Microsoft-backed Databricks plans IPO next year

Databricks Inc, whose business overlaps with data and analytics software maker Snowflake Inc, is preparing an initial public offering 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 $6.2 billion when it raised $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 $70 billion, has seen its shares double from its IPO price.

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

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

Microsoft Corp. 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 Plc, Conde Nast International Inc. and Regeneron Pharmaceuticals, Inc., according to its website.