Executive Summary
Databricks, one of the original founders in the cloud-based data industry, continues to expand its leadership position as the data intelligence platform while simultaneously broadening its product offerings across machine learning (ML), artificial intelligence (AI), and business intelligence (BI) all while driving down costs and delivering even more value for customers.
At the company’s annual Data and AI Summit in June, the Databricks team showcased a comprehensive platform evolution that positions the company as the central nervous system for enterprise AI transformation. Through strategic partnerships like OpenAI's gpt-oss integration, three major product launches (Lakebase, Agent Bricks, and Databricks Apps), and continued innovation in cost optimization, Databricks is demonstrating why it has become indispensable to so many Fortune 500 companies and achieved such remarkable financial performance.
Platform innovation: Broadening the AI and data stack
Three key product launches
At the Data + AI Summit, Databricks leaned into a “data-to-apps” arc, pairing Lakehouse governance with new application and agent surfaces that significantly expand its platform capabilities:
- Lakebase – Serverless Transactional Database Engine: Built on the recent $1 billion Neon acquisition, Lakebase provides a fully managed Postgres database with sub-10ms latency and continuous autoscaling, purpose-built for AI applications. This allows enterprises to consolidate their operational databases with their analytics platform, eliminating data silos while reducing infrastructure costs and complexity.
- Agent Bricks – Production-Ready AI Agents: Agent Bricks enables enterprises to deploy AI agents that can automatically perform tasks like data analysis, report generation, and decision-making using their proprietary data. The Multi-Agent Supervisor capability allows multiple AI agents to work together across different business functions, addressing the growing enterprise demand for automated, intelligent workflows that can operate at scale while maintaining accuracy and compliance.
- Databricks Apps – AI Application Development Platform: Since launching in November 2024, Databricks Apps has become the company's fastest-growing public preview product, with over 2,500 customers and 20,000+ applications created. This platform allows both technical and business users to build AI-powered applications without extensive coding knowledge, dramatically expanding who can create data-driven tools within an organization while maintaining enterprise security and governance.
Strategic partnership with OpenAI: Enterprise-ready frontier AI
Following the Data and AI Summit, the announcement of OpenAI's gpt-oss models (20B and 120B parameters) being natively available on Databricks demonstrates how leading AI companies view Databricks as a preferred enterprise deployment platform. This partnership enables enterprises to:
- Deploy advanced, open source reasoning models with enterprise governance: Access cutting-edge AI capabilities that can process long documents and complex reasoning tasks, while maintaining the security, compliance, and data governance standards that enterprises require
- Achieve cost optimization: Benefit from advanced AI models designed for efficiency, delivering faster responses at lower computational costs compared to traditional model architectures
- Enable custom fine-tuning: Customize AI models using their own proprietary data to achieve better performance for specific business use cases, while keeping sensitive data secure and compliant
This integration allows enterprises to access the latest AI innovations without sacrificing the security, compliance, and cost management they need for production deployments, creating significant competitive advantages for organizations that can leverage AI effectively at scale.
Market adoption and strategic positioning: At the center of Enterprise AI
The company's innovation is driving measurable adoption across their expanding product suite, while positioning Databricks at the center of enterprise AI transformation. The Data and AI Summit's high-profile attendee list, featuring CEOs from Anthropic, Microsoft, JPMorgan Chase, and Google Cloud, illustrates this unique market position.
Multi-product platform expansion: Over 50% of customers now use 6+ products in Q1 F2026, up from 40% in Q1 F2024, demonstrating successful cross-selling and increasing platform dependency as Databricks executes horizontal expansion across:
- ML operations: Traditional machine learning model training, deployment, and monitoring
- AI applications: Generative AI, agents, and copilot experiences
- Business intelligence: Self-service analytics and data democratization
AI-native workflow penetration: 98% of customers use Databricks Assistant (context-aware AI copilot) and 81% use Genie (conversational data interface), showing enterprise readiness for AI-augmented operations.
Enterprise-scale commitment: Nearly 50 of Databricks' 15,000+ customers are spending over $10 million annually, with approximately 600 customers exceeding $1 million in annual recurring revenue (ARR). JPMorgan's deployment of over 600 AI use cases with approximately $2 billion annual AI spending exemplifies the scale of enterprise AI transformation that platforms like Databricks are enabling.
Data governance leadership: Unity Catalog now has 9,000+ customers representing over 50% of ARR, highlighting the critical importance of unified data governance for AI workloads.
This platform consolidation strategy reduces vendor complexity while creating unified workflows that capture more value per customer relationship, validating Goldman Sachs' analysis that "value is gradually shifting up from the Infrastructure layer to Platform and Applications (IPA), especially with growing proof points of AI production workloads and increasing investment at the data layer."
Financial performance: Strong results validate platform strategy
All of these efforts appear to be translating into exceptional financial performance for the company that arguably rivals many of their top public market peers:
Sustained high growth at scale:
- FY25 delivered over $2.6 billion in revenue (60%+ YoY growth)
- Targeting $3.7 billion run-rate revenue for July 2025 quarter (50%+ growth)
- This combination of 50%+ growth at $3+ billion scale is in our view exceptionally rare
Path to profitability: The company achieved free cash flow breakeven in FY25 while maintaining high growth rates, demonstrating the platform's value proposition drives sustainable unit economics.
Product-specific metrics:
- DB SQL: 7,000+ customers, expected to cross $1 billion ARR in 2025
- AI ARR: Approaching $300 million
- Net Retention Rate: Over 140% (unchanged from previous year)
- Customer Expansion: Average 8x usage growth within three years
Our conviction grows stronger
Our belief that Databricks is one of the preeminent and most exciting private companies in the world has only grown that much more based on their recent performance, which includes:
- Product excellence: Consistent delivery of industry-leading capabilities across data engineering, ML operations, and generative AI demonstrates exceptional development execution and innovation velocity.
- Platform gravity: Multi-product adoption expanding to 50%+ of customers using 6+ products, combined with 140%+ net retention rates, creates strengthening competitive moats as enterprise data and AI workloads consolidate on the platform.
- Market positioning: Databricks is uniquely positioned at the convergence of cloud data transformation and AI revolution, with the governance and compliance capabilities essential for enterprise production deployments.
- Execution at scale: Maintaining 50%+ growth at $3+ billion revenue while achieving cash flow breakeven demonstrates world-class operational execution in a highly competitive, complex space.
Looking ahead
Having successfully evolved from a leading data analytics company into the foundational platform for enterprise AI transformation, we believe the company is now positioned to capture a disproportionately large share of value driven by their strategy to both expand and deepen their product offerings. This includes:
Enterprise AI going into production: As organizations move beyond experimentation they will require platforms, such as Databricks, that handle enterprise complexity, ensure governance, and provide cost-efficient access to frontier AI capabilities.
The data intelligence convergence: The integration of analytics, artificial intelligence, and databases (as evidenced by the Lakebase, Agent Bricks, and Unity Catalog expansion), positions Databricks as the unified foundation for modern data intelligence applications.
Frontier AI becoming more accessible: Strategic partnerships like OpenAI's gpt-oss integration demonstrate Databricks' role as the preferred platform for deploying cutting-edge AI models in enterprise environments.
Databricks has truly established themselves as one of the most exciting companies in the new AI world, not only executing on their original vision that drew us to invest initially but also delivering exceptional growth and product innovation at scale. We are extremely excited about what lies ahead for the company and are looking forward to continuing to be a vocal supporter and advocate as they move forward.
* The fund's full portfolio holdings are available here.
