Datto Announces Fourth Quarter and Full Year 2021 Financial Results|||

4th quarter subscription revenue grew nineteen percent year-over-year to $153.ii million

ARR grew 21 pct year-over-year to $658.4 1000000

NORWALK, Conn.–(BUSINESS WIRE)–#MSP—Datto Holding Corp. (Datto) (NYSE: MSP), the leading global provider of security and deject-based software solutions purpose-congenital for Managed Service Providers (MSPs), today announced its financial results for the fourth quarter and full yr concluded December 31, 2021.

“Nosotros finished 2021 on a strong note with another quarter of accelerating growth,” said Tim Weller, Datto’due south Master Executive Officer. “The fourth quarter capped an exceptional yr for Datto and our MSP partners. We exceeded all of our targets in our first full year as a public company and launched several new, highly differentiated products that assistance our MSP partners better secure digital avails on behalf of their SMB clients. MSPs now find themselves squarely in the security business, and Datto is right there with them. We further solidified Datto’s leading position in security solutions with the early 2022 conquering of cybersecurity business firm Infocyte. 2022 is shaping up to be another exciting yr for Datto as we continue to help our MSP partners on their security journey with our new products ramping and more on the way.”

Fourth Quarter and Full Year 2021 Financial Results
(In Millions)		Q4 2021		Q4 2020		Y/Y Change		FY 2021		FY 2020		Y/Y Change
Subscription Revenue(1)		$153.2		$129.0		nineteen%		$577.3		$485.iii		19%
Total Acquirement(i)		$164.3		$139.0		eighteen%		$618.seven		$518.8		19%
ARR(2)		$658.4		$542.8		21%		$658.4		$542.8		21%
Gross Margin		70%		69%		88 bps		71%		71%		45 bps
Not-GAAP Gross Margin(3)		72%		74%		(108 bps)		74%		73%		74 bps
Cyberspace Income		$5.7		$(7.2)		Due north/M		$51.4		$22.5		129%
Adjusted EBITDA(3)		$39.8		$forty.8		(iii)%		$175.4		$150.5		17%
Cyberspace Cash Provided by Operating Activities		$26.3		$34.6		(24)%		$125.iv		$108.vii		fifteen%
Complimentary Greenbacks Flow(3)		$xi.ii		$22.7		(51)%		$78.one		$68.two		fifteen%

	1	Subscription and Total Acquirement Y/Y percentage change includes benefits from favorable foreign commutation rates of approximately 25 ground points for the 4th quarter and 200 basis points for the full twelvemonth.
	2	Almanac run-charge per unit acquirement (ARR) is the annualized value of all subscription agreements equally of the end of a period. We calculate ARR by multiplying the monthly run-rate revenue for the final month of a menses by 12.
	3	A reconciliation of GAAP to non-GAAP fiscal measures is provided in the fiscal statement tables included in this press release. An explanation of these measures is also included nether the heading “Non-GAAP Fiscal Measures.”

Recent Highlights

• Concluded the quarter with more than 18,500 MSP partners, a net increase of 1,500 (+nine%) from the previous year.
• Concluded the quarter with average ARR per MSP of approximately $35,600, an increase of approximately $three,600 (+11%) from the previous twelvemonth.
• Expanded the number of MSPs contributing over $100,000 ARR to 1,400, a 27% increase from one,100 at Dec 31, 2020.
• Acquired cybersecurity visitor Infocyte, an innovator in Endpoint Detection and Response (EDR) technologies and Managed Detection and Response (MDR) services. The Infocyte team and engineering broaden Datto’s capabilities within the critical Protect, Detect, and Respond stages of the NIST security framework, and add together to the Visitor’s apace expanding set of MSP-delivered security offerings.
• Released a tool for MSPs to gainsay the Apache Log4j vulnerability. This endpoint assessment software works with any Remote Monitoring and Management (RMM) solution and tin can uniquely enumerate potentially vulnerable systems, detect intrusion attempts, and inoculate Windows systems against Log4j attacks.
• In support of Datto’s growth strategy and commitment to the DACH region (Germany, Austria, and Switzerland), the Company announced a partnership with Infinigate, a leading Value-Added Benefactor of cybersecurity solutions in Europe. Infinigate has a large customer base of operations in DACH and will strengthen our sales efforts in the region and help attract new MSPs to Datto through a proven selling model.
• Announced that Brooke Cunningham has joined the Visitor every bit Datto’s Primary Marketing Officer and Emily Tabak Epstein has joined as Full general Counsel.

