Backblaze, Inc. (BLZE) shares ended the last trading session 7.6% higher at $10.75. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 21.5% gain over the past four weeks.Backblaze is benefiting from accelerated B2 revenue growth, AI-driven opportunities, and innovative product offerings like B2 Overdrive and security features.This company is expected to post quarterly loss of $0.01 per share in its upcoming report, w ...

Core Viewpoint - Momentum investing focuses on following a stock's recent price trends, aiming to buy high and sell even higher, with the expectation that established trends will continue [1] Company Overview: Backblaze, Inc. (BLZE) - Backblaze, Inc. currently holds a Momentum Style Score of B and a Zacks Rank of 2 (Buy), indicating strong potential for outperformance [2][3] - The stock has seen significant price increases, with a 48.31% rise over the past quarter and a 36.66% increase over the last year, compared to the S&P 500's 9.8% and 15.8% respectively [6] Price Performance - Over the past week, BLZE shares increased by 1.58%, while the Zacks Internet - Software industry rose by 0.24% [5] - The monthly price change for BLZE is 61.51%, significantly outperforming the industry's 0.52% [5] Trading Volume - BLZE has an average 20-day trading volume of 737,278 shares, which is a useful indicator of market interest and can signal bullish or bearish trends [7] Earnings Outlook - In the past two months, four earnings estimates for BLZE have been revised upwards, with the consensus estimate improving from -$0.13 to -$0.03 [9] - For the next fiscal year, three estimates have also moved upwards, indicating positive sentiment regarding future earnings [9] Conclusion - Given the strong momentum indicators and positive earnings revisions, BLZE is positioned as a promising investment opportunity [11]

Group 1 - Backblaze, Inc. (BLZE) has reached a key level of support, with its 50-day simple moving average crossing above the 200-day simple moving average, indicating a "golden cross" which is a bullish signal for potential breakout [1] - The golden cross consists of three stages: a downtrend that bottoms out, the shorter moving average crossing above the longer moving average, and the stock continuing to rise [2] - Over the past four weeks, BLZE has gained 50.8%, and it currently holds a 2 (Buy) rating on the Zacks Rank, suggesting a strong bullish case [3] Group 2 - The positive earnings outlook for BLZE is supported by four upward revisions in earnings estimates over the past 60 days, with no downward revisions, indicating a favorable trend [3] - Investors are encouraged to consider adding BLZE to their watchlist due to the significant technical indicator and the positive movement in earnings estimates [5]

Company Performance - Backblaze, Inc. (BLZE) shares have increased by 50.8% over the past month, reaching a new 52-week high of $8.25 [1] - Year-to-date, Backblaze has gained 36.5%, outperforming the Zacks Computer and Technology sector's 12.4% and the Zacks Internet - Software industry's 19.5% [1] Earnings and Revenue - Backblaze has consistently exceeded earnings expectations, reporting EPS of $0.01 against a consensus estimate of -$0.05 in its last earnings report [2] - For the current fiscal year, Backblaze is projected to have earnings of -$0.03 per share on revenues of $146.26 million, reflecting a 92.5% change in EPS and a 14.59% change in revenues [3] - The next fiscal year forecasts earnings of $0.12 per share on revenues of $167.45 million, indicating a year-over-year change of 475% in EPS and 14.49% in revenues [3] Valuation Metrics - Backblaze has a Value Score of F, while its Growth and Momentum Scores are both A, resulting in a combined VGM Score of B [6] - The stock currently holds a Zacks Rank of 2 (Buy), supported by rising earnings estimates, suggesting potential for further gains [7] Industry Comparison - The Internet - Software industry is positioned in the top 29% of all industries, indicating favorable conditions for both Backblaze and its peer, Karooooo Ltd. (KARO) [10] - Karooooo Ltd. has a Zacks Rank of 2 (Buy) and is expected to post earnings of $1.93 per share on revenues of $308.19 million for the current fiscal year [8][9]

