Databricks Inc., a prominent software company and one of the most valuable privately held firms globally, has secured over $5 billion in financing from lenders such as Blackstone Inc., Apollo Global Management Inc., and Blue Owl Capital Inc. This marks the company’s largest debt fundraising effort to date, according to sources familiar with the matter.
As reported by Bloomberg, the financing, arranged by JPMorgan Chase & Co. last year, is intended to help the company address tax obligations tied to employee stock sales. This debt raise follows a $10 billion equity funding round announced late last year, which boosted Databricks’ valuation to $62 billion.
According to sources familiar with the matter, direct lenders offer Databricks a $2.25 billion term loan and a $500 million delay-draw tranche, which the company can access later. The debt is structured around the company’s annual recurring revenue and carries an interest rate of 4.5 percentage points above the Secured Overnight Financing Rate (SOFR).
Additionally, a consortium of banks, including JPMorgan, Barclays Plc, Citigroup Inc., Goldman Sachs Group Inc., Morgan Stanley, and BNP Paribas SA, has contributed to a $2.5 billion revolving credit facility as part of the overall debt package.
Representatives from Databricks, Blackstone, Apollo, Blue Owl, JPMorgan, Barclays, Citigroup, and BNP Paribas declined to comment, while Goldman Sachs and Morgan Stanley did not respond to requests for comment.
ARR loans have emerged as a favoured option for private credit firms to finance rapidly growing software companies that have not yet reached profitability. Creditors structure these loans with protections tied to a company’s recurring revenue, typically from long-term contracts rather than earnings.
In December, Databricks announced it expects to surpass $3 billion in annualized revenue and achieve positive free cash flow in its fourth quarter, which concludes on January 31. The company reported a sales growth of over 60% in the previous quarter, demonstrating remarkable expansion at a time when many software companies are facing slower growth.
The company will allocate proceeds from its $10 billion equity raise to develop new AI products, pursue acquisitions, and significantly expand its international go-to-market efforts. It will also use the funds to repurchase shares from current and former employees. Thrive Capital led the funding round, and firms such as Andreessen Horowitz and DST Global joined it.
Databricks specializes in software that enables businesses to ingest, analyze, and create AI applications using complex data from diverse sources. Its primary competitors include Snowflake Inc. and specific services offered by cloud infrastructure providers like Microsoft Corp.’s Fabric.
