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Datto Announces Third Quarter 2020 Financial Results

Subscription revenue grew 17 percent year-over-year to $122.8 million

ARR grew 17 percent year-over-year to $522.8 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 third-quarter ended September 30, 2020.

We are pleased to report strong third-quarter 2020 results as a newly public company. Both subscription revenue and ARR grew 17 percent year-over-year driven by expansion from existing managed service provider partners as they deployed more Datto solutions to more of their end clients, and by the addition of new partners,” said Tim Weller, Datto’s Chief Executive Officer. “Our sequential ARR growth of $16 million is evidence of the reacceleration of our business and the tailwinds from the digital transformation of small and medium businesses (SMBs). We continue to create enterprise-grade technology for SMBs delivered through our growing, global network of managed service provider partners. Our commitment to the MSP ecosystem is what makes Datto unique – it is the foundation of our strategy and culture.”

Third Quarter 2020 Financial Results

(In Millions)

 

 

Q3 2020

 

Q3 2019

 

Y/Y Change

Subscription Revenue

$122.8

 

$105.2

 

17%

Total Revenue

$130.7

 

$117.7

 

11%

ARR(1)

$522.8

 

$445.4

 

17%

Gross Margin

73%

 

66%

 

691 bps

Net Income

$19.5

 

$2.7

 

617%

Adjusted EBITDA(2)

$45.8

 

$25.8

 

78%

Free Cash Flow(2)

$43.6

 

-$2.8

 

NA

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

  • Datto priced its initial public offering (IPO) of 22,000,000 shares of common stock at a price to the public of $27.00 per share. The underwriters exercised in full their option to purchase an additional 3,300,000 shares of common stock at $27.00 per share. Net proceeds from the IPO totaled $641.6 million. Datto is listed on the NYSE under the ticker “MSP”.
  • Datto repaid all outstanding balances under its $550 million term loan facility and its $50 million revolving credit facility and entered into a new $200 million revolving credit facility which is undrawn.
  • MSP Partners grew to over 17,200, an increase of 1,000 year-over-year.
  • Datto hosted its second Virtual MSP Technology Day dedicated to highlighting the tools and technologies that are driving adoption of MSP services through the COVID-19 pandemic.
  • In July, Datto acquired Gluh Pty Ltd, an Australia-based company with a real-time quoting platform that enables MSPs to simplify the procurement of IT products and services for their clients.
  • Datto was named a winner of the 2020 CRN Annual Report Card (ARC) Awards. The award recognized Datto as a best-in-class channel provider in the categories of Data Protection and Managed Services Software.

Fourth Quarter and Full Year 2020 Financial Outlook

Datto is providing the following guidance for the fourth quarter and full-year 2020:

Q4 2020 Outlook

FY 2020 Outlook

Revenue

$133.0 – $135.0 million

 

$512.8 – $514.8 million

Adjusted EBITDA

$38.0 – $39.0 million

 

$147.7 – $148.7 million

Datto Third Quarter 2020 Financial Results Conference Call

When:
Monday, November 23, 2020

Time: 5:00 pm ET

Conference ID: 8549639

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 November 30, 2020)

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 final prospectus for our initial public offering, dated as of October 20, 2020.

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.

MSP-F

DATTO HOLDING CORP.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Revenue:
Subscription

$

122,753

 

$

105,170

 

$

356,348

 

$

301,107

 

Device

 

6,964

 

 

11,948

 

 

21,098

 

 

29,582

 

Professional services and other

 

950

 

 

575

 

 

2,347

 

 

1,937

 

Total revenue

 

130,667

 

 

117,693

 

 

379,793

 

 

332,626

 

Cost of revenue:
Subscription

 

18,915

 

 

20,815

 

 

60,786

 

 

60,472

 

Device

 

10,089

 

 

14,036

 

 

26,464

 

 

36,591

 

Professional services and other

 

1,332

 

 

1,438

 

 

4,399

 

 

3,874

 

Depreciation and amortization

 

5,526

 

 

4,150

 

 

15,746

 

