It looks like the upcoming Datto IPO is already in the clouds. Months after announcing layoffs and growth dilemmas due to the novel coronavirus, the information technology solutions provider is ready to come public. What do you need to know to profit ahead of the big debut?
After initially filing with the U.S. Securities and Exchange Commission earlier in the fall, we now know exactly when Datto will hit the market. Investors are excited — particularly because of how hot cloud services are.
If you are one of those profit-hungry, tech-loving investors, here is what you need to know about the upcoming Datto IPO:
- Datto will trade under the ticker MSP on the New York Stock Exchange. It has said that it will come to market on Wednesday, Oct. 21.
- The company has set an IPO range of $24-$27, and plans to offer 22 million shares.
- From this deal, the company plans to raise $561 million. A group of new investors including the Investors Group of Santa Barbara and Dragoneer Investment will spend more than $1oo million to acquire shares.
- Under these terms, Datto would have a market capitalization between $3.8 billion and $4.25 billion.
- Although it is coming public, Datto will be what is known as a controlled company after the IPO. That is because Vista Equity will retain more than 70% of company shares.
- How is it doing from a financial perspective? We know that as of June, its 12-month revenue came in at $493 million.
- The company also has more than 17,000 managed service providers as partners. Of that total, more than 1,000 MSPs contribute more than $100,000 in annual recurring revenue.
- Firms including Morgan Stanley, Barclays and Credit Suisse will be bookrunners on the IPO.
Why the Datto IPO Really Matters Now
Why are investors already so excited about the Datto IPO? The easy answer would be that in recent months, the stock market has welcomed practically every new offering after months without IPOs. However, its business is particularly exciting, especially in the recovery from the coronavirus.
As I wrote above, Datto was not immune from the pandemic. Why? Essentially, Datto develops IT solutions including products for mission-critical business continuity and disaster recovery — or in other words, backup and recovery solutions. Renaissance Capital says it is one of the leading companies in this niche, giving it an edge once it hits the NYSE. Once it develops these leading solutions, it sells them to MSPs, essentially outsourced providers of managed IT maintenance. Datto specifically targets MSPs that work with small and medium businesses, as part of what the company calls the IT-as-a-service world.
During the earlier months of the pandemic, business was struggling. MSPs were struggling. In turn, Datto was struggling. Now, as the business world starts to adjust to the new normal, and continues to hope for a more robust recovery, the services Datto provides are critical. We do everything online, which means cloud-based solutions from Datto can keep things secure and running smoothly.
Investors are clearly noting this trend, and also sizing up the competition. Datto primarily rivals names like VMware (NYSE:VMW), International Business Machines (NYSE:IBM) and Open Text (NASDAQ:OTEX).
As the upcoming Datto IPO draws near, keep a close eye on MSP stock. It could very well be a winner in the publicly traded cloud and IT market.
On the date of publication, Sarah Smith did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Sarah Smith is a Web Content Producer for InvestorPlace.com.