Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2021 | Oct. 31, 2021 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q3 | |
Document Period End Date | Sep. 30, 2021 | |
Document Transition Report | false | |
Entity File Number | 001-39637 | |
Entity Registrant Name | DATTO HOLDING CORP. | |
Entity Central Index Key | 0001724570 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 81-3345706 | |
Entity Address, Address Line One | 101 Merritt 7 | |
Entity Address, City or Town | Norwalk | |
Entity Address, State or Province | CT | |
Entity Address, Postal Zip Code | 06851 | |
City Area Code | 888 | |
Local Phone Number | 995-1431 | |
Title of 12(b) Security | Common Stock, $0.001 par value | |
Trading Symbol | MSP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 163,073,476 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Current assets | ||
Cash and cash equivalents | $ 205,862 | $ 168,877 |
Restricted cash | 1,309 | 1,536 |
Accounts receivable, net | 9,400 | 13,946 |
Inventory | 31,739 | 13,811 |
Prepaid expenses and other current assets | 33,640 | 28,316 |
Total current assets | 281,950 | 226,486 |
Property and equipment, net | 100,420 | 91,876 |
Operating lease assets | 30,290 | 0 |
Goodwill | 1,144,496 | 1,120,954 |
Intangible assets, net | 295,264 | 287,395 |
Other assets | 82,486 | 66,560 |
Total assets | 1,934,906 | 1,793,271 |
Current liabilities | ||
Accounts payable | 12,549 | 7,574 |
Accrued expenses and other current liabilities | 47,538 | 39,461 |
Deferred revenue | 21,634 | 23,763 |
Total current liabilities | 81,721 | 70,798 |
Deferred revenue, noncurrent | 3,108 | 3,322 |
Deferred income taxes | 30,476 | 18,947 |
Operating lease liabilities, noncurrent | 30,849 | 0 |
Other long-term liabilities | 3,537 | 11,736 |
Total liabilities | 149,691 | 104,803 |
Commitments and contingencies (Note 8) | ||
STOCKHOLDERS' EQUITY | ||
Preferred stock, $0.001 par value; 50,000,000 authorized at September 30, 2021 and December 31, 2020; no shares issued or outstanding at September 30, 2021 or December 31, 2020 | 0 | 0 |
Common stock, $0.001 par value; 500,000,000 shares authorized at September 30, 2021 and December 31, 2020; 163,212,109 and 161,420,016 shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively (inclusive of treasury stock) | 163 | 161 |
Additional paid-in capital | 1,807,533 | 1,755,387 |
Treasury stock, at cost; 362,126 shares at September 30, 2021 and December 31, 2020 | (3,621) | (3,621) |
Accumulated deficit | (19,539) | (65,226) |
Accumulated other comprehensive income | 679 | 1,767 |
Total stockholders’ equity | 1,785,215 | 1,688,468 |
Total liabilities and stockholders’ equity | $ 1,934,906 | $ 1,793,271 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2021 | Dec. 31, 2020 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 500,000,000 | 500,000,000 |
Common stock, shares issued (in shares) | 163,212,109 | 161,420,016 |
Common stock, shares outstanding (in shares) | 163,212,109 | 161,420,016 |
Treasury stock (in shares) | 362,126 | 362,126 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Revenue: | ||||
Revenue | $ 157,892 | $ 130,667 | $ 454,403 | $ 379,793 |
Cost of revenue: | ||||
Depreciation and amortization | 8,572 | 5,526 | 23,795 | 15,746 |
Total cost of revenue | 45,748 | 35,862 | 127,212 | 107,395 |
Gross profit | 112,144 | 94,805 | 327,191 | 272,398 |
Operating expenses: | ||||
Sales and marketing | 35,173 | 24,709 | 99,234 | 83,828 |
Research and development | 26,872 | 15,257 | 76,690 | 48,000 |
General and administrative | 27,802 | 17,433 | 78,908 | 59,389 |
Depreciation and amortization | 6,531 | 6,820 | 19,554 | 20,600 |
Total operating expenses | 96,378 | 64,219 | 274,386 | 211,817 |
Income from operations | 15,766 | 30,586 | 52,805 | 60,581 |
Other expense: | ||||
Interest expense | 156 | 7,065 | 433 | 23,590 |
Other expense (income), net | 338 | (987) | 224 | (1,402) |
Total other expense | 494 | 6,078 | 657 | 22,188 |
Income before income taxes | 15,272 | 24,508 | 52,148 | 38,393 |
Provision for income taxes | (1,787) | (4,962) | (6,461) | (8,727) |
Net income | $ 13,485 | $ 19,546 | $ 45,687 | $ 29,666 |
Net income per share attributable to common stockholders: | ||||
Basic (in usd per share) | $ 0.08 | $ 0.14 | $ 0.28 | $ 0.22 |
Diluted (in usd per share) | $ 0.08 | $ 0.14 | $ 0.28 | $ 0.22 |
Weighted-average shares used in computing net income per share: | ||||
Basic (in shares) | 162,424,260 | 135,553,097 | 161,657,479 | 135,496,696 |
Diluted (in shares) | 166,248,941 | 138,590,770 | 165,483,710 | 137,006,921 |
Subscription | ||||
Revenue: | ||||
Revenue | $ 146,764 | $ 122,753 | $ 424,097 | $ 356,348 |
Cost of revenue: | ||||
Cost of revenue | 22,776 | 18,915 | 65,344 | 60,786 |
Device | ||||
Revenue: | ||||
Revenue | 10,242 | 6,964 | 27,652 | 21,098 |
Cost of revenue: | ||||
Cost of revenue | 12,930 | 10,089 | 33,552 | 26,464 |
Professional services and other | ||||
Revenue: | ||||
Revenue | 886 | 950 | 2,654 | 2,347 |
Cost of revenue: | ||||
Cost of revenue | $ 1,470 | $ 1,332 | $ 4,521 | $ 4,399 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 13,485 | $ 19,546 | $ 45,687 | $ 29,666 |
Other comprehensive income (loss): | ||||
Currency translation adjustment | (1,437) | 719 | (1,088) | (60) |
Total comprehensive income | $ 12,048 | $ 20,265 | $ 44,599 | $ 29,606 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands | Total | Common Stock | Treasury Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2019 | 135,655,428 | |||||
Beginning balance at Dec. 31, 2019 | $ 992,303 | $ 136 | $ (3,621) | $ 1,083,082 | $ (87,724) | $ 430 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 1,914 | 1,914 | ||||
Exercise of common stock options (in shares) | 255,438 | |||||
Exercise of common stock options | 2,500 | 2,500 | ||||
Other comprehensive income (loss) | (700) | (700) | ||||
Net income | 1,353 | 1,353 | ||||
Ending balance (in shares) at Mar. 31, 2020 | 135,910,866 | |||||
Ending balance at Mar. 31, 2020 | 997,370 | $ 136 | (3,621) | 1,087,496 | (86,371) | (270) |
Beginning balance (in shares) at Dec. 31, 2019 | 135,655,428 | |||||
Beginning balance at Dec. 31, 2019 | 992,303 | $ 136 | (3,621) | 1,083,082 | (87,724) | 430 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income | 29,666 | |||||
Ending balance (in shares) at Sep. 30, 2020 | 135,915,527 | |||||
Ending balance at Sep. 30, 2020 | 1,030,917 | $ 136 | (3,621) | 1,092,090 | (58,058) | 370 |
Beginning balance (in shares) at Mar. 31, 2020 | 135,910,866 | |||||
Beginning balance at Mar. 31, 2020 | 997,370 | $ 136 | (3,621) | 1,087,496 | (86,371) | (270) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 1,858 | 1,858 | ||||
Other comprehensive income (loss) | (79) | (79) | ||||
Net income | 8,767 | 8,767 | ||||
Ending balance (in shares) at Jun. 30, 2020 | 135,910,866 | |||||
Ending balance at Jun. 30, 2020 | 1,007,916 | $ 136 | (3,621) | 1,089,354 | (77,604) | (349) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net share settlement of stock-based payment awards (shares) | 4,661 | |||||
Net share settlement of stock-based payment awards | (53) | (53) | ||||
Stock-based compensation | 2,789 | 2,789 | ||||
Other comprehensive income (loss) | 719 | 719 | ||||
Net income | 19,546 | 19,546 | ||||
Ending balance (in shares) at Sep. 30, 2020 | 135,915,527 | |||||
Ending balance at Sep. 30, 2020 | 1,030,917 | $ 136 | (3,621) | 1,092,090 | (58,058) | 370 |
Beginning balance (in shares) at Dec. 31, 2020 | 161,420,016 | |||||
Beginning balance at Dec. 31, 2020 | 1,688,468 | $ 161 | (3,621) | 1,755,387 | (65,226) | 1,767 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 11,511 | 11,511 | ||||
Shares issued upon exercise of stock options and vesting of restricted stock units (in shares) | 19,139 | |||||
Shares issued upon exercise of stock options and vesting of restricted stock units | 117 | 117 | ||||
Other comprehensive income (loss) | (1,012) | (1,012) | ||||
Net income | 15,286 | 15,286 | ||||
Ending balance (in shares) at Mar. 31, 2021 | 161,439,155 | |||||
Ending balance at Mar. 31, 2021 | 1,714,370 | $ 161 | (3,621) | 1,767,015 | (49,940) | 755 |
Beginning balance (in shares) at Dec. 31, 2020 | 161,420,016 | |||||
Beginning balance at Dec. 31, 2020 | $ 1,688,468 | $ 161 | (3,621) | 1,755,387 | (65,226) | 1,767 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Exercise of common stock options (in shares) | 1,704,829 | |||||
Net income | $ 45,687 | |||||
Ending balance (in shares) at Sep. 30, 2021 | 163,212,109 | |||||
Ending balance at Sep. 30, 2021 | 1,785,215 | $ 163 | (3,621) | 1,807,533 | (19,539) | 679 |
Beginning balance (in shares) at Mar. 31, 2021 | 161,439,155 | |||||
Beginning balance at Mar. 31, 2021 | 1,714,370 | $ 161 | (3,621) | 1,767,015 | (49,940) | 755 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 12,241 | 12,241 | ||||
Shares issued upon exercise of stock options and vesting of restricted stock units (in shares) | 951,278 | |||||
Shares issued upon exercise of stock options and vesting of restricted stock units | 9,588 | $ 1 | 9,587 | |||
Other comprehensive income (loss) | 1,361 | 1,361 | ||||
Net income | 16,916 | 16,916 | ||||
Ending balance (in shares) at Jun. 30, 2021 | 162,390,433 | |||||
Ending balance at Jun. 30, 2021 | 1,754,476 | $ 162 | (3,621) | 1,788,843 | (33,024) | 2,116 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Stock-based compensation | 11,603 | 11,603 | ||||
Shares issued upon exercise of stock options and vesting of restricted stock units (in shares) | 821,676 | |||||
Shares issued upon exercise of stock options and vesting of restricted stock units | 7,088 | $ 1 | 7,087 | |||
Other comprehensive income (loss) | (1,437) | (1,437) | ||||
Net income | 13,485 | 13,485 | ||||
Ending balance (in shares) at Sep. 30, 2021 | 163,212,109 | |||||
Ending balance at Sep. 30, 2021 | $ 1,785,215 | $ 163 | $ (3,621) | $ 1,807,533 | $ (19,539) | $ 679 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
OPERATING ACTIVITIES | ||
Net income | $ 45,687 | $ 29,666 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 23,368 | 19,615 |
Amortization of acquired intangible assets | 19,981 | 16,731 |
Amortization of debt issuance costs | 255 | 1,265 |
Reserve for inventory obsolescence | 54 | 1,508 |
Non-cash operating lease expense | 5,273 | 0 |
Stock-based compensation | 35,355 | 6,561 |
Provision for bad debt | 2,630 | 4,793 |
Deferred income taxes | 4,727 | 7,556 |
Unrealized foreign exchange | (296) | (647) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 1,878 | (766) |
Inventory | (18,043) | (6,337) |
Prepaid expenses and other current assets | (5,490) | 2,099 |
Other assets | (16,719) | (8,446) |
Accounts payable, accrued expenses and other | 2,928 | 109 |
Deferred revenue | (2,479) | 348 |
Net cash provided by operating activities | 99,109 | 74,055 |
INVESTING ACTIVITIES | ||
