| Welcome back! It's Cory and Valida. Plummeting software stocks aren't good news for any company with a big enterprise business that is considering going public. Nonetheless, there's a growing consensus that 12-year-old Databricks—whose initial public offering has been chatted about for years—could take the step by the end of this year, according to several investment bankers and investors in the company who have spoken to its executives recently. This may be wishful thinking, given that talk of a Databricks IPO stretches back to at least 2021—and the company remains private, most recently fetching a $134 billion valuation. But investors and bankers are taking cues from Databricks executives themselves, who have told them in recent months they are ready for an IPO and seem to have softened their tone about staying private for much longer. Databricks CEO Ali Ghodsi said in a CNBC interview in December he wouldn't rule out an IPO this year. A spokesperson said in a statement Thursday that, "our stance hasn't changed. We've always said when not if, we just haven't said when." Anticipation, of course, is building because another long-rumored IPO candidate—SpaceX—is finally getting ready for a listing, which could take place as soon as this summer. These plans now raise the question of when other highly valued startups, such as OpenAI, which is in talks to raise more money at a valuation of at least $730 billion, will follow suit. Databricks, now the fourth most valuable private tech company in the U.S., could be a harder sell to potential retail investors than these others, which are quite visible to consumers. Databricks works behind the scenes. It sells a database for storing different types of corporate data, and it is trying to convince customers they can replace traditional software with its AI agents to automate human resources and IT service management tasks. However, much as with rival Snowflake during its blockbuster IPO in 2020, investors could overlook any confusion if Databricks' business continues to grow quickly. The company's recent financials, as we wrote in November, are stellar: Sales were on pace to grow 55% annually, to $4.1 billion, with positive cash flow for the year. The man who will likely make the decision is Ghodsi, an intense leader we profiled in 2024 who likes to control almost every detail of his company, current and former employees told us then. Going public could mean losing some of that control. Private investors, of course, could use this IPO to return their funds—and then some. The company's largest backer by far is Andreessen Horowitz. As of two years ago, it owned roughly 15% of the company, we're told, which would now be worth an eye-popping $20 billion. A litany of other institutional investors, including NEA, T. Rowe Price, Tiger Global Management, Coatue Management and Green Bay Ventures, also own multibillion-dollar stakes, people familiar with the matter said. Employees, internally known as Bricksters, got to cash out a portion of their holdings in a tender offer last year, and they should be able to do so again this year. More tenured employees have seen the private price of these shares roughly quadruple in four years. A public listing is no guarantee the rise will continue. Shares of Figma, a venture-backed design software firm that went public last year, have lost about 80% of their value since the company's IPO. Snowflake, which trades around 10 times next year's sales, according to Koyfin, is down 17% in the last year. Palantir, which trades at 45 times forward sales, is up 28%. Employees in Databricks have only been able to sell shares because the company has used the same hack Stripe relied on. Databricks has raised billions of dollars to buy back stock from employees and cover the tax charges associated with the vesting of restricted stock units, charges that typically lower the payout to employees. That means a large chunk of the $15 billion it has raised in the last 15 months has gone toward the government rather than for corporate purposes. Unlike Stripe, Databricks doesn't appear to be close to the point where it can use its own cash to pay for those stock needs. (The company told investors last fall it expected to generate only about $10 million in free cash flow for the fiscal year that ended in January.) So what might actually push Databricks to an IPO? Getting off that fundraising treadmill, perhaps. Or, like many things in Silicon Valley, jealousy might rule the day. Rockets may not have anything to do with data software, but don't expect Databricks to fall far behind SpaceX if Elon Musk's IPO shoots for the moon. | 
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