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Databricks IPO

How to trade Databricks’ IPO

Enterprise software company Databricks is planning to go public on the stock market through an initial public offering (IPO) later this year. Find out about the company’s financials and prospectus, and sign up to receive a one-time notification when Databricks has listed and can be traded on via spread bets or CFDs with us.

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Late 2021

Databricks going public

$38bn

Databricks’ valuation

$600m

Databricks’ annual revenue

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What does Databricks do?

Databricks is an artificial intelligence (AI)-powered data analytics company that was founded by the creators of Apache Spark, an open-source analytics platform for data processing. It was founded in 2013 with headquarters in San Francisco, operating in over 20 countries worldwide.

The company has created several open-source projects that cover areas such as data science, data engineering, and machine learning, such as Delta Lake, MLflow and Koalas. Its software platform, which is hosted in the Cloud, helps large enterprises to manage their own data.

When is Databricks’ IPO date?

There isn’t yet an official date for Databricks’ IPO, but it could take place towards the end of 2021 or early 2022. It’s unclear whether the company plans to go public via a traditional IPO or direct listing, although CEO Ali Ghodsi has ruled out a potential merger with a special-purpose acquisition company (SPAC), according to Reuters.

Keep up to date with upcoming IPOs​ and new stocks that have debuted on the market recently. If you’d like to receive an email for when Databricks has officially listed on the NYSE or Nasdaq exchange, sign-up below and we will send you an email when a derivative is available to trade on our platform.

Databricks’ share price and valuation

An estimated share price has not yet been set; we expect this to be revealed closer to the IPO date.

The company is currently valued at over $38bn, according to CNBC. Its last funding round was led by Morgan Stanley in August 2021, where Databricks raised $1.6bn from investors such as Baillie Gifford and ClearBridge Investments. This round added $10bn to the company’s valuation, as it was last valued at $28bn in February. Previously, technology giants Amazon, Salesforce and Alphabet helped to raised $1bn of capital.

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.

Explore our range of order types

What are Databricks’ financials like?

As Databricks is still a privately held company, there isn’t a great deal of information on its financials. Its main source of revenue comes from customer subscriptions to its Software-as-a-Service (SaaS) tools. Rather than charging a set fee for its services, the company uses ‘Databricks Units’ (DBUs) to measure processing capability per hour, billing users on a per-second usage.

According to TechCrunch, Databricks has an annual recurring revenue (ARR) of $600m. It previously closed 2020 at $425m ARR and has a 75% year-on-year growth. This is particularly quick for a company of its size. At a new valuation of $38bn, Databricks is worth 63x its current ARR.

Please remember that past performance is not indicative of future results.

Why may investors be interested in Databricks’ IPO?

As the company is shown to be growing by 75% YoY, it’s on track to generate over $1bn in annual revenue in 2022, according to CNBC. Databricks serves over 5,000 clients which include established companies like Royal Dutch Shell, Comcast and Expedia.

Databricks has acquired several new 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. This suggests that it’s making enough money to take on other businesses and expand its product offering to customers.

The company plans to use its latest funding to focus on its open-source project ‘Data Lakehouse’, which is a mashup of a data lake and data warehouse. This provides organisations with a solution to store their structured and unstructured data in order to carry out data science and machine learning more efficiently.

Are there any risks to be aware of?

Databricks’ CEO has decided to keep the company private for a long period of time, given its growing capital in fundraising rounds. However, if the software market were to decline in value over the next few months, the company could be considered too expensive at its final valuation, deterring potential investors.

As mentioned above, the company hasn’t released a wealth of financial information, so it may be more difficult for investors to make an informed decision of whether Databricks will be profitable in the future. We don’t have data on its gross margin or net losses, for example. These types of financials should be revealed in its S-1 filing closer to the 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.

FAQ

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.

Download our app to trade on IPOs on-the-go

[Widget] Download our mobile app for iOS or Android to get started. Once Databricks has listed on its chosen stock exchange, you will be able to spread bet or trade CFDs on our Databricks share price.