Purchase of property and equipment | (32,170) | (28,519) |
Acquisition of business, net of cash acquired | (45,486) | (4,371) |
Net cash used in investing activities | (77,656) | (32,890) |
FINANCING ACTIVITIES | ||
Proceeds from debt | 0 | 32,100 |
Repayments of debt and capital leases | (73) | (4,468) |
Capitalized transaction costs | (684) | (980) |
Proceeds from stock option exercises | 16,839 | 2,500 |
Net Share Settlement And Settlement Of Stock Based Payment Awards | 0 | (53) |
Net cash provided by financing activities | 16,082 | 29,099 |
Effect of exchange rate changes on cash and cash equivalents | (777) | 720 |
Net increase in cash and cash equivalents | 36,758 | 70,984 |
Cash and cash equivalents and restricted cash, beginning of year | 170,413 | 29,066 |
Cash and cash equivalents and restricted cash, end of period | 207,171 | 100,050 |
Reconciliation of cash and cash equivalents and restricted cash: | ||
Cash and cash equivalents | 205,862 | 98,614 |
Restricted cash | 1,309 | 1,436 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION | ||
Cash paid for income taxes | 3,533 | 151 |
Cash paid for interest | 0 | 22,317 |
NON-CASH INVESTING AND FINANCING ACTIVITIES | ||
Purchase of property and equipment included in accounts payable | 251 | 40 |
Unpaid initial public offering costs in total current liabilities | $ 0 | $ 2,620 |
Business
Business | 9 Months Ended |
Sep. 30, 2021 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Business | Business Description of Business Datto Holding Corp. (“Datto Holding”) provides cloud-based software and security solutions purpose-built for delivery through the managed service provider (“MSP”) channel to small and medium businesses (“SMB”). Unless the context otherwise indicates or requires, references to “Datto”, “we,” “us,” “our” and “the Company” shall refer to Datto Holding and its wholly-owned subsidiaries as a combined entity. The Company’s platform enables its MSP partners to serve the SMB information technology market and includes mission-critical cloud-based software and technologies 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. The Company typically has no contractual relationship with the SMBs and considers its MSP partners to be the customers. By selling through the MSP channel, the Company is able to cost-effectively scale the reach of the Company’s solutions and support the global requirements of SMBs without a direct-to-SMB sales and support model. Initial Public Offering On October 23, 2020, the Company completed an initial public offering (“IPO”) of its common stock. As part of the IPO, the Company issued and sold 22,000,000 shares of its common stock at a public offering price of $27.00 per share. The Company received proceeds of approximately $558.0 million from the IPO, after deducting the underwriting discount. In addition, on November 3, 2020, the underwriters exercised in full their option to purchase 3,300,000 additional shares of common stock at a price of $27.00 per share, resulting in proceeds of approximately $83.6 million, after deducting the underwriting discount. The Company utilized the IPO proceeds to repay the outstanding principal balances of $590.2 million under the 2019 Credit Agreement, to pay $5.3 million of IPO offering costs, and to pay $1.2 million in debt issuance costs under the 2020 Credit Agreement. Upon entering the 2020 Credit Agreement in October 2020, the 2019 Credit Agreement was terminated. As of September 30, 2021, funds controlled by Vista Equity Partners (“Vista”) owned approximately 69.9% of the Company’s outstanding common stock, excluding treasury shares. As a result, the Company is a “controlled company” under New York Stock Exchange (“NYSE”) corporate governance rules. Sales to and purchases from as well as balances due to or from Vista and its portfolio companies as of and for the three and nine months ended September 30, 2021 and 2020, respectively, were immaterial. Emerging Growth Company Status The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that the Company (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, the Company’s condensed consolidated financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards based on public company effective dates. On June 30, 2021, the last day of the Company’s second fiscal quarter in 2021, the market value of the Company’s common equity held by non-affiliates exceeded $700 million. Accordingly, the Company will no longer qualify as an EGC; rather, it will be deemed a large accelerated filer as of December 31, 2021. Accordingly, the Company will no longer have the ability to take advantage of the extended transition period to comply with new or revised accounting standards. |
Significant Accounting Policies
Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Significant Accounting Policies | Significant Accounting Policies Unaudited Interim Financial Information The unaudited condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States (“GAAP”) and the requirements of the Securities and Exchange Commission (“SEC”) for interim reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by GAAP can be condensed or omitted. These financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, which are necessary for the fair statement of the Company’s financial information. These interim results are not necessarily indicative of the results to be expected for the fiscal year ending December 31, 2021 or for any other interim period or for any other future year. The accompanying unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes contained in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2020, as filed with the SEC on March 11, 2021 (the “Annual Report”). There continue to be many uncertainties regarding the ongoing coronavirus 2019 (“COVID-19”) pandemic, and the Company continues to monitor the impact of the pandemic on all aspects of its business, including how it has impacted and may continue to impact the Company’s operations and the operations of its MSP partners and their SMB customers in the future, including as a result of travel restrictions, business shutdowns, supply chain constraints, labor shortages and/or inflationary pressure. The governments of many of the countries in which the Company operates have eased the earlier measures to control the spread of COVID-19. However, it continues to be difficult at this time to estimate the impact that COVID-19 will continue to have on worldwide economic activity, the Company’s business, and the additional measures that may be taken by governments, businesses and other organizations in response to COVID-19 that could affect our business. The Company will continue to assess the evolving impact of the COVID-19 pandemic and will make adjustments to its operations as necessary. Basis of Presentation and Principles of Consolidation Datto Holding owns 100% of Merritt Holdco, Inc. (“Merritt Holdco”), which owns 100% of Datto, Inc., the Company’s primary operating company. Datto Holding has no operations or significant assets or liabilities other than its investment in Merritt Holdco. Accordingly, Datto Holding is dependent upon distributions from Merritt Holdco to fund any activity, including the payment of dividends. All obligations under Datto’s 2020 Credit Agreement, as defined in Note 9. Debt, are guaranteed by Merritt Holdco and certain direct and indirect subsidiaries of Datto, Inc. The condensed consolidated financial statements include the accounts of Datto Holding and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, contract balances, contract acquisition costs, allowances for doubtful accounts, reserves for inventory obsolescence, useful lives and recoverability of long-lived assets, the incremental borrowing rate for operating leases, determining the fair value of assets acquired and liabilities assumed in business combinations, income taxes, stock-based compensation and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including the uncertainty surrounding rapidly changing market and economic conditions from the COVID-19 pandemic. Actual results could materially differ from these estimates. With the exception of the adoption of the lease standard discussed below, there have been no material changes to the Company’s significant accounting policies. Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar. The functional currency of the Company's foreign subsidiaries is generally the local currency. Assets and liabilities are translated into U.S. Dollars at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenue, expenses, gains and losses are translated using average exchange rates for the reporting period. Resulting foreign currency translation adjustments are recorded directly within accumulated other comprehensive income (loss), a separate component of stockholders’ equity. Transaction gains and losses that arise from exchange rate fluctuations on transactions denominated in a currency other than the functional currency are included in other (income) expense, net in the accompanying condensed consolidated statements of operations. Transaction gains and losses were a charge of $0.3 million for the nine months ended September 30, 2021 and income of $1.0 million for the nine months ended September 30, 2020. Cash and Cash Equivalents and Restricted Cash Cash is stated at fair value. As of September 30, 2021 and December 31, 2020, the U.S. Dollar value of cash and restricted cash denominated in foreign currencies was $30.3 million and $28.1 million, respectively, comprised of various currencies in which the Company operates, including Euros, Australian Dollars and British Pounds. Cash equivalents consist of short-term, highly liquid investments with an original maturity of three months or earlier. The Company did not hold any cash equivalents as of September 30, 2021 or December 31, 2020. Restricted cash primarily includes amounts held by banks as security related to lease arrangements for office space. Accounts Receivable, Net Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are presented net of an estimated allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts based upon an analysis of past credit history and the current financial condition of the Company's partners, as well as the consideration of expected trends based upon characteristics of the accounts receivable and general economic conditions. The Company also considers other specific operational factors which may impact the Company's ability to collect past due amounts, including the impact of COVID-19. