The enterprise world has been struggling to find growth lately, with valuations seemingly plunging left and right. However, in the middle of this chaos, there is one company that continues to defy the odds – Databricks. In a massive round of funding, the late-stage startup raised $500 million, bringing its valuation to a whopping $43 billion. But that’s not all – this week, the company revealed some impressive revenue numbers, further solidifying the confidence of its investors.
For the fiscal year ending January 31, 2024, Databricks reported an astounding $1.6 billion in revenue, marking a growth of over 50% from the previous year. This is a truly remarkable achievement, especially in today’s economic climate.
As a privately held company, Databricks was not obligated to disclose its financial numbers. However, with such incredible growth, there was no reason not to share the good news with the world. While the public market remains a challenging space, Databricks seems content to stay private for now and showcase its success to customers and investors.
So, how has Databricks managed to achieve such remarkable growth, even ten years after its launch? According to Ray Wang, founder and principal analyst at Constellation Research, it’s all about being in the right place at the right time. With data at the center of enterprise computing and acting as the fuel for artificial intelligence and large language models, Databricks has positioned itself as the go-to platform for companies dealing with massive amounts of data.
“They are now the default for AI and data,” Wang told TechCrunch.
Databricks is not the only player in this space, however. Snowflake, founded just a year before Databricks in 2012, is also a key player and is seen as its primary competitor. Both companies have experienced exponential growth as the demand for data storage, processing, and management continues to increase.
Both Databricks and Snowflake have reaped the benefits of this demand by providing solutions that cater to businesses of all sizes. However, when it comes to revenue growth, Databricks outshines its public competitors, posting a growth rate of over 50%. In comparison, the fastest-growing public software company, SentinelOne, reported a growth rate of 42%, while Snowflake clocked in at 31.5%. This shows just how much of an outlier Databricks is in terms of growth.
Moreover, Databricks is not just growing, but it is doing so while maintaining strong customer retention and expanding its product offerings. Its Databricks SQL product, specifically for data warehousing, grew by a remarkable 200% year-over-year, with a run rate of over $250 million.
With such impressive results, it’s no surprise that Databricks is preparing for an eventual IPO, as revealed by Dharmesh Thakker, general partner at Battery Ventures, who was an early investor in the company.
“We’ve been fortunate to be an early investor in Databricks and support CEO Ali Ghodsi on his growth journey to almost 100x top-line growth since we invested,” Thakker told TechCrunch. “Yet even at $1.5 billion in revenue, it still feels like the company is in the early stages of growth, based on the broader market and the company’s competitive position.”
As we’ve closely followed Databricks’ journey as a private company over the years, our prior data allows us to clearly see its recent growth trajectory. And it is impressive – the company generated over $1.6 billion in revenue in its most recent fiscal year, and its Databricks SQL product contributed significantly to this figure. Additionally, its “net expansion rate” was an impressive 140%, compared to Snowflake’s 131%.
Databricks’ strong net retention, combined with its expanding product offerings, have contributed to its exceptional growth. And the company shows no signs of slowing down, with its “generative AI-related business” helping it achieve its best-ever quarter in terms of bookings, doubling its previous record.
So, what does all this mean for Databricks’ valuation? While it is not straightforward due to the company’s unique position, using a revenue multiple of 22x – in line with the most valuable software companies on the public market – would put its worth at around $35 billion, close to its latest private-market valuation. With a few more quarters of growth, Databricks could convince investors that it is worth even more, making it a hot prospect for its eventual IPO.
All in all, it’s clear that Databricks is a success story in the making. And with the current demand for data solutions and the rising importance of AI, the company’s future looks very bright indeed.
