BLZE — Backblaze, Inc.

Summary of Backblaze Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Total Revenue: $37.2 million, exceeding the high end of guidance ($37.1 million), representing a 14% year-over-year growth.
• B2 Cloud Storage Revenue: Grew 28% year-over-year, up from 19% organic growth in the same period last year.
• Adjusted EBITDA Margin: 23%, nearly double the 12% from the previous year.
• Net Loss: $3.8 million, significantly improved from a loss of $12.8 million a year ago.
• Non-GAAP Net Income: $1.9 million, compared to a loss of $4.1 million last year.
• Net Revenue Retention (NRR): 106% for the trailing four quarters, with in-quarter NRR for B2 at 116%.
• Gross Margin: 62%, up from 55% a year ago.
• Adjusted Free Cash Flow: Negative $3.5 million, an improvement of $0.5 million year-over-year.

2. Strategic Updates and Business Highlights

• Backblaze is undergoing a Phase 2 go-to-market transformation aimed at accelerating sales velocity and enhancing self-serve and direct sales motions.
• The company is focusing on AI workloads, with significant customer traction in this area, including a notable 6-figure deal with an AI start-up and a 7-figure expansion from an existing AI customer.
• Backblaze's B2 Overdrive product is gaining traction, with multiple 6-figure deals closed, indicating strong product-market fit.
• The company has been recognized for its technology innovation and cloud security, enhancing its market reputation.

3. Forward Guidance and Outlook

• For Q4, Backblaze expects revenue in the range of $37.3 million to $37.9 million, with B2 growth projected between 25% and 28% year-over-year.
• The company aims to achieve positive adjusted free cash flow in Q4 and is focused on reaching a Rule of 40 profile, targeting a significant improvement from a score of 9 at the beginning of the year.

4. Bad News, Challenges, or Points of Concern

• The B2 growth target of 30% for Q4 has been adjusted downward due to variability in customer data storage needs, particularly from a large AI customer that trimmed its usage more than expected.
• The company has noted that larger deals are taking longer to close than anticipated, which could impact growth momentum.
• Computer Backup revenue remained flat year-over-year, reflecting the final effects of a price increase implemented in 2023, indicating potential challenges in that segment.

5. Notable Q&A Insights

• Management acknowledged that while they are moving upmarket successfully, the complexity of larger deals requires more time and coordination among multiple stakeholders.
• The Phase 2 transformation is expected to enhance operational efficiency and sales effectiveness, particularly in targeting ideal customer profiles.
• There is a strong focus on improving self-serve motions to better cater to data-heavy AI use cases, with a notable increase in self-serve account creation.
• The company is actively working on restructuring to fund the next phase of its go-to-market strategy, emphasizing a talent refresh and operational improvements rather than cost-cutting.

Overall, Backblaze demonstrated strong financial performance in Q3 2025, with a clear focus on leveraging AI opportunities while addressing challenges in sales execution and customer variability. The outlook remains positive, with strategic initiatives aimed at driving future growth.