Databricks Launches Lakehouse for Retail as CEO Focuses on Growth

Ali Ghodsi, co-founder and CEO of Databricks Inc., speaks during a televised interview with Bloomberg Technology in San Francisco on October 22, 2019.

David Paul Morris | Bloomberg | Getty Images

Cloud computing stocks, in the midst of a two-month drop, don’t bother the CEO of one of the world’s most valuable private software companies.

Databricks, whose software helps clients store and clean data so employees can analyze and use it, was valued at $38 billion in its latest funding round in August. While the company hasn’t said when it plans to go public, CEO Ali Ghodsi told CNBC that if revenue continues to grow at its current pace, the share price will take care of itself when the time is right.

“As long as you have growth rates that are growing as fast as we are, in fact, those growth rates will sooner or later overcome the multiple contraction that is happening in the market,” Ghodsi said in an interview this week.

This is a bold statement. In recent weeks, investors have sharply lowered their valuation of publicly traded software vendors, moving into much more profitable companies as they brace for higher interest rates. Cloud computing fund WisdomTree, which includes, Datadog, Snowflake and other fast-growing companies, has fallen 8% in 2022 and is 27% below its all-time high in November.

Databricks, ranked 37th on CNBC’s 2021 Disruptor 50 list, said in August that it had $600 million in annual recurring revenue, up 75% from last year. This is a faster expansion than all but two of the 58 companies in the WisdomTree cloud group. and Snowflake reported 152% and 110% growth in the latest quarter, respectively.

Ghodsi said the important thing for Databricks and the sector as a whole is that costs continue to move in their favor.

“Maybe it’s the early days because this market correction is just now happening, but I haven’t seen any “Hey, let’s change how we spend on data, artificial intelligence and analytics,” Ghodsi said.

As a privately held company, Databricks can continue to focus on finding customers, and right now it is aiming to reach more retail and consumer products businesses. On Thursday, Databricks introduced Databricks Lakehouse for Retail to bring better data and AI tools to companies in the industry. Early adopters of the H&M Group include Walgreens and a Kroger subsidiary, Databricks said.

The strategy began to take shape last year after former Salesforce chief executive Andy Kofoyd joined Databricks as president of global field operations. Retail has been a growing market for other large cloud software companies such as Salesforce, as well as infrastructure providers Google and Microsoft.

The Kofoid team will have many competitors, including incumbent data warehouse company Teradata.

“I think a lot of things on the market are overpriced,” Ghodsi said. “Some of these margin structures I see as an opportunity to cut some of them without raising prices.”

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