Databricks Secures $5 Billion in Debt Financing, Bolstering Its AI-Driven Growth

Databricks secures over $5 billion in largest debt financing round - Bloomberg By Investing.com

Investing.com -- Databricks Inc., a renowned software maker, has secured over $5 billion in its biggest debt financing round to date, according to report from Bloomberg, citing people with knowledge of the matter. The funding was provided by several lenders, including Blackstone (NYSE:BX) Inc., Apollo Global Management (NYSE:APO) Inc., and Blue Owl Capital. The tech company, recognized as one of the globe's most valuable private firms, employed JPMorgan Chase & Co (NYSE:JPM) to arrange the capital raise last year. The firm intends to use the raised funds to alleviate tax burdens related to stock sales by its employees. This debt financing coincides with a $10 billion funding round that Databricks announced at the end of last year, which increased its valuation to $62 billion. The debt package includes a $2.25 billion term loan from direct lenders, structured as an annual recurring revenue (ARR) loan, and pays 4.5 percentage points over the Secured Overnight Financing Rate. The sources, who requested anonymity due to the confidential nature of the transaction, also revealed that the financing includes a $2.5 billion revolving credit facility provided by a large group of banks, including JPMorgan, and a $500 million delayed-draw term loan. ARR loans have gained popularity as a means for private credit lenders to extend loans to rapidly growing software companies that have yet to make a profit. In ARR loans, the safety measures for creditors are based on the firm's recurring revenue, usually derived from long-term contracts, rather than earnings. Databricks previously stated that the proceeds from its $10 billion equity raise would be invested in new AI products, acquisitions, and a significant expansion of its international go-to-market operations. The capital will also be used to purchase shares owned by current and former employees. Thrive Capital led that funding round, with participation from firms such as Andreessen Horowitz and DST Global. By the end of the fiscal year in January 2025, Databricks anticipates surpassing $3 billion in annualized revenue. The company reported a sales increase of over 60% in the most recent quarter, which ended in October, indicating a rapid pace of expansion at a time when many software makers are grappling with growth. Databricks develops software to ingest, analyze, and build artificial intelligence apps with complex data from a variety of sources. Its main competitors are generally considered to be Snowflake Inc . (NYSE:SNOW) and services offered by cloud infrastructure vendors like Microsoft Corp (NASDAQ:MSFT).'s Fabric.

Report: Databricks Completes Largest Financing Round Yet, Raising $5 Billion | PYMNTS.com

Databricks has reportedly raised $5 billion in financing, its largest debt raise ever, according to a Monday (Jan. 13) Bloomberg report. The funds were raised from lenders such as Blackstone, Apollo Global Management and Blue Owl Capital, Bloomberg reported, citing people with knowledge of the matter who asked not to be named. The software firm will use the funds to offset tax burdens associated with stock sales from staffers, according to the report. The fundraise was organized by JPMorgan Chase last year, and follows a $10 billion equity funding round in December that raised its valuation to $62 billion. Bloomberg noted that several banks, including JPMorgan, Barclays, Citigroup, Goldman Sachs Group, Morgan Stanley and BNP Paribas, provided a $2.5 billion revolving credit facility as part of the debt financing. In addition, direct lenders are providing a $2.25 billion term loan as well as a $500 million delay-draw tranche that Databricks can use later. The debt's structure is tied to the company's annual recurring revenue and pays 4.5 percentage points over the Secured Overnight Financing Rate, Bloomberg said. Databricks said in December it expects to cross $3 billion in annualized revenue in its fourth quarter, which ends on Jan. 31., according to Bloomberg. When Databricks announced its $10 billion Series J funding round last month, the artificial intelligence (AI) and software company said it planned to use the capital to develop new AI products, acquisitions and international go-to-market operations, provide liquidity for current and former employees and to pay related taxes. The round is "substantially oversubscribed," Databricks Co-Founder and CEO Ali Ghodsi said in the December release. "These are still the early days of AI," Ghodsi said. "We are positioning the Databricks Data Intelligence Platform to deliver long-term value for our customers, and our team is committed to helping companies across every industry build data intelligence." Interest in AI has sped up Databricks' growth to over 60% year over year in recent quarters, the release said at the time. The Databricks Data Intelligence Platform helps organizations use their data for analytics, machine learning and AI applications, according to the release.

Databricks reportedly secures $5bn in debt financing

Last month, the data intelligence platform provider raised $10bn in a Series J funding round. Databricks has raised more than $5bn in what is the software company's largest debt raise to date, sources have told Bloomberg. According to sources who spoke to the business news outlet, the company's lenders include Blackstone, Apollo Global Management and Blue Owl Capital. Direct lenders are providing the company with a $2.25bn term loan along with a $500m delay-draw tranche - or a term loan that lets borrowers withdraw predefined amounts of a total pre-approved loan amount, in addition to which, a group of banks including JP Morgan, Barclays and the Goldman Sachs Group have provided the company with $2.5bn in revolving credit. The software company plans to use the new financing to offset tax burdens, reports suggest. The latest debt financing round comes after the company announced that it raised $10bn in capital in a Series J funding last month, a deal that pushed its valuation up by nearly $20bn to $62bn. According to Databricks' announcement in December, the equity funding will be invested towards new artificial intelligence products, acquisitions and a "significant" expansion of its international market operations - opening new regional hubs based out of London and Singapore, alongside an expanded presence in Latin America and the Middle East. Moreover, in addition to fueling its growth, the company also said that the newly raised capital will be used towards providing liquidity for its employees as well as for paying taxes. The company, which refers to itself as the "largest and most successful independent open source company by revenue", provides a data intelligence platform designed to make it easier for organisations to use data, machine learning, analytics, and AI applications, also expects to cross $3bn in annual revenue by the end of this month. Earlier last year, Databricks acquired Tabular - a data management company - in a deal reportedly valued at $2bn. Founded by former Netflix employees Ryan Blue, Dan Weeks and Jason Reid, Tabular is a Silicon Valley start-up that helps optimise data stored in the cloud. According to Databricks, more than 10,000 organisations around the world - including Block, Comcast, Condé Nast, Rivian, Shell and more than 60pc of Fortune 500 companies - rely on its AI-powered data intelligence platform. In 2021, it raised $1.6bn at a valuation of $38bn, becoming one of the many 'decacorn' start-ups in 2021, while in 2023, it raised more than $500m in a Series I funding round, putting the company at a valuation of $43bn. Don't miss out on the knowledge you need to succeed. Sign up for the Daily Brief, Silicon Republic's digest of need-to-know sci-tech news.