Core Viewpoint - Rosen Law Firm is investigating potential securities claims on behalf of shareholders of Backblaze, Inc. due to allegations of materially misleading business information issued by the company [1] Group 1: Investigation and Allegations - The investigation is prompted by a report from Morpheus Research that accused Backblaze of financial missteps and questionable accounting practices since its IPO in November 2021 [3] - The Morpheus Research report led to a significant drop in Backblaze's stock price, which fell by 2.1% on April 24, 2025 [3] Group 2: Class Action Details - Shareholders who purchased Backblaze securities may be entitled to compensation through a class action lawsuit, with no out-of-pocket fees due to a contingency fee arrangement [2] - Interested investors can join the class action by submitting a form or contacting the Rosen Law Firm directly [2] Group 3: Rosen Law Firm's Credentials - The Rosen Law Firm has a strong track record in securities class actions, having achieved the largest settlement against a Chinese company and consistently ranking among the top firms for securities class action settlements since 2013 [4] - In 2019, the firm secured over $438 million for investors, showcasing its capability in recovering significant amounts for its clients [4]

Part I [Business Overview](index=5&type=section&id=Item%201.%20Business) Backblaze is a leading professional storage cloud platform, offering convenient and economical cloud services for data storage, usage, and protection to over 500,000 customers and managing approximately 4 exabytes of data as of December 31, 2024 - Backblaze is a leading professional storage cloud platform, offering convenient, economical, and high-performance cloud services to help customers store, use, and protect data[21](index=21&type=chunk) - As of December 31, 2024, the company has attracted over **500,000 customers** across **175 countries**, managing approximately **4 exabytes** of data storage[21](index=21&type=chunk) - Customers leverage its platform to support AI workflows, cyber resilience, media workflows, and other data applications and IT needs[21](index=21&type=chunk) [Overview](index=5&type=section&id=Overview) Backblaze provides easy-to-use, economical, high-performance cloud storage solutions, significantly reducing data storage costs and complexity, and fostering a large community through its transparent culture - The company significantly reduces data storage costs and complexity by offering easy-to-use, economical, and high-performance cloud storage solutions[21](index=21&type=chunk) - Through its blog and transparent culture, the company has built a community of millions of readers and brand advocates[21](index=21&type=chunk) [Our Platform and Cloud Services](index=5&type=section&id=Our%20Platform%20and%20Cloud%20Services) The Backblaze Storage Cloud platform, built on proprietary software and commodity hardware, offers B2 Cloud Storage (IaaS) and Backblaze Computer Backup (SaaS), managing over 850 billion files with a focus on durability, scalability, and security - Backblaze offers two core cloud services: - **Backblaze B2 Cloud Storage (IaaS):** Supports data storage, application development, and partner use cases with pay-as-you-go or committed contracts, suitable for backup, multi-cloud, application storage, ransomware protection, and AI/ML workflows[23](index=23&type=chunk)[24](index=24&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) - **Backblaze Computer Backup (SaaS):** Provides automatic backup for laptop and desktop data for businesses and individuals, using a fixed-rate subscription model, supporting virtually unlimited data backup, suitable for computer backup, ransomware protection, theft/loss prevention, and remote access[23](index=23&type=chunk)[24](index=24&type=chunk)[34](index=34&type=chunk)[36](index=36&type=chunk) - The Backblaze Storage Cloud platform manages over **850 billion files**, built on proprietary software and commodity hardware, designed for durability, availability, scalability, security, and high performance[23](index=23&type=chunk)[30](index=30&type=chunk) - As of December 31, 2024, B2 Cloud Storage revenue grew by **36%** year-over-year, and Computer Backup cloud service revenue grew by **16%**[27](index=27&type=chunk) [Customers](index=7&type=section&id=Customers) As of December 31, 2024, Backblaze serves over 500,000 customers across 175 countries, with a highly diversified base where no single customer contributed over 10% of total revenue in 2024 or 2023 - As of December 31, 2024, the company has over **500,000 customers** across **175 countries**[37](index=37&type=chunk) - Customer breakdown: approximately **400,000** use Computer Backup, **100,000** use B2 Cloud Storage, and **18,000** use both services[37](index=37&type=chunk) - The customer base is highly diversified, with no single customer contributing more than **10% of total revenue** in either 2024 or 2023[38](index=38&type=chunk) [Sales and Marketing](index=8&type=section&id=Sales%20and%20Marketing) Backblaze employs a tiered market strategy, with self-service contributing approximately 73% of total revenue in 2024, complemented by a sales-driven model for larger customers - The company employs a tiered market strategy, including self-service and sales-driven models (direct sales, channel partners, Powered By Backblaze white-label program)[39](index=39&type=chunk) - Approximately **73% of total revenue** in 2024 came from self-service customers, primarily attracted through website optimization, blog content, free trials, and self-registration processes[25](index=25&type=chunk)[40](index=40&type=chunk) - The sales-driven model focuses on acquiring large customers, who typically have significantly higher average revenue per customer[25](index=25&type=chunk)[39](index=39&type=chunk) [Research and Development](index=8&type=section&id=Research%20and%20Development) The company invests significantly in R&D to introduce new features and product enhancements, with the engineering team primarily focused on software development and weekly updates - The company invests significant R&D resources to introduce new features, such as shard stash, which improves small file upload speeds by **30%**, and product enhancements like the Powered By Backblaze white-label solution[42](index=42&type=chunk) - The engineering organization primarily focuses on software development, employing a continuous product release cycle with typical weekly updates[42](index=42&type=chunk)[43](index=43&type=chunk) [Competition](index=8&type=section&id=Competition) Backblaze competes with major public cloud providers and traditional on-premises storage vendors, differentiating through product ease of use, lower pricing, free egress, and an open cloud ecosystem - Key competitors include traditional public cloud providers (e.g., Amazon AWS, Google Cloud Platform, Microsoft Azure), smaller cloud storage competitors, and traditional on-premises storage vendors (e.g., Dell EMC)[44](index=44&type=chunk) - The company primarily differentiates through product ease of use, lower pricing, free egress (up to **3x** the stored data), an open cloud ecosystem, innovation, brand reputation, pricing transparency, customer support, independence, and partner ecosystem[45](index=45&type=chunk) [Intellectual Property](index=8&type=section&id=Intellectual%20Property) Backblaze protects its technology and cloud services through trade secrets, copyrights, trademarks, and domain names, with two pending patent applications, controlling access via confidentiality agreements - The company protects its intellectual property through trade secrets, copyrights, trademarks, service marks, and domain names, and has **two pending patent applications**[46](index=46&type=chunk)[47](index=47&type=chunk) - Access to proprietary technology is controlled through confidentiality and invention assignment agreements with employees and third parties[47](index=47&type=chunk) [Employees and Human Capital](index=9&type=section&id=Employees%20and%20Human%20Capital) As of December 31, 2024, Backblaze has 346 full-time employees, fostering an inclusive culture with a hybrid work model and positive employee relations - As of December 31, 2024, the company has **346 full-time employees**[49](index=49&type=chunk) - The company prioritizes fostering an inclusive environment, employs a hybrid work model, and maintains positive employee relations, with no work stoppages[50](index=50&type=chunk)[51](index=51&type=chunk)[52](index=52&type=chunk) [Facilities](index=9&type=section&id=Facilities) Backblaze's headquarters are in San Mateo, California, with leased data center