Databricks secures $1.8b financing, lifts total debt to $7.1b

Databricks, a private software company specializing in data analytics, has secured US$1.8 billion in new financing, according to sources.

The company increased its existing delayed-draw term loan to US$1.2 billion and its revolver to US$3.7 billion, with both facilities available for two years.

The interest rate is around 4.5 percentage points above the Secured Overnight Financing Rate.

The company previously raised over US$5 billion in debt to cover tax costs tied to employee stock sales.

Databricks total debt has now increased to about US$7.1 billion.

The recent financing was led by Insight Partners, Fidelity Management & Research Co., and JP Morgan Asset Management.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Key financial details of Databricks’ new financing remain undisclosed

The use of the new $1.8 billion financing was not disclosed. A prior debt round was set aside to cover tax bills from employee stock sales 1, but no purpose was given for the new package.
With total debt at $7.05 billion, Databricks’ cash and free cash flow would matter when judging repayment of debt priced at SOFR plus 4.5 percentage points. SOFR is the Secured Overnight Financing Rate, a benchmark for US dollar loans, one person said.
It has not been confirmed whether the upsized delayed-draw term loan and revolving credit facility (a line of credit companies can borrow from as needed) will be tapped right away. Whether the package is aimed at near-term spending or future flexibility would be determined by that choice.

Databricks’ debt package points to ARR-linked software lending and a pricing yardstick

Late-stage private software companies and their investors can treat this as an example for raising cash that does not dilute ownership. The report does not say whether Databricks wants growth funding or shareholder liquidity.
JPMorgan Chase & Co. led the financing. It follows an earlier Databricks debt round with lenders that included Blackstone Inc., Apollo Global Management Inc. and Blue Owl Capital Inc. 1.
The package signals broader comfort with annual recurring revenue (ARR)-linked loans for software firms. It also sets a price marker at SOFR+450 basis points, or 4.5 percentage points, one person said 1.