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The following table summarizes the activity of the allowance for doubtful accounts (in thousands): Amount Balance as of December 31, 2020 $ 5,485 Provision for bad debt 2,630 Net reductions and other (2,495) Balance as of September 30, 2021 $ 5,620 Unbilled accounts receivable are included in the accounts receivable balances and represent revenue earned, but the amount is not contractually billable as of the balance sheet date. The unbilled accounts receivable balance is principally invoiced within the following month. As of September 30, 2021 and December 31, 2020, unbilled accounts receivable was $1.7 million and $3.0 million, respectively. Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether the Company has the right to control the identified asset. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments in order to obtain the right to use the asset over the lease term. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. The Company elected to combine lease and non-lease components for its office and equipment leases. ROU assets are based on the measurement of the lease liability and also include any lease prepayments and any initial direct costs incurred, offset by tenant incentives received by the Company. For leases with an initial term of 12 months or less, the Company does not recognize a ROU asset and corresponding lease liability. Rent expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. Generally, the Company’s leases do not provide an implicit interest rate, and therefore the Company uses its incremental borrowing rate based on the estimated rate of interest for a collateralized borrowing over a similar term of the lease payments at the commencement date. The Company includes options to extend or terminate the lease in the determination of the ROU asset and corresponding lease liability when it is reasonably certain the Company will exercise the option. Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ( “ ASU ” ) 2016-02, Leases (Topic 842), (“ASC 842”). ASC 842 amends a number of aspects of lease accounting under ASC Topic 840 — Leases (“ASC 840”), including requiring lessees to recognize almost all leases with a term greater than one year as an ROU asset and corresponding lease liability, measured at the present value of the lease payments. ASC 842 provides a number of optional practical expedients in transition. On January 1, 2021, the Company adopted ASC 842 using the modified retrospective approach, and elected the practical expedients to i) not reassess its prior conclusions about lease identification under the new standard, ii) not reassess lease classification, and iii) not reassess initial direct costs. The Company did not elect the practical expedient allowing the use-of-hindsight, which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date. Upon adoption of ASC 842 the Company recognized operating lease assets of $35.8 million and operating lease liabilities of $46.3 million at January 1, 2021. Prior period amounts were not restated and are reported in accordance with ASC 840. For a description of the Company’s leases, see Note 6. Leases. Accounting Pronouncements Issued but Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”) . This standard changes the impairment model for most financial assets, including trade receivables and financial instruments and will require the Company to use a forward-looking expected loss method, which may result in earlier recognition of allowances for losses and require expected credit losses to be reflected as allowances rather than reductions in the amortized cost basis of financial assets. For public entities, the standard is currently effective. As the Company will cease to be an EGC as of December 31, 2021, the Company will adopt the standard on December 31, 2021, with the initial application of ASC 326 beginning on January 1, 2021. The Company is evaluating the impact this guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASC 740”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related i) to the approach for intraperiod tax allocation, ii) the methodology for calculating income taxes in an interim period and iii) the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The standard is currently effective for publicly traded companies. As the Company will cease to be an EGC as of December 31, 2021, the Company will adopt the standard on December 31, 2021, with the initial application of the standard beginning on January 1, 2021. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. |
Revenue Recognition
Revenue Recognition | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Revenue Recognition | Revenue Recognition Disaggregation of Revenue The following table disaggregates revenue by service and timing of recognition (in thousands): Three Months Ended September 30, 2021 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 10,242 $ — $ — $ 10,242 Recognized over time — 886 146,764 147,650 Total $ 10,242 $ 886 $ 146,764 $ 157,892 Three Months Ended September 30, 2020 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 6,964 $ — $ — $ 6,964 Recognized over time — 950 122,753 123,703 Total $ 6,964 $ 950 $ 122,753 $ 130,667 Nine Months Ended September 30, 2021 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 27,652 $ — $ — $ 27,652 Recognized over time — 2,654 424,097 426,751 Total $ 27,652 $ 2,654 $ 424,097 $ 454,403 Nine Months Ended September 30, 2020 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 21,098 $ — $ — $ 21,098 Recognized over time — 2,347 356,348 358,695 Total $ 21,098 $ 2,347 $ 356,348 $ 379,793 The following table summarizes sales to customers by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 United States $ 110,273 $ 94,632 $ 317,892 $ 277,654 International 47,619 36,035 136,511 102,139 Total $ 157,892 $ 130,667 $ 454,403 $ 379,793 Revenue by geography is determined by the billing address for the customer. Contract Balances Contract assets represent amounts for which the Company has recognized revenue, generally for device sales or contracts which contain free subscription periods pursuant to its revenue recognition policy, for contracts that have not yet been fully invoiced to customers where there is a remaining performance obligation. Contract assets relate to contractual arrangements which contain both a subscription and a device, a free subscription period or a professional service performance obligation. Amounts are recorded as a current asset or a non-current asset based on the amounts anticipated to be billed within one year of the balance sheet date. Current contract assets of $10.4 million and $7.7 million were included in prepaid expenses and other current assets as of September 30, 2021 and December 31, 2020, respectively. Non-current contract assets of $10.3 million and $7.9 million were included in other assets as of September 30, 2021 and December 31, 2020, respectively. Contract liabilities consist of customer payments in advance of revenue being recognized. Amounts anticipated to be recognized within one year of the balance sheet date are recorded as deferred revenue, current and the remaining portion is recorded as deferred revenue, noncurrent on the condensed consolidated balance sheets. Deferred revenue as of September 30, 2021 and December 31, 2020, was $24.7 million (of which $3.1 million was classified as non-current) and $27.1 million (of which $3.3 million was classified as non-current), respectively. The following table summarizes the activity of the Company's current and noncurrent deferred revenue balances for the nine months ended September 30, 2020 (in thousands): Amount Balance at December 31, 2020 $ 27,085 Deferred revenue recognized (19,631) Amounts deferred 17,341 Foreign currency translation and other (53) Balance at September 30, 2021 $ 24,742 Contract Acquisition Costs The Company capitalizes commission expenses paid to internal sales personnel for obtaining customer contracts, using a portfolio approach. Contract acquisition costs are included in other assets on the condensed consolidated balance sheets. Contract acquisition costs as of September 30, 2021 and December 31, 2020 were $59.1 million and $48.2 million, respectively. Remaining Performance Obligations Revenues expected to be recognized in the future related to performance obligations that are unsatisfied at September 30, 2021 were approximately $354.4 million, of which greater than 50% is anticipated to be recognized in the next twelve months, with substantially all revenue related to performance obligations to be recognized within thirty-six months. The amount excludes month-to-month contracts. |
Inventory
Inventory | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Inventory | Inventory Inventory, net of the reserves for obsolescence, consisted of the following (in thousands): September 30, December 31, Components $ 22,578 $ 8,914 Work in progress 3,449 580 Finished goods 5,712 4,317 Total inventory $ 31,739 $ 13,811 |
Property and Equipment, Net
Property and Equipment, Net | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): Estimated September 30, December 31, Servers 3 - 5 $ 117,637 $ 96,048 Leasehold improvements (a) 31,365 32,455 Computer equipment 3 - 5 14,284 14,977 Internally developed software 3 13,254 7,811 Furniture and fixtures 5 5,807 6,305 Purchased software 3 1,149 999 Vehicles 5 134 103 Total property and equipment 183,630 158,698 Less: accumulated depreciation and amortization (83,210) (66,822) Total property and equipment, net $ 100,420 $ 91,876 (a) The shorter of the remaining lease term or useful life. The Company capitalized $5.4 million and $1.6 million of internally developed software costs during the nine months ended September 30, 2021 and 2020, respectively. Depreciation expense included in cost of revenue and operating expenses was $5.9 million and $2.1 million, respectively, for the three months ended September 30, 2021, and $4.4 million and $2.4 million, respectively, for the three months ended September 30, 2020. Depreciation expense included in cost of revenue and operating expenses was $17.1 million and $6.3 million, respectively, for the nine months ended September 30, 2021, and $12.2 million and $7.4 million, respectively, for the nine months ended September 30, 2020. |
Leases