 

11,256

 

Total cost of revenue

 

35,862

 

 

40,439

 

 

107,395

 

 

112,193

 

Gross profit

 

94,805

 

 

77,254

 

 

272,398

 

 

220,433

 

Operating expenses:
Sales and marketing

 

24,709

 

 

25,084

 

 

83,828

 

 

79,172

 

Research and development

 

15,257

 

 

14,640

 

 

48,000

 

 

43,924

 

General and administrative

 

17,433

 

 

17,680

 

 

59,389

 

 

50,555

 

Depreciation and amortization

 

6,820

 

 

6,782

 

 

20,600

 

 

20,506

 

Total operating expenses

 

64,219

 

 

64,186

 

 

211,817

 

 

194,157

 

Income from operations

 

30,586

 

 

13,068

 

 

60,581

 

 

26,276

 

Other expense:
Interest expense

 

7,065

 

 

9,932

 

 

23,590

 

 

34,131

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

19,231

 

Other (income) expense, net

 

(987

)

 

7

 

 

(1,402

)

 

2

 

Total other expense

 

6,078

 

 

9,939

 

 

22,188

 

 

53,364

 

Income (loss) before income taxes

 

24,508

 

 

3,129

 

 

38,393

 

 

(27,088

)

(Provision for) benefit from income taxes

 

(4,962

)

 

(404

)

 

(8,727

)

 

4,130

 

Net income (loss)

$

19,546

 

$

2,725

 

$

29,666

 

$

(22,958

)

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

$

0.14

 

$

0.02

 

$

0.22

 

$

(0.17

)

Diluted

$

0.14

 

$

0.02

 

$

0.22

 

$

(0.17

)

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

 

135,553,097

 

 

135,195,800

 

 

135,496,696

 

 

135,195,800

 

Diluted

 

138,590,770

 

 

135,615,949

 

 

137,006,921

 

 

135,195,800

 

DATTO HOLDING CORP.

Condensed Consolidated Balance Sheets

(in thousands)

 

 

 

 

 

September 30,

 

December 31,

 

 

2020

 

 

 

2019

 

(unaudited)
 
ASSETS
Current assets
Cash

$

98,614

 

$

27,597

 

Restricted cash

 

1,436

 

 

1,469

 

Accounts receivable, net

 

16,668

 

 

20,841

 

Inventory, net

 

17,266

 

 

12,415

 

Prepaid expenses

 

8,831

 

 

10,265

 

Other current assets

 

9,453

 

 

10,120

 

Total current assets

 

152,268

 

 

82,707

 

Property and equipment, net

 

86,618

 

 

80,746

 

Goodwill

 

1,123,000

 

 

1,118,856

 

Intangible assets, net

 

289,954

 

 

306,685

 

Other assets

 

63,407

 

 

53,298

 

Total assets

$

1,715,247

 

$

1,642,292

 

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable

$

8,517

 

$

16,049

 

Accrued expenses and other current liabilities

 

35,407

 

 

33,909

 

Long-term debt, current portion

 

5,500

 

 

5,500

 

Deferred revenue

 

25,412

 

 

24,254

 

Total current liabilities

 

74,836

 

 

79,712

 

Long-term debt

 

575,739

 

 

546,499

 

Deferred revenue, noncurrent

 

2,937

 

 

3,798

 

Deferred income taxes

 

17,660

 

 

10,120

 

Other long-term liabilities

 

13,158

 

 

9,860

 

Total liabilities

 

684,330

 

 

649,989

 

Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock

 

136

 

 

136

 

Additional paid-in capital

 

1,092,090

 

 

1,083,082

 

Treasury stock

 

(3,621

)

 

(3,621

)

Accumulated deficit

 

(58,058

)

 

(87,724

)

Accumulated other comprehensive income

 

370

 

 

430

 

Total stockholders’ equity

 

1,030,917

 

 

992,303

 

Total liabilities and stockholders’ equity

$

1,715,247

 

$

1,642,292

 

DATTO HOLDING CORP.