Kickoff Quarter and Full Year 2022 Financial Outlook

Datto is providing the following guidance for the showtime quarter and full-twelvemonth 2022:

		(In Millions)		Q1 2022 Outlook		FY 2022 Outlook
		Total Revenue (one)		$168 – $169		$720 – $726
		Y/Y growth as reported		sixteen% – 17%		16% – 17%
		Y/Y growth constant currency		17% – 18%		xviii% – 19%
		Subscription Revenue (i)		$158 – $159		$676 – $682
		Y/Y growth equally reported		17% – 17%		17% – 18%
		Y/Y growth constant currency		18% – nineteen%		xviii% – 19%
		Adjusted EBITDA		$37 – $38		$163 – $168
		Adjusted EBITDA margin		22%		23%

1

Subscription and Total Revenue guidance include foreign substitution rate assumptions which reduce Y/Y growth rates by approximately 150 basis points for the get-go quarter and 130 basis points for the full yr and which are excluded in the abiding currency growth rates.

About Datto

As the leading global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs), Datto believes in that location is no limit to what pocket-size and medium businesses (SMBs) can achieve with the right technology. Datto’south proven Unified Continuity, Networking, Endpoint Management, and Business Management solutions bulldoze cyber resilience, efficiency, and growth for MSPs. Delivered via an integrated platform, Datto’s solutions help its global ecosystem of MSP partners serve over ane million businesses around the world. From proactive dynamic detection and prevention to fast, flexible recovery from cyber incidents, Datto’due south solutions defend against costly reanimation 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 Commonwealth of australia, Canada, China, Denmark, Federal republic of germany, State of israel, holland, Singapore, and the United Kingdom.

Learn more than at datto.com.

Forward-Looking Statements

This press release contains forrad-looking statements that reflect Datto’south current expectations and projections with respect to, among other things, its financial condition, results of operations, plans, objectives, time to come performance, and business organisation. These statements may be preceded by, followed past or include the words ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘believe,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘can take,’’ ‘‘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 Grade 10-K.

Frontward-looking statements include all statements that are non historical facts. Such forrard-looking statements are field of study to diverse risks and uncertainties. Accordingly, in that location are or will be important factors that could cause bodily outcomes or results to differ materially from those indicated in these statements.

There is no assurance that whatsoever forward-looking statements will materialize. You lot are cautioned not to place undue reliance on forrard-looking statements, which reflect expectations only as of this date. Datto undertakes no obligation to publicly update or review whatever forrard-looking statement, whether every bit a issue of new data, future developments or otherwise.

Non-GAAP Financial Measures

In addition to our results determined in accord with generally accepted accounting principles in the United States (“GAAP”), we believe that the non-GAAP financial measures of Non-GAAP Subscription Price of Revenue, Not-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, Not-GAAP General and Administrative expense, Non-GAAP Depreciation and Acquittal in Operating Expenses, Non-GAAP Operating Expenses, Not-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Net Income Per Share, Adjusted EBITDA, and Complimentary Cash Catamenia 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 acquittal, stock-based bounty expense, restructuring expense and transaction related and other expense. In addition, for Non-GAAP Net Income nosotros use a non-GAAP revenue enhancement rate of 25%, which we believe reflects our normalized effective tax rate. Nosotros believe that non-GAAP fiscal information, when taken collectively, may be helpful to investors considering information technology provides consistency and comparability with by financial operation 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 but, and should non be considered a substitute for financial data 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 not-GAAP financial measures used in this press release are included with the fiscal tables at the terminate of this press release.

Datto is not providing a quantitative reconciliation of forward-looking guidance of Adjusted EBITDA to its almost directly comparable GAAP mensurate considering certain items are out of Datto’south command or cannot be reasonably predicted, as the items are uncertain, depend on various factors, and could accept a material impact on GAAP reported results for the guidance flow. Accordingly, a reconciliation for forward-looking Adapted EBITDA is not available without unreasonable endeavour.

For more information near Datto, including supplemental financial information, please visit the investor relations website at investors.datto.com.