facilities across multiple US states and international locations - The company's headquarters are located in San Mateo, California[53](index=53&type=chunk) - Data center facilities are leased in California, Arizona, Virginia, Toronto, Canada, and Amsterdam, Netherlands[53](index=53&type=chunk) [Follow-On Offering](index=9&type=section&id=Follow-On%20Offering) On November 20, 2024, Backblaze completed a follow-on public offering, issuing 6,250,000 shares of Class A common stock at $5.60 per share, generating **$37.4 million** in net proceeds - On November 20, 2024, the company issued **6,250,000 shares** of Class A common stock at **$5.60 per share**, with underwriters purchasing an additional **937,500 shares**[54](index=54&type=chunk) - The offering resulted in **$37.4 million** in net proceeds to the company after deducting expenses[54](index=54&type=chunk) [Corporate Information](index=9&type=section&id=Corporate%20Information) Backblaze, Inc. was incorporated in Delaware in 2007, completed its IPO in November 2021, and is listed on Nasdaq Global Market under 'BLZE' - The company was incorporated in Delaware in **2007** and completed its initial public offering in November **2021**[55](index=55&type=chunk) - Its common stock is listed on the Nasdaq Global Market under the ticker symbol **“BLZE”**[55](index=55&type=chunk) [Available Information](index=10&type=section&id=Available%20Information) Backblaze's SEC filings (10-K, 10-Q, 8-K) and amendments are freely available on its investor relations website and the SEC's website - The company's reports (10-K, 10-Q, 8-K) filed with the SEC are freely available on its investor relations website (https://ir.backblaze.com) and the SEC's website (www.sec.gov)[56](index=56&type=chunk) [Risk Factors](index=10&type=section&id=Item%201A.%20Risk%20Factors) This section details various risks and uncertainties that could materially adversely affect Backblaze's business, financial condition, and results of operations, covering company operations, industry competition, infrastructure reliance, accounting and tax matters, and common stock ownership - This section describes risks and uncertainties that could materially adversely affect the company's business, financial condition, and results of operations[57](index=57&type=chunk) - Risk factors include a history of losses, intense market competition, service disruptions, cybersecurity attacks, challenges in customer acquisition and retention, reliance on third-party vendors, and internal control deficiencies[58](index=58&type=chunk) [Risk Factors Summary](index=10&type=section&id=Risk%20Factors%20Summary) This summary outlines key speculative factors for investing in the company's Class A common stock, including ongoing losses, intense competition, service disruptions, cybersecurity attacks, and internal control deficiencies - Key risks include a history of losses, intense market competition, service disruptions or data loss, damage to brand reputation, cybersecurity attacks, challenges in customer acquisition and retention, inability to deliver successful product enhancements, software defects, reliance on third-party suppliers, strategic partnerships, and internal control deficiencies[58](index=58&type=chunk) [Risks Related to Our Business and Our Industry](index=11&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) The company faces ongoing losses, intense competition, reputational damage from service disruptions or cyberattacks, and challenges in customer acquisition, growth management, and product enhancement - The company has a history of accumulated losses, with a net loss of **$48.5 million** in 2024 and **$59.7 million** in 2023, and expects to incur losses in the future[59](index=59&type=chunk) - Market competition is intense, with key competitors including large cloud service providers (e.g., Amazon AWS, Google Cloud Platform, Microsoft Azure) and on-premises storage vendors (e.g., Dell EMC)[60](index=60&type=chunk) - Service disruptions, data loss, or cybersecurity attacks could harm the company's reputation and results of operations[61](index=61&type=chunk)[65](index=65&type=chunk)[66](index=66&type=chunk) - The company faces challenges in cost-effectively acquiring and retaining customers, managing rapid growth, effectively managing data center capacity and costs, and continuously delivering product enhancements[67](index=67&type=chunk)[70](index=70&type=chunk)[74](index=74&type=chunk)[75](index=75&type=chunk) [Risks Related to Reliance on Infrastructure and Third Parties](index=24&type=section&id=Risks%20Related%20to%20Reliance%20on%20Infrastructure%20and%20Third%20Parties) Backblaze's business heavily relies on limited third-party data centers and key component suppliers, exposing it to supply chain disruptions, increased costs, and service interruptions, with strategic partnerships and payment processing also posing risks - The company is highly dependent on a limited number of third-party data centers and key component suppliers, such as hard drives and semiconductors, facing potential supply and service disruption risks[107](index=107&type=chunk)[108](index=108&type=chunk)[109](index=109&type=chunk) - Business success partly depends on strategic relationships with third parties, such as channel partners and integrators, whose failure could harm the company's market competitiveness and revenue growth[110](index=110&type=chunk) - Reliance on online payment processing methods and third-party software also poses risks, as any failure or interruption could adversely affect business management[111](index=111&type=chunk)[112](index=112&type=chunk) [Risks Related to Accounting and Tax Matters](index=26&type=section&id=Risks%20Related%20to%20Accounting%20and%20Tax%20Matters) The company faces risks related to maintaining effective internal controls, potential reduced investor appeal as an emerging growth company, and financial risks from tax law changes and inaccurate accounting estimates - The company previously identified and remediated material weaknesses in internal control over financial reporting, and failure to maintain effective controls in the future could harm its business and stock price[116](index=116&type=chunk)[117](index=117&type=chunk)[118](index=118&type=chunk) - As an emerging growth company, while benefiting from simplified reporting requirements, this may reduce the attractiveness of the company's common stock to investors[113](index=113&type=chunk)[115](index=115&type=chunk) - Risks include potential imposition of new sales or other related taxes, limitations on the use of net operating loss carryforwards, and adverse impacts on financial condition from changes in tax laws[123](index=123&type=chunk)[124](index=124&type=chunk)[126](index=126&type=chunk)[127](index=127&type=chunk) [Risks Related to Intellectual Property](index=29&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Backblaze faces risks from third-party IP infringement claims, reliance on trade secrets with limited patent protection, and potential issues from open-source software usage - Third-party intellectual property infringement claims could result in costly litigation, diversion of management's attention, service restrictions, and substantial damages[129](index=129&type=chunk)[130](index=130&type=chunk) - The company primarily relies on trademarks, copyrights, and trade secrets to protect its intellectual property, currently has no issued patents, and only **two pending patent applications**, which may limit its ability to protect technology[131](index=131&type=chunk)[132](index=132&type=chunk)[133](index=133&type=chunk) - The use of open-source software could lead to lawsuits, demands for proprietary source code disclosure, or redesigning solutions, thereby disrupting business[134](index=134&type=chunk) [Risks Related to Ownership of Our Common Stock](index=30&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Common stock ownership faces risks from anti-takeover provisions, high market price volatility, potential price declines from large stock sales, and no anticipated dividends, requiring reliance on stock appreciation - Anti-takeover provisions in the company's charter and Delaware law may delay or prevent acquisition attempts, limiting shareholders' opportunities to receive a premium[135](index=135&type=chunk)[137](index=137&type=chunk)[138](index=138&type=chunk) - The market price of the company's common stock has been and will continue to be highly volatile, influenced by various factors, potentially leading to investors losing part or all of their investment[139](index=139&type=chunk)[140](index=140&type=chunk)[141](index=141&type=chunk) - Large sales of common stock in the public market, future equity issuances, or failure to meet public performance guidance could lead to a decline in stock price[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - The company does not anticipate paying any cash dividends in the foreseeable future, requiring investors to rely on stock price appreciation as the sole means of realizing investment returns[147](index=147&type=chunk) [Unresolved Staff Comments](index=34&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report [Cybersecurity](index=34&type=section&id=Item%201C.