On Monday, Databricks was announced reached $5.4 billion in revenue, up 65% year-over-year, of which more than $1.4 billion came from its artificial intelligence products.
Co-founder and CEO Ali Ghodsi wanted to share those growth numbers because there’s so much talk about how AI will kill the SaaS business, he told TechCrunch.
“Everybody says, ‘Oh, it’s SaaS. What will happen to all these companies? What is AI going to do with all these companies?”For us, it’s just increasing usage,” he said.
Sure, it also wants to move Databricks away from the SaaS label, given that the private markets value it as an AI company. Databricks also officially closed on Monday its massive, previously announced $5 billion raise at a $134 billion valuation, and also took on a $2 billion debt facility.
But the company straddles both worlds. Databricks is even better known as a cloud data warehouse provider. A data warehouse is where businesses store vast amounts of data to analyze for business insights.
Ghodsi called, in particular, an artificial intelligence product that drives the use of his data warehouse: LLM’s user interface called Genie.
Genie is an example of how a SaaS business can replace its user interface with natural language. For example, he uses it to ask why warehouse usage and revenue increase on certain days.
Just a few years ago, such a request required writing queries in a specific technical language or programming a special report. Today, any product with an LLM interface can be used by anyone, Ghodsi noted. Genie is one reason for the company’s usage growth numbers, he said.
The threat of AI to SaaS is not, like one AI VC joked on Twitterthat businesses will ditch their SaaS “subscription systems” to replace them with vibe-encoded homegrown versions. Systems of record store critical business data, be it sales, customer support or finance.
“Why move your registration system? You know, it’s hard to move,” Ghodsi said.
Model builders don’t offer databases to store this data and become systems of record anyway. Instead, they hope to replace the user interface with natural language for human use, or APIs or other plugins for AI agents.
So the threat to SaaS businesses, Ghodsi says, is that people no longer spend their careers as masters of a particular product: Salesforce or ServiceNow or SAP experts. Once the interface is just language, the products become invisible, like plumbing.
“Millions of people around the world were trained on these user interfaces. And so that was the biggest moat these businesses have,” Ghodsi warned.
SaaS companies that adopt the new LLM interface could grow, as Databricks does. However, it also opens up opportunities for AI competitors to offer alternatives that work better with AI and agents.
That’s why Databricks created the Lakebase database designed for agents. Sees early traction. “In the eight months we’ve had it on the market, it’s had twice the revenue of our data warehouse when it was eight months old. OK, obviously, that’s like comparing toddlers,” says Ghodsi. “But this is a toddler who is twice as old.”
Meanwhile, now that Databricks has closed its massive funding round, Ghodsi tells us the company isn’t immediately working on another raise, nor is it preparing for an IPO.
“Now is not a good time to go public,” Ghodsi said. “I just wanted to be really well capitalized” if markets go south again, as they did in the 2022 recession, when interest rates rose sharply after years of near-zero rates. A fat bank account “protects us, gives us many, many years of runway,” he added.