Condensed Consolidated Statements of Cash Flows

(in thousands)

(unaudited)

 

 

 

 

 

Nine Months Ended

 

September 30,

 

 

2020

 

 

 

2019

 

OPERATING ACTIVITIES
Net income (loss)

$

29,666

 

$

(22,958

)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization of internally developed software

 

19,615

 

 

14,739

 

Amortization of acquired intangible assets

 

16,731

 

 

17,023

 

Loss on extinguishment of debt

 

 

 

19,231

 

Amortization of debt issuance costs

 

1,265

 

 

1,452

 

Reserve for inventory obsolescence

 

1,508

 

 

183

 

Stock-based compensation

 

6,561

 

 

9,454

 

Provision for bad debt

 

4,793

 

 

3,422

 

Deferred income taxes

 

7,556

 

 

(6,035

)

Unrealized gain (loss) on foreign exchange

 

(647

)

 

235

 

Changes in operating assets and liabilities:
Accounts receivable

 

(766

)

 

(12,202

)

Inventory

 

(6,337

)

 

(2,035

)

Prepaid expenses and current other assets

 

2,099

 

 

(4,464

)

Other assets

 

(8,446

)

 

(15,347

)

Accounts payable, accrued expenses and other

 

109

 

 

4,479

 

Deferred revenue

 

348

 

 

(554

)

Net cash provided by operating activities

 

74,055

 

 

6,623

 

INVESTING ACTIVITIES
Purchase of property and equipment

 

(28,519

)

 

(27,777

)

Acquisition of business, net of cash acquired

 

(4,371

)

 

 

Net cash used in investing activities

 

(32,890

)

 

(27,777

)

FINANCING ACTIVITIES
Proceeds from debt

 

32,100

 

 

562,250

 

Repayments of debt

 

(4,468

)

 

(522,048

)

Debt issuance costs

 

 

 

(8,775

)

Prepayment penalty on debt

 

 

 

(10,400

)

Capitalized transaction costs

 

(980

)

 

 

Proceeds from stock option exercise

 

2,500

 

 

 

Net share settlement and settlement of stock-based payment awards

 

(53

)

 

(1,072

)

Net cash provided by financing activities

 

29,099

 

 

19,955

 

Effect of exchange rate changes on cash

 

720

 

 

(396

)

Net increase (decrease) in cash

 

70,984

 

 

(1,595

)

Cash and restricted cash, beginning of year

 

29,066

 

 

37,258

 

Cash and restricted cash, end of period

$

100,050

 

$

35,663

 

Reconciliation of cash and restricted cash:
Cash

$

98,614

 

$

31,781

 

Restricted cash

$

1,436

 

$

3,882

 

 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes

$

151

 

$

1,117

 

Cash paid for interest

$

22,317

 

$

34,820

 

NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchase of property and equipment included in accounts payable

$

40

 

$

512

 

Deferred initial public offering costs in accounts payable and accrued liabilities

$

2,620

 

$

 

DATTO HOLDING CORP.

Non-GAAP Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Revenue:
Subscription

$

122,753

 

$

105,170

 

$

356,348

 

$

301,107

 

Device

 

6,964

 

 

11,948

 

 

21,098

 

 

29,582

 

Professional services and other

 

950

 

 

575

 

 

2,347

 

 

1,937

 

Total revenue

 

130,667

 

 

117,693

 

 

379,793

 

 

332,626

 

Cost of revenue:
Subscription

 

18,838

 

 

20,795

 

 

60,206

 

 

60,395

 

Device

 

10,089

 

 

14,036

 

 

26,464

 

 

36,591

 

Professional services and other

 

1,332

 

 

1,438

 

 

4,260

 

 

3,874

 

Depreciation and amortization

 

4,351

 

 

2,975

 

 

12,221

 

 

7,731

 

Total cost of revenue

 

34,610

 

 

39,244

 

 

103,151

 

 

108,591

 

Gross profit

 

96,057

 

 

78,449

 

 

276,642

 

 

224,035

 

Operating expenses:
Sales and marketing

 