%20Cybersecurity) Backblaze prioritizes cybersecurity with a comprehensive risk management program led by the CISO and overseen by the Board's Audit Committee, protecting company systems and customer data - The company has established a cybersecurity risk management program led by the Chief Information Security Officer (CISO) and overseen by the Board's Audit Committee[157](index=157&type=chunk)[158](index=158&type=chunk)[160](index=160&type=chunk) - The program aims to identify, assess, manage, and mitigate cybersecurity threats, protecting company systems and customer data[157](index=157&type=chunk)[158](index=158&type=chunk) [Risk Management Strategy](index=34&type=section&id=Risk%20Management%20Strategy) Backblaze's cybersecurity risk management program employs a cross-functional approach to identify, prevent, assess, and mitigate threats through various controls, incident response plans, and employee training - The cybersecurity risk management program employs a cross-functional approach, aiming to identify, prevent, assess, and mitigate cybersecurity threats and incidents[158](index=158&type=chunk) - Extensive policies, procedures, systems, and tools are implemented, including firewalls, endpoint protection, intrusion detection systems, multi-factor authentication, vulnerability scanning, and third-party penetration testing[158](index=158&type=chunk) - Incident response plans are maintained and regularly tested, third-party risks are managed, and employee security and privacy awareness training is conducted year-round[158](index=158&type=chunk)[159](index=159&type=chunk) [Governance](index=35&type=section&id=Governance) The Board, through its Audit Committee and Risk Management Advisory Committee, oversees enterprise risk management, with the CISO leading the cybersecurity program and reporting regularly to the Audit Committee - The Board of Directors and its Audit Committee, assisted by the Risk Management Advisory Committee, oversee enterprise risk management processes, including cybersecurity threats[160](index=160&type=chunk) - The Chief Information Security Officer (CISO) leads the company-wide cybersecurity strategy, policies, standards, architecture, and processes, reporting regularly to the Audit Committee[160](index=160&type=chunk) [Experience](index=35&type=section&id=Experience) The company's CISO has 30 years of experience in cybersecurity, IT, governance, risk management, and data protection, holding approximately 40 security, privacy, and risk management certifications - The company's CISO has **30 years** of experience in designing and implementing cybersecurity, IT, governance, risk management, regulatory compliance, and data protection and privacy programs[161](index=161&type=chunk) - The CISO previously served as CISO for several federal healthcare contractor organizations and holds approximately **40 security, privacy, and risk management certifications**[161](index=161&type=chunk) [Cybersecurity Risks](index=35&type=section&id=Cybersecurity%20Risks) Despite significant investment, the company may not successfully prevent or resolve cybersecurity incidents, potentially leading to data loss and financial impact, though no material impact was noted as of December 31, 2024 - Despite significant resource investment, the company may not successfully identify threats, prevent attacks, or resolve cybersecurity incidents, which could materially adversely affect its business, results of operations, and financial condition[162](index=162&type=chunk) - In December 2021, the Apache Log4j vulnerability briefly caused company systems to be taken offline to apply security patches[162](index=162&type=chunk) - As of December 31, 2024, the company does not believe any cybersecurity threats have materially impacted its business strategy, results of operations, or financial condition[162](index=162&type=chunk) [Properties](index=36&type=section&id=Item%202.%20Properties) Backblaze's headquarters are in San Mateo, California, leasing 24,000 square feet of office space and multiple data center facilities across the US and internationally, owning no real estate - The company's headquarters are located in San Mateo, California, leasing approximately **24,000 square feet** of office space[164](index=164&type=chunk) - The company leases data center facilities in the United States (California, Arizona, Virginia) and internationally (Toronto, Canada, and Amsterdam, Netherlands)[164](index=164&type=chunk) - All company facilities are leased, and it owns no real estate[164](index=164&type=chunk) [Legal Proceedings](index=36&type=section&id=Item%203.%20Legal%20Proceedings) Backblaze is occasionally involved in routine legal proceedings, currently believing no litigation will materially adversely affect its business, though outcomes are unpredictable and could incur costs - The company is occasionally involved in various claims and legal proceedings arising in the ordinary course of business[165](index=165&type=chunk) - Currently, the company believes no legal proceedings are likely to have a material adverse effect on its business, financial condition, or results of operations[165](index=165&type=chunk) - Litigation outcomes are inherently unpredictable and could adversely affect the company due to defense and settlement costs and diversion of management resources[165](index=165&type=chunk) [Mine Safety Disclosures](index=36&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Not applicable Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=37&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section provides market information for Backblaze's Class A common stock, including its Nasdaq listing, shareholder records, dividend policy, and details of the November 2024 follow-on public offering - The company's Class A common stock has been listed on the Nasdaq Global Market under the ticker symbol **“BLZE”** since November 11, **2021**[169](index=169&type=chunk) - The company has never declared or paid any dividends on its common stock and plans to retain all available funds and future earnings for business operations and expansion[171](index=171&type=chunk) - On November 20, 2024, the company completed a follow-on public offering, issuing **7,187,500 shares** of Class A common stock, generating **$37.4 million** in net proceeds, with no material change in the planned use of proceeds[174](index=174&type=chunk)[176](index=176&type=chunk) [Market information](index=37&type=section&id=Market%20information) Backblaze's Class A common stock has been listed on the Nasdaq Global Market under 'BLZE' since November 11, 2021, with no prior public trading market - The company's Class A common stock has been listed on the Nasdaq Global Market under the ticker symbol **“BLZE”** since November 11, **2021**[169](index=169&type=chunk) [Holders of Record](index=37&type=section&id=Holders%20of%20Record) As of February 28, 2025, Backblaze had 12 record holders for its common stock, but the total number of beneficial owners cannot be estimated due to institutional holdings - As of February 28, 2025, the number of record holders for the company's common stock was **12**[170](index=170&type=chunk) [Dividend Policy](index=37&type=section&id=Dividend%20Policy) Backblaze has never declared or paid common stock dividends and plans to retain all funds for business operations and expansion, thus not anticipating future dividends - The company has never declared or paid any dividends on its common stock[171](index=171&type=chunk) - The company currently plans to retain all available funds and future earnings for business operations and expansion, therefore not anticipating declaring or paying dividends in the foreseeable future[171](index=171&type=chunk) [Recent Sales of Unregistered Securities](index=37&type=section&id=Recent%20Sales%20of%20Unregistered%20Securities) Not applicable [Issuer Repurchases of Securities](index=37&type=section&id=Issuer%20Repurchases%20of%20Securities) The company did not conduct any securities repurchases [Use of Proceeds](index=37&type=section&id=Use%20of%20Proceeds) On November 20, 2024, the company completed a follow-on public offering, issuing 7,187,500 shares of Class A common stock for **$37.4 million** in net proceeds, with no material change in planned use - On November 20, 2024, the company issued **7,187,500 shares** of Class A common stock at **$5.60 per share**, generating **$37.4 million** in net proceeds[174](index=174&type=chunk) - The planned use of proceeds has not materially changed from what was previously disclosed[176](index=176&type=chunk) [Reserved](index=37&type=section&id=Item%206.