Microsoft-backed Databricks plans IPO next year

[SAN FRANCISCO] Databricks, whose business overlaps with data and analytics software maker Snowflake, is preparing an initial public offering (IPO) that could come in the first half of 2021, according to people with knowledge of the matter.

Discussions are at an early stage and the company has held talks with banks but has yet to hire underwriters, said the people, who asked not to be identified discussing private information. The company's plans could still change, they said.

San Francisco-based Databricks is aiming to go public at a price significantly higher than the valuation in its last funding round, one of the people said. It was valued in 2019 at US$6.2 billion when it raised US$400 million, according to a statement at the time.

A representative for Databricks declined to comment.

Software is the most profitable segment of the IPO market for investors, according to data compiled by Bloomberg. Snowflake, which went public last month at a market value of US$70 billion, has seen its shares double from its IPO price.

Of the US$129 billion raised in IPOs on US exchanges this year, Software accounts for 10 per cent of the total, the data show. That portion rises to more than 20 per cent when special purpose acquisition companies are excluded. Software firms have also outperformed other newly public companies, rising 97 per cent from their offer prices on a weighted average basis compared with 48 per cent for other companies, the data show.

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Databricks has raised about US$900 million from backers including Andreessen Horowitz, Coatue Management, New Enterprise Associates, Tiger Global Management, BlackRock and T Rowe Price Group. Its backers also include Battery Ventures, Sinewave Ventures, In-Q-Tel and Data Collective.

Microsoft is both a Databricks investor and a partner, integrating a version of the startup's software into its cloud product, Microsoft Azure.

Databricks, founded in 2013, has more than 5,000 customers including Royal Dutch Shell, Conde Nast International and Regeneron Pharmaceuticals, according to its website.

BLOOMBERG