24,200

 

 

24,465

 

 

80,104

 

 

76,913

 

Research and development

 

14,763

 

 

14,406

 

 

45,936

 

 

40,873

 

General and administrative

 

15,644

 

 

16,787

 

 

53,171

 

 

46,488

 

Depreciation and amortization

 

2,418

 

 

2,338

 

 

7,394

 

 

7,008

 

Total operating expenses

 

57,025

 

 

57,996

 

 

186,605

 

 

171,282

 

Income from operations

 

39,032

 

 

20,453

 

 

90,037

 

 

52,753

 

Other expense:
Interest expense

 

7,065

 

 

9,932

 

 

23,590

 

 

34,131

 

Other (income) expense, net

 

(987

)

 

7

 

 

(1,402

)

 

2

 

Total other expense

 

6,078

 

 

9,939

 

 

22,188

 

 

34,133

 

Income (loss) before income taxes

 

32,954

 

 

10,514

 

 

67,849

 

 

18,620

 

(Provision for) benefit from income taxes

 

(8,239

)

 

(2,629

)

 

(16,963

)

 

(4,656

)

Net income (loss)

$

24,715

 

$

7,885

 

$

50,886

 

$

13,964

 

 
Net income per share attributable to common stockholders:
Basic

$

0.18

 

$

0.06

 

$

0.38

 

$

0.10

 

Diluted

$

0.18

 

$

0.06

 

$

0.37

 

$

0.10

 

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

 

135,553,097

 

 

135,195,800

 

 

135,496,696

 

 

135,195,800

 

Diluted

 

138,590,770

 

 

135,615,949

 

 

137,006,921

 

 

135,626,273

 

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 Sept 30,

 

Nine Months Ended Sept 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 
Non-GAAP Subscription Cost of Revenue
GAAP subscription cost of revenue

$

18,915

 

$

20,815

 

$

60,786

 

$

60,472

 

Stock-based compensation expense

 

(77

)

 

(20

)

 

(118

)

 

(77

)

Restructuring expense

 

 

 

 

 

(462

)

 

 

Non-GAAP subscription cost of revenue

$

18,838

 

$

20,795

 

$

60,206

 

$

60,395

 

 
Non-GAAP Device Cost of Revenue
GAAP device cost of revenue

$

10,089

 

$

14,036

 

$

26,464

 

$

36,591

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

Restructuring expense

 

 

 

 

 

 

 

 

Non-GAAP device gross cost of revenue

$

10,089

 

$

14,036

 

$

26,464

 

$

36,591

 

 
Non-GAAP Professional Services and Other Cost of Revenue
GAAP professional services and other cost of revenue

$

1,332

 

$

1,438

 

$

4,399

 

$

3,874

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

Restructuring expense

 

 

 

 

 

(139

)

 

 

Non-GAAP professional services and other cost of revenue

$

1,332

 

$

1,438

 

$

4,260

 

$

3,874

 

 
Non-GAAP Depreciation and Amortization in Cost of Revenue
GAAP depreciation and amortization in cost of revenue

$

5,526

 

$

4,150

 

$

15,746

 

$

11,256

 

Amortization of acquired intangible assets

 

(1,175

)

 

(1,175

)

 

(3,525

)

 

(3,525

)

Non-GAAP depreciation and amortization in cost of revenue

$

4,351

 

$

2,975

 

$

12,221

 

$

7,731

 

 
Non-GAAP Cost of Revenue
GAAP cost of revenue

$

35,862

 

$

40,439

 

$

107,395

 

$

112,193

 

Amortization of acquired intangible assets

 

(1,175

)

 

(1,175

)

 

(3,525

)

 

(3,525

)

Stock-based compensation expense

 

(77

)

 

(20

)

 

(118

)

 

(77

)

Restructuring expense

 

 

 

 

 

(601

)

 

 

Non-GAAP cost of revenue

$

34,610

 

$

39,244

 

$

103,151

 

$

108,591

 

 
Non-GAAP Gross Profit
GAAP gross profit

$

94,805

 