Leases | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Leases | Leases The Company enters into operating leases from time to time, primarily for office space and co-located data centers. The Company’s leases have remaining lease terms which vary, up to approximately 8 years. These leases require monthly lease payments that may be subject to annual increases throughout the lease term. Certain of these leases also include options at the election of the Company to renew or extend the leases. The periods associated with these options to renew or extend have not been included in the determination of the ROU assets or lease liabilities associated with these leases as the Company did not consider it reasonably certain it would exercise the renewal options. For the three months ended September 30, 2021 and 2020, the Company recorded $2.4 million and $2.3 million, respectively, of operating lease costs in the condensed consolidated statements of operations. For the nine months ended September 30, 2021 and 2020, the Company recorded $7.1 million and $7.2 million, respectively, of operating lease costs in the condensed consolidated statements of operations. Variable lease costs, which are comprised primarily of the Company's proportionate share of operating expenses, property taxes, and insurance, were $0.6 million and $1.8 million, for the three and nine months ended September 30, 2021, respectively. Variable lease costs are not included in the measurement of the Company's ROU assets and lease liabilities. Cash paid for amounts related to operating lease liabilities for the nine months ended September 30, 2021 was $7.9 million. The following represents the Company's future minimum payments under non-cancelable operating leases as of September 30, 2021 (in thousands): Remaining 2021 $ 2,608 2022 9,756 2023 9,852 2024 8,944 2025 5,375 Thereafter 6,725 Total future undiscounted lease payments $ 43,260 Less imputed interest 3,470 Total reported lease liability $ 39,790 |
Acquisitions
Acquisitions | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Acquisitions | Acquisitions In March 2021, the Company acquired BitDam Ltd., an Israel-based cyber threat detection company (“BitDam”). The business combination was accounted for under the acquisition method of accounting. The consideration paid was allocated to the tangible and intangible assets acquired and liabilities assumed based on their fair values as of the acquisition date. As of September 30, 2021, the Company has performed a preliminary valuation of the assets acquired and liabilities assumed, including the fair value of acquired intangible assets. The preliminary valuation is subject to adjustment as the Company finalizes the allocation during the measurement period. The preliminary allocation of the purchase consideration is as follows (in thousands): Acquisition of BitDam Assets acquired Other current and noncurrent assets $ 63 Property and equipment 49 Finite lived intangible assets 27,400 Goodwill 23,155 Total assets acquired $ 50,667 Other current and noncurrent liabilities 879 Deferred tax liabilities 4,302 Total liabilities assumed $ 5,181 Purchase consideration, net of cash acquired $ 45,486 The finite lived intangible assets consist of acquired developed technology with an estimated life of 5 years. The Company has recorded $1.4 million and $2.8 million of amortization expense within cost of revenue for the three and nine months ended September 30, 2021, respectively, related to this asset. General and administrative expense within the condensed consolidated statements of operations includes $1.0 million of costs incurred in relation to the BitDam acquisition in the nine months ended September 30, 2021. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2021 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and ContingenciesLiabilities for loss contingencies arising from claims, assessments, litigation, fines, and penalties are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred. The Company believes there is no litigation or other liabilities for loss contingencies pending, individually or in the aggregate, that could have a material adverse effect on the Company’s financial position, results of operations, or cash flows. |
Debt
Debt | 9 Months Ended |
Sep. 30, 2021 | |
Debt Disclosure [Abstract] | |
Debt | Debt On October 23, 2020, Datto, Inc., as borrower (the “Borrower”), and certain of its direct and indirect wholly-owned subsidiaries of Datto (the “Guarantors,” and, together with the Borrower, the “Loan Parties”), entered into a new credit agreement with the lenders party thereto and Morgan Stanley Senior Funding, Inc., as administrative agent (the "2020 Credit Agreement"). The 2020 Credit Agreement is guaranteed by the “Guarantors” and is supported by a security interest in substantially all of the Loan Parties’ personal property and assets, subject to customary exceptions, as defined in the 2020 Credit Agreement. The 2020 Credit Agreement provides for an initial $200.0 million in commitments for revolving credit loans, which may be increased or decreased under specific circumstances, with a $40.0 million letter of credit sublimit and a $100.0 million alternative currency sublimit. In addition, the 2020 Credit Agreement provides for the ability of the Borrower to request term loan facilities. Borrowings pursuant to the 2020 Credit Agreement may be used for working capital and other general corporate purposes, including for acquisitions permitted under the 2020 Credit Agreement, and are scheduled to mature on October 23, 2025. The 2020 Credit Agreement contains certain customary representations and warranties and affirmative and negative covenants. At September 30, 2021, the Company was in compliance with all applicable covenants. The interest rates applicable to the revolving borrowings under the 2020 Credit Agreement, are, at the Borrower’s option, either (i) a base rate, equal to the greater of (a) the Prime Rate, (b) the Federal Funds Effective Rate plus 0.5% or (c) the Adjusted LIBO Rate for a one month Interest Period (each term as defined in the 2020 Credit Agreement) plus 1%, or (ii) the Adjusted LIBO Rate equal to the LIBO Rate for the applicable Interest Period, plus in the case of each of clauses (i) and (ii), the Applicable Rate (as defined in the 2020 Credit Agreement). The Applicable Rate (i) for base rate loans ranges from 0.25% to 1.0% per annum and (ii) for LIBO Rate loans ranges from 1.25% to 2.0% per annum, in each case, based on the Company's Senior Secured Net Leverage Ratio (as defined in the 2020 Credit Agreement). The 2020 Credit Agreement provides for a commitment fee ranging from 0.20% to 0.35% per annum of the average daily undrawn portion of the revolving commitments based on the Company's Senior Secured Net Leverage Ratio (as defined in the 2020 Credit Agreement). As of September 30, 2021 and December 31, 2020, the 2020 Credit Agreement was undrawn, with the exception of $1.9 million of outstanding letters of credit. The Company recorded amortization of the debt issuance costs and original issue discount of $0.1 million and $0.4 million as interest expense during the three months ended September 30, 2021 and 2020, respectively. The Company recorded amortization of the debt issuance costs and original issue discount of $0.3 million and $1.3 million as interest expense during the nine months ended September 30, 2021 and 2020, respectively. |
Stock-Based Compensation
Stock-Based Compensation | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation The Company has equity awards outstanding under various plans, as described further below. Datto 2020 Omnibus Incentive Plan In conjunction with the IPO, in October 2020, the Board adopted the Datto Holding Corp. Omnibus Incentive Plan (the “2020 Plan”) in order to align the interests of the participants with the interests of the Company's stockholders. The 2020 Plan provides for the grant of stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), bonus stock, dividend equivalents, other stock-based awards, substitute awards, annual incentive awards and performance awards to employees, consultants, and members of the Board. Authorized shares under the 2020 Plan automatically increase each January 1st by 5% of the outstanding number of shares of the Company's common stock on the immediately preceding December 31st, or such lesser number of shares as determined by the Board. See below for a reconciliation of shares of the Company’s common stock reserved for issuance under the 2020 Plan. Under the 2020 Plan, 4,068,399 RSUs and 80,000 stock options were outstanding as of September 30, 2021. 2017 Stock Option Plan In December 2017, the Company adopted the 2017 Stock Option Plan (the “2017 Plan”), as amended, which provides for grants of stock options to employees, directors, officers, and consultants. As of September 30, 2021, 7,314,484 stock options were outstanding under the 2017 Plan. No additional awards may be issued under the 2017 Plan. Other Equity Plans The Company also has outstanding options which were issued under the Autotask Superior Holdings 2013 Stock Option Plan (the “Autotask Plan”). As of September 30, 2021, 265,095 fully-vested stock options were outstanding under the Autotask Plan. No additional awards may be issued under the Autotask Plan. In addition, the Company has two other plans, which were adopted in relation to grants to independent members of the Board, prior to the adoption of the 2020 Plan. As of September 30, 2021, 11,719 RSUs were outstanding and no additional awards may be issued under these plans. Stock Options The following table summarizes stock option activity related to all plans during the nine months ended September 30, 2021 (in thousands, except share and per share amounts): Number of Weighted Weighted Aggregate Options outstanding at December 31, 2020 9,555,082 $ 10.49 7.5 $ 157,800 Options granted 80,000 $ 25.50 Options exercised (1,704,829) $ 9.86 Options forfeited & expired (270,674) $ 10.97 Options outstanding at September 30, 2021 7,659,579 $ 10.76 7.3 $ 100,738 Options vested and exercisable at September 30, 2021 4,509,837 $ 10.14 7.0 $ 62,067 The aggregate intrinsic value of stock options exercised during the nine months ended September 30, 2021 and 2020 was $27.7 million and $1.3 million, respectively. The weighted average fair value of options granted to purchase common stock during the nine months ended September 30, 2021 was $11.60. As of September 30, 2021, unrecognized compensation expense related to outstanding stock options was $27.0 million, which is expected to be recognized over the remaining weighted average term of 1.8 years. Restricted Stock Units The following table summarizes RSU activity under all plans during the nine months ended September 30, 2021: Number of Weighted RSUs outstanding at December 31, 2020 696,338 $ 26.73 RSUs granted 3,560,809 $ 25.83 RSUs vested (91,854) $ 25.10 RSUs forfeited (85,175) $ 26.17 RSUs outstanding at September 30, 2021 4,080,118 $ 25.99 As of September 30, 2021, unrecognized compensation expense related to outstanding RSUs was $95.1 million, which is expected to be recognized over the remaining weighted average term of 3.5 years. Shares Available for Future Grants The following table summarizes the shares available for future grants under the 2020 Plan: Shares Balance at December 31, 2020 20,195,974 Annual authorization increase 8,071,001 Options and RSUs granted (3,640,809) Options and RSUs forfeited or expired 86,346 Balance at September 30, 2021 24,712,512 Datto 2021 Employee Stock Purchase Plan In May 2021, shareholders