Datto Announces Fourth Quarter and Full Year 2021 Financial Results

By: Datto Holding Corp. via Business Wire

February 23, 2022 at 16:10 PM EST

Fourth quarter subscription revenue grew 19 percent year-over-year to $153.2 million

ARR grew 21 percent year-over-year to $658.4 million

Datto Holding Corp. (Datto) (NYSE: MSP), the leading global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs), today announced its financial results for the fourth quarter and full year ended December 31, 2021.

“We finished 2021 on a strong note with another quarter of accelerating growth,” said Tim Weller, Datto’s Chief Executive Officer. “The fourth quarter capped an exceptional year for Datto and our MSP partners. We exceeded all of our targets in our first full year as a public company and launched several new, highly differentiated products that help our MSP partners better secure digital assets on behalf of their SMB clients. MSPs now find themselves squarely in the security business, and Datto is right there with them. We further solidified Datto’s leading position in security solutions with the early 2022 acquisition of cybersecurity firm Infocyte. 2022 is shaping up to be another exciting year for Datto as we continue to help our MSP partners on their security journey with our new products ramping and more on the way.”

Fourth Quarter and Full Year 2021 Financial Results

(In Millions)

Q4 2021

Q4 2020

Y/Y Change

FY 2021

FY 2020

Y/Y Change

Subscription Revenue⁽¹⁾

$153.2

$129.0

19%

$577.3

$485.3

19%

Total Revenue⁽¹⁾

$164.3

$139.0

18%

$618.7

$518.8

19%

ARR⁽²⁾

$658.4

$542.8

21%

$658.4

$542.8

21%

Gross Margin

70%

69%

88 bps

71%

71%

45 bps

Non-GAAP Gross Margin⁽³⁾

72%

74%

(108 bps)

74%

73%

74 bps

Net Income

$5.7

$(7.2)

N/M

$51.4

$22.5

129%

Adjusted EBITDA⁽³⁾

$39.8

$40.8

(3)%

$175.4

$150.5

17%

Net Cash Provided by Operating Activities

$26.3

$34.6

(24)%

$125.4

$108.7

15%

Free Cash Flow⁽³⁾

$11.2

$22.7

(51)%

$78.1

$68.2

15%

	1	Subscription and Total Revenue Y/Y percentage change includes benefits from favorable foreign exchange rates of approximately 25 basis points for the fourth quarter and 200 basis points for the full year.
	2	Annual run-rate revenue (ARR) is the annualized value of all subscription agreements as of the end of a period. We calculate ARR by multiplying the monthly run-rate revenue for the last month of a period by 12.
	3	A reconciliation of GAAP to non-GAAP financial measures is provided in the financial statement tables included in this press release. An explanation of these measures is also included under the heading “Non-GAAP Financial Measures.”

Recent Highlights

Ended the quarter with more than 18,500 MSP partners, a net increase of 1,500 (+9%) from the previous year.
Ended the quarter with average ARR per MSP of approximately $35,600, an increase of approximately $3,600 (+11%) from the previous year.
Expanded the number of MSPs contributing over $100,000 ARR to 1,400, a 27% increase from 1,100 at December 31, 2020.
Acquired cybersecurity company Infocyte, an innovator in Endpoint Detection and Response (EDR) technologies and Managed Detection and Response (MDR) services. The Infocyte team and technology augment Datto’s capabilities within the critical Protect, Detect, and Respond stages of the NIST security framework, and add to the Company’s rapidly expanding set of MSP-delivered security offerings.
Released a tool for MSPs to combat the Apache Log4j vulnerability. This endpoint assessment software works with any Remote Monitoring and Management (RMM) solution and can uniquely enumerate potentially vulnerable systems, detect intrusion attempts, and inoculate Windows systems against Log4j attacks.
In support of Datto’s growth strategy and commitment to the DACH region (Germany, Austria, and Switzerland), the Company announced a partnership with Infinigate, a leading Value-Added Distributor of cybersecurity solutions in Europe. Infinigate has a large customer base in DACH and will strengthen our sales efforts in the region and help attract new MSPs to Datto through a proven selling model.
Announced that Brooke Cunningham has joined the Company as Datto’s Chief Marketing Officer and Emily Tabak Epstein has joined as General Counsel.

