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 | ) | ||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20201123006232/en/
Contacts:
Shoba V. Lemoine
communications@datto.com