approved the Datto Holding Corp. 2021 Employee Stock Purchase Plan (“ESPP”). The ESPP contains a component intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code (the “423 Component”) and a component primarily related to purchases by international employees. The ESPP provides all eligible Datto employees the opportunity to contribute up to 15% of their base earnings and other eligible compensation to purchase shares of Datto common stock. A participant can purchase a maximum of 1,000 shares of Datto common stock per biannual offering period, although participants in the 423 Component cannot purchase shares that would accrue at a rate which exceeds $25,000 of fair market value of Datto common stock (determined based on the fair market value on the first day of each offering period) for each calendar year. The purchase price is equal to 85% of the fair market value of Datto common stock on the first or last day of the offering period, whichever is lower. There are 3,221,541 shares available for issuance under the ESPP, although none were outstanding at September 30, 2021. The pool of shares available for issuance under the ESPP is subject to an annual increase on the first day of each year beginning on January 1, 2022 and annually thereafter ending in 2031 equal to the lesser of (i) 1% of all classes of the Company’s shares outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of shares as may be determined by the Board; provided, however, no more than 16,000,000 shares may be issued in total under the 423 Component. Approximately 0.2 million shares will be purchased at the end of the offering period in January 2022, based on the enrollment and stock price as of September 30, 2021. The Company has withheld $1.5 million on behalf of employees for these future purchases under the ESPP, which is included in accrued expenses and other current liabilities within the condensed consolidated balance sheets as of September 30, 2021. The fair value of shares issued under the ESPP is estimated on the grant date using the Black-Scholes option pricing model. As of September 30, 2021, unrecognized compensation expense related to the ESPP was $0.7 million, which is expected to be recognized over the remaining weighted average term of 0.3 years. Stock-Based Compensation Expense Stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenue—subscription $ 1,052 $ 77 $ 3,165 $ 118 Cost of revenue—device 43 — 150 — Cost of revenue—professional services and other (15) — 151 — Sales and marketing 2,354 524 6,491 1,803 Research and development 5,325 494 17,257 1,115 General and administrative 2,844 1,694 8,141 3,525 Total stock-based compensation expense $ 11,603 $ 2,789 $ 35,355 $ 6,561 |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesThe Company incurred a provision for income taxes of $1.8 million and $5.0 million for the three months ended September 30, 2021 and 2020, respectively. The effective tax rate for the three months ended September 30, 2021 was 11.7%, driven by the tax benefit related to employee stock option exercises. The Company incurred a provision for income taxes of $6.5 million and $8.7 million for the nine months ended September 30, 2021 and 2020, respectively. The effective tax rate for the nine months ended September 30, 2021 was 12.4%, reflecting the favorable impact of a change in tax law in the state of Connecticut resulting in the ability to utilize additional research and development credits generated in prior years, the tax benefit related to employee stock option exercises, and the favorable impact of an amendment to the Company's 2018 federal tax return resulting from clarification of certain tax guidance. |
Net Income per Share
Net Income per Share | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Net Income per Share | Net Income per Share Basic net income per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders is calculated by giving effect to all potential shares of common stock, including the Company's outstanding stock options, common stock related to unvested RSUs, and the estimated number of shares to be issued under the ESPP based upon the enrollment and stock price as of September 30, 2021, to the extent such potential shares are dilutive. For the purpose of computing diluted earnings per share, options with a performance-based vesting condition are considered contingently issuable, and such contingent shares are included in the denominator for computing diluted net income per share only once the performance condition is met, and only to the extent such options are dilutive. As described in Note 10. Stock-Based Compensation, the IPO Contingent Options contained a performance-vesting condition, and were only considered in computing diluted net income per share after the IPO in October of 2020. The calculation of basic and diluted income per share is as follows (in thousands, except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net income attributable to common stockholders $ 13,485 $ 19,546 $ 45,687 $ 29,666 Denominator: Weighted-average shares used in computing net income per share attributable to common stockholders Basic 162,424,260 135,553,097 161,657,479 135,496,696 Total dilutive effect of outstanding equity awards including the ESPP 3,824,681 3,037,673 3,826,231 1,510,225 Diluted 166,248,941 138,590,770 165,483,710 137,006,921 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.14 $ 0.28 $ 0.22 Diluted $ 0.08 $ 0.14 $ 0.28 $ 0.22 For the three and nine month periods ended September 30, 2021 there were 256,111 and 316,521, respectively, of weighted-average outstanding options to purchase shares excluded from the computation of diluted net income per share attributable to common stockholders for the period presented because including them would have been antidilutive. For the three and nine month periods ended September 30, 2020 there were 1,058,594 and 2,216,118, |
Restructuring
Restructuring | 9 Months Ended |
Sep. 30, 2021 | |
Restructuring and Related Activities [Abstract] | |
Restructuring | Restructuring In response to the COVID-19 pandemic, the Company undertook various measures during the second quarter of 2020 to mitigate the risk of potential reductions in revenue and delays or reductions in payments from the Company's customers. The measures included a focus on the Company's cost structure to match expenditures to its revised forecasts of revenue and cash generation activities at that time. As a result of these actions, the Company incurred approximately $3.8 million for restructuring activities in the second quarter of 2020, primarily related to severance for a reduction in workforce, including $0.6 million in cost of revenue and $3.2 million in operating expenses, all of which was paid as of December 31, 2020. |
Significant Accounting Polici_2
Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Principles of Consolidation | Basis of Presentation and Principles of ConsolidationDatto Holding owns 100% of Merritt Holdco, Inc. (“Merritt Holdco”), which owns 100% of Datto, Inc., the Company’s primary operating company. Datto Holding has no operations or significant assets or liabilities other than its investment in Merritt Holdco. Accordingly, Datto Holding is dependent upon distributions from Merritt Holdco to fund any activity, including the payment of dividends. All obligations under Datto’s 2020 Credit Agreement, as defined in Note 9. Debt, are guaranteed by Merritt Holdco and certain direct and indirect subsidiaries of Datto, Inc. The condensed consolidated financial statements include the accounts of Datto Holding and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, the Company evaluates its estimates and assumptions, including those related to revenue recognition, contract balances, contract acquisition costs, allowances for doubtful accounts, reserves for inventory obsolescence, useful lives and recoverability of long-lived assets, the incremental borrowing rate for operating leases, determining the fair value of assets acquired and liabilities assumed in business combinations, income taxes, stock-based compensation and contingencies. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including the uncertainty surrounding rapidly changing market and economic conditions from the COVID-19 pandemic. Actual results could materially differ from these estimates. With the exception of the adoption of the lease standard discussed below, there have been no material changes to the Company’s significant accounting policies. |
Foreign Currency Translation | Foreign Currency Translation The Company’s reporting currency is the U.S. Dollar. The functional currency of the Company's foreign subsidiaries is generally the local currency. Assets and liabilities are translated into U.S. Dollars at the exchange rates at the balance sheet date, equity accounts are translated at historical exchange rates and revenue, expenses, gains and losses are |
Cash and Cash Equivalents and Restricted Cash | Cash and Cash Equivalents and Restricted Cash Cash is stated at fair value. As of September 30, 2021 and December 31, 2020, the U.S. Dollar value of cash and restricted cash denominated in foreign currencies was $30.3 million and $28.1 million, respectively, comprised of various currencies in which the Company operates, including Euros, Australian Dollars and British Pounds. Cash equivalents consist of short-term, highly liquid investments with an original maturity of three months or earlier. The Company did not hold any cash equivalents as of September 30, 2021 or December 31, 2020. Restricted cash primarily includes amounts held by banks as security related to lease arrangements for office space. |
Accounts Receivable, Net | Accounts Receivable, Net Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Accounts receivable are presented net of an estimated allowance for doubtful accounts. The Company maintains an allowance for doubtful accounts based upon an analysis of past credit history and the current financial condition of the Company's partners, as well as the consideration of expected trends based upon characteristics of the accounts receivable and general economic conditions. The Company also considers other specific operational factors which may impact the Company's ability to collect past due amounts, including the impact of COVID-19. Account balances are written off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. |