First Quarter and Full Year 2022 Financial Outlook

Datto is providing the following guidance for the first quarter and full-year 2022:

(In Millions)	Q1 2022 Outlook	FY 2022 Outlook
Total Revenue⁽¹⁾	$168 - $169	$720 - $726
Y/Y growth as reported	16% - 17%	16% - 17%
Y/Y growth constant currency	17% - 18%	18% - 19%
Subscription Revenue ⁽¹⁾	$158 - $159	$676 - $682
Y/Y growth as reported	17% - 17%	17% - 18%
Y/Y growth constant currency	18% - 19%	18% - 19%
Adjusted EBITDA	$37 - $38	$163 - $168
Adjusted EBITDA margin	22%	23%

Subscription and Total Revenue guidance include foreign exchange rate assumptions which reduce Y/Y growth rates by approximately 150 basis points for the first quarter and 130 basis points for the full year and which are excluded in the constant currency growth rates.

Datto Fourth Quarter and Full-Year 2021 Results Conference Call

    When: Wednesday, February 23, 2022

    Time: 5:00 pm ET

    Conference ID: 8751783

    Live Call: 1-888-660-6179 (US/Canada Toll-Free) or 1-929-203-1946 (International)

    Replay: 1-800-770-2030 (US/Canada Toll-Free) or 1-647-362-9199 (International)

    (The replay will be available approximately two hours after the completion of the live call)

    Webcast: https://investors.datto.com

About Datto

As the leading global provider of security and cloud-based software solutions purpose-built for Managed Service Providers (MSPs), Datto believes there is no limit to what small and medium businesses (SMBs) can achieve with the right technology. Datto’s proven Unified Continuity, Networking, Endpoint Management, and Business Management solutions drive cyber resilience, efficiency, and growth for MSPs. Delivered via an integrated platform, Datto’s solutions help its global ecosystem of MSP partners serve over one million businesses around the world. From proactive dynamic detection and prevention to fast, flexible recovery from cyber incidents, Datto’s solutions defend against costly downtime and data loss in servers, virtual machines, cloud applications, or anywhere data resides. Since its founding in 2007, Datto has won numerous awards for its product excellence, superior technical support, rapid growth, and for fostering an outstanding workplace. With headquarters in Norwalk, Connecticut, Datto has global offices in Australia, Canada, China, Denmark, Germany, Israel, the Netherlands, Singapore, and the United Kingdom.

Learn more at datto.com.

Forward-Looking Statements

This press release contains forward-looking statements that reflect Datto’s current expectations and projections with respect to, among other things, its financial condition, results of operations, plans, objectives, future performance, and business. These statements may be preceded by, followed by or include the words ‘‘anticipate,’’ ‘‘estimate,’’ ‘‘expect,’’ ‘‘project,’’ ‘‘plan,’’ ‘‘intend,’’ ‘‘believe,’’ ‘‘may,’’ ‘‘will,’’ ‘‘should,’’ ‘‘can have,’’ ‘‘likely’’ and the negatives thereof and other words and terms of similar meaning. Further information on potential factors that could affect our results is included in our Annual Report on Form 10-K.

Forward-looking statements include all statements that are not historical facts. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements.

There is no assurance that any forward-looking statements will materialize. You are cautioned not to place undue reliance on forward-looking statements, which reflect expectations only as of this date. Datto undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

Non-GAAP Financial Measures

In addition to our results determined in accordance with generally accepted accounting principles in the United States (“GAAP”), we believe that the non-GAAP financial measures of Non-GAAP Subscription Cost of Revenue, Non-GAAP Device Cost of Revenue, Non-GAAP Professional Services and Other Cost of Revenue, Non-GAAP Depreciation and Amortization in Cost of Revenue, Non-GAAP Cost of Revenue, Non-GAAP Gross Profit, Non-GAAP Sales and Marketing expense, Non-GAAP Research and Development expense, Non-GAAP General and Administrative expense, Non-GAAP Depreciation and Amortization in Operating Expenses, Non-GAAP Operating Expenses, Non-GAAP Income from Operations, Non-GAAP Net Income and Non-GAAP Net Income Per Share, Adjusted EBITDA, and Free Cash Flow are useful in evaluating our operating performance. Certain of these measures exclude interest and other (income) expense, net, loss on extinguishment of debt, depreciation and amortization, stock-based compensation expense, restructuring expense and transaction related and other expense. In addition, for Non-GAAP Net Income we utilize a non-GAAP tax rate of 25%, which we believe reflects our normalized effective tax rate. We believe that non-GAAP financial information, when taken collectively, may be helpful to investors because it provides consistency and comparability with past financial performance and assists in comparisons with other companies, some of which use similar non-GAAP financial information to supplement their GAAP results. The non-GAAP financial information is presented for supplemental informational purposes only, and should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly-titled non-GAAP measures used by other companies.