%20Reserved) This section is reserved, with no specific disclosures [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section discusses Backblaze's financial condition and operating results, including 2024 financial developments, business model, key metrics, non-GAAP measures, liquidity, and critical accounting estimates, highlighting significant revenue growth and a narrowed net loss - The company achieved significant revenue growth and narrowed its net loss in 2024, while implementing a restructuring plan to improve efficiency[232](index=232&type=chunk)[188](index=188&type=chunk) - This section discusses the company overview, 2024 financial developments, business model, factors affecting performance, key business metrics, components of results of operations, non-GAAP financial measures, liquidity and capital resources, contractual obligations, and critical accounting estimates[178](index=178&type=chunk) [Overview](index=38&type=section&id=Overview) Backblaze, a leading professional storage cloud platform, provides convenient and economical data storage and protection services to over 500,000 global customers, supporting AI workflows and cyber resilience, and expanded into Canada in 2024 - Backblaze is a leading professional storage cloud platform, providing convenient and economical data storage and protection services to over **500,000 customers** globally[180](index=180&type=chunk) - The company supports various applications, including AI workflows and cyber resilience, through its two core services: B2 Cloud Storage (IaaS) and Computer Backup (SaaS)[181](index=181&type=chunk) - In 2024, the company partnered with a Canadian hybrid cloud leader and opened a new data center region in Canada to expand market reach[183](index=183&type=chunk) [Price Increases and Product Updates](index=39&type=section&id=Price%20Increases%20and%20Product%20Updates) Effective October 2023, Backblaze increased B2 Cloud Storage on-demand rates to **$6 per TB** with free egress up to 3x stored data, and Computer Backup prices to **$9 per month** - Effective October 3, 2023, B2 Cloud Storage on-demand storage rates increased from **$5 to $6 per TB**, offering free egress up to **3x** the stored data volume[185](index=185&type=chunk) - Computer Backup prices increased to **$9 per month**, or **$99 for one year**, **$189 for two years**, bundled with a one-year extended version history feature[185](index=185&type=chunk) [2024 Financial Developments](index=39&type=section&id=2024%20Financial%20Developments) In 2024, Backblaze completed a follow-on public offering for **$37.4 million** in net proceeds, terminated its credit facility, and implemented a restructuring plan to improve cost structure and efficiency - On November 20, 2024, the company completed a follow-on public offering, generating **$37.4 million** in net proceeds[186](index=186&type=chunk) - On December 10, 2024, the company voluntarily terminated its revolving credit facility with City National Bank, with no outstanding amounts at that time[187](index=187&type=chunk) - In November 2024, the company implemented a restructuring plan, including workforce reductions and a reduction in corporate headquarters office space, to improve its cost structure and operational efficiency[188](index=188&type=chunk) [Our Business Model](index=39&type=section&id=Our%20Business%20Model) Backblaze's business model provides easy-to-use, cost-effective cloud storage solutions, with revenue from B2 Cloud Storage and Computer Backup, employing a 'land-and-expand' strategy for customer growth - The business model targets individuals and businesses of all sizes, offering easy-to-use, cost-effective, and reliably high-performance solutions[189](index=189&type=chunk) - Revenue primarily derives from B2 Cloud Storage (consumption- or capacity-based) and Computer Backup (SaaS subscription, fixed-rate)[190](index=190&type=chunk) - The company employs a 'land-and-expand' model, increasing revenue from existing customers through cross-selling (e.g., Computer Backup customers adopting B2 Cloud Storage), upselling (e.g., enterprise control, snapshots, enhanced support), and use case expansion[194](index=194&type=chunk)[195](index=195&type=chunk) - Market outreach models include direct sales, channel sales, and self-service, with approximately **73% of total revenue** in 2024 coming from self-service customers[193](index=193&type=chunk) [Factors Affecting Our Performance](index=40&type=section&id=Factors%20Affecting%20Our%20Performance) Future performance growth depends on expanding sales, increasing existing customer revenue, growing self-service acquisition, continuous platform investment, new product launches, and international market expansion - Key factors for future performance growth include expanding direct sales efforts targeting large customers and building a partner ecosystem[196](index=196&type=chunk)[197](index=197&type=chunk) - Plans include increasing revenue and platform usage from existing customers by developing new features, expanding use cases, and strengthening customer success programs[198](index=198&type=chunk) - Continued investment in self-service customer acquisition activities, including blog content, case studies, and conversion rate optimization, is planned[199](index=199&type=chunk) - The company is committed to continuous platform investment and launching new products adjacent to existing offerings, along with targeted international expansion, such as opening a data center in Toronto, Canada[200](index=200&type=chunk)[201](index=201&type=chunk) [Key Business Metrics](index=42&type=section&id=Key%20Business%20Metrics) Backblaze assesses business health using NRR, Gross Customer Retention, ARR, and ARPU, showing strong customer expansion and revenue growth in 2024, with total ARR reaching **$136.7 million** Key Business Metrics (As of December 31) | Metric | 2024 | 2023 | | :-------------------------------- | :----- | :----- | | **B2 Cloud Storage** | | | | Net revenue retention rate (NRR) | 123 % | 122 % | | Gross customer retention rate | 89 % | 90 % | | Annual recurring revenue (in millions of US dollars) | $ 70.2 | $ 57.6 | | Number of customers | 107,616 | 97,842 | | Annual average revenue per user (in US dollars) | $ 645 | $ 577 | | **Computer Backup** | | | | Net revenue retention rate (NRR) | 109 % | 100 % | | Gross customer retention rate | 90 % | 91 % | | Annual recurring revenue (in millions of US dollars) | $ 66.5 | $ 60.0 | | Number of customers | 417,845 | 431,745 | | Annual average revenue per user (in US dollars) | $ 159 | $ 140 | | **Total Company** | | | | Net revenue retention rate (NRR) | 116 % | 109 % | | Gross customer retention rate | 90 % | 91 % | | Annual recurring revenue (in millions of US dollars) | $ 136.7 | $ 117.6 | | Number of customers | 507,647 | 511,942 | | Annual average revenue per user (in US dollars) | $ 268 | $ 228 | - In 2024, B2 Cloud Storage Net Revenue Retention (NRR) was **123%**, and Computer Backup NRR was **109%** (up from **100%** in 2023), primarily driven by price increases[204](index=204&type=chunk)[207](index=207&type=chunk) - Total Annual Recurring Revenue (ARR) grew by **$19.1 million (22%)** to **$136.7 million** in 2024, primarily driven by price increases and increased storage volumes from new and existing customers[204](index=204&type=chunk)[213](index=213&type=chunk) - In 2024, Annual Average Revenue Per User (ARPU) for B2 Cloud Storage and Computer Backup increased by **12%** and **14%**, respectively, primarily due to increased storage volumes and a focus on larger customers[216](index=216&type=chunk) [Key Components of Results of Operations](index=44&type=section&id=Key%20Components%20of%20Results%20of%20Operations) Revenue primarily from B2 Cloud Storage and Computer Backup, positively impacted by 2023 price increases; cost of revenue includes data center operations, network, depreciation, and personnel; operating expenses are expected to increase with growth despite short-term restructuring reductions - Revenue primarily derives from B2 Cloud Storage (consumption- or committed contracts) and Computer Backup (subscription-based), with the October 2023 