Databricks recently revealed that it recorded revenue of more than $1 billion in the financial year ended January 31. The company also said it grew more than 60% last year and its data warehousing product crossed the $100 million annual recurring revenue (ARR) threshold in April.
Databricks has always grown quickly, so it’s not surprising to hear that it has surpassed new revenue milestones, but these numbers are impressive even though we’ve been tracking this company for a while.
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Databricks reached ARR of $600 million when it raised a massive round in August 2021, reached $800 million in ARR at the end of 2021, and last August, crossed the $1 billion ARR threshold. However, as ARR is more of a forward-looking metric, the fact that Databricks managed to generate a full billion dollars in revenue is indeed a feat.
Today, we’re nearly half-a-year behind the company’s actual growth curve. Since Databricks saw revenue of $1 billion last year, it must have closed the year with higher ARR, and it has grown for nearly two quarters since then. It’s not easy to nail down how much revenue the company would be making today, but that’s not going to stop us from having a little fun with big numbers.
Databricks has been in the news lately for other reasons as well. Last month, it acquired Okera, a data governance platform with a focus on AI, and Bloomberg recently reported it bought Rubicon, a startup focused on data storage for AI-related work. Given that Databricks deals with corporate data, it makes sense that it is working with AI-related data services — in fact, the company open-sourced its own LLM in April.
But that’s all related to product. Today, we’re just talking about revenue, growth and how close Databricks is to harmonizing its private-market worth with what the public markets might afford it. Spoiler: The fact that it is deep in the AI trenches is not going to hurt its path to an eventual IPO, even if CEO Ali Ghodsi is in no hurry to go public.
The path to $1 billion
Rewinding through all our Databricks financial coverage takes a moment, but it’s worth our time. Here’s a rundown of what we have learned through time:
- Q3 2019: $200 million run-rate revenue at a $6.2 billion valuation — 31x run-rate multiple;
- Late 2020: $425 million ARR with a $28 billion valuation — 66x ARR multiple;
- August 2021: $600 million ARR with a $38 billion valuation — 63x ARR multiple;
- Late 2021: $800 million ARR at a $38 billion valuation — 47.5x ARR multiple;
- August 2022: More than $1 billion in run rate revenue at a $38 billion valuation — under 38x run-rate multiple;
- F.Y. ended January 31: $1 billion in trailing revenue (four quarters).
Without consistent metrics, it’s a bit tricky to compare how much the company grew between annualized run-rate revenue, ARR and trailing results. In fact, regular readers of The Exchange will recall that when Databricks crossed the $1 billion run-rate mark, we wound up getting some of the math wrong when trying to calculate the company’s pace of growth. That was fun.
The good news is that Databricks was kind enough to share some notes with TechCrunch+. The company said its revenue growth rate was above 60% in Q4 of its last financial year, which was slower than its full-year revenue growth rate. It declined to share that latter number.
Databricks records higher ARR and annualized run-rate revenue than it does in trailing revenue terms. For those of you wondering why that is the case, let’s use Samsara’s recent results to explain:
- In its fiscal 2023, Samsara closed with ARR of $795 million and GAAP revenue of $653 million;
- In the first quarter of its F.Y. 2024, Samsara reported ARR of $856 million and GAAP revenue of $204 million.
When we consider Samsara’s trailing results compared to its ARR, its annual recurring revenue was 22% greater than its full-year top-line. And when we compare its Q1 F24 ARR against its annualized run-rate revenue (Q1 F24 revenue multiplied by four), we find a smaller 5% gap. The more forward a metric is, the greater the gap between it and trailing results. ARR is more forward-looking than an annualized quarter, in other words, and both of these metrics are often ahead of trailing revenue results.
As we know that Databricks’ trailing revenues came to $1 billion last year, it is simple to infer that the company’s end-of-year annualized run rate revenue and ARR were above the $1 billion mark.
That means that Databricks’ ARR multiple is now comfortably less than 38x. If the company’s ARR has reached $1.25 billion since then, its multiple would be around the 30x mark. (These figures grow even more attractive if we compare Databricks’ most recently reported 409a valuation of $31 billion instead of its last private valuation.)
Even at 30x, Databricks’ multiple would be quite a bit above the median revenue multiple of the most richly valued public software companies. But it is coming down — public-market multiples are slowly recharging, especially for the fastest-growing cohort of public SaaS businesses.
Databricks is getting closer to harmonizing its historical valuation with current market norms. A little more growth and help from rising multiples and the company could go public safely — especially if it targets a $31 billion market cap.
Databricks is more than a financial story, but even if we narrow our vision to just the dollars and cents, it’s been quite the journey.
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