Reconciliation tables of the most directly comparable GAAP financial measures to the non-GAAP financial measures used in this press release are included with the financial tables at the end of this press release.

Datto is not providing a quantitative reconciliation of forward-looking guidance of Adjusted EBITDA to its most directly comparable GAAP measure because certain items are out of Datto’s control or cannot be reasonably predicted, as the items are uncertain, depend on various factors, and could have a material impact on GAAP reported results for the guidance period. Accordingly, a reconciliation for forward-looking Adjusted EBITDA is not available without unreasonable effort.

For more information about Datto, including supplemental financial information, please visit the investor relations website at investors.datto.com.


DATTO HOLDING CORP. Condensed Consolidated Statements of Operations *(in thousands, except share and per share amounts)* *(unaudited)*

	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
Revenue:
Subscription	$	153,224		$	128,978		$	577,321		$	485,326
Device		10,180			9,104			37,832			30,202
Professional services and other		850			910			3,504			3,257
Total revenue		164,254			138,992			618,657			518,785
Cost of revenue:
Subscription		24,818			23,677			90,162			84,463
Device		13,863			11,143			47,415			37,607
Professional services and other		1,538			1,845			6,059			6,244
Depreciation and amortization		8,917			6,144			32,712			21,890
Total cost of revenue		49,136			42,809			176,348			150,204
Gross profit		115,118			96,183			442,309			368,581
Operating expenses:
Sales and marketing		40,023			31,962			139,257			115,790
Research and development		31,209			30,932			107,899			78,932
General and administrative		27,570			26,279			106,478			85,668
Depreciation and amortization		6,917			6,623			26,471			27,223
Total operating expenses		105,719			95,796			380,105			307,613
Income from operations		9,399			387			62,204			60,968
Other expense:
Interest expense		22			1,758			455			25,348
Loss on extinguishment of debt		—			8,488			—			8,488
Other expense (income), net		163			(2,026	)		387			(3,428	)
Total other expense		185			8,220			842			30,408
Income (loss) before income taxes		9,214			(7,833	)		61,362			30,560
Provision for income taxes		(3,467	)		665			(9,928	)		(8,062	)
Net income (loss)	$	5,747		$	(7,168	)	$	51,434		$	22,498

Net income per share attributable to common stockholders:
Basic	$	0.04		$	(0.05	)	$	0.32		$	0.16
Diluted	$	0.03		$	(0.05	)	$	0.31		$	0.16
Weighted-average shares used in computing net income per share:
Basic		163,210,116			154,968,918			162,048,828			140,404,763
Diluted		166,574,607			154,968,918			165,759,624			142,514,848


DATTO HOLDING CORP. Condensed Consolidated Balance Sheets *(in thousands)* *(unaudited)*

	December 31,
		2021			2020
ASSETS
Current assets
Cash and cash equivalents	$	221,421		$	168,877
Restricted cash		1,319			1,536
Accounts receivable, net		12,870			13,946
Inventory		34,901			13,811
Prepaid expenses and other current assets		39,456			28,316
Total current assets		309,967			226,486
Property and equipment, net		106,577			91,876
Operating lease assets		31,003			—
Goodwill		1,141,726			1,120,954
Intangible assets, net		287,605			287,395
Other assets		85,313			66,560
Total assets	$	1,962,191		$	1,793,271

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	9,997		$	7,574
Accrued expenses and other current liabilities		59,553			39,461
Deferred revenue		20,356			23,763
Total current liabilities		89,906			70,798
Deferred revenue, noncurrent		3,341			3,322
Deferred income taxes		24,955			18,947
Operating lease liabilities, noncurrent		31,332			—
Other long-term liabilities		715			11,736
Total liabilities		150,249			104,803
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Common stock		164			161
Additional paid-in capital		1,829,957			1,755,387
Treasury stock		(3,621	)		(3,621	)
Accumulated deficit		(13,792	)		(65,226	)
Accumulated other comprehensive income		(766	)		1,767
Total stockholders’ equity		1,811,942			1,688,468
Total liabilities and stockholders’ equity	$	1,962,191		$	1,793,271


