Databricks Inc., considered an extremely valuable start-up in the U.S., is looking forward to releasing an IPO or Initial public offering despite Wall Street’s skepticism about the software industry, according to Ali Ghodsi, the company’s CEO.
Ghodsi, in an interview, said that the IPO timing is not affected by stock market volatility. His company is in for a long journey and not in a great hurry to launch an IPO.
Databricks are in the business of allowing customers to gather insights from large information data. As per Bloomberg News, the company has raised $3.5 billion and commands a valuation of $38 billion.
According to CB Insights, a research firm, Databricks is the world’s ninth most valuable start-up. Databricks have the potential to reach a $139 billion market size by 2025.
Some suggest that Databricks will be the next blockbuster IPO that investors are looking for in the data analytics sector after the historic 2020 offering from Snowflake Inc.
Databricks based out of San Francisco said it ended 2021 with more than $800 million annual revenue, with 80% growth year on year. Databricks has 7000+ customers with a net retention rate of more than 150% from its existing customer. This is significantly more than the industry average for software vendors at the Pre-IPO stage. When Snowflake went public in 2020, it had an estimated Annual Recurring Revenue of $530 million.
Databricks results do not reflect revenue from data storage and computing services. According to Ghodsi, customers instead pay to cloud vendors like Microsoft directly. Databricks is now offering the customers the option to pay for these services, which are bundled alongside the software offered. This is noteworthy as other vendors make millions of dollars annually from usage fees alone.
Ghodsi declined to comment on the potential IPO timing. According to him, the company will include the compute revenue in its earnings from now on. The shares of software companies which has zoomed during the pandemic have dropped in 2022 so far. The S&P North American Tech soft index, which has 124 members, has declined 14% so far in 2022.
Databricks is attracting top talents from Alphabet Inc. and Amazon Inc., cloud divisions at the senior level. They include Sridhar Machiraju, the guy who headed Google Cloud relational database Spanner, and Michalis Petropoulos, who oversaw the Redshift product at Amazon before moving to Google as engineering Director.
Databricks also hired Andy Kofoid from Salesforce.com as its Head of field operations, Fermin Serna as its Chief Security officer, who was earlier with Google as their Product Security leader, and Naveen Zutshi, the former Chief information officer with Palo Alto Networks.
The company is following the footsteps of Microsoft, Salesforce, Snowflake, and others to cater to specific industries in retail and healthcare with tailored software tools.
Databricks launched a new product on Tuesday, which targeted the financial services industry. The product allows businesses like Nasdaq to improve their functions in fraud detection by bringing customer transaction information over decades into a shared repository.
Bill Dague, Nasdaq’s Head of alternative data, conceded that they have a large amount of historical data, which was very hard to process. Databricks allow them the share and access large amounts of data more efficiently.
