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Datto Quarterly Financial Results Show MSP Partner Momentum

Datto's latest quarterly financial results show MSP partner momentum, CEO Tim Weller said and demonstrated in a Q2 2021 earnings release issued August 11, 2021.

Among the Datto business metrics to note, the company said:

  • It has more than 17,800 MSP partners, a net sequential increase of 500 in the quarter, up from an increase of 300 in the previous quarter.
  • Roughly 1,250 MSPs each contribute over $100,000 ARR (annual recurring revenue) to Datto, compared to 1,000 MSPs at that ARR level in June 2020.
  • Revenue was $151.6 million in Q2 of fiscal 2021, up 22 percent from Q2 of fiscal 2020. The results generally beat Wall Street's expectations.

Datto and N-able: MSP and SMB Technology Spending Bellwethers

Datto's business and financial metrics reinforce the continued, growing popularity of MSP (managed IT services provider) business models in the SMB (small and midsize business) segment. Datto's portfolio of products and cloud-based services include backup and disaster recovery (BDR), data protection, IT management, business automation and cybersecurity tools that MSPs consume and/or manage on behalf of small business customers.

Datto and rival N-able are both publicly held -- and therefore serve as bellwethers for the health of the MSP-SMB market. For its part, N-able announced 16 percent year-over-year quarterly revenue growth in July 2021. Other MSP software and technology rivals such as Barracuda, ConnectWise, Kaseya and NinjaRMM (among others) are privately held and backed by private equity and/or venture capital investors.

Datto CEO Tim Weller: Next Moves

In a prepared comment about Datto's earnings, CEO Tim Weller said:

“Our second quarter results mark one of the strongest quarters in our history and are a clear indication of the power of the MSP model. Our subscription revenue growth accelerated to 21% year-over-year and we added 500 net new partners in the quarter, both representing new highs since the onset of the pandemic in early 2020. Looking ahead, we continue to see strong momentum across our business and are excited about the new product launches in cloud and security planned for the second half of 2021. We remain well positioned to capitalize on the large opportunity to help our MSP partners manage, protect, and connect their SMB clients’ data in an increasingly digital world.”

On the R&D (research and development) front, Datto is preparing Azure Cloud Continuity, the company’s first continuity product for applications running in the public cloud, Weller revealed during a Q1 earnings call in March 2021.

The push toward public cloud data protection services could be a smart one. Indeed, upstart OwnBackup has seen its valuation skyrocket amid growing demand for Salesforce data protection services, with a Microsoft Dynamics 365 data protection push also on the way.

In addition to R&D priorities, Datto is set to host its annual DattoCon21 conference from October 11 to 13, the financial release noted. The release didn't mention the location (Seattle, Washington).

PS: Check this blog regularly for updates from Datto's earnings call.

Joe Panettieri

Joe Panettieri is co-founder & editorial director of MSSP Alert and ChannelE2E, the two leading news & analysis sites for managed service providers in the cybersecurity market.