DATTO HOLDING CORP. Condensed Consolidated Statements of Cash Flows *(in thousands)* *(unaudited)*

	Year Ended December 31,
		2021			2020
OPERATING ACTIVITIES
Net income	$	51,434		$	22,498
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		32,044			26,434
Amortization of acquired intangible assets		27,139			22,679
Loss on extinguishment of debt		—			8,488
Amortization of debt issuance costs		341			1,428
Reserve for inventory obsolescence		57			1,517
Non-cash operating lease expense		7,292			—
Stock-based compensation		48,909			33,460
Allowance for expected credit losses		367			6,217
Deferred income taxes		4,922			7,770
Unrealized foreign exchange		(1,303	)		(1,204	)
Changes in operating assets and liabilities:
Accounts receivable		1,598			769
Inventory		(21,186	)		(2,826	)
Prepaid expenses and other current assets		(11,487	)		(7,498	)
Other assets		(19,641	)		(12,952	)
Accounts payable, accrued expenses and other		8,391			3,073
Deferred revenue		(3,511	)		(1,155	)
Net cash provided by operating activities		125,366			108,698
INVESTING ACTIVITIES
Purchase of property and equipment		(47,237	)		(40,466	)
Acquisition of business, net of cash acquired		(45,486	)		(4,371	)
Net cash used in investing activities		(92,723	)		(44,837	)
FINANCING ACTIVITIES
Proceeds from debt		—			32,100
Repayments of debt and capital leases		(101	)		(594,727	)
Debt issuance costs		—			(1,178	)
Proceeds from initial public offering, net of underwriting costs		—			641,643
Capitalized transaction costs		(684	)		(5,256	)
Proceeds from stock option exercises		22,510			3,150
Repurchase of common stock and settlement of stock-based payment awards		—			(53	)
Net cash provided by financing activities		21,725			75,679
Effect of exchange rate changes on cash and cash equivalents		(2,041	)		1,807
Net increase in cash and cash equivalents		52,327			141,347
Cash and cash equivalents and restricted cash, beginning of year		170,413			29,066
Cash and cash equivalents and restricted cash, end of period	$	222,740		$	170,413
Reconciliation of cash and cash equivalents and restricted cash:
Cash and cash equivalents	$	221,421		$	168,877
Restricted cash	$	1,319		$	1,536
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes	$	6,380		$	890
Cash paid for interest	$	133		$	24,037
NON-CASH INVESTING AND FINANCING ACTIVITIES
Purchase of property and equipment included in accounts payable	$	—		$	17
Unpaid initial public offering costs in total current liabilities	$	—		$	684


DATTO HOLDING CORP. Non-GAAP Condensed Consolidated Statements of Operations *(in thousands, except share and per share amounts)* *(unaudited)*

	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
Revenue:
Subscription	$	153,224		$	128,978		$	577,321		$	485,326
Device		10,180			9,104			37,832			30,202
Professional services and other		850			910			3,504			3,257
Total revenue		164,254			138,992			618,657			518,785
Cost of revenue:
Subscription		23,681			19,703			85,860			79,909
Device		13,820			10,940			47,222			37,404
Professional services and other		1,489			1,427			5,859			5,687
Depreciation and amortization		6,180			4,646			23,261			16,867
Total cost of revenue		45,170			36,716			162,202			139,867
Gross profit		119,084			102,276			456,455			378,918
Operating expenses:
Sales and marketing		37,047			27,151			129,790			107,255
Research and development		25,047			18,457			84,480			64,393
General and administrative		23,367			20,478			89,997			73,649
Depreciation and amortization		2,496			2,173			8,783			9,567
Total operating expenses		87,957			68,259			313,050			254,864
Income from operations		31,127			34,017			143,405			124,054
Other expense:
Interest expense		22			1,758			455			25,348
Other expense (income), net		163			(2,026	)		387			(3,428	)
Total other expense (income)		185			(268	)		842			21,920
Income before income taxes		30,942			34,285			142,563			102,134
Provision for income taxes		(7,736	)		(8,571	)		(35,641	)		(25,534	)
Net income	$	23,206		$	25,714		$	106,922		$	76,600

Net income per share attributable to common stockholders:
Basic	$	0.14		$	0.17		$	0.66		$	0.55
Diluted	$	0.14		$	0.16		$	0.65		$	0.54
Weighted-average shares used in computing net income per share:
Basic		163,210,116			154,968,918			162,048,828			140,404,763
Diluted		166,574,607			158,856,958			165,759,624			142,514,848


