An S-1 registration statement shows that Datto Holding Corp. has filed to raise $561 million through an IPO of its stock. The company will sell 22 million shares at a midpoint price of $25.50 per share.
What is Datto?
Based in Norwalk, Conn., Datto was originally founded as a backup company by Austin McChord. The company has expanded to provide technology solutions for managed service providers to small to medium businesses.
In 2014, Datto acquired Backupify and added SaaS applications to its portfolio of protective offerings. The company also acquired OpenMesh, now Datto Networking, and Australian company Gluh.
CEO, Tim Weller, has been with Datto since 2017. He served as the CFO and moved into the CEO role in 2019.
Datto has 17,000 MSP partners on its platform. Its innovative technology helps MSPs protect small and medium businesses from threats so they can minimize costly downtime from technological issues. As SMBs rely more on IT software and cloud services, Datto and similar companies are poised for additional growth.
According to SeekingAlpha, “Many firms prefer to use managed services to simplify their in-house IT operations as they focus their limited attention on achieving their other business goals.”
Vista Equity Partners purchased Datto in 2017 and merged it with Autotask. Vista Equity will own 72.2 percent of the public shares upon its IPO launch, according to the SEC filing.
Other companies in the industry include Ubiquiti, Barracuda, IBM, and OpenText.
Datto continues to grow
CEO Weller noted in the S-1 filing that the company has seen 19 percent year-over-year growth. In a letter alongside the filing, he said that SMBs will adopt new technologies quicker in the future.
“Datto will be there as technology creator, thought leader and support partner as they deploy new applications; navigate technology on-premises, in public clouds and in hybrids of both; and continue to defend against proliferating security threats,” according to Weller’s letter.
Datto had $60 million in cash and $673.1 million in total liabilities at the end of June 2020. At the time, the company’s 12-month revenue was $493 million.
When is the Datto stock IPO date?
Datto expects to price its IPO on Oct. 20 and start trading on Oct. 21. The valuation range should put the company’s market capitalization between $3.8 billion and $4.2 billion. After the IPO launches, Datto expects to trade under the ticker symbol “MSP.”
Datto has received other funding of at least $1.1 billion from investors like Vista Funds and Austin McChord — the firm’s founder.
Is the Datto stock IPO a good investment?
The global managed services market is poised to grow in the near future. A 2020 market research report projects a CAGR of 9.6 percent from 2019 to 2025 or from $179 billion to $309 billion.
Cloud-based services and solutions will be essential to businesses in an increasingly online society. With that in mind, Datto stock may be a good investment to consider.