

 

 

 

 

 

Non-GAAP (provision for) benefit from income taxes

(8,571

)

 

 

(432

)

 

 

(25,534

)

 

 

(5,088

)

 

Non-GAAP net income

$

25,714

 

 

 

$

1,295

 

 

 

$

76,600

 

 

 

$

15,259

 

 

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

 

 

 

 

 

 

 

Basic

$

0.17

 

 

 

$

0.01

 

 

 

$

0.55

 

 

 

$

0.11

 

 

Diluted

$

0.16

 

 

 

$

0.01

 

 

 

$

0.54

 

 

 

$

0.11

 

 

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

154,968,918

 

 

 

135,262,441

 

 

 

140,404,763

 

 

 

135,212,597

 

 

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

154,968,918

 

 

 

135,262,441

 

 

 

142,514,848

 

 

 

135,212,597

 

 

Adjustment to fully diluted shares

3,888,040

 

 

 

447,878

 

 

 

 

 

 

434,687

 

 

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

158,856,958

 

 

 

135,710,319

 

 

 

142,514,848

 

 

 

135,647,284

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

GAAP net income (loss)

$

(7,168

)

 

 

$

(8,230

)

 

 

$

22,498

 

 

 

$

(31,188

)

 

Interest and other expense, net

(268

)

 

 

9,560

 

 

 

21,920

 

 

 

43,693

 

 

Loss on extinguishment of debt

8,488

 

 

 

 

 

 

8,488

 

 

 

19,231

 

 

Depreciation and amortization

12,767

 

 

 

11,400

 

 

 

49,113

 

 

 

43,162

 

 

Provision for (benefit from) income tax

(665

)

 

 

1,619

 

 

 

8,062

 

 

 

(2,511

)

 

Stock-based compensation expense

26,899

 

 

 

2,761

 

 

 

33,460

 

 

 

12,215

 

 

Restructuring expense

 

 

 

 

 

 

3,835

 

 

 

 

 

Transaction related and other expense

783

 

 

 

 

 

 

3,112

 

 

 

 

 

Adjusted EBITDA

$

40,836

 

 

 

$

17,110

 

 

 

$

150,488

 

 

 

$

84,602

 

 

Adjusted EBITDA margin

29.4

 

%

 

13.6

 

%

 

29.0

 

%

 

18.4

 

%

 

 

 

 

 

 

 

 

Free Cash Flow

 

 

 

 

 

 

 

GAAP net cash provided by operating activities

$

34,643

 

 

 

$

4,612

 

 

 

$

108,698

 

 

 

$

11,235

 

 

Less: Purchases of property and equipment

(11,947

)

 

 

(10,449

)

 

 

(40,466

)

 

 

(38,226

)

 

Free cash flow

$

22,696

 

 

 

$

(5,837

)

 

 

$

68,232

 

 

 

$

(26,991

)

 

Contacts

Media Contact:
Shoba V. Lemoine

communications@datto.com

Investor Contact:
Ryan Burkart

ir@datto.com

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