The data management vendors -- and longtime partners -- on Monday signed a definitive agreement to become a single company in an all-stock deal. Financial terms were not disclosed. However, Fivetran was valued at $5.6 billion in September 2021 when it raised $565 million in venture capital funding, while DBT Labs was valued at $4.2 billion in February 2022 when it raised $222 million in funding.
Based in Oakland, Calif., Fivetran is a data integration specialist that provides a broad network of connectors enabling customers to extract, transform and load (ETL) data from a multitude of sources. This is its third merger and acquisition deal in six months. In May, the vendor acquired Census to add reverse ETL capabilities for sending transformed data back to applications where it can inform decisions. In September, Fivetran acquired Tobiko Data to boost its burgeoning set of data transformation tools.
DBT Labs, based in Philadelphia, originated as an open source platform for transforming raw data into cleansed and validated data. It has since evolved to include semantic modeling and data governance capabilities.
Given that Fivetran specializes in moving data between platforms while DBT Labs provides a platform for preparing data, the merger brings together complementary capabilities, according to Kevin Petrie, an analyst at BARC U.S.
"This deal makes sense on several fronts," he said. "Fivetran and DBT … are longtime partners, with DBT providing critical transformation capabilities that complement Fivetran's extraction and loading. Both companies have built strong businesses, especially by helping companies consolidate and prepare multi-source data for analytics on cloud data lakehouses."
Sanjeev Mohan, founder and principal of analyst firm SanjMo, likewise noted the value of bringing together capabilities that complement one another.
"I think it's a great deal," he said. "Fivetran is very good at data ingestion and with Census added reverse ETL, but [customers] had to go to DBT to transform data. Fivetran bought Tobiko, but DBT is the 800-pound gorilla in the [data transformation] space. Now, Fivetran has completed the lifecycle of ingestion, modeling, transforming and reverse ETL. It's a good thing."
This deal makes sense on several fronts. Fivetran and DBT … are longtime partners, with DBT providing critical transformation capabilities that complement Fivetran's extraction and loading. Both companies have built strong businesses.
Kevin PetrieAnalyst, BARC U.S.
The transaction, which has been approved by the boards of directors of both Fivetran and DBT Labs, remains subject to customary closing conditions, including regulatory approval.
Following the closing, Fivetran CEO George Fraser will serve as CEO of the combined entity, which is yet to be named, while DBT Labs founder and CEO Tristan Handy will be its co-founder and president. Together, Fivetran and DBT Labs are approaching $600 million in annual recurring revenue, according to Fivetran.
Additive capabilities
While both Fivetran and DBT Labs provide tools that help get data ready to inform AI and analytics applications, neither on its own provides the complete array of capabilities required to take raw data from its source and turn it into high-quality information that can be used to inform decisions.
"Together, we create a more comprehensive, open and interoperable platform at a moment when enterprises are racing to modernize infrastructure for AI," he said. "For Fivetran, the benefit is scale, deeper integration into enterprise data workflows and a stronger path to long-term growth."
DBT's impetus likewise is to provide a more complete data preparation platform, according to Handy. He noted that Fivetran and DBT Labs have over 1,500 joint users and that the companies are already aligned through their partnership. As a result, the merger was inevitable, as he sees it.
"In a world being reshaped by AI and open standards like Iceberg, data teams need simplicity and openness," Handy said. "I believe in that future, and George Fraser does too. Joining forces will allow us to move much faster toward that version of the world. Together, we can build the most complete open data infrastructure platform in the market."
However, while the merger brings together complementary capabilities, it doesn't address everything that developers and engineers need to build cutting-edge applications, according to Donald Farmer, founder and principal of TreeHive Strategy.
Data quality, including data observability to monitor data for changes and anomalies as it moves through pipelines, and governance through data catalogs are also critical elements, Farmer said.
But adding such capabilities to a stack still might not satisfy all potential customers, he continued.
"Organizations with complex needs will still find that best-of-breed tools outperform platform features," Farmer said. "So, a company might use Fivetran-DBT for core workflows while relying on Monte Carlo for data quality and Atlan for governance."
Meanwhile, despite the potential benefits of bringing together complementary capabilities, there are potential drawbacks to the merger, according to Petrie. While Fivetran and DBT Labs integrate their respective companies, competitors such as Coalesce and Qlik could take advantage of the adjustment period to increase their market share.
"Large [mergers and] acquisitions always struggle with organizational disruptions and turf wars," Petrie said. "This inevitable challenge creates a near-term opportunity for competitors to take share. Over time, I do think the combination of these two will succeed."
Farmer similarly noted that the merger between Fivetran and DBT Labs could provide competitors with a window to attract potential customers that might fear getting too closely tied to a single vendor.
"When commercial vendors merge, they often create the conditions for open alternatives to flourish," he said. "I think for many data teams, this may feel like another big vendor whose stack locks them in."
In addition, Farmer said that integrating companies is difficult, both from a technical and cultural perspective.
A culture clash could be a real possibility, according to Mohan.
DBT Labs has its roots in the open source community. Though it eventually became a for-profit vendor, it still provides DBT Core, an open source version of its platform, and has an open source community of more than 100,000 members.
Fivetran is not open source. It remains to be seen, therefore, whether the combined company continues to support DBT's open source platform and community with the same commitment DBT did as an independent entity, despite a promise as part of the merger announcement that DBT Core will remain open under its current license and the company will ensure that "its development remains vibrant."
"DBT has a very strong user base on the free product, so the potential drawback is Fivetran's commitment to DBT Core," Mohan said. "Now, the question is what happens to that open source community."
Looking ahead
Once the merger is complete, assuming all closing conditions are met, the goal of the combined company is to provide an open data infrastructure, according to Kundavaram.
"For enterprises, this means faster insights, fewer integration bottlenecks and data systems that can scale without added complexity," he said.
Handy similarly noted the importance of providing customers with an open infrastructure for preparing data.
"This will be absolutely critical to the future of analytics and AI," he said.
Beyond openness, one way the combined entity could appeal to potential new users is by improving its governance capabilities, according to Petrie. Informatica, which has been one of the more well-regarded data infrastructure vendors, is in the process of being acquired by Salesforce, leaving a potential void that Fivetran and DBT could fill.
"Fivetran and DBT might become the new Informatica -- in other words, the new Switzerland provider of data management tools -- as Informatica folds into Salesforce in the coming months," Petrie said. "But to fill that role, they'll need to strengthen their capabilities in data governance -- for example, by acquiring a data observability vendor."
Mohan, meanwhile, suggested that Fivetran and DBT Labs develop agents that help customers perform certain tasks and -- like many other data management vendors -- add capabilities that enable users to develop their own agents.
"I want them to become even more of a complete offering," he said. "Right now, they're creating a platform. But they could add agents, for example, to do orchestration. And they could take their technologies, including a semantic layer, to enable the AI stack. They should [add capabilities to] become a single interface for customers to build not just data products but also AI products."
Eric Avidon is a senior news writer for Informa TechTarget and a journalist with more than 25 years of experience. He covers analytics and data management.
