TLDR
- Databricks closed $5 billion funding round at $134 billion valuation plus $2 billion debt capacity from JPMorgan Chase
- Company posted $5.4 billion annualized revenue in Q4, up 65% from prior year with positive free cash flow generation
- AI-related products now produce $1.4 billion in annual revenue as enterprise adoption accelerates
- Oversubscribed funding round defied software stock selloff that sent Oracle and Snowflake down 13% last week
- CEO Ali Ghodsi says staying private allows focus on growth without quarterly market distractions
Databricks secured $5 billion in new equity funding on Monday. The private company also arranged $2 billion in debt financing.
The data analytics firm achieved a $134 billion valuation. This came despite a broader selloff hitting public software companies.
Goldman Sachs, Glade Brook Capital, Morgan Stanley, Neuberger Berman and Qatar Investment Authority participated in the equity portion. JPMorgan Chase arranged the debt component.
CEO Ali Ghodsi said the round was oversubscribed. Demand exceeded the company’s initial expectations.
Strong Financial Performance
Databricks reported annualized revenue of $5.4 billion for the January quarter. Growth reached 65% compared to the same period last year.
The company generated positive free cash flow over the trailing 12 months. This marks a milestone for the enterprise software provider.
AI products contribute $1.4 billion to annual revenue. The platform enables companies to build custom AI agents using their proprietary data.
Growth rates are improving. Databricks projected just 50% expansion when it reported results in June.
The $7 billion capital injection gives the company substantial financial flexibility. “Really well capitalized, in case there’s a winter coming,” Ghodsi told Reuters.
Market Position Strengthens
Databricks now generates more revenue than public competitor Snowflake. Snowflake posted $1.21 billion in the October quarter.
Snowflake trades at a $58 billion market capitalization. That’s less than half of Databricks’ private valuation.
The new funding will accelerate development of Lakebase. This AI-focused database targets enterprise customers.
Resources also support Genie, the company’s conversational AI assistant. Both products position Databricks to capture AI infrastructure spending.
Software stocks dropped sharply last week. Oracle and Snowflake each fell 13% on concerns about AI disruption.
Ghodsi called the market reaction an overreaction. “You’re going to see all these companies be around, and nobody’s getting rid of them anytime soon,” he said.
But he acknowledged competitive dynamics are shifting. “Their moat is shrinking,” Ghodsi added.
IPO Plans on Hold
Databricks could go public “when the time is right,” Ghodsi told CNBC. The company maintains IPO readiness.
Staying private offers strategic advantages. Management avoids quarterly earnings pressures and market volatility.
“If this correction hasn’t bottomed out yet, and it’s just going to continue, we’re just going to continue as a private company,” Ghodsi explained.
The company announced plans to raise over $4 billion in December. Final demand pushed the total to $5 billion.
“We weren’t sure we’re going to actually be able to raise all of the five,” Ghodsi said. Investor interest intensified in recent weeks.
Databricks will offer employee liquidity options later this year. The company’s balance sheet can support these programs.
Michael Ashley Schulman from Running Point Capital Advisors said private funding at $134 billion lets Databricks “stay private and preserve control” without quarterly reporting requirements.
Databricks joins a potential wave of 2026 tech IPOs. SpaceX, OpenAI and Anthropic are also considering public listings this year.
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