$

77,254

 

$

272,398

 

$

220,433

 

Amortization of acquired intangible assets

 

1,175

 

 

1,175

 

 

3,525

 

 

3,525

 

Stock-based compensation expense

 

77

 

 

20

 

 

118

 

 

77

 

Restructuring expense

 

 

 

 

 

601

 

 

 

Non-GAAP gross profit

$

96,057

 

$

78,449

 

$

276,642

 

$

224,035

 

Non-GAAP gross margin

 

73.5

%

 

66.7

%

 

72.8

%

 

67.4

%

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 Sept 30,

 

Nine Months Ended Sept 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Non-GAAP Sales and Marketing
GAAP sales and marketing expense

$

24,709

 

$

25,084

 

$

83,828

 

$

79,172

 

Stock-based compensation expense

 

(524

)

 

(619

)

 

(1,803

)

 

(2,259

)

Restructuring expense

 

15

 

 

 

 

(1,921

)

 

 

Transaction related and other expense

 

 

 

 

 

 

 

 

Non-GAAP sales and marketing expense

$

24,200

 

$

24,465

 

$

80,104

 

$

76,913

 

Non-GAAP sales and marketing as a % of revenue

 

18.5

%

 

20.8

%

 

21.1

%

 

23.1

%

 
Non-GAAP Research and Development
GAAP research and development expense

$

15,257

 

$

14,640

 

$

48,000

 

$

43,924

 

Stock-based compensation expense

 

(494

)

 

(234

)

 

(1,115

)

 

(3,051

)

Restructuring expense

 

 

 

 

 

(949

)

 

 

Transaction related and other expense

 

 

 

 

 

 

 

 

Non-GAAP research and development expense

$

14,763

 

$

14,406

 

$

45,936

 

$

40,873

 

Non-GAAP research and development as a % of revenue

 

11.3

%

 

12.2

%

 

12.1

%

 

12.3

%

 
Non-GAAP General and Administrative
GAAP general and administrative expense

$

17,433

 

$

17,680

 

$

59,389

 

$

50,555

 

Stock-based compensation expense

 

(1,694

)

 

(893

)

 

(3,525

)

 

(4,067

)

Restructuring expense

 

 

 

 

 

(364

)

 

 

Transaction related and other expense

 

(95

)

 

 

 

(2,329

)

 

 

Non-GAAP general and administrative expense

$

15,644

 

$

16,787

 

$

53,171

 

$

46,488

 

Non-GAAP general and administrative as a % of revenue

 

12.0

%

 

14.3

%

 

14.0

%

 

14.0

%

 
Non-GAAP Depreciation and Amortization in Operating Expenses
GAAP depreciation and amortization in operating expenses

$

6,820

 

$

6,782

 

$

20,600

 

$

20,506

 

Amortization of acquired intangible assets

 

(4,402

)

 

(4,444

)

 

(13,206

)

 

(13,498

)

Non-GAAP depreciation and amortization in operating expense

$

2,418

 

$

2,338

 

$

7,394

 

$

7,008

 

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

 

1.9

%

 

2.0

%

 

1.9

%

 

2.1

%

 
Non-GAAP Operating Expenses
GAAP operating expenses

$

64,219

 

$

64,186

 

$

211,817

 

$

194,157

 

Amortization of acquired intangible assets

 

(4,402

)

 

(4,444

)

 

(13,206

)

 

(13,498

)

Stock-based compensation expense

 

(2,712

)

 

(1,746

)

 

(6,443

)

 

(9,377

)

Restructuring expense

 

15

 

 

 

 

(3,234

)

 

 

Transaction related and other expense

 

(95

)

 

 

 

(2,329

)

 

 

Non-GAAP operating expenses

$

57,025

 

$

57,996

 

$

186,605

 

$

171,282

 

Non-GAAP operating expenses as a % of revenue

 

43.6

%

 

49.3

%

 

49.1

%

 

51.5

%

 
Non-GAAP Income From Operations
GAAP income from operations

$

30,586

 

$

13,068

 