Leases | Leases The Company determines if an arrangement is or contains a lease at inception by assessing whether the arrangement contains an identified asset and whether the Company has the right to control the identified asset. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments in order to obtain the right to use the asset over the lease term. Lease liabilities are recognized at the lease commencement date based on the present value of future lease payments over the lease term. The Company elected to combine lease and non-lease components for its office and equipment leases. ROU assets are based on the measurement of the lease liability and also include any lease prepayments and any initial direct costs incurred, offset by tenant incentives received by the Company. For leases with an initial term of 12 months or less, the Company does not recognize a ROU asset and corresponding lease liability. Rent expense for the Company’s operating leases is recognized on a straight-line basis over the lease term. |
Recently Adopted Accounting Pronouncements and Accounting Pronouncements Issued but Not Yet Adopted | Recently Adopted Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update ( “ ASU ” ) 2016-02, Leases (Topic 842), (“ASC 842”). ASC 842 amends a number of aspects of lease accounting under ASC Topic 840 — Leases (“ASC 840”), including requiring lessees to recognize almost all leases with a term greater than one year as an ROU asset and corresponding lease liability, measured at the present value of the lease payments. ASC 842 provides a number of optional practical expedients in transition. On January 1, 2021, the Company adopted ASC 842 using the modified retrospective approach, and elected the practical expedients to i) not reassess its prior conclusions about lease identification under the new standard, ii) not reassess lease classification, and iii) not reassess initial direct costs. The Company did not elect the practical expedient allowing the use-of-hindsight, which would require the Company to reassess the lease term of its leases based on all facts and circumstances through the effective date. Upon adoption of ASC 842 the Company recognized operating lease assets of $35.8 million and operating lease liabilities of $46.3 million at January 1, 2021. Prior period amounts were not restated and are reported in accordance with ASC 840. For a description of the Company’s leases, see Note 6. Leases. Accounting Pronouncements Issued but Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASC 326”) . This standard changes the impairment model for most financial assets, including trade receivables and financial instruments and will require the Company to use a forward-looking expected loss method, which may result in earlier recognition of allowances for losses and require expected credit losses to be reflected as allowances rather than reductions in the amortized cost basis of financial assets. For public entities, the standard is currently effective. As the Company will cease to be an EGC as of December 31, 2021, the Company will adopt the standard on December 31, 2021, with the initial application of ASC 326 beginning on January 1, 2021. The Company is evaluating the impact this guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASC 740”), which simplifies the accounting for income taxes by eliminating certain exceptions to the guidance in ASC 740 related i) to the approach for intraperiod tax allocation, ii) the methodology for calculating income taxes in an interim period and iii) the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The standard is currently effective for publicly traded companies. As the Company will cease to be an EGC as of December 31, 2021, the Company will adopt the standard on December 31, 2021, with the initial application of the standard beginning on January 1, 2021. Upon adoption, the Company must apply certain aspects of this standard retrospectively for all periods presented while other aspects are applied on a modified retrospective basis through a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The Company is currently evaluating the impact this guidance will have on the Company’s consolidated financial statements. |
Net Income per Share | Net Income per ShareBasic net income per share attributable to common stockholders is calculated by dividing the net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the period. Diluted net income per share attributable to common stockholders is calculated by giving effect to all potential shares of common stock, including the Company's outstanding stock options, common stock related to unvested RSUs, and the estimated number of shares to be issued under the ESPP based upon the enrollment and stock price as of September 30, 2021, to the extent such potential shares are dilutive. For the purpose of computing diluted earnings per share, options with a performance-based vesting condition are considered contingently issuable, and such contingent shares are included in the denominator for computing diluted net income per share only once the performance condition is met, and only to the extent such options are dilutive. |
Significant Accounting Polici_3
Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Accounting Policies [Abstract] | |
Summary of Allowance for Doubtful Accounts | The following table summarizes the activity of the allowance for doubtful accounts (in thousands): Amount Balance as of December 31, 2020 $ 5,485 Provision for bad debt 2,630 Net reductions and other (2,495) Balance as of September 30, 2021 $ 5,620 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Revenue from Contract with Customer [Abstract] | |
Summary of Disaggregation Revenue | The following table disaggregates revenue by service and timing of recognition (in thousands): Three Months Ended September 30, 2021 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 10,242 $ — $ — $ 10,242 Recognized over time — 886 146,764 147,650 Total $ 10,242 $ 886 $ 146,764 $ 157,892 Three Months Ended September 30, 2020 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 6,964 $ — $ — $ 6,964 Recognized over time — 950 122,753 123,703 Total $ 6,964 $ 950 $ 122,753 $ 130,667 Nine Months Ended September 30, 2021 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 27,652 $ — $ — $ 27,652 Recognized over time — 2,654 424,097 426,751 Total $ 27,652 $ 2,654 $ 424,097 $ 454,403 Nine Months Ended September 30, 2020 Device Professional Subscription Total Timing of revenue recognition: Recognized at a point in time $ 21,098 $ — $ — $ 21,098 Recognized over time — 2,347 356,348 358,695 Total $ 21,098 $ 2,347 $ 356,348 $ 379,793 |
Summary of Disaggregation Revenue By Geography | The following table summarizes sales to customers by geography (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 United States $ 110,273 $ 94,632 $ 317,892 $ 277,654 International 47,619 36,035 136,511 102,139 Total $ 157,892 $ 130,667 $ 454,403 $ 379,793 |
Summary of Contract Liability and Contract Asset | The following table summarizes the activity of the Company's current and noncurrent deferred revenue balances for the nine months ended September 30, 2020 (in thousands): Amount Balance at December 31, 2020 $ 27,085 Deferred revenue recognized (19,631) Amounts deferred 17,341 Foreign currency translation and other (53) Balance at September 30, 2021 $ 24,742 |
Inventory (Tables)
Inventory (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Inventory Disclosure [Abstract] | |
Summary of Composition of Inventories | Inventory, net of the reserves for obsolescence, consisted of the following (in thousands): September 30, December 31, Components $ 22,578 $ 8,914 Work in progress 3,449 580 Finished goods 5,712 4,317 Total inventory $ 31,739 $ 13,811 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Property, Plant and Equipment [Abstract] | |
Summary of Property and Equipment, Net | Property and equipment, net, consisted of the following (in thousands): Estimated September 30, December 31, Servers 3 - 5 $ 117,637 $ 96,048 Leasehold improvements (a) 31,365 32,455 Computer equipment 3 - 5 14,284 14,977 Internally developed software 3 13,254 7,811 Furniture and fixtures 5 5,807 6,305 Purchased software 3 1,149 999 Vehicles 5 134 103 Total property and equipment 183,630 158,698 Less: accumulated depreciation and amortization (83,210) (66,822) Total property and equipment, net $ 100,420 $ 91,876 (a) The shorter of the remaining lease term or useful life. |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Leases [Abstract] | |
Schedule of Future Minimum Payments Under Non-Cancelable Operating Leases | The following represents the Company's future minimum payments under non-cancelable operating leases as of September 30, 2021 (in thousands): Remaining 2021 $ 2,608 2022 9,756 2023 9,852 2024 8,944 2025 5,375 Thereafter 6,725 Total future undiscounted lease payments $ 43,260 Less imputed interest 3,470 Total reported lease liability $ 39,790 |
Acquisitions (Tables)
Acquisitions (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Business Acquisition | The preliminary allocation of the purchase consideration is as follows (in thousands): Acquisition of BitDam Assets acquired Other current and noncurrent assets $ 63 Property and equipment 49 Finite lived intangible assets 27,400 Goodwill 23,155 Total assets acquired $ 50,667 Other current and noncurrent liabilities 879 Deferred tax liabilities 4,302 Total liabilities assumed $ 5,181 Purchase consideration, net of cash acquired $ 45,486 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Share-based Payment Arrangement [Abstract] | |
Summary of Stock Option Activity | The following table summarizes stock option activity related to all plans during the nine months ended September 30, 2021 (in thousands, except share and per share amounts): Number of Weighted Weighted Aggregate Options outstanding at December 31, 2020 9,555,082 $ 10.49 7.5 $ 157,800 Options granted 80,000 $ 25.50 Options exercised (1,704,829) $ 9.86 Options forfeited & expired (270,674) $ 10.97 Options outstanding at September 30, 2021 7,659,579 $ 10.76 7.3 $ 100,738 Options vested and exercisable at September 30, 2021 4,509,837 $ 10.14 7.0 $ 62,067 |
Schedule of RSU Activity | The following table summarizes RSU activity under all plans during the nine months ended September 30, 2021: Number of Weighted RSUs outstanding at December 31, 2020 696,338 $ 26.73 RSUs granted 3,560,809 $ 25.83 RSUs vested (91,854) $ 25.10 RSUs forfeited (85,175) $ 26.17 RSUs outstanding at September 30, 2021 4,080,118 $ 25.99 |
Summary of the Options Available for Future Grants | The following table summarizes the shares available for future grants under the 2020 Plan: Shares Balance at December 31, 2020 20,195,974 Annual authorization increase 8,071,001 Options and RSUs granted (3,640,809) Options and RSUs forfeited or expired 86,346 Balance at September 30, 2021 24,712,512 |
Summary of Stock-based Compensation Expense | Stock-based compensation expense for the three and nine months ended September 30, 2021 and 2020 was as follows (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Cost of revenue—subscription $ 1,052 $ 77 $ 3,165 $ 118 Cost of revenue—device 43 — 150 — Cost of revenue—professional services and other (15) — 151 — Sales and marketing 2,354 524 6,491 1,803 Research and development 5,325 494 17,257 1,115 General and administrative 2,844 1,694 8,141 3,525 Total stock-based compensation expense $ 11,603 $ 2,789 $ 35,355 $ 6,561 |
