Datto Announces First Quarter 2021 Financial Results

First quarter subscription revenue grew 17 percent year-over-year to $135.6 million

ARR grew 15 percent year-over-year to $572.5 million

NORWALK, Conn.–(BUSINESS WIRE)–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 first-quarter ended March 31, 2021.

“Our first quarter results represented a great start to the year,” said Tim Weller, Datto’s Chief Executive Officer. “We delivered subscription revenue growth of 17% year over year, added 300 net new partners during the quarter and drove another sequential increase in ARR growth, so the business continues to accelerate. Looking ahead to the rest of 2021, we remain focused on our investments in cloud and security as we give our MSP partners the ability to secure SMB digital assets in a hybrid cloud world no matter where the data and applications live. We see good momentum across the product suite and we are well positioned to capitalize on the large and growing market opportunity ahead of us.”

First Quarter 2021 Financial Results

Recent Highlights

• Ended the quarter with more than 17,300 MSP partners, a net increase of 300 in the quarter.
• Expanded MSPs contributing over $100,000 ARR to 1,150 up from 1,000 at March 31, 2020.
• Launched Datto Commerce in North America. By simplifying how MSPs quote, sell and procure, Datto Commerce improves operational efficiency and productivity for MSPs.
• Hosted our fourth MSP Tech Day, with a focus on cyber resilience. The event delivered a deep dive into cybersecurity, business continuity, and incident response to help MSPs and their small and medium business (SMB) clients protect against growing cyber threats.
• Announced the findings of a commissioned study by Forrester highlighting that Datto’s integrated solutions yielded an average return on investment (ROI) of 256% within a three year period for MSPs, with the platform paying for itself in less than six months.
• Recognized as a Strategic, high-performance RMM/PSA vendor by Canalys in their recent RMM/PSA vendor Point of View report.
• Closed the acquisition of BitDam, an Israel-based cyber security company that protects SMBs against ransomware, malware, and phishing threats. BitDam’s elite team and leading cyber threat detection technology significantly enhance Datto’s cyber resilience solutions.

Second Quarter and Full Year 2021 Financial Outlook

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

Datto First Quarter 2021 Results Conference Call

When: Wednesday, May 12, 2021

Time: 5:00 pm ET

Conference ID: 1110219

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 May 19, 2021)

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 Balance Sheets (in thousands) (unaudited)
Â		March 31,			Â	December 31,			Â
Â		2021			Â	2020			Â
ASSETS		Â			Â	Â			Â
Current assets		Â			Â	Â			Â
Cash and cash equivalents		$	147,819	Â	Â	$	168,877	Â	Â
Restricted cash		1,375		Â	Â	1,536		Â	Â
Accounts receivable, net		12,920		Â	Â	13,946		Â	Â
Inventory		19,332		Â	Â	13,811		Â	Â
Prepaid expenses and other current assets		32,089		Â	Â	28,316		Â	Â
Total current assets		213,535		Â	Â	226,486		Â	Â
Property and equipment, net		95,408		Â	Â	91,876		Â	Â
Operating lease assets		33,881		Â	Â	—		Â	Â
Goodwill		1,143,796		Â	Â	1,120,954		Â	Â
Intangible assets, net		308,711		Â	Â	287,395		Â	Â
Other assets		70,582		Â	Â	66,560		Â	Â
Total assets		$	1,865,913	Â	Â	$	1,793,271	Â	Â
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