Databricks IPO: everything you need to know about Databricks

The Databricks IPO has been highly anticipated for the last two years, but its floatation could finally be on the horizon. Find out everything we know about the Databricks IPO.

What do we know about the Databricks IPO?

Currently, there’s little information on the Databricks IPO, but the company has been hinting at its plans to go public for a while. Although there's no official date for the listing, it's rumoured to be taking place in the latter half of 2023.

Like a lot of technology companies that have been looking to go public for the last few years, Databricks is likely waiting for someone else to go first.

SoftBank-owned chip designer ARM is expected to list in September 2023, so we could see the floodgates open if that’s successful – or we could see another period of IPO-market drought should it flop.

Databricks is also reportedly considering a fresh funding round to fuel AI developments, which could lessen its rush for a listing. But after its recent acquisition of MosaicML and new artificial intelligence strategy, the appetite for its stock is already on the up.

How to trade Databricks

When Databricks lists, you’ll be able to trade its shares in the same way you would any other publicly-traded company on the market.

In the meantime, you can trade thousands of stocks with us via these easy steps:

1. Open a City Index account, or log in if you’re already a customer
2. Search for the company you want to trade in our award-winning trading platforms
3.  Choose your position and size, and your stop and limit levels
4. Place the trade

Alternatively, you can practise with a risk-free demo trading account, and get to grips with trading shares with virtual funds before you tackle live markets.

How much is Databricks worth?

Databricks is worth around $38 billion following its latest fundraising round of $1.6 billion in August 2021, led by Counterpoint Global.

This valuation was quite a jump from its previous round earlier the same year, which valued Databricks at $28 billion.

Until we see an IPO prospectus from Databricks, its post-IPO valuation is hard to ascertain. Especially as a lot has happened since the original rumours of the IPO and now. Based on the 2021 valuation of $38 billion, Databrick's IPO valuation could be above $40 billion. But we know a lot of similar technology companies have gone to market with drastically reduced valuations recently.

What does Databricks do?

Databricks is a San Francisco-based enterprise software company that was started to commercialise the Apache Spark analytics engine. Put simply, the business offers an open-source big data platform that helps other companies manage data.

Databricks is known for its Data Lakehouse Platform, which is a one-platform system for data integration, storage, processing, governance, sharing analytics and AI.

The company was founded in 2013 by Swedish-Iranian computer scientist Ali Ghodsi, alongside a team of other engineers who had previously worked on Apache Spark at the University of California’s AMPLAB.

What has set Databricks apart in the past was its focus on machine learning and artificial intelligence, but as these areas of technology have come to the forefront, the company is having to adapt to bring in new customers.

What is Databricks' business strategy?

Databricks’ business strategy has always been centred around providing a service that allowed companies to manage vast amounts of data in as straightforward a manner as possible.

Databricks was based on the idea that eventually the cloud would house all data without the need for a physical data storage solution.

Originally, developers were using the company’s solutions for free, but eventually, Databricks began continually updating the SaaS offering in the background and charging customers for the new developments in addition to running, operating, and hosting the software.

In 2020, Databricks acquired Israeli company Redash, which helps analysts and data scientists visualise their data and build dashboards around it. The acquisition represented a bid to turn the Databricks Lakehouse functionality into a go-to platform for all data teams.

In August 2023, Databricks acquired MosaicML, a generative AI platform that competes with Open AI with its large language models (LLMs) – a deep learning algorithm that can be trained using large data sets.

This is part of the company’s push toward AI and making the technology accessible to organisations. Soon, Databricks expects to be able to provide its 10,000 customers with the ability to build, own and secure AI models, including LLMs, with its proprietary data.

According to an interview with Forbes, Ghodsi’s early goal was to sell the company for between $100 and $200 million. So, considering the firm could be worth as much as $40 billion, Ghodsi has been successful.

How does Databricks make money?

Databricks makes money through subscriptions to its Software as a Service (SaaS) tools. The company uses ‘Databricks Units’, or DBUs, to measure processing capability per hour, and bills its users on per-second usage rather than having a set cost. 

Is Databricks profitable?

Databricks is still a private company, which means it is not required to release figures about its net income. However, most companies that are eyeing an IPO will give a taste of their financial situation. The last figure released was that Databrick’s revenue in 2021 was $600 million.

Who owns Databricks?

The ownership of Databricks is split between a range of individuals, such as the founders Ghodsi, Zaharia and Stoica, as well as financial institutions such as Counterpoint Global, and Andreessen Horowitz.

Numerous tech giants such as Microsoft, Google and Amazon also hold a stake in the company. 

Key personnel of Databricks

• Ali Ghodsi – Co-Founder and Chief Executive Officer
• Matei Zaharia – Co-Founder and Chief Technology Officer
• Ion Stoica – Co-Founder
• Ron Gabrisko – Chief Revenue Officer
• Rick Schultz – Chief Marketing Officer

Who are Databricks’s competitors?

Databricks’s competitors include the likes of Domino Data Lab, Alteryx and Snowflake, as well as offerings from giants such as Amazon Web Services, Google and Microsoft.

Now that the company is branching out into artificial intelligence, it can also be considered a competitor to Open AI and other chatbot platforms.