Core Viewpoint - Backblaze, Inc. (BLZE) shares have increased by 39.3% in the past four weeks, closing at $7.65, with a potential upside indicated by Wall Street analysts' price targets suggesting a mean estimate of $10.64, representing a 39.1% upside [1] Price Targets - The average price target consists of seven short-term estimates ranging from a low of $8.00 to a high of $14.00, with a standard deviation of $2.06, indicating variability among analysts [2] - The lowest estimate suggests a 4.6% increase from the current price, while the highest estimate indicates an 83% upside [2] Analyst Sentiment - Analysts show strong agreement regarding BLZE's ability to report better earnings than previously predicted, which supports the view of potential upside [4] - The Zacks Consensus Estimate for the current year has risen by 16.4% over the past month, with four estimates increasing and no negative revisions [12] Zacks Rank - BLZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimate factors, indicating a strong potential upside [13] Conclusion on Price Targets - While the consensus price target may not be a reliable indicator of the extent of potential gains, the direction implied by these targets appears to be a useful guide for further research [14]

Group 1: SkyWater Technology - SkyWater Technology has a 12-month stock price forecast of $13.00, indicating a 13.50% upside from the current price of $11.45, based on three analyst ratings [2] - The company reported a significant revenue drop of 37% year-over-year in Q2 2025, leading to widened losses per share, although gross margin improved by 20 basis points to 18.5% [2][3] - The acquisition of Fab 25 from Infineon Technologies is expected to generate at least $300 million in annual revenue and enhance EBITDA, with positive impacts anticipated as early as the current quarter [3][4] - SkyWater's acquisition supports a multi-year supply agreement exceeding $1 billion and positions the company favorably amid U.S. regulations favoring onshore semiconductor manufacturing [4] Group 2: Emergent BioSolutions - Emergent BioSolutions has a 12-month stock price forecast of $14.33, representing a 56.61% upside from the current price of $9.15, based on three analyst ratings [5] - The company experienced mixed results in Q2 but improved EPS significantly, beating expectations by 42 cents per share, driven by strong NARCAN sales and cost optimization strategies [6][7] - Emergent secured a $65 million contract with the Ontario Ministry of Health for NARCAN, contributing to the rapid growth of its international medical countermeasures business [8] Group 3: Backblaze - Backblaze has a 12-month stock price forecast of $10.07, indicating a 32.05% upside from the current price of $7.63, based on seven analyst ratings [9] - The company reported a 16% year-over-year revenue increase and a 29% surge in storage revenue due to rising demand from AI, despite wider-than-expected GAAP losses per share [9][10] - Backblaze's adjusted EBITDA margin is improving, and the successful launch of its B2 OverDrive platform is a positive indicator for future growth [10][11] - The stock has gained over 48% in the past month, with unanimous Buy ratings from all seven analysts and a consensus price target suggesting an additional 31% upside [11]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $36.3 million, representing a 16% year-over-year increase [5][22] - B2 revenue reached $19.8 million, up 29% year-over-year [5][22] - Adjusted EBITDA margin doubled year-over-year to 18%, exceeding guidance [6][26] - Gross margin improved to 63% from 55% in the prior year, primarily due to a change in the estimated useful life of fixed assets [25] - Adjusted free cash flow for the quarter was negative 11%, an improvement from negative 21% a year ago [26] Business Line Data and Key Metrics Changes - Computer backup revenue grew 4% year-over-year, but is expected to decline in the low to mid-single digits on a quarterly basis moving forward [23] - The number of customers generating over $50,000 in ARR increased to 150,000, a 30% year-over-year increase [10] - The B2 growth rate accelerated to 29% in Q2, driven by strong direct sales bookings