IPOs + SPACs of Interest

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>>> Datto Stock Jumps 20% in Market Debut Before Falling Back


Barron's

By Luisa Beltram

Oct. 21, 2020


https://www.barrons.com/articles/software-stock-set-to-trade-after-the-ipo-prices-at-the-top-of-the-range-51603291999?siteid=yhoof2


Datto provides business-continuity software, including backup and disaster recovery.

Shares of Datto Holding rose as much as 20% in its first day of trading.

The stock opened at $32 Wednesday and hit a high of $32.36. Shares recently changed hands at $28.05, up 3.9%, in afternoon trading.

Datto’s (ticker: MSP) decent performance comes after the backup-software company collected roughly $550 million late Tuesday. The company sold 22 million shares at $27 each, the top of its $24-$27 price range.

Morgan Stanley, BofA Securities, Barclays, and Credit Suisse are underwriters on the deal.

Datto is the latest software company to go public. Both Asana (ASAN), which offers cloud-based project-management software, and Snowflake (SNOW), a cloud software company, made their debuts in late September. McAfee, the cybersecurity company, is expected to price its offering Wednesday night and begin trading on Thursday.

Founded in 2007, Datto provides business-continuity software, including backup and disaster recovery, that helps companies secure their data. Datto’s software is delivered through a managed-service-provider, or MSP, channel to small and medium-size businesses. The company had 17,000 MSP partners as of June 30, according to its prospectus. Datto said it helped restore more than 200 million software as a service objects in 2020, the prospectus said.

The company reported $10.1 million in profit for the six months ended June 30 on $249.1 million in revenue. This compares with $25.7 million in losses a year earlier on $215 million in revenue. Long-term debt stood at $577 million as of June 30. It has 1,653 employees as of June 30.

With 157,548,740 shares outstanding, Datto has a roughly $4.3 billion market cap, at $27 a share.

Vista Equity Partners acquired Datto in 2017 for $1.3 billion and merged the company with Autotask. Vista will own 70.7% of Datto after the IPO, while Austin McChord, Datto’s founder, will have 13%.

The Datto IPO comes just days since Robert Smith, Vista’s CEO, reached a $140 million settlement with the Justice Department, The Wall Street Journal reported. The nonprosecution agreement ends a yearslong U.S. tax investigation and calls for Smith to admit tax fraud as well as not properly filing foreign bank account reports, according to the Journal.

No Vista entity is part of Smith’s settlement with the DOJ, which is considered a personal tax matter, Barron’s has learned. Neither Vista, nor any of its funds or portfolio companies, were involved or of interest or under investigation by the DOJ, Barron’s has learned.

Brian Sheth, Vista’s president and co-founder, is now looking to leave the firm, Barron’s has learned. The executive has been with Vista since he was 23 years old. Sheth has wanted to retire for some time but had to wait until Smith signed the nonprosecution agreement with the DOJ, Barron’s has learned. The timing of Sheth’s departure is unclear. He has noncompete and nonsolicitation agreements with Vista and with Dyal Capital Partners, which owns a minority of Vista, Barron’s has learned.

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