Net Income per Share (Tables)
Net Income per Share (Tables) | 9 Months Ended |
Sep. 30, 2021 | |
Earnings Per Share [Abstract] | |
Summary of Net Income (Loss) per Share | The calculation of basic and diluted income per share is as follows (in thousands, except share and per share amounts): Three Months Ended September 30, Nine Months Ended September 30, 2021 2020 2021 2020 Numerator: Net income attributable to common stockholders $ 13,485 $ 19,546 $ 45,687 $ 29,666 Denominator: Weighted-average shares used in computing net income per share attributable to common stockholders Basic 162,424,260 135,553,097 161,657,479 135,496,696 Total dilutive effect of outstanding equity awards including the ESPP 3,824,681 3,037,673 3,826,231 1,510,225 Diluted 166,248,941 138,590,770 165,483,710 137,006,921 Net income per share attributable to common stockholders Basic $ 0.08 $ 0.14 $ 0.28 $ 0.22 Diluted $ 0.08 $ 0.14 $ 0.28 $ 0.22 |
Business - Additional informati
Business - Additional information (Detail) - USD ($) $ / shares in Units, $ in Thousands | Nov. 03, 2020 | Oct. 23, 2020 | Sep. 30, 2021 | Sep. 30, 2020 |
Nature Of Business [Line Items] | ||||
Payments of stock issuance costs | $ 684 | $ 980 | ||
2020 Credit Agreement | ||||
Nature Of Business [Line Items] | ||||
Payments related to debt issuance costs | $ 1,200 | |||
Term Loan Facility | 2019 Credit Agreement | ||||
Nature Of Business [Line Items] | ||||
Repayments of debt | $ 590,200 | |||
Vista | ||||
Nature Of Business [Line Items] | ||||
Entity ownership percentage by parent | 69.90% | |||
IPO | ||||
Nature Of Business [Line Items] | ||||
Stock issued during the period shares | 3,300,000 | 22,000,000 | ||
Shares issued price per share | $ 27 | $ 27 | ||
Proceeds from sale of stock | $ 83,600 | $ 558,000 | ||
Payments of stock issuance costs | $ 5,300 |
Significant Accounting Polici_4
Significant Accounting Policies - Additional Information (Detail) - USD ($) $ in Thousands | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Jan. 01, 2021 | Dec. 31, 2020 | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Foreign currency transaction gain (loss), unrealized | $ (300) | $ 1,000 | ||
Unbilled accounts receivable current | 1,700 | $ 3,000 | ||
Operating lease assets | 30,290 | 0 | ||
Operating lease liabilities | $ 39,790 | |||
Merrit Holdco | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Ownership percentage | 100.00% | |||
Datto, Inc. | Merrit Holdco | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Ownership percentage | 100.00% | |||
International | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Cash and restricted cash | $ 30,300 | $ 28,100 | ||
ASU 2016-02 | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Operating lease assets | $ 35,800 | |||
Operating lease liabilities | $ 46,300 |
Significant Accounting Polici_5
Significant Accounting Policies - Summary of Allowance for Doubtful Accounts (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Sep. 30, 2020 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance as of December 31, 2020 | $ 5,485 | |
Provision for bad debt | 2,630 | $ 4,793 |
Net reductions and other | (2,495) | |
Balance as of September 30, 2021 | $ 5,620 |
Revenue Recognition - Disaggreg
Revenue Recognition - Disaggregation Revenue by Service (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 157,892 | $ 130,667 | $ 454,403 | $ 379,793 |
Recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,242 | 6,964 | 27,652 | 21,098 |
Recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 147,650 | 123,703 | 426,751 | 358,695 |
Device | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,242 | 6,964 | 27,652 | 21,098 |
Device | Recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 10,242 | 6,964 | 27,652 | 21,098 |
Device | Recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Professional Services | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 886 | 950 | 2,654 | 2,347 |
Professional Services | Recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Professional Services | Recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 886 | 950 | 2,654 | 2,347 |
Subscription | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 146,764 | 122,753 | 424,097 | 356,348 |
Subscription | Recognized at a point in time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 0 | 0 | 0 | 0 |
Subscription | Recognized over time | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 146,764 | $ 122,753 | $ 424,097 | $ 356,348 |
Revenue Recognition - Disaggr_2
Revenue Recognition - Disaggregation Revenue By Geography (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 157,892 | $ 130,667 | $ 454,403 | $ 379,793 |
United States | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 110,273 | 94,632 | 317,892 | 277,654 |
International | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 47,619 | $ 36,035 | $ 136,511 | $ 102,139 |
Revenue Recognition - Additiona
Revenue Recognition - Additional Information (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Revenue from Contract with Customer [Abstract] | ||
Contract with customer, asset, current | $ 10,400 | $ 7,700 |
Contract with customer, asset, non current | 10,300 | 7,900 |
Contract with customer, liability | 24,742 | 27,085 |
Contract with customer, liability, noncurrent | 3,108 | 3,322 |
Contract acquisition costs | $ 59,100 | $ 48,200 |
Revenue Recognition - Current a
Revenue Recognition - Current and Noncurrent Deferred Revenue (Detail) $ in Thousands | 9 Months Ended |
Sep. 30, 2021USD ($) | |
Change in Contract with Customer, Liability [Roll Forward] | |
Balance at December 31, 2020 | $ 27,085 |
Deferred revenue recognized | (19,631) |
Amounts deferred | 17,341 |
Foreign currency translation and other | (53) |
Balance at September 30, 2021 | $ 24,742 |
Revenue Recognition - Remaining
Revenue Recognition - Remaining Performance Obligations (Detail) $ in Millions | Sep. 30, 2021USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligations | $ 354.4 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2021-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligations, percentage | 50.00% |
Remaining unsatisfied performance obligation, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining unsatisfied performance obligations, percentage | 50.00% |
Remaining unsatisfied performance obligation, period | 24 months |
Inventory - Summary of Composit
Inventory - Summary of Composition of Inventories (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Dec. 31, 2020 |
Inventory Disclosure [Abstract] | ||
Components | $ 22,578 | $ 8,914 |
Work in progress | 3,449 | 580 |
Finished goods | 5,712 | 4,317 |
Total inventory | $ 31,739 | $ 13,811 |
Property and Equipment, Net - S
Property and Equipment, Net - Summary of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2021 | Dec. 31, 2020 | |
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 183,630 | $ 158,698 |
Less: accumulated depreciation and amortization | (83,210) | (66,822) |
Total property and equipment, net | 100,420 | 91,876 |
Servers | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 117,637 | 96,048 |
Servers | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (in Years) | 3 years | |
Servers | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (in Years) | 5 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 31,365 | 32,455 |
Computer equipment | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 14,284 | 14,977 |
Computer equipment | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (in Years) | 3 years | |
Computer equipment | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated Useful Life (in Years) | 5 years | |
Internally developed software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 13,254 | 7,811 |
Estimated Useful Life (in Years) | 3 years | |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 5,807 | 6,305 |
Estimated Useful Life (in Years) | 5 years | |
Purchased software | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 1,149 | 999 |
Estimated Useful Life (in Years) | 3 years | |
Vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Total property and equipment | $ 134 | $ 103 |
Estimated Useful Life (in Years) | 5 years |
Property and Equipment, Net - A
Property and Equipment, Net - Additional information (Detail) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Property, Plant and Equipment [Abstract] | ||||
Capitalization of internally developed software costs | $ 5.4 | $ 1.6 | ||
Depreciation, cost of revenue | $ 5.9 | $ 4.4 | 17.1 | 12.2 |
Depreciation, operating expense | $ 2.1 | $ 2.4 | $ 6.3 | $ 7.4 |
Leases - Additional Information
Leases - Additional Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | |
Leases [Abstract] | |||||
Remaining lease terms (years) | 8 years | 8 years | |||
Operating lease costs | $ 2,400 | $ 2,300 | $ 7,100 | $ 7,200 | |
Variable lease costs | $ 600 | 1,800 | |||
Operating cash flows from operating leases | $ 7,900 | ||||
Weighted average remaining lease term (years) | 4 years 10 months 24 days | 4 years 10 months 24 days | |||
Weighted average discount rate, percent | 3.30% | 3.30% | |||
Right-of-use assets | $ 30,290 | $ 30,290 | $ 0 | ||
Operating lease liabilities, current | 9,000 | 9,000 | |||
Operating lease liabilities, noncurrent | $ 30,849 | $ 30,849 | $ 0 |
Leases - Future Minimum Payment
Leases - Future Minimum Payments Under Non-Cancelable Operating Leases (Details) $ in Thousands | Sep. 30, 2021USD ($) |
Leases [Abstract] | |
Remaining 2021 | $ 2,608 |
2022 | 9,756 |
2023 | 9,852 |
2024 | 8,944 |
2025 | 5,375 |
Thereafter | 6,725 |
Total future undiscounted lease payments | 43,260 |
Less imputed interest | 3,470 |
Total reported lease liability | $ 39,790 |
Acquisitions - Business Acquisi
Acquisitions - Business Acquisitions (Detail) - USD ($) $ in Thousands | Sep. 30, 2021 | Mar. 31, 2021 | Dec. 31, 2020 |
Business Combination, Provisional Information [Abstract] | |||
Goodwill | $ 1,144,496 | $ 1,120,954 | |
BitDam | |||
Business Combination, Provisional Information [Abstract] | |||
Other current and noncurrent assets | $ 63 | ||
Property and equipment | 49 | ||
Finite lived intangible assets | 27,400 | ||
Goodwill | 23,155 | ||
Total assets acquired | 50,667 | ||
Other current and noncurrent liabilities | 879 | ||
Deferred tax liabilities | 4,302 | ||
Total liabilities assumed | 5,181 | ||
Purchase consideration, net of cash acquired | $ 45,486 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | |
Jul. 31, 2020USD ($)businessAcquired | Sep. 30, 2021USD ($) | Sep. 30, 2021USD ($) | Sep. 30, 2020USD ($) | |