price increases positively impacting total revenue without materially affecting customer retention[217](index=217&type=chunk)[219](index=219&type=chunk) - Cost of revenue includes hosting facility operations, network and bandwidth costs, equipment depreciation, personnel-related costs (customer support, service availability maintenance), credit card processing fees, and amortization of capitalized internal-use software development costs[220](index=220&type=chunk) - Operating expenses (research and development, sales and marketing, general and administrative) are primarily personnel costs, expected to decrease in the short term due to the 2024 restructuring plan but increase in absolute terms with business growth over the long term[222](index=222&type=chunk)[223](index=223&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk)[228](index=228&type=chunk) [Results of Operations](index=46&type=section&id=Results%20of%20Operations) In 2024, Backblaze's total revenue grew **25%** to **$127.6 million**, gross margin improved to **54%**, and net loss narrowed to **$48.5 million**, driven by price increases and increased storage volumes Consolidated Statements of Operations and Comprehensive Loss (in thousands of US dollars) | Metric | 2024 | 2023 | Change | % Change | | :-------------------------------- | :------- | :------- | :------- | :------- | | Revenue | $ 127,628 | $ 102,019 | $ 25,609 | 25 % | | Cost of revenue | 58,285 | 52,162 | 6,123 | 12 % | | Gross profit | 69,343 | 49,857 | 19,486 | 39 % | | Operating expenses: | | | | | | Research and development | 42,098 | 39,527 | 2,571 | 7 % | | Sales and marketing | 44,440 | 41,270 | 3,170 | 8 % | | General and administrative | 29,094 | 26,965 | 2,129 | 8 % | | Total operating expenses | 115,632 | 107,762 | 7,870 | 7 % | | Loss from operations | (46,289) | (57,905) | 11,616 | (20)% | | Investment income | 1,422 | 1,984 | (562) | (28)% | | Interest expense, net | (3,658) | (3,792) | 134 | 4 % | | Loss before provision for income taxes | (48,525) | (59,713) | 11,188 | (19)% | | Income tax provision | 6 | — | 6 | — % | | Net loss and comprehensive loss | $ (48,531) | $ (59,713) | $ 11,182 | (19)% | - Total revenue grew by **25% ($25.6 million)** to **$127.6 million** in 2024, with B2 Cloud Storage growing **36% ($16.9 million)** and Computer Backup growing **16% ($8.7 million)**, primarily due to price increases and increased storage volumes from new and existing customers[235](index=235&type=chunk) - Gross margin increased from **49%** in 2023 to **54%** in 2024, primarily due to total revenue growth from price increases; cost of revenue grew by **12% ($6.1 million)**, mainly from depreciation, rent, bandwidth, and credit card fees[236](index=236&type=chunk)[237](index=237&type=chunk) - Net loss narrowed by **19%** to **$48.5 million** in 2024, compared to **$59.7 million** in 2023[232](index=232&type=chunk) [Non-GAAP Financial Measures](index=49&type=section&id=Non-GAAP%20Financial%20Measures) Backblaze uses non-GAAP measures like Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to provide insights into core operating performance by excluding non-cash and non-recurring items, with 2024 Adjusted Gross Margin at **78%** and Adjusted EBITDA at **$13.0 million** - The company uses non-GAAP financial measures such as Adjusted Gross Margin, Adjusted EBITDA, and Adjusted EBITDA Margin to assess ongoing operating performance by excluding non-cash and non-recurring expenses[245](index=245&type=chunk)[246](index=246&type=chunk)[249](index=249&type=chunk) Adjusted Gross Margin Reconciliation (in thousands of US dollars) | Metric | 2024 | 2023 | | :-------------------------- | :------- | :------- | | Gross profit (GAAP) | $ 69,343 | $ 49,857 | | Adjustments: | | | | Stock-based compensation | 1,616 | 1,986 | | Depreciation and amortization | 27,761 | 24,330 | | Restructuring charges | 460 | — | | Adjusted gross profit | $ 99,180 | $ 76,173 | | Gross margin (GAAP) | 54 % | 49 % | | Adjusted gross margin | 78 % | 75 % | Adjusted EBITDA Reconciliation (in thousands of US dollars) | Metric | 2024 | 2023 | | :------------------------------------ | :------- | :------- | | Net loss (GAAP) | $ (48,531) | $ (59,713) | | Adjustments: | | | | Depreciation and amortization | 28,328 | 24,912 | | Stock-based compensation | 26,104 | 25,052 | | Interest expense and investment income | 2,236 | 1,808 | | Income tax provision | 6 | — | | Foreign exchange loss | 32 | 123 | | Non-recurring professional services | — | 411 | | Restructuring charges | 4,861 | 3,616 | | Adjusted EBITDA | $ 13,036 | $ (3,791) | | Adjusted EBITDA Margin | 10 % | (4)% | [Liquidity and Capital Resources](index=51&type=section&id=Liquidity%20and%20Capital%20Resources) As of December 31, 2024, Backblaze's cash, restricted cash, and short-term investments totaled **$54.9 million**, deemed sufficient for the next 12 months, with operating activities providing **$12.5 million** in cash in 2024, a significant improvement - As of December 31, 2024, the company's total cash, restricted cash, and short-term investments amounted to **$54.9 million**, an increase from **$33.4 million** in 2023[252](index=252&type=chunk) - The company believes its existing cash, cash equivalents, and short-term investments, combined with cash provided by operations, will be sufficient to support its working capital and capital expenditure needs for at least the next **12 months**[253](index=253&type=chunk) Cash Flow Summary (in thousands of US dollars) | Cash Flow Activity | 2024 | 2023 | | :---------------------------------------- | :------- | :------- | | Net cash provided by (used in) operating activities | $ 12,505 | $ (7,350) | | Net cash (used in) provided by investing activities | $ (6,131) | $ 21,657 | | Net cash provided by (used in) financing activities | $ 22,772 | $ (8,842) | - Cash provided by operating activities in 2024 was **$12.5 million**, a significant improvement from the **$7.4 million** used in 2023, primarily due to customer base growth, increased storage volumes from new and existing customers, and price increases effective October 2023[264](index=264&type=chunk)[266](index=266&type=chunk) [Contractual Obligations and Commitments](index=53&type=section&id=Contractual%20Obligations%20and%20Commitments) Backblaze's significant cash requirements include contractual obligations under finance lease agreements, operating lease agreements, and purchase commitments, with non-cancelable purchase commitments of **$1.0 million** for 2025 and **$0.4 million** for 2026 - The company's significant cash requirements include contractual obligations under finance lease agreements, operating lease agreements, and purchase commitments[253](index=253&type=chunk)[271](index=271&type=chunk) - As of December 31, 2024, non-cancelable purchase commitments were **$1.0 million** for 2025 and **$0.4 million** for 2026[261](index=261&type=chunk) [Critical Accounting Estimates](index=53&type=section&id=Critical%20Accounting%20Estimates) Financial statement preparation requires management estimates and assumptions for capitalized internal-use software, long-lived asset useful lives and impairment, lease incremental borrowing rates, variable consideration, and income tax accounting, with actual results potentially differing significantly - Critical accounting estimates and assumptions involve costs of capitalized internal-use software, useful lives of long-lived assets, impairment of long-lived assets, incremental borrowing rates for lease agreements, variable consideration, and income tax accounting[272](index=272&type=chunk)[273](index=273&type=chunk) - These estimates are based on historical experience and reasonable assumptions, but actual results may differ significantly from management's estimates[273](index=273&type=chunk) [Recent Accounting Pronouncements](index=54&type=section&id=Recent%20Accounting%20Pronouncements) Backblaze adopted ASU 2023-07 in Q4 2025 with no financial impact and is evaluating ASU 2024-03 and ASU 2023-09, effective for fiscal years beginning after 2026 and December 15, 2024, respectively - The company adopted ASU 2023-07, 'Segment Reporting,' in the fourth quarter of **2025**, with no impact on its financial condition or results of operations[353](index=353&type=chunk) - The company is evaluating ASU 2024-03, 'Income Statement—Disaggregation of Expenses,' and ASU 2023-09, 'Income Taxes—Improvements to Income Tax Disclosures,' effective for fiscal years beginning after **2026** and December 15, **2024**, respectively[355](index=355&type=chunk)[356](index=356&type=chunk) [JOBS Act Accounting Election](index=54&type=section&id=JOBS%20Act%20Accounting%20Election) As an emerging