The IPO will give Datto and its MSP partners a competitive advantage, says Datto's Rob Rae.

Edward Gately, Senior News Editor

October 21, 2020

4 Min Read
IPO
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Datto MSP partners have a lot to look forward to with the company going public.

That’s according to Rob Rae, Datto’s senior vice president of business development. On Wednesday, Datto officially began trading on the New York Stock Exchange (NYSE), selling 22 million shares to raise $594 million in its IPO.

The company filed its plans to go public last month with the Securities and Exchange Commission. It’s under the ticker symbol “MSP.” Vista Equity Partners owns Datto.

Tim Weller, Datto’s CEO, and Austin McChord, Datto’s founder, rang the NYSE opening bell to highlight the first day of trading.

MSP Growth Fueled IPO

Datto has kept quiet about the IPO until now.

Rae-Rob_Datto-2019-web-size.jpg

Datto’s Rob Rae

“I’m crazy excited about this,” Rae said. “I’ve been working in the MSP space with MSPs for more than a decade now. And just to see the growth of what’s happened in the MSP market and for us to get to the point where a channel-only company like Datto can actually go and do this, it’s going to mean a lot. The fact that we’re focused on MSPs and MSP technology, the growth that MSPs are having worldwide and working with MSPs, this allows us to do a lot of different things.”

MSPs are growing, Rae said. SMBs are transforming digitally every day, and the importance of the technology is increasing.

“What this does is give us the ability to invest in not only growing and supporting our partners better than we have, and continue to provide great support, but it also allows us to expand a little bit and help the MSPs bring even more technology support and innovation to their market, and provide even better technology and more technology to their SMB customers,” he said.

MSPs are an essential part of Datto‘s growth, Rae said. And the growth the company experiences will come from what MSPs are doing in the market.

“The world continues to be dangerous from a technology perspective, from malware and ransomware, and all the things that SMBs are dealing with,” he said. “They really have no choice but to work with MSPs because those MSPs have the skills, the experience, the equipment, the IT and all those types of things. We’re very proud at Datto to be an essential part of that MSP offering, and continuing to assist them and support them in growing.”

Delayed Because of Pandemic

The IPO has been something the company has talked about for some time, Rae said. COVID-19 delayed it because of uncertain market conditions.

“When this all happened, first of all right out of the gate, MSPs were listed as essential services,” he said. “They recognized that these SMBs need that technology in order to continue to run their businesses through COVID-19. So if anything, MSPs became even more essential through all of this. So when you talk about the IPO, that’s where early on we pivoted and made sure that our partners were getting the support they needed, that they were OK, that everything was going. And then you get a better sense of where the public market is and the timing just worked out very well.”

The IPO will give Datto and its MSP partners a competitive advantage, Rae said. Datto can continue to innovate with the funding.

“We can continue to take a look at new technologies we can bring,” he said. “We can provide better support, which gives them better margins. That gives them the ability to provide better services to their ultimate end users. So it’s a win all the way down the line.”

SMB spending will continue to grow, Rae said. And that’s not just technology, but using MSPs to leverage that technology.

“We chose the stock ticker to reflect that the growth is going to happen through MSPs,” he said. “SMBs need MSP services in order to accelerate their own businesses with technology. We’re bringing attention to the managed services market. We’re bringing attention to MSPs and the essential role that they play in technology with an SMB today.”

As of June 30, Datto reported $507 million in annual recurring revenue and 17,000 MSP partners. It also reported a 19% year-over-year increase in subscription revenue.

The company’s stock didn’t have a blockbuster opening like some tech IPOs have had recently. But it still ended the day up 0.37% from its morning debut.

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About the Author(s)

Edward Gately

Senior News Editor, Channel Futures

As news editor, Edward Gately covers cybersecurity, new channel programs and program changes, M&A and other IT channel trends. Prior to Informa, he spent 26 years as a newspaper journalist in Texas, Louisiana and Arizona.

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