DATTO HOLDING CORP. GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics *(in thousands, except percentages and share and per share amounts)* *(unaudited)*

	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
Non-GAAP Subscription Cost of Revenue
GAAP subscription cost of revenue	$	24,818		$	23,677		$	90,162		$	84,463
Stock-based compensation expense		(1,137	)		(3,974	)		(4,302	)		(4,092	)
Restructuring expense		—			—			—			(462	)
Non-GAAP subscription cost of revenue	$	23,681		$	19,703		$	85,860		$	79,909

Non-GAAP Device Cost of Revenue
GAAP device cost of revenue	$	13,863		$	11,143		$	47,415		$	37,607
Stock-based compensation expense		(43	)		(203	)		(193	)		(203	)
Non-GAAP device gross cost of revenue	$	13,820		$	10,940		$	47,222		$	37,404

Non-GAAP Professional Services and Other Cost of Revenue
GAAP professional services and other cost of revenue	$	1,538		$	1,845		$	6,059		$	6,244
Stock-based compensation expense		(49	)		(418	)		(200	)		(418	)
Restructuring expense		—			—			—			(139	)
Non-GAAP professional services and other cost of revenue	$	1,489		$	1,427		$	5,859		$	5,687

Non-GAAP Depreciation and Amortization in Cost of Revenue
GAAP depreciation and amortization in cost of revenue	$	8,917		$	6,144		$	32,712		$	21,890
Amortization of acquired intangible assets		(2,737	)		(1,498	)		(9,451	)		(5,023	)
Non-GAAP depreciation and amortization in cost of revenue	$	6,180		$	4,646		$	23,261		$	16,867

Non-GAAP Cost of Revenue
GAAP cost of revenue	$	49,136		$	42,809		$	176,348		$	150,204
Amortization of acquired intangible assets		(2,737	)		(1,498	)		(9,451	)		(5,023	)
Stock-based compensation expense		(1,229	)		(4,595	)		(4,695	)		(4,713	)
Restructuring expense		—			—			—			(601	)
Non-GAAP cost of revenue	$	45,170		$	36,716		$	162,202		$	139,867

Non-GAAP Gross Profit
GAAP gross profit	$	115,118		$	96,183		$	442,309		$	368,581
Amortization of acquired intangible assets		2,737			1,498			9,451			5,023
Stock-based compensation expense		1,229			4,595			4,695			4,713
Restructuring expense		—			—			—			601
Non-GAAP gross profit	$	119,084		$	102,276		$	456,455		$	378,918
Non-GAAP gross margin		72.5	%		73.6	%		73.8	%		73.0	%


DATTO HOLDING CORP. GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics *(in thousands, except percentages and share and per share amounts)* *(unaudited)*