Acquisitions [Line Items] | ||||
Estimated amortization | $ 19,981 | $ 16,731 | ||
Acquisitions purchase price | 45,486 | $ 4,371 | ||
BitDam | ||||
Acquisitions [Line Items] | ||||
Estimated amortization | $ 1,400 | 2,800 | ||
Costs incurred | $ 1,000 | $ 1,000 | ||
BitDam | Developed Technology Rights | ||||
Acquisitions [Line Items] | ||||
Useful life of intangible asset | 5 years | |||
Gluh | ||||
Acquisitions [Line Items] | ||||
Number of business acquired | businessAcquired | 2 | |||
Acquisitions purchase price | $ 4,400 | |||
Purchase price prior to certain closing adjustments | $ 4,000 |
Debt (Detail)
Debt (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | |||||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | Dec. 31, 2020 | Oct. 31, 2020 | Oct. 23, 2020 | |
Line of Credit Facility [Line Items] | |||||||
Amortization of debt issuance costs | $ 100,000 | $ 400,000 | $ 300,000 | $ 1,300,000 | |||
2020 Credit Agreement | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Commitment fee, percent | 0.20% | ||||||
2020 Credit Agreement | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Commitment fee, percent | 0.35% | ||||||
2020 Credit Agreement | Federal Funds Effective Rate | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 0.50% | ||||||
2020 Credit Agreement | LIBOR | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 1.00% | ||||||
2020 Credit Agreement | LIBOR | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 1.25% | ||||||
2020 Credit Agreement | LIBOR | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 2.00% | ||||||
2020 Credit Agreement | Base Rate | Minimum | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 0.25% | ||||||
2020 Credit Agreement | Base Rate | Maximum | |||||||
Line of Credit Facility [Line Items] | |||||||
Interest rate, percent | 1.00% | ||||||
Revolving Credit Facility | 2020 Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit maximum borrowing capacity | $ 200,000,000 | ||||||
Letters of credit | $ 1,900,000 | $ 1,900,000 | $ 1,900,000 | ||||
Revolving Credit Facility | 2019 Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit maximum borrowing capacity | $ 50,000,000 | ||||||
Letter of Credit | 2020 Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit maximum borrowing capacity | 40,000,000 | ||||||
Alternative Currency | 2020 Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Line of credit maximum borrowing capacity | $ 100,000,000 | ||||||
Term Loan Facility | 2019 Credit Agreement | |||||||
Line of Credit Facility [Line Items] | |||||||
Debt instrument, face amount | $ 550,000,000 |
Stock-Based Compensation - Addi
Stock-Based Compensation - Additional Information (Detail) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021USD ($)stockOptionPlanshares | Sep. 30, 2021USD ($)stockOptionPlan$ / sharesshares | Sep. 30, 2020USD ($) | Dec. 31, 2020shares | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding (in shares) | 7,659,579 | 7,659,579 | 9,555,082 | |
Aggregate intrinsic value of stock options exercised | $ | $ 27,700,000 | $ 1,300,000 | ||
Weighted average fair value of options granted (in usd per share) | $ / shares | $ 11.60 | |||
Unrecognized compensation expense | $ | $ 27,000,000 | $ 27,000,000 | ||
Recognized over the remaining weighted-average vesting term (years) | 1 year 9 months 18 days | |||
Shares to be repurchased at the end of the offering period (shares) | 200,000 | |||
2020 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized, annual increase, percentage | 5.00% | |||
Non-option equity instruments, outstanding (in shares) | 4,068,399 | 4,068,399 | ||
Options outstanding (in shares) | 80,000 | 80,000 | ||
2017 Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Options outstanding (in shares) | 7,314,484 | 7,314,484 | ||
Autotask Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-option equity instruments, outstanding (in shares) | 265,095 | 265,095 | ||
Stock Option Plans Prior to 2020 Plan Adoption | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Non-option equity instruments, outstanding (in shares) | 11,719 | 11,719 | ||
Number of stock option plans | stockOptionPlan | 2 | 2 | ||
Restricted Stock Units | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recognized over the remaining weighted-average vesting term (years) | 3 years 6 months | |||
Unrecognized compensation expense | $ | $ 95,100,000 | $ 95,100,000 | ||
Employee Stock | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Recognized over the remaining weighted-average vesting term (years) | 3 months 18 days | |||
Amount withheld for tax withhold obligation | $ | 1,500,000 | $ 1,500,000 | ||
Unrecognized compensation expense | $ | $ 700,000 | $ 700,000 | ||
Employee Stock | Employee Stock Purchase Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Shares authorized, annual increase, percentage | 1.00% | |||
Non-option equity instruments, outstanding (in shares) | 0 | 0 | ||
Maximum employee subscription rate, percent | 15.00% | 15.00% | ||
Maximum number of shares per offering period, per employee | 1,000 | 1,000 | ||
Maximum common stock value per employee | $ | $ 25,000 | $ 25,000 | ||
Purchase price of common stock, percent | 85.00% | |||
Shares authorized (in shares) | 3,221,541 | 3,221,541 | ||
Maximum common stock capital shares available for future issuance | 16,000,000 | 16,000,000 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Detail) - USD ($) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2021 | Dec. 31, 2020 | |
Number of Shares | ||
Options outstanding at December 31, 2020 (in shares) | 9,555,082 | |
Options granted (in shares) | 80,000 | |
Options exercised (in shares) | (1,704,829) | |
Options forfeited & expired (in shares) | (270,674) | |
Options outstanding at September 30, 2021 (in shares) | 7,659,579 | 9,555,082 |
Options vested and exercisable (in shares) | 4,509,837 | |
Weighted Average Exercise Price | ||
Options outstanding at December 31, 2020 (in usd per share) | $ 10.49 | |
Options granted (in usd per share) | 25.50 | |
Options exercised (in usd per share) | 9.86 | |
Options forfeited & expired (in usd per share) | 10.97 | |
Options outstanding at September 30, 2021 (in usd per share) | 10.76 | $ 10.49 |
Options vested and exercisable (in usd per share) | $ 10.14 | |
Weighted Average Remaining Contractual Life (Years), Options outstanding | 7 years 3 months 18 days | 7 years 6 months |
Weighted Average Remaining Contractual Life (Years), Options vested and exercisable | 7 years | |
Aggregate Intrinsic Value, Options outstanding | $ 100,738 | $ 157,800 |
Aggregate Intrinsic Value, Options vested and exercisable | $ 62,067 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units Activity (Detail) - Restricted Stock Units | 9 Months Ended |
Sep. 30, 2021$ / sharesshares | |
Number of Shares | |
RSUs outstanding at December 31, 2020 (in shares) | shares | 696,338 |
RSUs granted (in shares) | shares | 3,560,809 |
RSUs vested (in shares) | shares | (91,854) |
RSUs forfeited (in shares) | shares | (85,175) |
RSUs outstanding at September 30, 2021 (in shares) | shares | 4,080,118 |
Weighted Average Grant Date Fair Value | |
RSUs outstanding at December 31, 2020 (in usd per share) | $ / shares | $ 26.73 |
RSUs granted (in usd per share) | $ / shares | 25.83 |
RSUs vested (in usd per share) | $ / shares | 25.10 |
RSUs forfeited (in usd per share) | $ / shares | 26.17 |
RSUs outstanding at September 30, 2021 (in usd per share) | $ / shares | $ 25.99 |
Stock-Based Compensation - Opti
Stock-Based Compensation - Options Available For Future Grants (Detail) - 2020 Plan | 9 Months Ended |
Sep. 30, 2021shares | |
Share-Based Compensation Arrangement By Share-Based Payment Award, Shares Available for Grant [Roll Forward] | |
Balance at December 31, 2020 (in shares) | 20,195,974 |
Annual authorization increase (in shares) | 8,071,001 |
Options and RSUs granted (in shares) | (3,640,809) |
Options and RSUs forfeited, expired and repurchased (in shares) | 86,346 |
Balance at September 30, 2021 (in shares) | 24,712,512 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-based Compensation Expense (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 11,603 | $ 2,789 | $ 35,355 | $ 6,561 |
Cost of revenue | Subscription | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 1,052 | 77 | 3,165 | 118 |
Cost of revenue | Device | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 43 | 0 | 150 | 0 |
Cost of revenue | Professional services and other | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | (15) | 0 | 151 | 0 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 2,354 | 524 | 6,491 | 1,803 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | 5,325 | 494 | 17,257 | 1,115 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Stock-based compensation expense | $ 2,844 | $ 1,694 | $ 8,141 | $ 3,525 |
Income Taxes (Detail)
Income Taxes (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Income Tax Disclosure [Abstract] | ||||
Provision for (benefit from) income taxes | $ 1,787 | $ 4,962 | $ 6,461 | $ 8,727 |
Effective tax rate | 11.70% | 12.40% |
Net Income per Share - Summary
Net Income per Share - Summary of Net Income (Loss) per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Sep. 30, 2021 | Jun. 30, 2021 | Mar. 31, 2021 | Sep. 30, 2020 | Jun. 30, 2020 | Mar. 31, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Numerator: | ||||||||
Net income attributable to common stockholders | $ 13,485 | $ 16,916 | $ 15,286 | $ 19,546 | $ 8,767 | $ 1,353 | $ 45,687 | $ 29,666 |
Weighted-average shares used in computing net income per share attributable to common stockholders | ||||||||
Basic (in shares) | 162,424,260 | 135,553,097 | 161,657,479 | 135,496,696 | ||||
Total dilutive effect of outstanding equity awards including the ESPP (in shares) | 3,824,681 | 3,037,673 | 3,826,231 | 1,510,225 | ||||
Diluted (in shares) | 166,248,941 | 138,590,770 | 165,483,710 | 137,006,921 | ||||
Net income per share attributable to common stockholders | ||||||||
Basic (in usd per share) | $ 0.08 | $ 0.14 | $ 0.28 | $ 0.22 | ||||
Diluted (in usd per share) | $ 0.08 | $ 0.14 | $ 0.28 | $ 0.22 |
Net Income per Share - Addition
Net Income per Share - Additional Information (Detail) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2021 | Sep. 30, 2020 | Sep. 30, 2021 | Sep. 30, 2020 | |
Earnings Per Share [Abstract] | ||||
Antidilutive securities excluded from computation of earnings per share | 256,111 | 1,058,594 | 316,521 | 2,216,118 |
Restructuring - Additional info
Restructuring - Additional information (Detail) $ in Millions | 9 Months Ended |
Sep. 30, 2020USD ($) | |
Restructuring Charges | |
Restructuring charges | $ 3.8 |
Cost of revenue | |
Restructuring Charges | |
Restructuring charges | 0.6 |
Operating Expense | |
Restructuring Charges | |
Restructuring charges | $ 3.2 |