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Databricks IPO

How to trade Databricks’ potential IPO

Databricks, a US company that specialises in data analysis and artificial intelligence (AI), may be planning an initial public offering (IPO​) in the near future. Find out about the company’s growth story, financials and IPO prospects, and sign up to receive a notification when Databricks lists on the stock market, allowing you to trade on its shares with us.

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What does Databricks do?

Databricks is a data analytics company that was founded by the creators of Apache Spark, an open-source analytics platform for data processing. Founded in 2013 with headquarters in San Francisco, California, Databricks has around 7,000 employees and operates in over 20 countries worldwide.

Databricks’ cloud-based software platform helps businesses process, store, share, analyse and manage their data and AI models. The company also runs several open-source projects, including Delta Lake, MLflow and Koalas, which cover areas such as data science, data engineering and machine learning.

When is Databricks’ IPO date?

Databricks hasn’t yet set a date for its highly anticipated IPO, but it could go public in the next couple of years. In an article published by Yahoo Finance on 18 December 2024, CEO Ali Ghodsi is quoted as having said that it would have been “dumb to IPO” in 2024 amid the uncertainty of a US presidential election, though he hinted that 2025 could be a possibility. “We wanted to get some stability – people are worried about interest rates, inflation... The earliest theoretical possibility of an IPO would be next year,” said Ghodsi.

While it’s unclear how the company plans to go public, Ghodsi ruled out a merger with a special-purpose acquisition company (SPAC), as reported by Reuters in August 2021. 

Databricks’ share price and valuation

It remains to be seen what the Databricks share price will be when the company lists on the stock market. We expect an offer price to be revealed closer to the IPO date.

Databricks was valued at $62bn in December 2024 after a venture capital funding round raised $10bn. This latest valuation marked a 44% increase from its 2023 valuation of $43bn. The oversubscribed 2024 funding round, led by Joshua Kushner's Thrive Capital, drew financing from investors such as Andreessen Horowitz, DST Global, GIC, Insight Partners and WCM Investment Management, according to a report by Reuters on 17 December 2024. 

How to trade on the upcoming Databricks IPO

1. Sign-up to receive alerts

Enter your email address into the box above to receive a one-time notification when Databricks has listed on its chosen exchange.

2. Register for an account

You can trade on 10,000 in the meantime, including competitors of Databricks.

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3. Pick a trading strategy

Choose whether you want to go long (buy) or go short (sell). Please note that some trading restrictions may apply on initial trading.

4. Add risk-management tools

We offer traditional, trailing and guaranteed stop-losses, as well as take-profit orders, to effectively control your risk.

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What are Databricks’ financials like?

As Databricks is still a privately held company, it’s hard to get a complete picture of its financials. However, Reuters’ December 2024 article on Databrick’s $10bn funding round stated that the company “expects to achieve positive free cash flow for the first time in the quarter ending 31 January 2025”. The report added that Databrick “expects to generate $3.8bn in revenue in the following fiscal year”.

The latest round of funding will be used to let some employees cash out their stock, as well as to hire top AI talent, invest in new AI products, and pursue potential merger and acquisition opportunities, according to Reuters.

The company’s main source of revenue is customer subscriptions to its software-as-a-service (SaaS) tools. Rather than charging a set fee for its services, the company uses ‘Databricks units’ to measure processing capability, billing users on per-second usage.

Why may investors be interested in Databricks’ IPO?

Interest in a public listing is likely to be driven by investor appetite for fast-growing AI businesses. Databricks serves over 10,000 clients, including established companies like Shell, Comcast and Expedia. Among its customer base, more than 300 businesses are generating annual revenue of $1m or more.

Buoyed by increased demand for AI, the company is also growing through acquisitions. It has purchased several companies over the past few years, including Redash, an open-source tech company for data visualisation, and 8080 Labs, a German no-code start-up. Takeovers such as these have enabled Databricks – whose rivals include Snowflake, which has a market capitalisation of more than $50bn – to expand its product offering. 

Are there any risks to be aware of?

The timing of a future IPO could be a potential risk. Databricks’ CEO Ali Ghodsi has kept the company private for years, and the latest funding round could reduce the need to secure further investment through a floatation, potentially delaying an IPO. Nevertheless, he insists that an IPO is a question of “when, not if”. But if the company waits too long to go public and investor appetite for AI wanes, Databricks could be considered too expensive when it finally comes to market, potentially deterring some investors.

Openness about its accounts may also be an issue. The company hasn’t released key financial data such as its gross margin or profit/loss, so investors may not be able to make an informed decision about whether Databricks will be profitable in the future. However, detailed financial information should be made available in its S-1 filing closer to an IPO date.

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Client sentiment is provided by CMC Markets for general information only, is historical in nature and is not intended to provide any form of trading or investment advice – it must not form the basis of your trading or investment decisions.

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How can I trade on Databricks’ IPO?

To spread bet or trade CFDs on our Databricks share price when it becomes available on our platform, open a trading account now. You can sign-up to be alerted on the day it lists on the stock market by entering your email address into the box at the top of this article.

What are some other companies focused on AI?

Similar companies to Databricks that use AI as part of their daily operations include Alphabet, NVIDIA, C3.ai, IBM and Palantir. See more artificial intelligence stocks that are taking advantage of the AI boom right now.

What’s the difference between Databricks and Snowflake?

Databricks shares many similarities with data platform Snowflake [SNOW], although the main difference between the two is that Databricks doesn’t need clients to copy data into its software in order to work; instead, data can stay in AWS’ storage systems and still be crunched by the company.

Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.

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