	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
Non-GAAP Sales and Marketing
GAAP sales and marketing expense	$	40,023		$	31,962		$	139,257		$	115,790
Stock-based compensation expense		(2,976	)		(4,811	)		(9,467	)		(6,614	)
Restructuring expense		—			—			—			(1,921	)
Non-GAAP sales and marketing expense	$	37,047		$	27,151		$	129,790		$	107,255
Non-GAAP sales and marketing as a % of revenue		22.6	%		19.5	%		21.0	%		20.7	%
Non-GAAP Research and Development
GAAP research and development expense	$	31,209		$	30,932		$	107,899		$	78,932
Stock-based compensation expense		(6,162	)		(12,475	)		(23,419	)		(13,590	)
Restructuring expense		—			—			—			(949	)
Non-GAAP research and development expense	$	25,047		$	18,457		$	84,480		$	64,393
Non-GAAP research and development as a % of revenue		15.2	%		13.3	%		13.7	%		12.4	%
Non-GAAP General and Administrative
GAAP general and administrative expense	$	27,570		$	26,279		$	106,478		$	85,668
Stock-based compensation expense		(3,187	)		(5,018	)		(11,328	)		(8,543	)
Restructuring expense		—			—			—			(364	)
Transaction related and other expense		(1,016	)		(783	)		(5,153	)		(3,112	)
Non-GAAP general and administrative expense	$	23,367		$	20,478		$	89,997		$	73,649
Non-GAAP general and administrative as a % of revenue		14.2	%		14.7	%		14.5	%		14.2	%
Non-GAAP Depreciation and Amortization in Operating Expenses
GAAP depreciation and amortization in operating expenses	$	6,917		$	6,623		$	26,471		$	27,223
Amortization of acquired intangible assets		(4,421	)		(4,450	)		(17,688	)		(17,656	)
Non-GAAP depreciation and amortization in operating expense	$	2,496		$	2,173		$	8,783		$	9,567
Non-GAAP depreciation and amortization in operating expense as a % of revenue		1.5	%		1.6	%		1.4	%		1.8	%
Non-GAAP Operating Expenses
GAAP operating expenses	$	105,719		$	95,796		$	380,105		$	307,613
Amortization of acquired intangible assets		(4,421	)		(4,450	)		(17,688	)		(17,656	)
Stock-based compensation expense		(12,325	)		(22,304	)		(44,214	)		(28,747	)
Restructuring expense		—			—			—			(3,234	)
Transaction related and other expense		(1,016	)		(783	)		(5,153	)		(3,112	)
Non-GAAP operating expenses	$	87,957		$	68,259		$	313,050		$	254,864
Non-GAAP operating expenses as a % of revenue		53.5	%		49.1	%		50.6	%		49.1	%
Non-GAAP Income From Operations
GAAP income from operations	$	9,399		$	387		$	62,204		$	60,968
Amortization of acquired intangible assets		7,158			5,948			27,139			22,679
Stock-based compensation expense		13,554			26,899			48,909			33,460
Restructuring expense		—			—			—			3,835
Transaction related and other expense		1,016			783			5,153			3,112
Non-GAAP income from operations	$	31,127		$	34,017		$	143,405		$	124,054
Non-GAAP operating margin		19.0	%		24.5	%		23.2	%		23.9	%


DATTO HOLDING CORP. GAAP to Non-GAAP Reconciliations and Calculation of Other Key Metrics *(in thousands, except percentages and share and per share amounts)* *(unaudited)*

	Three Months Ended December 31,						Year Ended December 31,
		2021			2020			2021			2020
Non-GAAP Net Income and Net Income Per Share
GAAP net income	$	5,747		$	(7,168	)	$	51,434		$	22,498
GAAP provision for income taxes		3,467			(665	)		9,928			8,062
GAAP income before income taxes		9,214			(7,833	)		61,362			30,560
Loss on extinguishment of debt		—			8,488			—			8,488
Amortization of acquired intangible assets		7,158			5,948			27,139			22,679
Stock-based compensation expense		13,554			26,899			48,909			33,460
Restructuring expense		—			—			—			3,835
Transaction related and other expense		1,016			783			5,153			3,112
Non-GAAP provision for income taxes		(7,736	)		(8,571	)		(35,641	)		(25,534	)
Non-GAAP net income	$	23,206		$	25,714		$	106,922		$	76,600
Non-GAAP net income per share attributable to common shareholders:
Basic	$	0.14		$	0.17		$	0.66		$	0.55
Diluted	$	0.14		$	0.16		$	0.65		$	0.54
Weighted-Average Shares used in computing Non-GAAP Net Income per Share:
Non-GAAP weighted-average shares used in computing net income per share, basic		163,210,116			154,968,918			162,048,828			140,404,763
Non-GAAP weighted-average shares used in computing net income per share, diluted		166,574,607			158,856,958			165,759,624			142,514,848

Adjusted EBITDA
GAAP net income	$	5,747		$	(7,168	)	$	51,434		$	22,498
Interest and other expense, net		185			(268	)		842			21,920
Loss on extinguishment of debt		—			8,488			—			8,488
Depreciation and amortization		15,834			12,767			59,183			49,113
Provision for income tax		3,467			(665	)		9,928			8,062
Stock-based compensation expense		13,554			26,899			48,909			33,460
Restructuring expense		—			—			—			3,835
Transaction related and other expense		1,016			783			5,153			3,112
Adjusted EBITDA	$	39,803		$	40,836		$	175,449		$	150,488
Adjusted EBITDA margin		24.2	%		29.4	%		28.4	%		29.0	%

Free Cash Flow
GAAP net cash provided by operating activities	$	26,257		$	34,643		$	125,366		$	108,698
Less: Purchases of property and equipment		(15,067	)		(11,947	)		(47,237	)		(40,466	)
Free cash flow	$	11,190		$	22,696		$	78,129		$	68,232

MSP-F

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