Databricks reported annualized revenue of $6.9 billion with over 80% year-over-year growth, CEO Ali Ghodsi told CNBC in an interview on Tuesday at the company's Data and AI Summit in San Francisco. The data analytics company's margins are declining as AI agents generate higher query volumes, increasing infrastructure costs under its consumption-based business model. Databricks now generates $1.7 billion in annual revenue from AI products, up from $1.4 billion in February, while maintaining a private market valuation of $134 billion.
Databricks Revenue Surpasses Snowflake at $6.9 Billion Annualized
Databricks told analysts at the conference that annualized revenue jumped over 80% from a year earlier to $6.9 billion, up from $5.4 billion in the fiscal fourth quarter. The company's $134 billion private market valuation exceeds rival Snowflake's $83 billion market cap. Snowflake's annualized revenue sits at approximately $5.6 billion based on its latest quarterly results published last month.
AI Agent Query Costs Drive Margin Pressure
"It's the consumption-based business model, agentic AI coming," Ghodsi told CNBC. "The agents are generating way more queries. We have all these agents, the agents and agent platform we have also generates revenue, so it just increases the consumption of everything all around." Ghodsi declined to provide Databricks' current gross margin but confirmed it will go lower as AI product usage expands.
Databricks' Genie answers questions from business users about corporate data, while Agent Bricks allows developers to build custom AI apps. As these products gain adoption, Databricks must spend more on underlying AI models. The company's Unity AI Gateway notifies users as they approach AI budget limits.
Ghodsi said companies have shifted from "tokenmaxxing"—encouraging maximum token usage—to "value-maxxing" to optimize efficiency. Large companies "want to be able to absolutely use the frontier, smartest models," he said, highlighting Anthropic's Mythos. "They are interested in that, but not for everything, right? And for the mundane tasks, they absolutely want to curb the cost and use simple open-source models." Chinese models are extremely popular among Databricks customers, Ghodsi said.
Databricks Acquires Panther and Launches CustomerLake
On Tuesday, Databricks announced it would acquire Panther, a security startup valued at $1.4 billion in 2021. The company also unveiled CustomerLake software for managing marketing data. Databricks entered the cybersecurity market in March with the introduction of Lakewatch software.
FAQ
What revenue did Databricks report on Tuesday?
Databricks reported annualized revenue of $6.9 billion with over 80% year-over-year growth, up from $5.4 billion in the fiscal fourth quarter.
Why are Databricks' margins declining?
Margins are declining because AI agents generate significantly higher query volumes, increasing infrastructure costs under Databricks' consumption-based business model. The company must spend more on underlying AI models as its Genie and Agent Bricks products gain adoption.
What acquisitions did Databricks announce on Tuesday?
Databricks announced it would acquire Panther, a security startup valued at $1.4 billion in 2021, and unveiled CustomerLake software for managing marketing data.
