April 6, 2020
Tim Weller
Chief Executive Officer
Datto Holding Corp.
101 Merritt 7
Norwalk, CT 06851
Re: Datto Holding Corp.
Amendment No. 2 to Draft Registration Statement on Form S-1
Submitted March 23, 2020
CIK No. 0001724570
Dear Mr. Weller:
We have reviewed your amended draft registration statement and have the
following
comments. In some of our comments, we may ask you to provide us with
information so we
may better understand your disclosure.
Please respond to this letter by providing the requested information and
either submitting
an amended draft registration statement or publicly filing your registration
statement on
EDGAR. If you do not believe our comments apply to your facts and circumstances
or do not
believe an amendment is appropriate, please tell us why in your response.
After reviewing the information you provide in response to these comments
and your
amended draft registration statement or filed registration statement, we may
have additional
comments. References to our prior comments refer to our letter dated February
14, 2020.
Amendment No 2 to Draft Registration Statement on Form S-1
Management's Discussion and Analysis of Financial Condition and Results of
Operations
Overview, page 73
1. You state in your risk factor disclosures that COVID-19 will disrupt
your operations and
the operations of your MSP partners and their SMB customers for an
indefinite period of
time. You further state that COVID-19 will adversely impact your
business, financial
condition or results of operations. Please revise your MD&A and
liquidity disclosures to
address the reasonably known effect that the Coronavirus pandemic may
have your
financial condition, operating results and/or liquidity. In this regard,
we note that MSP
partners may renew their annual subscriptions for month-to-month terms
and currently
approximately 35% of your revenues are derived from such contracts that
can be cancelled
Tim Weller
FirstName LastNameTim Weller
Datto Holding Corp.
Comapany NameDatto Holding Corp.
April 6, 2020
April 2 2020 Page 2
Page 6,
FirstName LastName
at any time. Refer to Item 303(a) of Regulation S-K and SEC Release
No. 33-8350. For
additional guidance, please refer to CF Disclosure Guidance: Topic No.
9 available on our
website at https://www.sec.gov/corpfin/coronavirus-covid-19.
Key Performance Metrics, page 77
2. We note your revised disclosure in response to prior comment 3. Please
further revise to
disclose the dollar-based gross retention rate and the percentage of
month-to-month
contracts included in your ARR calculations for fiscal 2018.
Results of Operations for the Years Ended December 31, 2018 and December 31,
2019, page 84
3. We note that the key performance indicators used to evaluate your
business include the
number of MSP partners and dollar-based net retention rate. Please
revise to clarify how
such measures impacted your revenue growth. In this regard, consider
including a
quantified discussion of the dollar or percentage change in revenue
due to the acquisition
of new customers versus the retention and expansion of customers.
Refer to Item
303(a)(3) of Regulation S-K and Section III.D of SEC Release No.
33-6835.
Liquidity and Capital Resources
Term Loan and Revolving Loan Facilties, page 87
4. Please revise to clarify the terms of the accordion feature included
with your 2019 Credit
Agreement. In this regard, explain under what circumstances the credit
facility can be
increased and disclose what amount, if any, is currently available
under such feature.
Note 2. Significant Accounting Policies
Unaudited Pro Forma Financial Information, page F-9
5. We note you intend to present pro forma balance sheet and pro forma
per share
information on the face of the audited financial statements. Please
address the following
as it relates to such disclosures:
Remove any adjustment related to the use of proceeds from this
offering, such as for
the repayment of debt, from the face of the audited financial
statements.
You state that contingently issuable IPO option shares are included
in the
denominator for computing dilutive net earnings per share to the
extent such options
"are anti-dilutive." Please clarify whether you intended to state
to the extent such
options are not anti-dilutive and if so, revise accordingly.
You state that for the purpose of determining pro-forma earnings per
share,
IPO options were considered as potentially dilutive securities,
but the impact was
anti-dilutive as you incurred a loss for the period. However, we
note that you have
included a placeholder in Note 15 for the assumed vesting of IPO
options. Please tell
us whether you intend to adjust your pro forma weighted shares
outstanding for IPO
options and revise your disclosures as necessary, either here or
in Note 15, to clarify
your intent.
Tim Weller
Datto Holding Corp.
April 6, 2020
Page 3
You may contact Kathleen Collins, Accounting Branch Chief, at (202)
551-3499 if you
have questions regarding comments on the financial statements and related
matters. Please
contact Edwin Kim, Attorney-Advisor, at (202) 551-3297 or Larry Spirgel, Office
Chief, at (202)
551-3815 with any other questions.
Sincerely,
FirstName LastNameTim Weller
Division of
Corporation Finance
Comapany NameDatto Holding Corp.
Office of Technology
April 6, 2020 Page 3
cc: Robert E. Goedert, P.C.
FirstName LastName