BLZE — Backblaze, Inc.

Summary of Backblaze, Inc. Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $38.7 million, up 12% year-over-year, exceeding guidance of $38 million.
• Adjusted EBITDA: $10 million (26% margin), up from $6 million (18% margin) year-over-year.
• B2 Cloud Storage Revenue: $22.4 million, growing 24% year-over-year; ARR increased by 28% year-over-year to $158 million.
• Net Revenue Retention (NRR): 110%, up from 105% a year ago.
• Gross Margin: Improved to 61% from 56% year-over-year.
• Adjusted Free Cash Flow: Negative $1.8 million in Q1, but expected to be positive for the full year.

2. Strategic Updates and Business Highlights

• AI Market Engagement: Over one-third of new bookings are from AI customers, with a 76% year-over-year growth in AI customer usage.
• Go-to-Market Transformation: Progress in increasing awareness and pipeline consistency; welcomed Anuj Kumar as Chief Revenue Officer to enhance sales execution.
• Neocloud Market: Backblaze is positioned to capture a $14 billion opportunity by 2030, focusing on providing cost-efficient storage solutions for Neoclouds.
• Customer Wins: Notable deals include a nearly $1 million ARR contract with a training data provider and a $500,000 ARR deal with an AI-powered video creation company.

3. Forward Guidance and Outlook

• Q2 Revenue Guidance: Expected to be between $39.8 million and $40.2 million, with B2 growth projected at approximately 20%.
• Full-Year Revenue Guidance: Raised to $161.5 million to $163.5 million, reflecting stronger Q1 performance and new pricing strategies.
• Adjusted EBITDA Margin Guidance: Increased to a range of 23% to 25% for the full year.

4. Bad News, Challenges, or Points of Concern

• Computer Backup Segment: Expected to decline by 5% year-over-year, with NRR below 100%, indicating challenges in this segment.
• Free Cash Flow: Q1 showed negative free cash flow, though the company anticipates it will be positive for the full year.
• Competitive Pressures: Concerns about Neoclouds potentially developing their own lower-cost storage solutions, although management believes their unique IP and expertise provide a competitive moat.

5. Notable Q&A Insights

• AI Customer Growth: Gleb Budman highlighted that AI customers are growing three times faster than average customers, driven by data growth from AI use cases.
• Pricing Update Impact: The recent pricing changes are expected to contribute significantly to revenue growth, with half of the raised guidance attributed to this adjustment.
• Sales Strategy: The company is seeing improved sales execution and pipeline growth, with a focus on expanding within existing customer accounts.
• Neocloud Engagement: Backblaze is actively engaged with many top Neoclouds, emphasizing their role in providing the data lake layer for AI workflows.

This summary encapsulates the key points from the Q1 2026 earnings call, highlighting both the positive developments and the challenges faced by Backblaze, Inc.