DATTO HOLDING CORP. Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended December 31,								Year Ended December 31,
		2021				2020				2021				2020
Revenue:
Subscription	$	153,224			$	128,978			$	577,321			$	485,326
Device		x,180				9,104				37,832				30,202
Professional services and other		850				910				3,504				3,257
Total acquirement		164,254				138,992				618,657				518,785
Toll of revenue:
Subscription		24,818				23,677				ninety,162				84,463
Device		13,863				eleven,143				47,415				37,607
Professional person services and other		1,538				i,845				6,059				6,244
Depreciation and acquittal		8,917				six,144				32,712				21,890
Full cost of revenue		49,136				42,809				176,348				150,204
Gross profit		115,118				96,183				442,309				368,581
Operating expenses:
Sales and marketing		40,023				31,962				139,257				115,790
Enquiry and development		31,209				30,932				107,899				78,932
General and administrative		27,570				26,279				106,478				85,668
Depreciation and amortization		6,917				6,623				26,471				27,223
Total operating expenses		105,719				95,796				380,105				307,613
Income from operations		9,399				387				62,204				lx,968
Other expense:
Interest expense		22				i,758				455				25,348
Loss on extinguishment of debt		—				8,488				—				8,488
Other expense (income), net		163				(2,026	)			387				(three,428	)
Full other expense		185				viii,220				842				30,408
Income (loss) earlier income taxes		9,214				(7,833	)			61,362				xxx,560
Provision for income taxes		(iii,467	)			665				(nine,928	)			(eight,062	)
Net income (loss)	$	five,747			$	(vii,168	)		$	51,434			$	22,498
Net income per share owing to common stockholders:
Bones	$	0.04			$	(0.05	)		$	0.32			$	0.xvi
Diluted	$	0.03			$	(0.05	)		$	0.31			$	0.16
Weighted-average shares used in computing net income per share:
Basic		163,210,116				154,968,918				162,048,828				140,404,763
Diluted		166,574,607				154,968,918				165,759,624				142,514,848

DATTO Holding CORP. Condensed Consolidated Balance Sheets (in thousands) (unaudited)
	December 31,
		2021				2020
ASSETS
Current avails
Cash and cash equivalents	$	221,421			$	168,877
Restricted greenbacks		1,319				one,536
Accounts receivable, net		12,870				13,946
Inventory		34,901				13,811
Prepaid expenses and other current assets		39,456				28,316
Total electric current avails		309,967				226,486
Property and equipment, internet		106,577				91,876
Operating lease assets		31,003				—
Goodwill		1,141,726				1,120,954
Intangible avails, net		287,605				287,395
Other assets		85,313				66,560
Full assets	$	1,962,191			$	ane,793,271
LIABILITIES AND STOCKHOLDERS’ Disinterestedness
Current liabilities
Accounts payable	$	9,997			$	7,574
Accrued expenses and other current liabilities		59,553				39,461
Deferred revenue		20,356				23,763
Total electric current liabilities		89,906				70,798
Deferred revenue, noncurrent		3,341				iii,322
Deferred income taxes		24,955				18,947
Operating charter liabilities, noncurrent		31,332				—
Other long-term liabilities		715				eleven,736
Total liabilities		150,249				104,803
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock		164				161
Boosted paid-in capital letter		1,829,957				ane,755,387
Treasury stock		(iii,621	)			(iii,621	)
Accumulated deficit		(13,792	)			(65,226	)
Accumulated other comprehensive income		(766	)			1,767
Total stockholders’ equity		1,811,942				1,688,468
Total liabilities and stockholders’ disinterestedness	$	ane,962,191			$	1,793,271

DATTO HOLDING CORP. Condensed Consolidated Statements of Cash Flows (in thousands) (unaudited)
	Twelvemonth Concluded December 31,
		2021				2020
OPERATING ACTIVITIES
Net income	$	51,434			$	22,498
Adjustments to reconcile net income to net greenbacks provided by operating activities:
Depreciation		32,044				26,434
Amortization of acquired intangible assets		27,139				22,679
Loss on extinguishment of debt		—				8,488
Amortization of debt issuance costs		341				i,428
Reserve for inventory obsolescence		57				one,517
Non-cash operating charter expense		7,292				—
Stock-based bounty		48,909				33,460
Allowance for expected credit losses		367				six,217
Deferred income taxes		4,922				7,770
Unrealized foreign exchange		(1,303	)			(i,204	)
Changes in operating assets and liabilities:
Accounts receivable		1,598				769
Inventory		(21,186	)			(2,826	)
Prepaid expenses and other electric current assets		(11,487	)			(7,498	)
Other assets		(19,641	)			(12,952	)
Accounts payable, accrued expenses and other		8,391				iii,073
Deferred acquirement		(3,511	)			(1,155	)
Net cash provided by operating activities		125,366				108,698
INVESTING ACTIVITIES
Purchase of property and equipment		(47,237	)			(twoscore,466	)
Acquisition of business, net of cash acquired		(45,486	)			(4,371	)
Net cash used in investing activities		(92,723	)			(44,837	)
FINANCING ACTIVITIES
Proceeds from debt		—				32,100
Repayments of debt and capital leases		(101	)			(594,727	)
Debt issuance costs		—				(1,178	)
Proceeds from initial public offering, net of underwriting costs		—				641,643
Capitalized transaction costs		(684	)			(5,256	)
Proceeds from stock option exercises		22,510				3,150
Repurchase of mutual stock and settlement of stock-based payment awards		—				(53	)
Net cash provided by financing activities		21,725				75,679
Effect of substitution rate changes on cash and cash equivalents		(ii,041	)			1,807
Internet increase in greenbacks and greenbacks equivalents		52,327				141,347
Cash and cash equivalents and restricted greenbacks, beginning of year		170,413				29,066
Cash and cash equivalents and restricted cash, end of menstruum	$	222,740			$	170,413
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	221,421			$	168,877
Restricted cash	$	1,319			$	1,536
SUPPLEMENTAL DISCLOSURE OF CASH FLOW Information
Cash paid for income taxes	$	6,380			$	890
Cash paid for interest	$	133			$	24,037
NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchase of belongings and equipment included in accounts payable	$	—			$	17
Unpaid initial public offering costs in full current liabilities	$	—			$	684

