Data analytics software maker Databricks announced on Tuesday that it is acquiring Tabular, a startup that helps optimize data stored in the cloud.
Databricks may benefit from this gesture to accelerate product development in the face of competition from Snowflake and others.
Databricks CEO Ali Ghodsi revealed in an interview that the company is paying more than $1 billion to acquire Tabular. The Wall Street Journal reported the size of the transaction earlier on Tuesday. According to CNBC, Snowflake and Confluent were both interested in acquiring Tabular. Snowflake declined to comment. Confluent did not return a request for comment.
Databricks has received billions of dollars in venture capital to fund this and other recent transactions, including the $100 million acquisitions of database replication startup Arcion and artificial intelligence efficiency startup MosaicML for $1.3 billion. In September, Databricks announced that it had raised new funding at a $43 billion valuation, making it more valuable than most startups and publicly traded enterprise software companies.
The costs of running queries before exploring and creating charts with data can add up. Developers created Apache Iceberg, an open-source format that stores data in tables that can then be accessed using a variety of tools.
Ryan Blue and Dan Weeks, co-founders of Tabular, developed Iceberg while working at Netflix. Tabular enhances Iceberg with business-friendly features while keeping tables in Amazon or Google clouds. From there, organizations can connect tables to Snowflake and other systems, resulting in less expensive queries.
Last week, software stocks fell as executives from Salesforce, MongoDB, and Okta warned investors about economic uncertainty. Databricks behaves differently. It’s expanding quickly and leveraging its capital to gain market share. In March, Databricks told media outlets that it generated $1.6 billion in revenue for the fiscal year ending January 31, an increase of more than 50%.
Snowflake executives have stated that some large clients want to move data away from the company’s native storage layer and into Iceberg tables, which reside in a separate location, such as object storage in the Amazon Web Services cloud. This could result in lower storage revenue for Snowflake. However, as organizations become more comfortable with running queries on Iceberg tables, revenue growth from computing workloads based on large amounts of data stored elsewhere may accelerate.
“Net-net, we think it’s going to be positive,” Snowflake’s finance chief, Mike Scarpelli, said at a Morgan Stanley event in March.
Snowflake announced at its Summit conference in San Francisco on Monday that it would make open-source catalog software for finding Iceberg tables available within 90 days. Tabular was one of the exhibitors at the conference.
Databricks has promoted its own open-source initiative, Delta Lake. By focusing more on Iceberg tables, Databricks may be able to compete with Snowflake clients who prefer the format. Ghodsi stated that the current goal is to provide “full interoperability” between the Delta Lake and Iceberg projects.
Tabular launched in 2021 and has raised more than $30 million in funding, including from Altimeter Capital, Andreessen Horowitz, and Zetta Venture Partners.
Ghodsi stated that Tabular has hundreds of customers and will collaborate with Databricks to determine how to best use the product.
