Street Calls of the Week
On Monday, Databricks announced a colossal $10 billion Series J funding round, catapulting the company's valuation to $62 billion. The injection of capital is earmarked for investment in new artificial intelligence products, strategic acquisitions, expansion of international go-to-market strategies, and providing liquidity for employees.
This development comes as Databricks anticipates surpassing $3 billion in annual recurring revenue (ARR) and achieving positive free cash flow in the fourth quarter.
For comparison, competitor Snowflake currently maintains a market capitalization of $51.2 billion, with annual revenue of $3.4 billion and positive free cash flow of $823.6 million in the last twelve months.
Keybanc's bi-weekly Data Dispatch, released following the week ending December 27, noted that data and analytics stocks experienced a slight dip, with an equal-weighted return of -1.7%, lagging behind the IGV's -1.3% and the S&P 500's gain of +0.7%. Despite the weekly underperformance, year-to-date figures show data/analytics stocks up +24.7%, although still trailing the IGV's +26.1% and the S&P 500's +25.2%.
In the realm of cloud database management systems (DBMS), Gartner (NYSE:IT) published its 2024 Magic Quadrant (MQ), positioning industry giants AWS, Google (NASDAQ:GOOGL), Oracle (NYSE:ORCL), Microsoft, Databricks, MongoDB (NASDAQ:MDB), Snowflake, Alibaba (NYSE:BABA) Cloud, and IBM (NYSE:IBM) in the leader's quadrant. IBM emerged as a new leader this year. Notably, Databricks outshone Snowflake in the MQ with a stronger position on both Completeness of Vision and Ability (OTC:ABILF) to Execute.
According to InvestingPro, Snowflake maintains strong analyst support, with 33 analysts recently revising their earnings estimates upward for the upcoming period. The company's robust financial health is reflected in its current ratio of 1.88, indicating strong liquidity.
Dynatrace (NYSE:DT) unveiled a new pricing option for its Dynatrace Platform Subscription (DPS), termed "Retain with Included Queries." This model allows customers to query data for up to 35 days at no additional charge, beyond the costs for data ingest and retention, with configurable retention periods between 10-35 days. Dynatrace plans to eventually offer both this and its existing usage-based pricing model concurrently to cater to varied customer needs.
In other industry news, Perplexity reportedly raised $500 million at a $9 billion valuation, as reported by Bloomberg. Additionally, MongoDB has enhanced its offerings by integrating with Ably LiveSync, enabling real-time syncing of database changes with front-end clients.
These developments underscore the dynamic growth and competitive landscape in the data and analytics sector. For deeper insights into Snowflake and its competitors, InvestingPro subscribers can access comprehensive analysis, including Fair Value estimates, financial health scores, and detailed competitive positioning metrics across more than 1,400 US stocks.
In other recent news, Databricks secured a substantial $10 billion in financing, boosting its valuation to a notable $62 billion. This will facilitate the company's expansion into international markets and offer liquidity options to its current and former employees. The company also announced it is on track to achieve positive free cash flow with a projected revenue run rate of $3 billion for the quarter ending January 31.
Snowflake Inc . (NYSE:SNOW) has been the subject of multiple analyst firms' attention, with Jefferies, Baird, and KeyBanc Capital Markets raising their price targets for the company based on its strong growth trajectory. Analysts from Piper Sandler also released insights on the tech sector, revealing a strong outlook for IT spending, with cloud applications and generative AI poised for significant growth.
Microsoft Corporation (NASDAQ:MSFT) reported a 16% year-on-year increase in Q1 FY2025 revenue, reaching $65.6 billion. Analyst firms, including TD Cowen, Citi, Mizuho (NYSE:MFG), and Goldman Sachs, have maintained their positive ratings on Microsoft's stock.
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