What to Make of Datto in Its Market Debut
Datto’s shares opened trading above the original initial public offering pricing of $27 per share.
Datto Holding Corp. (NYSE: MSP) entered the market with a handy gain on Wednesday. Datto’s shares opened trading at $32, above the original initial public offering pricing of $27 per share. This is also at the high end of the expected price range of $24 to $27 for the 22 million shares being offered. At the $27 price tag, the entire offering was valued up to $594 million.
The underwriters for the offering are Morgan Stanley, BofA Securities, Barclays, Credit Suisse, Citigroup, Jefferies, RBC Capital Markets, Evercore ISI, BMO Capital Markets, Macquarie Capital, Mizuho Securities, William Blair, Ramirez and Siebert Williams Shank.
This company is the leading provider of cloud-based software and technology solutions purpose-built for delivery through the managed service provider (MSP) channel to small and medium businesses (SMBs).
Its platform enables Datto’s 17,000 MSP partners to manage and grow their businesses serving the SMB information technology market. The platform also combines mission-critical cloud-based software, technologies and security solutions that MSPs sell to SMBs, business management software to help MSPs scale their own businesses and marketing tools, content, training and industry-leading events that cultivate an empowered and highly engaged MSP partner community.
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In terms of its finances, Datto’s annual reccurring revenue (ARR) for the 2019 full year was $474.7 million and revenue was $458.8 million, of which roughly 90% was recurring subscription revenue. As of June 30, 2020, ARR was $506.7 million and revenue for the six months ended June 30, 2020, was $249.1 million, of which about 94% was recurring subscription revenue.
The company intends to use the net proceeds from the offering to pay down its debt, as well as for working capital and general corporate purposes.
Datto stock was last seen up 9% at $29.23, in a range of $28.30 to $32.20 on the day thus far. About 7.5 million shares had moved as of 12:40 p.m. Eastern.
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Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics. Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications. A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.