growth company (EGC) under the JOBS Act, Backblaze uses the extended transition period for new accounting standards, potentially making its financial statements incomparable to non-EGC public companies - As an emerging growth company (EGC), the company has elected to use the extended transition period provided by the JOBS Act for complying with new or revised accounting standards[275](index=275&type=chunk) - Consequently, the company's consolidated financial statements may not be comparable to those of public companies that comply with new or revised accounting standards as of their effective dates[275](index=275&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=54&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discloses Backblaze's market risks, primarily interest rate, inflation, and foreign currency exchange rate risks, managed by holding investments to maturity and cost control, with international expansion potentially increasing foreign exchange risk - The company's market risks primarily include interest rate risk, inflation risk, and foreign currency exchange rate risk[276](index=276&type=chunk) - The company manages these risks by holding investments to maturity and focusing on cost control, though international expansion may increase foreign exchange risk[277](index=277&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) [Interest Rate Risk](index=54&type=section&id=Interest%20Rate%20Risk) Backblaze's interest rate risk arises from data center equipment financing leases and investment income, with a focus on capital preservation and holding investments to maturity, without using derivatives - Interest rate risk primarily arises from financing lease arrangements for data center equipment and interest income generated from cash, cash equivalents, and short-term investments[277](index=277&type=chunk) - The company's investment objectives are capital preservation and maximizing returns, not for trading or speculative purposes, not using derivative financial instruments to manage interest rate risk, and planning to hold all investments to maturity[277](index=277&type=chunk) [Inflation Risk](index=55&type=section&id=Inflation%20Risk) Despite recent inflation declines, high interest rates may increase Backblaze's operating costs and interest expenses; the company mitigates this by focusing on revenue growth, productivity, and cost reduction, but cannot guarantee full offset - Despite recent declines in inflation rates, high interest rates may continue to increase the company's operating costs and interest expenses[279](index=279&type=chunk) - The company endeavors to mitigate inflation's impact by focusing on high-end market revenue growth, improving productivity, and reducing costs, but cannot guarantee full offset of cost increases[279](index=279&type=chunk) [Foreign Currency Exchange Rate Risk](index=55&type=section&id=Foreign%20Currency%20Exchange%20Rate%20Risk) Backblaze currently faces minimal foreign exchange risk as its reporting and functional currencies are USD and sales are primarily USD-denominated, but future international expansion could increase this risk, which is not hedged with derivatives - The company's reporting and functional currencies are both US dollars, and sales are primarily denominated in US dollars, resulting in minimal foreign exchange risk currently[280](index=280&type=chunk) - Future increases in international sales or more expenses denominated in non-US dollar currencies could lead to adverse impacts on operating results from exchange rate fluctuations[280](index=280&type=chunk) - The company currently does not use derivative financial instruments to hedge foreign currency exchange rate risk[280](index=280&type=chunk) [Financial Statements and Supplementary Data](index=56&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents Backblaze's consolidated financial statements as of December 31, 2024, and 2023, including balance sheets, statements of operations, equity changes, and cash flows, with detailed notes on accounting policies and financial items - This section includes consolidated financial statements as of December 31, 2024, and 2023, comprising balance sheets, statements of operations and comprehensive loss, statements of changes in stockholders' equity, and statements of cash flows[283](index=283&type=chunk) - The notes to the financial statements provide detailed supplementary information on company organization, accounting policies, revenue, investments, leases, debt, equity, and income taxes[283](index=283&type=chunk) [Report of Independent Registered Public Accounting Firm](index=57&type=section&id=Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) BDO USA, P.C. issued an unqualified opinion on Backblaze's consolidated financial statements for 2024 and 2023, affirming fair presentation under U.S. GAAP, with no internal control attestation due to EGC exemption - BDO USA, P.C. issued an unqualified audit opinion on Backblaze's consolidated financial statements as of December 31, 2024, and 2023, stating they are presented fairly in accordance with U.S. Generally Accepted Accounting Principles[284](index=284&type=chunk) - Due to the company's exemption as an 'emerging growth company,' this audit did not include an attestation on the effectiveness of internal controls[286](index=286&type=chunk) [Consolidated Balance Sheets](index=58&type=section&id=Consolidated%20Balance%20Sheets) As of December 31, 2024, Backblaze's total assets increased to **$168.6 million**, total liabilities to **$90.9 million**, and stockholders' equity to **$77.6 million**, driven by increased cash and the follow-on public offering Consolidated Balance Sheets (in thousands of US dollars) | Metric | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------------------ | :----------- | :----------- | | **Assets** | | | | Cash and cash equivalents | $ 45,776 | $ 12,502 | | Accounts receivable, net | 1,831 | 800 | | Short-term investments, net | 9,139 | 16,799 | | Prepaid expenses and other current assets | 9,002 | 8,413 | | Total current assets | 65,748 | 38,514 | | Restricted cash, non-current | — | 4,128 | | Property and equipment, net | 42,949 | 45,600 | | Operating lease right-of-use assets, net | 15,873 | 9,980 | | Capitalized internal-use software, net | 41,801 | 32,521 | | Other assets | 2,187 | 944 | | **Total assets** | **$ 168,558** | **$ 131,687** | | **Liabilities** | | | | Accounts payable | $ 1,459 | $ 1,973 | | Accrued expenses and other current liabilities | 7,584 | 8,768 | | Finance lease liabilities and lease financing obligations, current | 16,327 | 18,492 | | Operating lease liabilities, current | 4,026 | 1,878 | | Deferred revenue, current | 30,407 | 25,976 | | Total current liabilities | 59,803 | 57,087 | | Finance lease liabilities and lease financing obligations, non-current | 13,142 | 13,310 | | Operating lease liabilities, non-current | 12,844 | 8,151 | | Deferred revenue, non-current | 5,147 | 4,073 | | Debt facility, non-current | — | 4,128 | | **Total liabilities** | **$ 90,936** | **$ 86,749** | | **Stockholders' Equity** | | | | Total stockholders' equity | $ 77,622 | $ 44,938 | | **Total liabilities and stockholders' equity** | **$ 168,558** | **$ 131,687** | - Total assets increased by **$36.9 million (28%)** to **$168.6 million** in 2024, primarily due to a **$33.3 million** increase in cash and cash equivalents[290](index=290&type=chunk) - Total stockholders' equity increased by **$32.7 million (73%)** to **$77.6 million** in 2024, primarily influenced by the follow-on public offering and stock-based compensation[290](index=290&type=chunk)[293](index=293&type=chunk) [Consolidated Statements of Operations and Comprehensive Loss](index=59&type=section&id=Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) For the year ended December 31, 2024, Backblaze's total revenue was **$127.6 million** (up **25%**), gross profit was **$69.3 million** (**54%** margin), and net loss narrowed to **$48.5 million**, with basic and diluted net loss per share at **($1.11)** Consolidated Statements of Operations and Comprehensive Loss (in thousands of US dollars, except per share data) | Metric | 2024 | 2023 | | :---------------------------------------- | :------- | :------- | | Revenue | $ 127,628 | $ 102,019 | | Cost of revenue | 58,285 | 52,162 | | Gross profit | 69,343 | 49,857 | | Operating expenses: | | | | Research and development | 42,098 | 39,527 | | Sales and marketing | 44,440 | 41,270 | | General and administrative | 29,094 | 26,965 | | Total operating expenses | 115,632 | 107,762 | | Loss from operations | (46,289) | (57,905) | | Investment income | 1,422 | 1,984 | | Interest expense, net | (3,658) | (3,792) | | Loss before provision for income taxes | (48,525) | (59,713) | | Income tax provision | 6 | — | | Net loss and comprehensive loss | $ (48,531) | $ (59,713) | | Net loss per share, basic and diluted (in US dollars) | $ (1.11) | $ (1.66) | - Total revenue in 2024 was **$127.6 million**, a **25%** increase from **$102.0 million** in 2023[291](index=291&type=chunk) - Net loss narrowed by **19%** to **$48.5 million** in 2024, compared to **$59.7 million** in 2023[291](index=291&type=chunk) - Basic and diluted net loss per share was **($1.11)** in 2024, compared to **($1.66)** in 2023[291](index=291&type=chunk) [Consolidated Statements of Changes in Stockholders' Equity](index=60&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders%27%20Equity) As of December 31, 2024, Backblaze's total stockholders' equity increased to **$77.6 million** from **$44.9 million** in 2023, driven by public offering proceeds, stock option exercises, and stock-based compensation, partially offset by net loss - As of December 31, 2024, total stockholders' equity increased to **$77.6 million** from **$44.9 million** as of December 31, 2023[293](index=293&type=chunk) - Key drivers of this increase include **$36.9 million** in net proceeds from the public offering, **$7.5 million** from stock option exercises, and **$30.4 million** in stock-based compensation expense[293](index=293&type=chunk) - The increase was partially offset by a net loss of **$48.5 million** for the year ended December 31, 2024[293](index=293&type=chunk) [Consolidated Statements of Cash Flows](index=61&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) In 2024, Backblaze generated **$12.5 million** in net cash from operating activities, a significant improvement, while investing activities used **$6.1 million**, and financing activities provided **$22.8 million**, primarily from the public offering Consolidated Statements of Cash Flows (in thousands of US dollars) | Cash Flow Activity | 2024 | 2023 | | :---------------------------------------- | :------- | :------- | | Net cash provided by (used in) operating activities | $ 12,505 | $ (7,350) | | Net cash (used in) provided by investing activities | $ (6,131) | $ 21,657 | | Net cash provided by (used in) financing activities | $ 22,772 | $ (8,842) | | Net increase in cash | $ 29,146 | $ 5,465 | | Cash and cash equivalents, at end of period | $ 45,776 | $ 16,630 | - Net cash provided by operating activities in 2024 was **$12.5 million**, a significant improvement from the **$7.4 million** used in 2023, primarily due to improved net loss and non-cash adjustments[296](index=296&type=chunk)[264](index=264&type=chunk) - Investing activities used **$6.1 million** in cash in 2024, primarily for purchases of marketable securities and capitalized internal-use software, partially offset by proceeds from maturities of marketable securities[296](index=296&type=chunk)[267](index=267&type=chunk) - Financing activities provided **$22.8 million** in cash in 2024, primarily from the follow-on public offering, stock option exercises, and ESPP, partially offset by principal payments on finance leases[296](index=296&type=chunk)[269](index=269&type=chunk) [Notes to Consolidated Financial Statements](index=63&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed accounting information on Backblaze's organization, policies, revenue, investments, leases, debt, equity, and income taxes, crucial for understanding its financial position and performance [Note 1. Organization and Description of Business](index=63&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Backblaze, Inc., incorporated in Delaware in 2007, provides storage cloud platforms, and in November 2024, completed a public offering, issuing 7,187,500 shares for **$37.4 million** in net proceeds - Backblaze, Inc. was incorporated in Delaware in **2007** as a company providing a storage cloud platform for businesses and consumers[300](index=300&type=chunk) - On November 20, 2024, the company completed a follow-on public offering, issuing **7,187,500 shares** of Class A common stock, generating **$37.4 million** in net proceeds[301](index=301&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=63&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) Consolidated financial statements are prepared under U.S. GAAP, consolidating all subsidiaries; as an EGC, Backblaze uses an extended transition period for new accounting standards, with key policies covering revenue recognition, internal-use software capitalization, stock-based compensation, and fair value measurement - The consolidated financial statements are prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and include the consolidation of the company and its wholly-owned subsidiaries[302](index=302&type=chunk) - As an emerging growth company, the company has elected to use the extended transition period for complying with new or revised accounting standards[303](index=303&type=chunk) - Revenue recognition follows a five-step approach, distinguishing between consumption-based (B2 Cloud Storage) and subscription-based (Computer Backup) arrangements[312](index=312&type=chunk)[316](index=316&type=chunk)[320](index=320&type=chunk) - Significant accounting policies also include capitalization of internal-use software, stock-based compensation, and fair value measurement of financial instruments, all involving management estimates and assumptions[306](index=306&type=chunk)[329](index=329&type=chunk)[344](index=344&type=chunk) [Note 3. Revenues](index=71&type=section&id=Note%203.%20Revenues) In 2024, total revenue was **$127.6 million**, with B2 Cloud Storage at **$63.3 million** and Computer Backup at **$64.3 million**; **26%** of revenue was international, and remaining performance obligations totaled **$41.3 million** as of December 31, 2024 Revenue by Solution (in thousands of US dollars) | Solution | 2024 | 2023 | | :---------------- | :------- | :------- | | B2 Cloud Storage | $ 63,335 | $ 46,427 | | Computer Backup | 64,293 | 55,592 | | Total revenue | $ 127,628 | $ 102,019 | Revenue by Timing of Recognition (in thousands of US dollars) | Timing of Recognition | 2024 | 2023 | | :-------------------------- | :------- | :------- | | Consumption-based arrangements | $ 61,459 | $ 45,771 | | Subscription-based arrangements | 65,658 | 55,679 | | Physical Media (point in time) | 511 | 569 | | Total revenue | $ 127,628 | $ 102,019 | - Approximately **26% of total revenue** in 2024 was derived from outside the United States[201](index=201&type=chunk)[357](index=357&type=chunk) - As of December 31, 2024, remaining performance obligations (RPOs) totaled **$41.3 million**, with approximately **83% ($34.3 million)** expected to be recognized within the next **12 months**[358](index=358&type=chunk) [Note 4. Investments](index=72&type=section&id=Note%204.%20Investments) Backblaze holds investment-grade commercial paper, classified as held-to-maturity investments and reported at amortized cost, totaling **$9.1 million** as of December 31, 2024, with all investments maturing within one year - The company holds investment-grade commercial paper, classified as held-to-maturity investments and reported at amortized cost[333](index=333&type=chunk)[335](index=335&type=chunk) Investments (in thousands of US dollars) | Metric | Dec 31, 2024 (Amortized Cost) | Dec 31, 2023 (Amortized Cost) | | :---------------- | :---------------------------- | :---------------------------- | | Commercial paper | $ 9,139 | $ 16,799 | - As of December 31, 2024, all held-to-maturity securities mature within **one year**[364](index=364&type=chunk) [Note 5. Fair Value Measurements](index=74&type=section&id=Note%205.%20Fair%20Value%20Measurements) The company classifies its held-to-maturity investments (commercial paper) as Level 2 in the fair value hierarchy, valued using observable market data, with a fair value of **$9.1 million** as of December 31, 2024 - Held-to-maturity investments (commercial paper) are classified as Level 2 within the fair value hierarchy, with their fair value priced using observable market data[368](index=368&type=chunk) Fair Value of Level 2 Financial Instruments (in thousands of US dollars) | Instrument | Dec 31, 2024 | Dec 31, 2023 | | :--------------- | :----------- | :----------- | | Commercial paper | $ 9,137 | $ 16,789 | [Note 6. Prepaid Expenses and Other Current Assets](index=74&type=section&id=Note%206.