Monday, Databricks announcement it achieved revenue of $5.4 billion, growing 65% year-over-year, of which more than $1.4 billion came from its AI products.
Co-founder and CEO Ali Ghodsi wanted to share these growth numbers because there’s so much talk about how AI is going to kill the SaaS business, he told TechCrunch.
“Everyone’s like, ‘Oh, it’s SaaS. What will happen to all these companies? What is AI going to do with all these companies?’ For us, it just increases usage,” he said.
To be sure, he also wants to move Databricks away from the SaaS label, given that private markets value it as an AI company. Databricks also officially closed its previously announced massive $5 billion raise on Monday. at a valuation of $134 billionand also secured a $2 billion loan facility.
But the company straddles both worlds. Databricks is still best known as a cloud data warehouse provider. A data warehouse is where businesses store huge amounts of data to analyze for business insights.
Ghodsi specifically cited one AI product that is driving the use of its data warehouse: its LLM user interface called Genie.
Genie is an example of how a SaaS company can replace its user interface with natural language. For example, he uses it to ask why warehouse utilization and revenue increase on certain days.
Until 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, he said.
The threat of AI to SaaS is not, as an AI VC jokingly tweetedthat companies will remove their SaaS “systems of record” and replace them with local, ambient-coded versions. Systems of record store critical business data, whether sales, customer support, or financial.
“Why would you move your recording system? You know, it’s hard to move it,” Ghodsi said.
Modelers do not provide 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 with APIs or other plug-ins for AI agents.
So the threat to SaaS companies, according to Ghodsi, is that people no longer spend their careers becoming masters of a particular product: Salesforce specialists, or ServiceNow, or SAP. Once the interface is just language, products become invisible, like plumbing.
“Millions of people around the world have been trained on these user interfaces, so this is the biggest gap these companies have,” Ghodsi warned.
SaaS companies that adopt the new LLM interface could grow, as Databricks is doing. But it also opens up the opportunity for AI-native competitors to offer alternatives that work better with AI and agents.
That’s why Databricks created its Lakebase database designed for agents. He notices early traction. “In the eight months we had it on the market, it generated twice as much revenue as our data warehouse did when it was eight months old. Okay, obviously it’s like comparing toddlers,” says Ghodsi. “But he’s a toddler who’s twice as big.”
Meanwhile, now that Databricks has closed its massive funding round, Ghodsi tells us the company is not immediately working on another raise, nor is it preparing for an IPO.
“This is not the ideal time to make this information public,” Ghodsi said. “I just wanted to be really well capitalized” if markets were to “head south” again, as they did during the 2022 economic downturn, when interest rates rose sharply after years of near-zero rates. A thick bank account “protects us, gives us many, many years of runway,” he added.