and AI tailwinds [22][26] Market Data and Key Metrics Changes - The number of AI customers grew 70% year-over-year, with data stored by these customers increasing 40 times [15] - AI companies now represent three of the top ten customers, highlighting the growing importance of AI in the market [14] Company Strategy and Development Direction - The company is focused on becoming a profitable Rule of 40 company, emphasizing B2 growth and adjusted free cash flow positivity by Q4 [6][20] - A go-to-market transformation is underway, with significant changes in account-based marketing and customer success strategies [10][12] - The introduction of B2 OverDrive aims to capture high-performance needs in the AI sector, indicating a strategic shift towards high-value customers [8][13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to continue delivering durable and efficient B2 revenue growth, with expectations of exiting the year with at least 30% B2 revenue growth [30] - The management team highlighted the importance of AI as a significant market opportunity, with plans to leverage AI across products and internal initiatives [15][16] Other Important Information - The company announced a stock repurchase program of up to $10 million to reduce equity dilution [29] - A new $20 million line of credit was established to enhance financial flexibility [27] Q&A Session Summary Question: Background on the 7-figure customer deal - The 7-figure customer was an existing smaller customer that significantly increased their data usage due to AI needs, leading to a displacement from a hyperscaler [34][36] Question: Pipeline for B2 OverDrive - The pipeline for B2 OverDrive is still early, with about a dozen companies in discussions, all of which are multi-petabyte customers [40][41] Question: Update on channel efforts - The company is seeing an increasing number and value of leads and closed ARR business through a focused approach on a smaller number of channel partners [42] Question: Customer count decline in computer backup - The gross customer retention rate for computer backup remains strong at 90%, but the business is experiencing a secular decline due to changing consumer behaviors [66] Question: B2 NRR outlook - The decline in B2 NRR is primarily due to price increases lapping, with expectations for stabilization in the coming quarters [90][91] Question: AI storage side disadvantage - The company believes it is at an advantage by participating in all five stages of the AI data pipeline, rather than being limited to just GPU offerings [95][100]

Financial Performance - B2 Cloud Storage revenue grew by 29% year-over-year in Q2 2025 [11, 19, 33], reaching $19.8 million [42] - Total company revenue reached $36.3 million in Q2 2025, representing a 16% year-over-year growth [42] - Adjusted EBITDA margin was 18% in Q2 2025, doubling compared to the previous year [33, 61] - The company is targeting 30%+ B2 growth in Q4 2025 [34] - Adjusted Free Cash Flow margin improved to -11% in Q2 2025 [62] Strategic Initiatives and Growth Drivers - AI is a significant growth driver, with a 70% increase in AI customer count year-over-year [28] and a 40x growth in data stored by AI customers [28] - The company secured a new $20 million line of credit [33] - A stock buyback program of up to $10 million was approved [33, 49, 50] - The company launched new cyber security features, including Anomaly Alerts, Enterprise Web Console, and Bucket Access Logs [16] Customer Success - The company highlighted a B2 Overdrive customer win with a Generative AI Video Company [21] - The company closed a six-figure deal with a hyperscaler displacement customer [24] - The number of customers with ARR above $50,000 increased by 30% year-over-year, reaching 150 [19, 20]

