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    Databricks' Accelerating Growth by @ttunguz

    Venture Capitalist at Theory

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    2 minute read / Jun 13, 2024 /

    Databricks' Accelerating Growth

    Databricks revealed some sensational growth this week, as they did last year. Exiting this quarter to $2.4 billion annual run rate, the company’s revenue growth is accelerated year-over-year by 10 percentage points.

    Quarter Q2 2023 Q2 2024
    Quarterly Revenue, $m 375 600
    Revenue Growth 50% 60%
    Customers 10,000
    Gross Margin 85% 80%
    Net Dollar Retention 140%
    Data Warehouse Revenue, $m 100 400
    Average Annual Customer Value 37,500

    Net dollar retention is a major driver of growth at 140%, which is top decile. The table above shows the other data points that we’ve collected through their press releases in the last two years.

    The fastest growing product category mentioned is the data warehouse revenue : 300% growth, now at $400m annually, nearing 20% of revenue.

    With these modest data points, we can build a basic linear regression model for what the company is worth. This model is rough with an R^2 of approximately 0.45. image click on the image to enlarge

    Assuming Databricks continues to grow at roughly 50%, that implies the company in the public markets would be worth approximately $54b. However, the company will likely trade at a premium to this. It is one of the few companies that provides significant exposure to AI software in the public markets.

    Company Snowflake Databricks
    TTM Revenue, $B 3.0 2.4
    Revenue Growth Rate 33% 60%
    Estimated Multiple 12 14.5

    Compared to Snowflake, Databricks is growing nearly twice as quickly. Without additional data, it’s difficult to comment on the relative sales efficiency or profitability.

    Databricks’ growth rate is yet another example of the rapid demand for AI infrastructure & the systems needed to power it.


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