msp-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-39637

DATTO HOLDING CORP.

(Exact name of registrant as specified in its charter)


Delaware						81-3345706
(State or other jurisdiction of incorporation)						(IRS Employer Identification No.)

101 Merritt 7

Norwalk

06851

(Address of principal executive offices)

(Zip Code)

888-995-1431

(Registrant’s telephone number, including area code)

Not Applicable

(Former name or former address, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading
Symbol(s)

Name of each exchange
on which registered

Common Stock, $0.001 par value

MSP

The New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

At April 30, 2022, there were approximately 165,211,487 shares of the Registrant’s Common Stock outstanding (excluding treasury shares of 362,126).

TABLE OF CONTENTS


		Page
PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of March 31, 2022 and December 31, 2021	4
	Condensed Consolidated Statements of Operations for the Three Months Ended March 31, 2022 and 2021	5
	Condensed Consolidated Statements of Comprehensive Income for the Three Months Ended March 31 , 202 2 and 202 1	6
	Condensed Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2022 and 202 1	7
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2022 and 202 1	8
	Notes to Condensed Consolidated Financial Statements	9

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	37
Item 4.	Controls and Procedures	38

PART II	OTHER INFORMATION
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	40
Item 3.	Defaults Upon Senior Securities	40
Item 4.	Mine Safety Disclosures	40
Item 5.	Other Information	40
Item 6.	Exhibits	41
SIGNATURE

OTHER AVAILABLE INFORMATION

Please note that in addition to filing our periodic and current reports, we may announce material business and financial information to our investors using filings we make with the Securities and Exchange Commission (“SEC”), webcasts, press releases, conference calls, and our investor relations website which can be found at www.investors.datto.com. The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. We use these media, including our website, to communicate with our stockholders and the public about our company. It is possible that the information that we make available through these media may be deemed to be material information. We therefore encourage investors and others interested in our company to review all such media.

The information contained on the website referenced in this Quarterly Report on Form 10-Q is not incorporated by reference into this filing, and the website address is provided only as a reference.

PART I – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

DATTO HOLDING CORP.

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


	Page

Financial Statements:

Condensed Consolidated Balance Sheets		4

Condensed Consolidated Statements of Operations		5

Condensed Consolidated Statements of Comprehensive Income		6

Condensed Consolidated Statements of Changes in Stockholders’ Equity		7

Condensed Consolidated Statements of Cash Flows		8

Notes to Condensed Consolidated Financial Statements		9

Table of Contents

DATTO HOLDING CORP.

Condensed Consolidated Balance Sheets

(in thousands, except share amounts)

(unaudited)


	March 31, 2022		December 31, 2021
ASSETS
Current assets
Cash and cash equivalents	$	191,188	$	221,421
Restricted cash	1,637		1,319
Accounts receivable, net	13,419		12,870
Inventory	43,913		34,901
Prepaid expenses and other current assets	44,490		39,456

Total current assets	294,647		309,967
Property and equipment, net	108,475		106,577
Operating lease assets	31,994		31,003
Goodwill	1,172,860		1,141,726
Intangible assets, net	292,568		287,605
Other assets	89,901		85,313
Total assets	$	1,990,445	$	1,962,191
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	15,227	$	9,997
Accrued expenses and other current liabilities	56,125		59,553

Deferred revenue	20,274		20,356
Total current liabilities	91,626		89,906

Deferred revenue, noncurrent	3,293		3,341
Deferred income taxes	22,725		24,955
Operating lease liabilities, noncurrent	30,761		31,332
Other long-term liabilities	762		715
Total liabilities	149,167		150,249
Commitments and contingencies (Note 8)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.001 par value; 50,000,000 authorized at March 31, 2022 and December 31, 2021; no shares issued or outstanding at March 31, 2022 or December 31, 2021	—		—
Common stock, $0.001 par value; 500,000,000 shares authorized at March 31, 2022 and December 31, 2021; 164,891,735 and 163,991,681 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively (inclusive of treasury stock)	165		164
Additional paid-in capital	1,852,073		1,829,957
Treasury stock, at cost; 362,126 shares at March 31, 2022 and December 31, 2021	(3,621)		(3,621)
Accumulated deficit	(5,845)		(13,792)
Accumulated other comprehensive income (loss)	(1,494)		(766)
Total stockholders’ equity	1,841,278		1,811,942
Total liabilities and stockholders’ equity	$	1,990,445	$	1,962,191

The accompanying notes are an integral part of these condensed consolidated financial statements.

Table of Contents

DATTO HOLDING CORP.

Condensed Consolidated Statements of Operations

(in thousands, except share and per share amounts)

(unaudited)


	Three Months Ended March 31,
		2022	2021
Revenue:
Subscription		$

SEC Form 10-Q filed by Datto Holding Corp.