Part I [Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) The unaudited condensed consolidated financial statements present Backblaze's financial position, operations, and cash flows, highlighting a 16% revenue increase, improved gross margin, and narrowed net loss [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$186.0 million** as of June 30, 2025, driven by property and equipment, while total liabilities and stockholders' equity also rose Condensed Consolidated Balance Sheet Data (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $32,187 | $45,776 | | Total current assets | $64,453 | $65,748 | | Property and equipment, net | $49,938 | $42,949 | | Total assets | $186,045 | $168,558 | | **Liabilities & Stockholders' Equity** | | | | Total current liabilities | $59,914 | $59,803 | | Total liabilities | $106,403 | $90,936 | | Total stockholders' equity | $79,642 | $77,622 | | Total liabilities and stockholders' equity | $186,045 | $168,558 | [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Q2 2025 revenue grew **16%** to **$36.3 million**, with gross profit up **34%** and gross margin expanding to **63%**, significantly narrowing the net loss Statement of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $36,298 | $31,285 | $70,911 | $61,253 | | Gross Profit | $23,041 | $17,229 | $42,297 | $33,040 | | Loss from operations | $(6,717) | $(9,809) | $(15,637) | $(20,319) | | Net loss | $(7,097) | $(10,348) | $(16,421) | $(21,401) | | Net loss per share | $(0.13) | $(0.25) | $(0.30) | $(0.52) | [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity increased to **$79.6 million** by June 30, 2025, driven by stock-based compensation and option exercises, partially offset by net loss - The accumulated deficit grew to **$(212.4) million** as of June 30, 2025, from **$(196.0) million** at the end of 2024, reflecting the net loss for the period[20](index=20&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities improved to **$8.5 million** for the first six months of 2025, though overall cash and equivalents decreased by **$13.6 million** due to investing and financing activities Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,488 | $5,643 | | Net cash used in investing activities | $(14,689) | $(4,942) | | Net cash used in financing activities | $(7,388) | $(3,376) | | **Net decrease in cash and cash equivalents** | **$(13,589)** | **$(2,675)** | [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Notes detail accounting policies, including a change in equipment useful life, strong B2 Cloud Storage revenue growth, a new **$20 million** credit facility, and a **$10 million** share repurchase program - Effective April 1, 2025, the company extended the estimated useful lives of its data center equipment to a uniform **6 years**, reducing depreciation expense by approximately **$2.4 million** for the three and six months ended June 30, 2025[32](index=32&type=chunk)[33](index=33&type=chunk) Revenue by Product (in thousands) | Product | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | B2 Cloud Storage | $19,841 | $15,415 | 28.7% | | Computer Backup | $16,457 | $15,870 | 3.7% | | **Total revenue** | **$36,298** | **$31,285** | **16.0%** | - In June 2025, the company entered into a new **$20.0 million** senior secured revolving credit facility with Citizens Bank, N.A., maturing in June 2027[74](index=74&type=chunk) - In August 2025, the company announced a share repurchase program to purchase up to **$10.0 million** of its common stock through August 1, 2026, intended to be cash neutral by using proceeds from employee stock option exercises and ESPP purchases[109](index=109&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=29&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the strategic shift to up-market, **16%** revenue growth driven by B2 Cloud Storage, improved gross margin and non-GAAP metrics, and solid liquidity with a new **$20 million** credit facility [Overview](index=29&type=section&id=MD%26A%20Overview) Backblaze is transforming its go-to-market strategy to target up-market enterprise and AI customers with new product launches, serving over **500,000** customers globally - The company is actively moving up-market, evidenced by signing multiple deals with total contract values over **$1.0 million** each[117](index=117&type=chunk) - Recent product launches include B2 Overdrive, a premium high-throughput storage solution for AI/ML workloads, and a suite of enterprise cybersecurity features to expand the addressable market[118](index=118&type=chunk) [Key Business Metrics](index=31&type=section&id=Key%20Business%20Metrics) Total Annual Recurring Revenue (ARR) reached **$145.9 million** as of June 30, 2025, driven by **29%** growth in B2 Cloud Storage ARR, with overall NRR at **109%** Key Business Metrics as of June 30 | Metric | 2025 | 2024 | | :--- | :--- | :--- | | **Total Company** | | | | Net revenue retention rate | 109% | 114% | | Gross customer retention rate | 90% | 90% | | Annual recurring revenue (in millions) | $145.9 | $126.3 | | **B2 Cloud Storage** | | | | Net revenue retention rate | 112% | 126% | | Annual recurring revenue (in millions) | $80.7 | $62.8 | | **Computer Backup** | | | | Net revenue retention rate | 106% | 105% | | Annual recurring revenue (in millions) | $65.2 | $63.5 | - The decrease in the NRR for B2 Cloud Storage is largely attributed to lapping the impact of the October 2023 price increase[129](index=129&type=chunk) [Results of Operations](index=35&type=section&id=Results%20of%20Operations) Q2 2025 revenue grew **16%** to **$36.3 million**, with gross margin expanding to **63%** due to extended asset life, leading to a reduced operating loss - The **16%** YoY revenue growth in Q2 2025 was primarily driven by a **$4.4 million (29%)** increase in B2 Cloud Storage revenue, stemming from higher usage by existing customers and sales to new customers[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - Gross margin improved to **63%** in Q2 2025 from **55%** in Q2 2024, with the extension of infrastructure equipment's useful life contributing **7 percentage points** to the margin improvement for the quarter[159](index=159&type=chunk) - Sales and Marketing expenses decreased by **$0.8 million (7%)** in Q2 2025 compared to Q2 2024, due to reduced headcount and more efficient, targeted marketing efforts[161](index=161&type=chunk)[163](index=163&type=chunk) [Non-GAAP Financial Measures](index=39&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP financial performance improved significantly, with Adjusted Gross Margin at **79%** and Adjusted EBITDA more than doubling to **$6.6 million (18% margin)** in Q2 2025 Reconciliation to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | | Net loss and comprehensive loss | $(7,097) | $(10,348) | | Adjustments (Depreciation, Stock-Comp, etc.) | $13,703 | $13,091 | | **Adjusted EBITDA** | **$6,610** | **$2,743** | | **Adjusted EBITDA Margin** | **18%** | **9%** | Reconciliation to Adjusted Free Cash Flow (in thousands) | Metric | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,488 | $5,643 | | Capital expenditures | $(5,471) | $(7,522) | | Principal payments on finance leases | $(9,277) | $(9,711) | | Other adjustments | $242 | $0 | | **Adjusted Free Cash Flow** | **$(6,018)** | **$(11,590)** | | **Adjusted Free Cash Flow Margin** | **(8)%** | **(19)%** | [Liquidity and Capital Resources](index=42&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity as of June 30, 2025, totaled **$50.5 million** in cash and marketable securities, supplemented by a new **$20.0 million** revolving credit facility, deemed sufficient for the next 12 months - Principal sources of liquidity as of June 30, 2025, were cash, cash equivalents, and marketable securities totaling **$50.5 million**[181](index=181&type=chunk) - On June 4, 2025, the company entered into a new **$20.0 million** senior secured revolving credit facility with Citizens Bank, N.A., which was undrawn as of June 30, 2025[184](index=184&type=chunk)[187](index=187&type=chunk) - In August 2025, the company announced a new share repurchase program of up to **$10 million**, intended to be funded by proceeds from employee stock exercises to be cash neutral[196](index=196&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=46&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk exposures are primarily interest rates and foreign currency, both considered minimal due to short-term investments and U.S. dollar-denominated sales - Interest rate risk primarily relates to future finance lease arrangements, with a **100 basis point** change not expected to materially affect financial position due to the short-term nature of investments[212](index=212&type=chunk) - Foreign currency risk is considered minimal as most sales are denominated in U.S. dollars, despite some expenses in foreign