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Databricks IPO: Updates From the AI-Driven Data Giant

Is the Databricks IPO on the way? The company recently hinted at plans to go public. So, let’s dive into the details…

Databricks IPO: About the Business

Databricks IPO

The creators of Apache Spark, Delta Lake and MLflow co-founded Databricks in 2013. Headquartered in San Francisco, California, Databricks is an artificial intelligence (AI)-powered data analytics company.

It pioneered the idea of “lakehouse” architecture in the cloud. This combined data “lakes,” large amounts of raw data, with “warehouses,” organized structures of processed data.

The Lakehouse platform helps enterprises manage their data using an open and unified platform for data and AI. The new method for storing, analyzing and choosing information may put an end to the data warehouse, according to supporters. This is a big deal since data warehouses have been central to corporate IT portfolios for more than three decades.

Databricks operates in over 12 countries worldwide with an international reach of more than 5,000 organizations. Additionally, the company maintains partnerships with more than 450 international firms that provide services on the Databricks Lakehouse Platform.

Over 40% of the Fortune 500 use Databricks’ platform. Importantly, seeing a company supported by so many investors and enterprises is rare. Furthermore, the company is on track to keep growing in 2022.

Databricks on Track to Reach $1 Billion in Revenue in 2022

The past two years have been huge for tech companies as many businesses moved online. And Databricks benefited as well. In 2020, Databricks passed $425 million in annual recurring revenue, a year-over-year growth of more than 75%. Furthermore, in 2021, annual recurring revenue jumped even more to $600 million.

According to reports, the COVID-19 pandemic heightened companies’ interest in cloud-based analytics. This is proving to be true with the company on track to reach $1 billion in revenue for 2022, according to an investor. Pete Sonsini, who joined Databricks’ board in 2014, said companies rushed to analyze their data in the cloud…

They definitely accelerated through the pandemic… We invested in Databricks when they had zero software revenue, and they’re going to do about $1 billion in GAAP revenue next year… Could be more.

Yet, prospective speculators interested in the Databricks IPO will want to learn more about the margins associated with that figure. So far, no details have come out. However, the company recently landed a $38 billion valuation. The figure is leading investors to believe a Databricks IPO is coming soon.

Databricks Lands $38 Billion Valuation

At the end of August, Databricks announced that it raised $1.6 billion in a Series H round. The funding round gave the company a staggering $38 billion valuation. This valuation came just seven months after a $1 billion Series G funding that landed Databricks a $28 billion valuation. In other words, in just seven months, Databricks increased its valuation by $10 billion.

Databricks’ most recent fiscal year ended in September 2021 with revenues of $425 million. This represents a year-over-year increase of over 75%. However, in terms of profitability, Databricks doesn’t release figures. So, it’s unknown if the company is profitable. Moreover, any figures that might exist for profitability are speculative.

After the Series H funding round landed Databricks a $38 billion valuation, Ali Ghodsi, co-founder and CEO, said…

This new investment is a reflection of the rapid adoption and incredible customer demand we’re seeing for the Databricks Lakehouse Platform and underscores the industry and investor confidence in our vision – that lakehouse is the data architecture of the future… This marks a thrilling new chapter that will allow us to accelerate our pace of innovation and further invest in the success of data-driven organizations on their journey to the lakehouse.

The company has raised almost $3.6 billion in funding from investors. Furthermore, the company receives backing from all four major cloud providers: Amazon (Nasdaq: AMZN), Microsoft (Nasdaq: MSFT), Alphabet (Nasdaq: GOOG) and Salesforce (NYSE: CRM). Moreover, the latest capital raise has investors speculating that a Databricks IPO could come soon.

So, how much could the company raise in the Databricks IPO? Let’s look at the filing details…

Databricks IPO Filing Details

Investors are on the edge of their seats for a Databricks IPO. Furthermore, while an IPO isn’t official, it’s rumored to be taking place in 2022. Ghodsi tried to end speculation sparked by the funding round by stating the latest money raise “does not push out the IPO,” according to Reuters.

However, Ghodsi hinted toward going public in a February interview with CNBC. At the time, Ghodsi didn’t disclose if the Databricks IPO will come via a traditional IPO route or a direct listing. However, he hinted that the company was considering going public via direct listing. This news came after the SEC’s new rule that allows companies to raise funds while direct listing.

However, Ghodsi was quick to argue that a traditional IPO has one big benefit. In a traditional IPO, the company can choose its new shareholders. Since the company is looking for long-term investors, this could be more beneficial in the long run.

In summary, the method that investors could get Databricks stock is still unknown. However, Ghodsi did say that the company will not go public via a SPAC.

Furthermore, in a more recent August interview with Protocol, Ghodsi said…

We’re going public six months at a time… Usually when you IPO, you want to make sure you are getting the long-term investors … [and] we’re basically allocating the big blocks of allocations to the big mutual funds and other investors right now.

It’s been a few months since Ghodsi gave an update on the Databricks IPO. However, we can expect to hear more news on Databricks stock soon.

Furthermore, if IPO investing interests you, check out our top recent IPOs and our IPO calendar. We update the calendar daily to give you the latest news on upcoming and filed IPOs.


About

Aimee Bohn graduated from the College of Business and Economics at Towson University. Her background in marketing research helps her uncover valuable trends. Researching IPOs and other trends has been her primary focus over the past year. When Aimee isn’t writing for Investment U, you can usually find her doing graphic design or traveling with friends.

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