PitchBook noted in a new report that the infrastructure software as a service (SaaS) sector has experienced significant growth, driven by the increasing adoption of digital transformation, Big Data, and advanced technologies like large language models.
The report from PitchBook explained that this sector encompasses a broad range of solutions, including application development, data creation and management, and IT and digital infrastructure services.
The research report added that in the fourth quarter of 2024, the infrastructure SaaS sector witnessed a substantial surge in funding, largely attributed to Databricks’ $10 billion Series J megadeal.
The report from PitchBook revealed that this transaction propelled the quarter’s deal value to $12.1 billion, representing a 37.8% increase from the previous highest quarter, Q1 2023, which saw a $6.9 billion megadeal by Stripe.
The PitchBook report also mentioned that Q4 deal value marked a significant 194.2% increase from Q3’s $4.1 billion, continuing a streak of consecutive quarterly increases in deal value since Q3 2023.
The Databricks megadeal further boosted the full-year 2024 deal value to $22.3 billion, a 32.4% year-over-year (YoY) increase from 2023’s $16.8 billion.
The report added when excluding the Databricks megadeal, the YoY growth would have been 23.7%, still indicating a notable increase. Deal counts for 2024 remained relatively flat, declining 6.1% YoY.
The report from PitchBook further noted that the infrastructure SaaS sector has experienced fluctuations in deal value and count over the years.
In 2019, pre-pandemic, deal value was $6.3 billion across 404 deals, while in 2021, at the pandemic peak, deal value reached $24.1 billion across 729 deals.
In Q4 2024, deal counts declined for the second consecutive quarter, reaching 82.
Excluding the Databricks megadeal, Q4 deal value was $2.1 billion, a 48.2% decline from Q3’s $4.1 billion.
The PitchBook report also mentioned that the sector’s performance was mixed, with a massive increase in deal value due to the Databricks megadeal, but a decline in deal counts and a softer deal value excluding the megadeal.
The data software and systems segment, where Databricks is categorized, experienced a decline in deal counts, with only 16 deals in Q4, compared to 30 deals in application infrastructure and 18 deals each in development operations (DevOps) and IT operations (ITOps).
AI disruption was a central focus of the largest deals in Q4, with notable investments in Liquid AI, Q-CTRL, and Observe.
The infrastructure SaaS sector has demonstrated resilience and growth, driven by the increasing adoption of digital transformation and advanced technologies.
The PitchBook report concluded that while deal counts and value may fluctuate, the sector’s potential for innovation and disruption, particularly in AI, remains a positive sign for investment.
