Databricks Inc., specializing in software development and headquartered in San Francisco, raised more than $5 billion.
The mentioned information was published by the media with reference to insiders who are aware of the specified process. The technology company has received funding from lenders including Blackstone Inc., Apollo Global Management Inc., and Blue Owl Capital Inc. In this case, it was the largest software raise to date in the software developer’s history.
The interlocutors of the journalists used the right of anonymity since information about the receipt of financing by a technology company is still classified as confidential.
Currently, Databricks is one of the most valuable closely held firms in the world. Last year, the technology company tapped JPMorgan Chase & Co. to arrange the financing. According to media reports, the software developer plans to use the funds received to offset the tax burden associated with the sale of stocks from staffers.
It is worth noting that the debt deal comes alongside the technology company’s $10 billion equity funding round, which Databricks announced at the end of last year and which increased the indicator of its market capitalization to $62 billion.
Direct lenders provide the software developer with a $2.25 billion term loan and a $500 million delay-draw tranche, which the firm can tap later. This was reported by the media, citing insiders. The interlocutors of the journalists also noted that the debt structure is tied to the annual recurring revenue of the technology company. This debt pays 4.5% over the Secured Overnight Financing Rate.
Moreover, insiders reported that a group of banks, including JPMorgan Chase, Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, and BNP Paribas SA, provided a $2.5 billion revolving credit facility under debt financing.
Representatives of Databricks, Blackstone, Apollo, Blue Owl, JPMorgan Chase, Barclays, Citigroup, BNP, Goldman Sachs, and Morgan Stanley did not provide comments on the mentioned information.
ARR loans have become a popular way in which private credit companies extend loans to fast-growing software development firms that are not yet profiting. As part of the relevant practice, credit safeguards are set on measures of companies’ recurring revenue, which is typically based on long-term contracts rather than earnings.
Databricks said last month that it expects its annual revenue to exceed the $3 billion mark. Also at that time, the technology company predicted that its free cash flow for the fourth fiscal quarter, which will end on January 31, would be positive. Over the previous three months, Databricks’ sales have grown by more than 60%. It is worth noting that the corresponding result was recorded at a time when many software development firms were struggling with growth.
The revenue of the technology company for fiscal 2023 was fixed at $1.6 billion. This indicator is more than twice the previous level.
Databricks announced the intention to use the proceeds from its $10 billion equity raise for new artificial intelligence products, acquisitions, a significant expansion of its international go-to-market operations, and to buy shares owned by former and current employees. Thrive Capital led that funding round alongside companies including Andreessen Horowitz and DST Global.
Databricks develops software to ingest, analyze, and build artificial intelligence apps with complex data from various sources. The technology company’s main competitors are Snowflake Inc. and some services offered by cloud infrastructure vendors such as Microsoft Corp.’s Fabric.
It is worth noting that the so-called artificial intelligence boom, which is currently what can be called a global technological tendency, has become one of the factors driving the growth of Databricks’ business. In general, AI has improved the position of many companies. It is also worth noting that the boom in artificial intelligence continues and shows no signs of abating. This means positive prospects for the beneficiaries of global interest in AI. It is worth noting that the business growth driven by the boom of artificial intelligence is highly intensive. In many cases, financial performance increases exponentially.
The Databricks Data Intelligence Platform helps organizations use their data for analytics, machine learning, and artificial intelligence apps.
Last month, Databricks along with Wiz and Workday decided to run their products on top of AWS via the new feature called Buy with AWS button.
