2020 was a strong year for Datto, and an expanded focus on the cloud and security will lead the company to new heights in the coming year, Datto CEO Tim Weller said.
“Our commitment to the MSP opportunity has never been higher as SMBs continue to accelerate the digital transformation,” Weller told investors during the call for the fourth quarter 2020 financial analyst conference the company Thursday.
[Related: Datto CEO Tim Weller: IPO’s ‘MSP’ Ticker Symbol A ‘Shout-Out’ To Our Partners]
Weller also used the conference call to provide details about acquiring Datto from BitDam, a developer of Advanced Risk Protection (ATP) technology which he said offers complete protection against malware, phishing, co-attacks business email configuration, account negotiation and spam.
Datto in the autumn became a public company with the stock ticker “MSP” in what Weller said at the time to CRN as a shout out to the company’s customer base, who are just MSPs.
With its global MSP ecosystem, Datto is in a position to take advantage of the global opportunities that lie ahead in 2021, particularly in two key areas, Weller said during his prepared remarks.
“Cloud and security issues will be the focus areas for Datto as we deliver new solutions to our MSP partners in 2021,” he said.
Weller said all Datto products have been cloud-managed from day one and have deep security.
“In 2021, we will be monitoring new outputs more directly in these two areas,” he said. “In the cloud, with continuity of advocacy responsibilities in the public cloud, and in security, with new products to help MSPs protect their SMB clients.”
Datto in 2021 plans to launch its first Continuity products for applications running in public clouds, especially in Microsoft Azure, Weller said.
“This new Azure Continuity product will build on the success of SaaS Continuity where we protect cloud data hosted in Microsoft 365 and Google Workspaces,” he said. “We plan to bring Azure into beta with a group of partners in Q2.”
Weller said Azure Continuity is focused on Datto’s installed base as the kind of technology that MSPs would want to have before they build and move servers to Azure and provide new opportunities.
Datto expects to be in beta in the second quarter with a wider slate available later this year, he said.
Datto today also protects laptop and desktop PCs through the Datto Cloud with the Continuity Cloud for PCs.
Datto offers several benefits with its Continuity Cloud line, Weller said.
First, MSPs trust Datto and its service model and will reap the same benefits that they will see now as they move into the cloud, he said. Second, Datto offers hybrid in nature to give them the same experience whether there is a workload in the building or in public or private clouds and third, there are copies of applications and data in all environments live securely stored away from public cloud providers in the Datto Cloud. , he said. And, he said, the business model remains the same for MSPs.
“The long-term Continuity roadmap continues to consolidate and protect SMB applications and data at any time and, increasingly, anywhere in the clouds and premises, on virtual and physical devices. , servers and PCs, ”he said.
On the security side, cyberattacks have expanded over the past year with the work-from-home movement caused by COVID-19 coronavirus pandemic, which Weller said is leaving businesses increasingly vulnerable. injured.
Datto works to increase security with a model made up of three concentric rings, Weller said. They affirm Datto, affirm Datto MSP partners and affirm the customers of those MSPs.
Security remains one of the most pressing challenges facing MSPs, Weller said. Speaking from Datto’s annual ransomware survey, he said 95 per cent of MSPs report that their own businesses are more targeted by attacks, while 70 per cent report ransomware as the most common malware threat at SMBs.
Datto has approached security for years in two ways, through its Continuity line that has led to many updates of backup images after primary servers were locked in with ransomware, and through its RMM platform that provides patch management and system monitoring, Weller said.
“We retrieve and restore claims and data to victims of cybersecurity attacks and downtime thousands of times a year, in many cases even after an attacker has their production servers and lock or delete their main backup copies, ”he said.
During some fourth quarter 2020 cyberattacks, Datto created within a few days the Datto FireEye anti-theft scanner with protective scripts for MSPs whether or not they were former Datto partners, leading to more than 1 million scans and many malicious detections within Datto’s partner systems, Weller said. The company recently did the same to deal with macOS Silver Sparrow malware, he said.