currencies[213](index=213&type=chunk) [Item 4. Controls and Procedures](index=46&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by this report (June 30, 2025)[216](index=216&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[217](index=217&type=chunk) Part II [Part II - Other Information](index=48&type=section&id=Part%20II%20-%20Other%20Information) [Item 1. Legal Proceedings](index=48&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any legal proceedings expected to have a material adverse effect on its business or financial condition - From time to time, the company may be involved in legal proceedings in the ordinary course of business, but it is not presently a party to any that are considered material[220](index=220&type=chunk) [Item 1A. Risk Factors](index=48&type=section&id=Item%201A.%20Risk%20Factors) This section details numerous risks, including cumulative losses, intense competition, service disruptions, cybersecurity threats, and reliance on third-party vendors for critical infrastructure - The company has a history of cumulative losses (**$212.4 million** accumulated deficit as of June 30, 2025) and does not expect to be profitable for the foreseeable future due to continued investments in scaling the business[223](index=223&type=chunk) - The markets for cloud services are intensely competitive, with major competitors like AWS, Google Cloud, and Microsoft Azure having significantly greater resources, brand recognition, and broader service offerings[224](index=224&type=chunk) - The business relies on third-party vendors for critical components and services, including data centers and hard drives from limited sources, exposing it to potential supply chain and service disruptions[272](index=272&type=chunk) - Cybersecurity attacks, data breaches, or other system disruptions could damage the company's reputation, harm the business, and lead to significant costs and liabilities[225](index=225&type=chunk)[229](index=229&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=73&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reported no unregistered sales of equity securities, no use of proceeds from registered securities, and no purchases of its equity securities during the period - There were no unregistered sales of equity securities during the reporting period[324](index=324&type=chunk) [Item 5. Other Information](index=73&type=section&id=Item%205.%20Other%20Information) CEO Gleb Budman terminated a Rule 10b5-1 trading plan on May 5, 2025 - CEO Gleb Budman terminated a previously adopted Rule 10b5-1 trading plan on May 5, 2025[327](index=327&type=chunk) [Item 6. Exhibits](index=74&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including officer certifications and Interactive Data Files (XBRL) - The report includes certifications from the Principal Executive Officer and Principal Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act[329](index=329&type=chunk) Signatures - The report was duly signed on August 7, 2025, by Gleb Budman, Chief Executive Officer, and Marc Suidan, Chief Financial Officer[333](index=333&type=chunk)

[Financial & Operational Highlights](index=1&type=section&id=Financial%20%26%20Operational%20Highlights) Backblaze reported strong Q2 2025 results with 16% total revenue growth, 29% B2 Cloud Storage growth, significantly improved profitability, and key operational achievements in AI and cybersecurity Q2 2025 Financial Highlights (YoY) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | % Change | | :--- | :--- | :--- | :--- | | **Total Revenue** | $36.3 million | $31.3 million | +16% | | B2 Cloud Storage Revenue | $19.8 million | $15.3 million | +29% | | Computer Backup Revenue | $16.5 million | $15.9 million | +4% | | **Gross Profit** | $23.0 million | $17.2 million | +33.7% | | Gross Margin | 63% | 55% | +8 p.p. | | **Net Loss** | $(7.1) million | $(10.3) million | N/A | | Net Loss Per Share | $(0.13) | $(0.25) | N/A | | **Adjusted EBITDA** | $6.6 million | $2.7 million | +144% | | Adjusted EBITDA Margin | 18% | 9% | +9 p.p. | | **Non-GAAP Net Income (Loss)** | $0.8 million | $(4.8) million | N/A | - B2 Cloud Storage revenue growth accelerated sequentially from **23%** in Q1 to **29%** in Q2, solidifying