Databricks hits $1B revenue milestone as it doubles down on AI with Rubicon acquisition

AI

Big-data analytics firm Databricks Inc. revealed today that it surpassed the $1 billion revenue milestone during its most recent fiscal year, at a time when it’s diversifying its business into new areas such as artificial intelligence.

And that diversification continued apace today, as the company announced it’s acquiring an AI storage startup called Rubicon Inc.

The privately held Databricks announced last August that it was targeting $1 billion in revenue, and today it said its sales rose by more than 60% in the fiscal year ended in January. One of the reasons for that jump was Databrick’s data warehouse offering, Databricks SQL, which generated $100 million in annualized recurring revenue in April, according to a report by Bloomberg.

Databricks Chief Executive Ali Ghodsi (pictured) told Bloomberg that he believes it has emerged as the “fastest-growing software company” in the world. It has seen enormous demand from enterprises that are desperately trying to organize their data to take advantage of new advances in AI. Those customers are also making considerable efforts to reduce their expensive cloud infrastructure costs, he said.

Ghodsi said Databricks SQL is popular because it helps organizations to cut down on their cloud computing costs significantly. Customers are growing increasingly concerned about their cloud spending, he added.

Although Databricks competes with Snowflake Inc. in the data warehousing market, it’s better known for helping companies analyze their data, making its name as a data analytics tool. So far it has raised $3.5 billion in venture capital funding. The company was valued at a cool $38 billion following its last funding round in 2021, though it has since reduced that figure. However, CB Insights still ranks Databricks as the world’s eighth most-valuable startup.

Ghodsi told Bloomberg that Databricks is keen to hold an initial public offering eventually, but the company is in no rush to do so yet. Not only are the markets unreceptive to IPOs right now, but being private means Databricks has the freedom to make some significant investments in areas such as AI, where it desperately wants to become a major player.

Databricks has made a big push in AI lately, open-sourcing a generative AI model similar to OpenAI LP’s ChatGPT in March as part of a bid to democratize access to large language models. That model, called Dolly, was subsequently improved with the launch of Dolly 2.0 in April. Notably, Dolly 2.0 comes with a license that permits commercial use, meaning enterprises are free to fine-tune it using their own datasets and create AI models they can then make money from.

The launch of Dolly 2.0 was followed by the acquisition of an AI data governance startup called Okera Inc., which provides tools for discovering, classifying and tagging sensitive data. Companies can use Okera’s tools to create access policies that provide them with more control over such data, Databricks explained at the time.

Continuing those efforts, Databricks announced its latest acquisition today — a stealth startup called Rubicon Inc. that’s building next-generation storage infrastructure for AI.

Ghodsi told Bloomberg that it would have been much more difficult for Databricks to justify those acquisitions if it were a public company. The financial terms of the Rubicon and Okera acquisitions were not disclosed, but they were most likely expensive. When it comes to buying AI-focused companies, Ghodsi said, “right now you have to pay up.”

Photo: SiliconANGLE