Databricks CEO says SaaS isn’t dead, but AI will soon make it irrelevant

On Monday, Databricks announced it reached $5.4 billion in revenue, up 65% year-over-year, with more than $1.4 billion of that coming from its AI products.

Founder CEO Ali Ghodsi wanted to share these growth numbers because there is so much talk about how AI will destroy the SaaS business, he told TechCrunch

“Everyone’s saying, ‘Oh, it’s SaaS. What’s going to happen to all these companies? What’s AI going to do to all these companies? For us, it just increases usage,” he says.

To be fair, he also wants to move the SaaS label away from Databricks, which is priced as an AI company by the private markets. Databricks also officially closed on Monday its massive previously announced $5 billion raise at a $134 billion valuation, and also secured a $2 billion loan facility.

But the company straddles both worlds. Databricks is still best known as a provider of cloud data warehouses. A data warehouse is where enterprises store vast amounts of data to analyze for business insights.

Ghodsi mentioned one AI product in particular that is driving usage of its data warehouse: the LLM user interface called Genie.

Genie is an example of how a SaaS company can do that replace the user interface with natural language. For example, he uses it to ask why warehouse usage and turnover peak on certain days.

Just a few years ago, such a request required a specific query language, otherwise a special report might have been programmed. Today, any product with an LLM interface can be used by anyone, Ghodsi noted. Genie is one reason for the usage growth rates, he said.

The threat of AI to SaaS is not an AI VC jokingly tweetedthat companies will rip out their SaaS “systems of record” and replace them with a vibe-coded, homegrown version. Records systems store crucial business data, whether it’s sales, customer support or finance.

“Why would you move your registration system? You know, it’s hard to move it,” Ghodsi said.

The model makers do not offer databases to store that data and become registration systems anyway. Instead, they hope to replace the user interface with natural language for human use, or with APIs or other plug-ins for agents.

So the threat to SaaS companies, says Ghodsi, is that people no longer spend their careers mastering a particular product: Salesforce specialists, or ServiceNow, or SAP. Once the interface consists only of language, the products become invisible, just like plumbing.

“Millions of people around the world have been trained in these user interfaces. And so that has been the biggest challenge these companies have,” Ghodsi warns.

SaaS companies that embrace the new LLM interface could grow, as Databricks is doing. But it also opens up opportunities for AI-native competitors to offer alternatives that work better with AI and agents.

That’s why Databricks designed its Lakebase database for agents. He’s seeing early traction. “In the eight months we’ve had it on the market, it’s generated twice as much revenue as our data warehouse did when it was eight months old. OK, that’s kind of like comparing toddlers,” says Ghodsi. “But this is a toddler twice her size.”

Meanwhile, now that Databricks has completed its massive funding round, Ghodsi tells us the company is not immediately working on another pay hike or preparing for an IPO.

“This is not a good time to go public,” Ghodsi said. “I just wanted to be really well capitalized,” should the markets go “south” again, as they did during the post-ZIRP crash of 2022. A fat bank account “protects us and gives us many, many years off the runway,” he added.