the company's path to be Adjusted Free Cash Flow positive in **Q4 2025**[2](index=2&type=chunk) - Key operational developments include: - **AI Momentum**: Signed the first six-figure B2 Overdrive customer for AI workloads just two months after launch - **Cybersecurity**: Launched a suite of enterprise security features, including AI-powered 'Anomaly Alerts' - **Up-Market Growth**: The number of customers contributing over $50,000 in ARR grew **53%** year-over-year[2](index=2&type=chunk)[7](index=7&type=chunk) Key Business Metrics (YoY) | Metric | Q2 2025 (USD) | Q2 2024 (USD) | | :--- | :--- | :--- | | Annual Recurring Revenue (ARR) | $145.9 million (+16%) | N/A | | B2 Cloud Storage ARR | $80.7 million (+29%) | N/A | | Computer Backup ARR | $65.2 million (+3%) | N/A | | Net Revenue Retention (NRR) | 109% | 114% | | B2 Cloud Storage NRR | 112% | 126% | [Financial Outlook](index=2&type=section&id=Financial%20Outlook) The company issued positive Q3 2025 guidance and raised its full-year revenue forecast, expecting continued strong B2 Cloud Storage growth accelerating to over 30% by Q4 2025 Q3 and Full-Year 2025 Guidance | Metric | Q3 2025 Outlook (USD) | Full-Year 2025 Outlook (USD) | Previous FY2025 Outlook (USD) | | :--- | :--- | :--- | :--- | | **Revenue** | $36.7 million - $37.1 million | $145.0 million - $147.0 million | $144.0 million - $146.0 million | | **Adjusted EBITDA Margin** | 17% - 19% | 17% - 19% | N/A | B2 Business YoY Growth Outlook for 2025 | Quarter | Q1 2025 (Actual) | Q2 2025 (Actual) | Q3 2025 (Outlook) | Q4 2025 (Outlook) | | :--- | :--- | :--- | :--- | :--- | | **YoY Growth** | 23% | 29% | 28-30% | 30%+ | [Consolidated Financial Statements](index=7&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements detail the company's financial position and performance, reflecting growth in assets and liabilities, increased revenue, improved gross margins, a smaller net loss, and positive cash from operations [Condensed Consolidated Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets increased to $186.0 million and total liabilities grew to $106.4 million, with cash and marketable securities totaling $50.5 million Balance Sheet Summary (in thousands) | Account | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $32,187 | $45,776 | | Marketable securities | $18,354 | $9,139 | | **Total Assets** | **$186,045** | **$168,558** | | Total current liabilities | $59,914 | $59,803 | | **Total Liabilities** | **$106,403** | **$90,936** | | **Total Stockholders' Equity** | **$79,642** | **$77,622** | [Condensed Consolidated Statements of Operations](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) For Q2 2025, revenue grew 16% to $36.3 million, gross profit increased 33.7% to $23.0 million with margin expanding to 63%, and net loss significantly reduced to $7.1 million Statement of Operations Summary - Q2 (in thousands) | Account | Three Months Ended June 30, 2025 (in thousands USD) | Three Months Ended June 30, 2024 (in thousands USD) | | :--- | :--- | :--- | | **Revenue** | $36,298 | $31,285 | | **Gross Profit** | $23,041 | $17,229 | | Total operating expenses | $29,758 | $27,038 | | Loss from operations | $(6,717) | $(9,809) | | **Net Loss** | **$(7,097)** | **$(10,348)** | | Net loss per share | $(0.13) | $(0.25) | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2025, net cash from operations improved to $8.5 million, while investing and financing activities resulted in a net decrease in cash of $13.6 million Cash Flow Summary (in thousands) | Activity | Six Months Ended June 30, 2025 (in thousands USD) | Six Months Ended June 30, 2024 (in thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,488 | $5,643 | | Net cash used in investing activities | $(14,689) | $(4,942) | | Net cash used in financing activities | $(7,388) | $(3,376) | | **Net decrease in cash** | **$(13,589)** | **$(2,675)** | [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section reconciles key non-GAAP financial measures to GAAP, demonstrating significant improvement in underlying profitability with positive Non-GAAP net income, doubled Adjusted EBITDA, and nearly halved adjusted free cash flow burn [Adjusted Gross