Datto also recently started releasing their first products with fringe opportunities for MSPs looking to protect their customers, starting with Ransomware Detection and Isolation for Datto RMM, which it was installed in more than 250,000 devices in just 90 days, Weller said.
Datto followed it up this week with the construction of BitDam, which protects cloud-based applications from ransomware, malware and phishing attacks, in a $ 46 million deal.
Datto refused to rule out the expected revenue or EBITDA impact that BitDam’s acquisition had on its 2021 finances and declined to say how many people Datto got with the purchase.
Weller said Datto has acquired a team that has been working together for several years, one that has far more ideas than they could have moved forward as a starting point.
“Depth is the key, not space,” he said. “We need to bring this into our key platforms, take it into the hands of MSPs, and get them to fringe as quickly as possible. That’s going to require a nice narrowing of the focus. But then, we can start expanding from there. And we are not lost on that [BitDam’s] based in Israel and there is a lot of security technology talent there as well, so we put a number of people there going forward. ”
Datto has already started to integrate BitDam technology into its own offerings and later this year it will be available to 17,000 Datto MSPs to take their SMB customers with them, said Weller.
“Security and cloud are complex by nature, but we will simplify them and turn them into fringe growth opportunities for our partners,” he said. “We continue to believe that both opportunities are huge, and we feel that Datto is well placed. We will continue to increase our investment in all areas to expand our product offerings and address market, which we believe will drive strong partner retention and drive revenue growth. long-term entry. ”
When asked if the SolarWinds-related MSP attack will drive a request for cyber-tolerance, Weller said Datto was ready to respond quickly to MSPs seeking help.
“Of course, it wants more attention on security as an issue, which we were already in a way anyway,” he said. “Security for most tech companies like us is an opportunity and a risk. … In direct response to that particular attack, we were able to release some countermeasure scripts for both MSPs with our RMM tool as well as post it in the public domain. We did the same for Silver Sparrow [macOS malware]. And I think, yesterday or today, we did the same for the recent Microsoft hacks as well. It’s something we get to know very well. ”
For its fourth fiscal quarter 2020, which ended Dec. 31, Datto reported revenue of $ 139.0 million, up 10 percent over the $ 126.1 million the company reported for its fourth fiscal quarter 2019.
These included membership revenues of $ 129.0 million, up 16 percent from $ 111.1 million last year.
Datto also reported a GAAP loss for the quarter of $ 7.2 million, or 5 cents per share, which was better than the $ 8.2 million loss, or 6.2 cents per share, which it reported last year. On a non-GAAP basis, Datto reported net income for the quarter of $ 25.7 million, or 17 cents per share, up from $ 1.3 million last year, or 1 percent.
For the entire fiscal year 2020, Datto reported revenue of $ 518.8 million, up 13 percent over last year’s revenue of $ 458.8 million.
That included annual revenue of $ 485.3 million, up 18 percent over the $ 412.2 million it reported last year.
Datto reported GAAP net income of $ 22.5 million, or 16 cents per share, a significant improvement from last year’s loss of $ 31.2 million, or 23 cents per share. On a non-GAAP basis, Datto reported net income of $ 76.6 million, or 55 cents per share, up from $ 15.3 million last year, or 11 cents per share.
Datto also reported annual running rate revenue of $ 542.8 million, up 14 percent over $ 474.8 million last year.
John Abbot, CFO Datto, said during the conference call that the company’s annual running rate revenue per MSP has expanded to nearly $ 32,000 from $ 28,600 a year ago. It has been expanding quarterly despite the change in MSP counts, Aba said.
The growth reflects the growth in larger partners, as MSPs increase the number of Datto products, and the churning of smaller partners, Aba said.
“It is important to note that adding more MSPs is lowering the average as these new MSPs start small and grow the business with Datto over time,” he said.
Datto revenue for the fourth quarter exceeded analysts ’expectations by $ 5.0 million, according to analysts surveyed by Seeking Alpha. GAAP earnings per share 5 cents were lower than expected, and non-GAAP earnings per share were 5 cents higher than expected, Seeking Alpha said.