DATTO Property CORP. Non-GAAP Condensed Consolidated Statements of Operations (in thousands, except share and per share amounts) (unaudited)
	Three Months Ended December 31,								Twelvemonth Ended December 31,
		2021				2020				2021				2020
Revenue:
Subscription	$	153,224			$	128,978			$	577,321			$	485,326
Device		10,180				nine,104				37,832				30,202
Professional person services and other		850				910				3,504				3,257
Full revenue		164,254				138,992				618,657				518,785
Cost of revenue:
Subscription		23,681				nineteen,703				85,860				79,909
Device		xiii,820				10,940				47,222				37,404
Professional person services and other		1,489				1,427				5,859				v,687
Depreciation and acquittal		six,180				4,646				23,261				16,867
Total price of revenue		45,170				36,716				162,202				139,867
Gross profit		119,084				102,276				456,455				378,918
Operating expenses:
Sales and marketing		37,047				27,151				129,790				107,255
Research and development		25,047				xviii,457				84,480				64,393
General and administrative		23,367				20,478				89,997				73,649
Depreciation and amortization		2,496				ii,173				eight,783				nine,567
Total operating expenses		87,957				68,259				313,050				254,864
Income from operations		31,127				34,017				143,405				124,054
Other expense:
Involvement expense		22				1,758				455				25,348
Other expense (income), net		163				(ii,026	)			387				(3,428	)
Total other expense (income)		185				(268	)			842				21,920
Income before income taxes		30,942				34,285				142,563				102,134
Provision for income taxes		(7,736	)			(8,571	)			(35,641	)			(25,534	)
Net income	$	23,206			$	25,714			$	106,922			$	76,600
Internet income per share owing to mutual stockholders:
Basic	$	0.fourteen			$	0.17			$	0.66			$	0.55
Diluted	$	0.14			$	0.16			$	0.65			$	0.54
Weighted-boilerplate shares used in computing net income per share:
Basic		163,210,116				154,968,918				162,048,828				140,404,763
Diluted		166,574,607				158,856,958				165,759,624				142,514,848

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)
	Iii Months Ended December 31,								Year Ended December 31,
		2021				2020				2021				2020
Non-GAAP Subscription Price of Revenue
GAAP subscription cost of revenue	$	24,818			$	23,677			$	90,162			$	84,463
Stock-based compensation expense		(1,137	)			(3,974	)			(4,302	)			(4,092	)
Restructuring expense		—				—				—				(462	)
Non-GAAP subscription price of revenue	$	23,681			$	19,703			$	85,860			$	79,909
Non-GAAP Device Price of Acquirement
GAAP device cost of acquirement	$	13,863			$	eleven,143			$	47,415			$	37,607
Stock-based compensation expense		(43	)			(203	)			(193	)			(203	)
Non-GAAP device gross cost of acquirement	$	13,820			$	10,940			$	47,222			$	37,404
Non-GAAP Professional Services and Other Cost of Revenue
GAAP professional services and other cost of revenue	$	1,538			$	1,845			$	6,059			$	6,244
Stock-based bounty expense		(49	)			(418	)			(200	)			(418	)
Restructuring expense		—				—				—				(139	)
Non-GAAP professional services and other toll of revenue	$	ane,489			$	1,427			$	5,859			$	five,687
Non-GAAP Depreciation and Amortization in Cost of Revenue
GAAP depreciation and acquittal in cost of acquirement	$	viii,917			$	half-dozen,144			$	32,712			$	21,890
Amortization of caused intangible avails		(two,737	)			(1,498	)			(ix,451	)			(5,023	)
Not-GAAP depreciation and amortization in cost of revenue	$	half dozen,180			$	four,646			$	23,261			$	16,867
Non-GAAP Price of Revenue
GAAP cost of acquirement	$	49,136			$	42,809			$	176,348			$	150,204
Amortization of acquired intangible assets		(2,737	)			(1,498	)			(9,451	)			(5,023	)
Stock-based compensation expense		(1,229	)			(iv,595	)			(4,695	)			(four,713	)
Restructuring expense		—				—				—				(601	)
Not-GAAP toll of revenue	$	45,170			$	36,716			$	162,202			$	139,867
Non-GAAP Gross Profit
GAAP gross profit	$	115,118			$	96,183			$	442,309			$	368,581
Acquittal of acquired intangible assets		2,737				i,498				9,451				5,023
Stock-based bounty expense		i,229				four,595				four,695				4,713
Restructuring expense		—				—				—				601
Not-GAAP gross profit	$	119,084			$	102,276			$	456,455			$	378,918
Non-GAAP gross margin		72.5	%			73.half dozen	%			73.8	%			73.0	%

