dbt Labs staffing up: Will this be the year of the Data Platform IPO?

With the start of the new year, we always take a look at what could transpire.  While getting to IPO takes a lot of things to go right for a company, such as doing your internal “beat and raise” on eight consecutive quarters, it is not impossible.  This year could be the year we see a few names in the data platform market, test the IPO waters, file confidential S-1s, and then public S-1s.  One sign that some of these companies are preparing for this motion, if not for this year but for future years, is that they are recruiting very hard from the “been there, done it” crew.  Many of the companies in this space have significant valuations as private companies.  Three we are watching closely and can be a good proxy for the data platforms market are:

Databricks       $43      Billion Valuation

Vast Data         $9        Billion Valuation

dbt Labs          $4.3     Billion Valuation

Databricks, which raised $500 million in additional funding in September 2023, is currently the most advanced in its journey toward an IPO. The company has been actively working to strengthen its customer base of data science users and expand its total addressable market (TAM) with the help of Photon SQL and Unity Catalog. Furthermore, Databricks has made strategic acquisitions such as Mosaic ML and Arcion to round out the features of its platform. Databricks is considered the poster child for the new modern data stack, showcasing how to have open source at the core and build a sustainable business based on its Apache Spark heritage. Unlike Red Hat’s approach to building their open-source Linux empire, Databricks focuses on a different tactic than an operating system. The company has been boosted by the significant tailwind of AI, with wise choices on the go-to-market side helping them to succeed in the data lake and data warehouse market.

Vast Data, which is building a data platform that is sold on other companies’ hardware, recently secured an additional $118 million of funding in December 2023 as part of its series E. The company has been winning AI service providers as customers and establishing itself as a reliable source of AI infrastructure alongside leading companies like Nvidia. Vast Data has a strong board comprised of industry veterans with experience in scaling up and taking companies public, including Tom Mendoza of NetApp. During an analyst briefing, Vast Data expressed its intention to hire a CFO by 2024.

Over the past 12 months, dbt Labs has made significant progress in terms of product development and hiring. They have committed to leaving dbt Core open source under Apache 2 licensing, which is a smart move based on the user community and a swipe at HashiCorp’s licensing change. As a result, dbt is evolving from a “data modeling tool” to a data optimization and management platform. They have also expanded dbt Cloud into new spaces. Here is a discussion I had with Tristan Handy, founder and CEO of dbt Labs:

To support this growth, dbt Labs has made several key hires, including Mark Porter as Chief Technology Officer just today, Brandon Sweeney as President and Chief Operating Officer in November 2023, and Luis Maldonado as VP of Product in July 2023.

dbt Labs is heading towards an IPO and has recently added key personnel with data platforms and IPO lineages, such as Mark Porter from MongoDB, Brandon Sweeney from HashiCorp, and Luis Maldonado from Amazon Web Services (AWS), who have experience in leading and scaling companies in their respective areas. These additions are great for the founders Tristan Handy and Drew Banin, who have not navigated the waters of an IPO before. What’s most interesting about the new hires is that they will have a direct impact on product delivery, sales, and support to customers. It is expected that Dbt Labs will continue to invest in its executive team throughout 2024 to achieve sustainable growth for its dbt Cloud platform.

Our view is that one of these companies may make it to IPO in 2024, but that it is highly unlikely that all three would be able to make it to IPO.  Others not mentioned here could also go public from the data platforms market.  It also would not surprise us if the acquisition market heats back up and one of these companies is acquired.  Based on our analysis and data from our partner ETR, it seems that AI spending will remain popular as companies focus on use cases that offer a strong ROI. Meanwhile, IT spending, in general, is expected to grow modestly by approximately 4% this year. This could lead to a promising year for these companies, with the potential for growth and success as public companies in the future. As long as the AI trend continues to support them, their prospects for reaching an IPO and achieving long-term success remain bright.

Disclosure: theCUBE Research is a research and advisory services firm that engages or has engaged in research, analysis, and advisory services with many technology companies, which can include those mentioned in this article.  Analysis and opinions expressed herein are specific to the analyst individually, and data and other information that might have been provided for validation, not those of theCUBE Research or SiliconANGLE Media as a whole.

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