As Databricks Reaches $800M ARR, a Fresh Look at Its Last Private Valuation

As Databricks Reaches $800M ARR, a Fresh Look at Its Last Private Valuation

Unicorn of big data analytics Databricks is again in the headlines, this time with a fresh sales number and a forecasted growth rate for 2021. For years, TechCrunch has been following the firm, interested in its progress and what its increased value meant for its market. Today, we’re looking at the company’s most current financial data and comparing it to its most recent private financing. But first, we’ll need to perform some background research. TechCrunch spoke with Databricks CEO Ali Ghodsi on his company’s newest mega-raise when it received $1.6 billion in August of 2021 at a $38 billion post-money value. We have a few inquiries.

One of my questions was about how he felt about the pressure that such a high private-market valuation would appear to imply — after all, startup valuations are estimations until they exit, so higher prices imply larger expectations for future success. Ghodsi was unconcerned. He said he didn’t feel much pressure at the time and that he was sleeping comfortably.

He cited a number of reasons for this. The first was his view that his organization is truly creating a new category of service, according to our notes from the talk. Second, he hadn’t maximized for valuation in the fundraising event, and there was more demand for funds than there was room to accept in both of his company’s 2021 rounds. When it comes to startups and unicorns in a rush, the above is fairly conventional CEO fare. His final point, that companies that develop rapidly — he used a 75 percent growth rate as an example — can overcome market corrections through growth, was more intriguing. 

In other words, even if the market changed its mind about the value of software revenues, as long as Databricks continued to grow, everything would be great. Since that talk, the market has changed, with the value of software sales being repriced by public markets beginning in late 2021 and extending into early 2022. And Databricks continued to expand.

So, this afternoon, we’ll have a little fun estimating the company’s revenue multiples in August and at the end of the year using today’s market data. The trial will reveal how much, if any, ground Databricks must cover before its private-market valuation can be translated to the public markets on a 1:1 basis. I promised myself I wouldn’t make anymore “when will Databricks go public” jokes, so let’s get down to business.

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