DATTO Holding CORP. GAAP to Not-GAAP Reconciliations and Calculation of Other Key Metrics (in thousands, except percentages and share and per share amounts) (unaudited)
	Three Months Ended December 31,								Year Concluded December 31,
		2021				2020				2021				2020
Not-GAAP Sales and Marketing
GAAP sales and marketing expense	$	forty,023			$	31,962			$	139,257			$	115,790
Stock-based bounty expense		(2,976	)			(4,811	)			(nine,467	)			(6,614	)
Restructuring expense		—				—				—				(1,921	)
Non-GAAP sales and marketing expense	$	37,047			$	27,151			$	129,790			$	107,255
Non-GAAP sales and marketing every bit a % of acquirement		22.6	%			nineteen.5	%			21.0	%			twenty.7	%
Non-GAAP Research and Evolution
GAAP inquiry and development expense	$	31,209			$	30,932			$	107,899			$	78,932
Stock-based compensation expense		(6,162	)			(12,475	)			(23,419	)			(13,590	)
Restructuring expense		—				—				—				(949	)
Non-GAAP research and development expense	$	25,047			$	xviii,457			$	84,480			$	64,393
Non-GAAP research and development equally a % of revenue		15.2	%			13.3	%			13.seven	%			12.4	%
Non-GAAP General and Administrative
GAAP general and administrative expense	$	27,570			$	26,279			$	106,478			$	85,668
Stock-based compensation expense		(3,187	)			(5,018	)			(11,328	)			(viii,543	)
Restructuring expense		—				—				—				(364	)
Transaction related and other expense		(ane,016	)			(783	)			(five,153	)			(3,112	)
Non-GAAP general and authoritative expense	$	23,367			$	20,478			$	89,997			$	73,649
Non-GAAP general and administrative equally a % of revenue		14.2	%			14.7	%			14.5	%			xiv.ii	%
Non-GAAP Depreciation and Amortization in Operating Expenses
GAAP depreciation and acquittal in operating expenses	$	6,917			$	half-dozen,623			$	26,471			$	27,223
Amortization of caused intangible assets		(4,421	)			(4,450	)			(17,688	)			(17,656	)
Non-GAAP depreciation and amortization in operating expense	$	2,496			$	2,173			$	8,783			$	9,567
Non-GAAP depreciation and amortization in operating expense as a % of revenue		i.5	%			i.half-dozen	%			1.4	%			1.viii	%
Non-GAAP Operating Expenses
GAAP operating expenses	$	105,719			$	95,796			$	380,105			$	307,613
Amortization of acquired intangible avails		(4,421	)			(4,450	)			(17,688	)			(17,656	)
Stock-based compensation expense		(12,325	)			(22,304	)			(44,214	)			(28,747	)
Restructuring expense		—				—				—				(three,234	)
Transaction related and other expense		(1,016	)			(783	)			(5,153	)			(iii,112	)
Non-GAAP operating expenses	$	87,957			$	68,259			$	313,050			$	254,864
Non-GAAP operating expenses as a % of revenue		53.5	%			49.i	%			fifty.6	%			49.1	%
Not-GAAP Income From Operations
GAAP income from operations	$	9,399			$	387			$	62,204			$	sixty,968
Amortization of acquired intangible assets		7,158				v,948				27,139				22,679
Stock-based compensation expense		13,554				26,899				48,909				33,460
Restructuring expense		—				—				—				3,835
Transaction related and other expense		i,016				783				5,153				3,112
Non-GAAP income from operations	$	31,127			$	34,017			$	143,405			$	124,054
Non-GAAP operating margin		xix.0	%			24.5	%			23.two	%			23.9	%

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