Profit](index=10&type=section&id=Adjusted%20Gross%20Profit) Adjusted gross profit for Q2 2025 was $28.8 million, with an adjusted gross margin of 79%, a slight improvement from 78% in Q2 2024 after excluding non-cash items Adjusted Gross Profit Reconciliation - Q2 (in thousands) | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | | :--- | :--- | :--- | | GAAP Gross Profit | $23,041 | $17,229 | | Stock-based compensation | $432 | $354 | | Depreciation and amortization | $5,384 | $6,879 | | **Adjusted Gross Profit** | **$28,844** | **$24,462** | | **Adjusted Gross Margin** | **79%** | **78%** | [Adjusted EBITDA](index=10&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA for Q2 2025 more than doubled to $6.6 million from $2.7 million, with the margin expanding significantly to 18% from 9%, reflecting strong operating profitability improvement Adjusted EBITDA Reconciliation - Q2 (in thousands) | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | | :--- | :--- | :--- | | Net Loss | $(7,097) | $(10,348) | | Depreciation and amortization | $5,474 | $7,025 | | Stock-based compensation | $7,304 | $5,528 | | Other adjustments | $929 | $538 | | **Adjusted EBITDA** | **$6,610** | **$2,743** | | **Adjusted EBITDA Margin** | **18%** | **9%** | [Non-GAAP Net Income (Loss)](index=12&type=section&id=Non-GAAP%20Net%20Income%20%28Loss%29) In Q2 2025, Backblaze achieved a Non-GAAP net income of $0.8 million ($0.01 per share), a significant turnaround from a $4.8 million loss in Q2 2024, primarily by excluding stock-based compensation Non-GAAP Net Income (Loss) Reconciliation - Q2 (in thousands) | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | | :--- | :--- | :--- | | Net Loss | $(7,097) | $(10,348) | | Stock-based compensation | $7,304 | $5,528 | | Other adjustments | $549 | $(1) | | **Non-GAAP Net Income (Loss)** | **$756** | **$(4,821)** | | **Non-GAAP Net Income (Loss) per share** | **$0.01** | **$(0.11)** | [Adjusted Free Cash Flow](index=12&type=section&id=Adjusted%20Free%20Cash%20Flow) For the first six months of 2025, adjusted free cash flow outflow significantly improved to $(6.0) million from $(11.6) million, with the margin improving to (8)% from (19)%, indicating progress towards cash flow positivity Adjusted Free Cash Flow Reconciliation (in thousands) | Metric | Six Months Ended June 30, 2025 (in thousands USD) | Six Months Ended June 30, 2024 (in thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,488 | $5,643 | | Capital expenditures | $(5,471) | $(7,522) | | Principal payments on finance leases | $(9,277) | $(9,711) | | Other adjustments | $242 | $0 | | **Adjusted Free Cash Flow** | **$(6,018)** | **$(11,590)** | [Definitions of Key Metrics & Non-GAAP Measures](index=4&type=section&id=Definitions%20of%20Key%20Metrics%20%26%20Non-GAAP%20Measures) This section defines key business metrics like ARR, NRR, and Gross Customer Retention Rate, alongside non-GAAP financial measures such as Adjusted Gross Profit, Adjusted EBITDA, and Adjusted Free Cash Flow, used to assess performance and provide a clearer view of core operations - **Annual Recurring Revenue (ARR)**: Defined as the annualized value of all B2 and Computer Backup arrangements as of the end of a period, calculated by multiplying the last month's revenue by 12[21](index=21&type=chunk) - **Net Revenue Retention Rate (NRR)**: Calculated as the average of the last four quarters' NRR. A quarterly NRR is the revenue from a cohort of customers in the current quarter divided by the revenue from the same cohort in the prior-year quarter[22](index=22&type=chunk) - **Gross Customer Retention Rate**: Measures the ability to retain customers, irrespective of revenue changes. It is the trailing four-quarter average of the quarterly retention rate[23](index=23&type=chunk) - **Non-GAAP Measures**: The company uses several non-GAAP metrics, including **Adjusted Gross Profit**, **Adjusted EBITDA**, **Non-GAAP Net Income**, and **Adjusted Free Cash Flow**, to supplement GAAP results. These typically exclude expenses such as stock-based compensation, depreciation & amortization, and other non-recurring charges to better reflect core operational performance[13](index=13&type=chunk)[16](index=16&type=chunk)[17](index=17&type=chunk)