Databricks raises $5 billion in latest funding, defying software selloff

By Jaspreet Singh, Pritam Biswas and ⁠Krystal Hu

Feb 9 (Reuters) - ⁠Databricks said ‍on Monday it has completed a fundraising of about $5 billion at a $134 billion valuation, as the data analytics software company bolsters its balance sheet to invest in artificial intelligence products focusing ‍on enterprise customers.

One of the most valuable privately held companies, Databricks also announced about $2 ​billion in new debt capacity, as its annualized revenue run-rate rose 65% to $5.4 billion in the fourth quarter.

The $7 billion capital injection ​makes the company "really well capitalized, in case there's a winter coming", CEO Ali Ghodsi said in an interview with Reuters.

While widely viewed as a public market candidate, Ghodsi said that by staying private, the firm is able to continue to ​invest in growth while not getting distracted by the swings in the public market. The company is planning on providing liquidity options using its balance sheet for employees later this year.

The outsized funding round was ​completed amid a public market selloff on software stocks around the globe over mounting worries from investors that fast-advancing AI tools could upend ‌the industry instead of aiding them.

"I think one of the reasons this round was oversubscribed is that investors look at the numbers that we have, and it's ​realized that we are an AI beneficiary. Anything that the AI ⁠layer directly uses is going to increase in exploding consumption because you have these agents running around doing it," Ghodsi said.

Databricks offers a platform designed to help ‌users ingest, analyze and build AI applications using complex data from various sources. It competes with Snowflake and analysts widely see it as a public listing candidate along with marquee names such as SpaceX, OpenAI and Anthropic.

A potential Databricks IPO ‌would add to signs of a thawing new-issues market, with highly valued companies testing investor appetite as equity markets rebound and ‌interest rates drop.

The company said it will use the new capital to accelerate development of Lakebase, its AI-focused database, and Genie, its conversational assistant.

Databricks said that its AI products currently bring in $1.4 billion in annualized revenue.

Not all market watchers agree ‍an IPO is the best near-term path. If late-stage private capital prices you at $134 billion and lets you keep building without quarterly theater, "you stay private and ⁠preserve control," said Michael Ashley Schulman, partner and CIO at Running Point Capital Advisors.

JPMorgan Chase led the debt financing. Goldman Sachs, Glade Brook Capital, Morgan Stanley, Neuberger Berman and the Qatar Investment Authority were among the investors in the new equity round.

(Reporting by Pritam Biswas and Jaspreet Singh in Bengaluru and Krystal Hu in San Francisco; Editing by Tasim Zahid and Jacqueline Wong)

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