$

60,581

 

$

26,276

 

Amortization of acquired intangible assets

 

5,577

 

 

5,619

 

 

16,731

 

 

17,023

 

Stock-based compensation expense

 

2,789

 

 

1,766

 

 

6,561

 

 

9,454

 

Restructuring expense

 

(15

)

 

 

 

3,835

 

 

 

Transaction related and other expense

 

95

 

 

 

 

2,329

 

 

 

Non-GAAP income from operations

$

39,032

 

$

20,453

 

$

90,037

 

$

52,753

 

Non-GAAP operating margin

 

29.9

%

 

17.4

%

 

23.7

%

 

15.9

%

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 Sept 30,

 

Nine Months Ended Sept 30,

 

 

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

Non-GAAP Net Income and Net Income Per Share
GAAP net income (loss)

$

19,546

 

$

2,725

 

$

29,666

 

$

(22,958

)

GAAP (provision for) benefit from income taxes

 

(4,962

)

 

(404

)

 

(8,727

)

 

4,130

 

GAAP income (loss) before income taxes

 

24,508

 

 

3,129

 

 

38,393

 

 

(27,088

)

Loss on extinguishment of debt

 

 

 

 

 

 

 

19,231

 

Amortization of acquired intangible assets

 

5,577

 

 

5,619

 

 

16,731

 

 

17,023

 

Stock-based compensation expense

 

2,789

 

 

1,766

 

 

6,561

 

 

9,454

 

Restructuring expense

 

(15

)

 

 

 

3,835

 

 

 

Transaction related and other expense

 

95

 

 

 

 

2,329

 

 

 

Non-GAAP (provision for) benefit from income taxes

 

(8,239

)

 

(2,629

)

 

(16,963

)

 

(4,656

)

Non-GAAP net income

$

24,715

 

$

7,885

 

$

50,886

 

$

13,964

 

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

$

0.18

 

$

0.06

 

$

0.38

 

$

0.10

 

Diluted

$

0.18

 

$

0.06

 

$

0.37

 

$

0.10

 

 
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

 

135,553,097

 

 

135,195,800

 

 

135,496,696

 

 

135,195,800

 

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

 

138,590,770

 

 

135,615,949

 

 

137,006,921

 

 

135,195,800

 

Adjustment to fully diluted shares

 

 

 

 

 

 

 

430,473

 

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

 

138,590,770

 

 

135,615,949

 

 

137,006,921

 

 

135,626,273

 

 
Adjusted EBITDA
GAAP net income (loss)

$

19,546

 

$

2,725

 

$

29,666

 

$

(22,958

)

Interest and other expense, net

 

6,078

 

 

9,939

 

 

22,188

 

 

34,133

 

Loss on extinguishment of debt

 

 

 

 

 

 

 

19,231

 

Depreciation and amortization

 

12,346

 

 

10,932

 

 

36,346

 

 

31,762

 

Provision for (benefit from) income tax

 

4,962

 

 

404

 

 

8,727

 

 

(4,130

)

Stock-based compensation expense

 

2,789

 

 

1,766

 

 

6,561

 

 

9,454

 

Restructuring expense

 

(15

)

 

 

 

3,835

 

 

 

Transaction related and other expense

 

95

 

 

 

 

2,329

 

 

 

Adjusted EBITDA

$

45,801

 

$

25,766

 

$

109,652

 

$

67,492

 

Adjusted EBITDA margin

 

35.1

%

 

21.9

%

 

28.9

%

 

20.3

%

 
Free Cash Flow
GAAP net cash provided by operating activities

$

50,080

 

$

4,864

 

$

74,055

 

$

6,623

 

Less: Purchases of property and equipment

 

(6,519

)

 

(7,667

)

 

(28,519

)

 

(27,777

)

Free cash flow

$

43,561

 

$

(2,803

)

$

45,536

 

$

(21,154

)

Contacts

Media Contact:
Shoba V. Lemoine

communications@datto.com

Investor Contact:
Kelsey Turcotte

ir@datto.com

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