%20Prepaid%20Expenses%20and%20Other%20Current%20Assets) As of December 31, 2024, prepaid expenses and other current assets totaled **$9.0 million**, including unbilled accounts receivable (**$2.9 million**), prepaid expenses (**$3.3 million**), and payment processor receivable (**$1.3 million**) Prepaid Expenses and Other Current Assets (in thousands of US dollars) | Component | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------ | :----------- | :----------- | | Unbilled accounts receivable, net | $ 2,864 | $ 2,375 | | Prepaid expenses | 3,257 | 3,314 | | Receivable from payment processor | 1,347 | 1,276 | | Other | 1,534 | 1,448 | | Total | $ 9,002 | $ 8,413 | [Note 7. Property and Equipment, Net](index=75&type=section&id=Note%207.%20Property%20and%20Equipment%2C%20Net) As of December 31, 2024, property and equipment, net, decreased to **$42.9 million**, including data center equipment (**$54.6 million**) and leased equipment (**$65.0 million**), with depreciation expense at **$21.3 million** for both 2024 and 2023 Property and Equipment, Net (in thousands of US dollars) | Component | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------------- | :----------- | :----------- | | Data center equipment | $ 54,552 | $ 37,245 | | Leased and financed data center equipment | 65,037 | 68,757 | | Machinery and equipment | 16,872 | 14,004 | | Computer equipment | 2,239 | 2,472 | | Leasehold improvements | 244 | 1,114 | | Construction-in-process | 311 | 1,371 | | Total property and equipment | 139,255 | 124,963 | | Less: accumulated depreciation and amortization | (96,306) | (79,363) | | Total property and equipment, net | $ 42,949 | $ 45,600 | - Depreciation expense for the years ended December 31, 2024, and 2023, was **$21.3 million** for both years[370](index=370&type=chunk) - In 2024, total property and equipment, net, and operating lease right-of-use assets by geographic region amounted to **$58.8 million**, with **$47.9 million** in the United States, **$3.3 million** in Canada, and **$7.6 million** in the Netherlands[372](index=372&type=chunk) [Note 8. Capitalized Internal-Use Software, Net](index=75&type=section&id=Note%208.%20Capitalized%20Internal-Use%20Software%2C%20Net) As of December 31, 2024, capitalized internal-use software, net, increased to **$41.8 million**, with amortization expense at **$7.0 million** in 2024, and projected at **$10.3 million** for 2025 Capitalized Internal-Use Software, Net (in thousands of US dollars) | Component | Dec 31, 2024 | Dec 31, 2023 | | :-------------------------------- | :----------- | :----------- | | Developed software | $ 59,435 | $ 43,156 | | General and administrative software | 144 | 144 | | Total capitalized internal-use software | 59,579 | 43,300 | | Less: accumulated amortization | (17,778) | (10,779) | | Total capitalized internal-use software, net | $ 41,801 | $ 32,521 | - Amortization expense for capitalized internal-use software was **$7.0 million** in 2024, up from **$3.6 million** in 2023[374](index=374&type=chunk) - Future amortization expense is projected to be **$10.3 million** for 2025[375](index=375&type=chunk) [Note 9. Accrued Expenses and Other Current Liabilities](index=76&type=section&id=Note%209.%20Accrued%20Expenses%20and%20Other%20Current%20Liabilities) As of December 31, 2024, accrued expenses and other current liabilities decreased to **$7.6 million**, including accrued compensation (**$3.6 million**), ESPP withholding (**$0.5 million**), and accrued VAT (**$1.1 million**) Accrued Expenses and Other Current Liabilities (in thousands of US dollars) | Component | Dec 31, 2024 | Dec 31, 2023 | | :------------------------------------ | :----------- | :----------- | | Accrued compensation | $ 3,620 | $ 4,105 | | ESPP withholding | 485 | 426 | | Accrued expenses | 1,457 | 1,284 | | Accrued value-added tax ("VAT") | 1,139 | 1,266 | | Financed insurance premiums | — | 893 | | Other | 883 | 486 | | Total | $ 7,584 | $ 8,460 | [Note 10. Finance Leases and Lease Financing Obligations](index=76&type=section&id=Note%2010.%20Finance%20Leases%20and%20Lease%20Financing%20Obligations) Backblaze acquires data center equipment via finance leases (2-4 year terms), with total

DENVER and SAN MATEO, Calif., March 11, 2025 (GLOBE NEWSWIRE) -- Cologix, a leading North American network-neutral data center provider, today announced Backblaze (Nasdaq: BLZE), a publicly traded cloud storage company, has deployed its services at Cologix’s TOR3 digital edge data center in Toronto. This deployment features a high-capacity setup with dedicated power and a direct fiber connection to Cologix’s TOR1 digital edge data center, Canada’s largest carrier hotel, providing fast access to multiple net ...

Group 1 - The article emphasizes the importance for investors to focus on selecting individual stocks with specific catalysts for a rally, especially as stock markets hover around all-time highs [1] - Gary Alexander, with extensive experience in technology and startups, provides insights into industry themes and has been a contributor to Seeking Alpha since 2017 [1] Group 2 - The article does not provide any specific company or industry analysis, focusing instead on general investment strategies and the author's background [2][3]

Financial Data and Key Metrics Changes - Revenue grew 18% year-over-year to $33.8 million in Q4 2024, slightly ahead of guidance [35] - Adjusted EBITDA margin improved to 14%, more than doubling from the previous year [39] - Net revenue retention (NRR) increased to 116% compared to 109% last year, benefiting from a price increase [38] - Average revenue per user (ARPU) rose to $268, an 18% increase year-over-year [39] Business Line Data and Key Metrics Changes - B2 Cloud Storage revenue reached $17.1 million, representing a 22% year-over-year growth, driven by customer expansion and new acquisitions [35] - Computer Backup revenue was $16.7 million, reflecting a 13% year-over-year growth primarily due to a price increase [35] - B2 annual recurring revenue (ARR) increased by $5 million sequentially, marking the largest organic sequential increase since the IPO [37] Market Data and Key Metrics Changes - The company has seen a nearly tenfold increase in data stored by AI customers, with three out of the top ten customers now being AI companies [30] - The average deal size from channel leads nearly doubled year-over-year, indicating strong growth in partnerships [18] Company Strategy and Development Direction - The company aims to become a "Rule of 40" company, focusing on both growth and profitability [11] - A go-to-market transformation is underway, emphasizing B2 growth and aiming for adjusted free cash flow positivity by Q4 2025 [12][45] - The company is expanding its partnerships and sales strategies, including co-build, co-market, and co-sell initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acceleration in B2 growth, expecting it to exceed 30% by the end of 2025 [46] - The company anticipates adjusted EBITDA margins to exceed 20% by Q4 2025, with a focus on operational efficiency [47] - Management highlighted the importance of flexibility and data mobility in the evolving AI landscape, positioning Backblaze as a key player [28] Other Important Information - The company completed a secondary offering for $37 million in net proceeds to strengthen its balance sheet [33] - Cash flow from operations improved significantly, showing a $20 million improvement year-over-year [44] Q&A Session Summary Question: Key metrics for partners in 2025 - Management monitors pipeline and sales productivity for channel partners, while alliance metrics focus on co-build, co-market, and co-sell initiatives [51][52] Question: Long-term growth outlook for B2 and Computer Backup - B2 is expected to grow over 30% year-over-year by the end of 2025, while Computer Backup may see flattish growth due to consumer decline [55][56] Question: Progress of gross margins - Management expects adjusted gross margins to remain stable at 78% [59] Question: AI use cases and their impact on growth - AI customers utilize Backblaze for data collection, processing, model training, and inference, indicating a direct correlation between their growth and Backblaze's growth [66][70] Question: Competitive landscape update - The competitive landscape remains similar, with major players like Amazon, Google, and Microsoft still present, but new partnerships have emerged [118][120]

Financial Performance - Q4 2024 revenue was $33.8 million, an increase of 18% year-over-year, with B2 Cloud Storage revenue growing 22% to $17.1 million[4] - Adjusted EBITDA for Q4 2024 was $4.6 million, representing a margin of 14%, more than doubling from 6% in Q4 2023[4] - Annual recurring revenue (ARR) reached $136.7 million, a 16% increase year-over-year, with B2 Cloud Storage ARR growing 22% to $70.2 million[7] - Net loss for Q4 2024 was $14.4 million, compared to a net loss of $12.2 million in Q4 2023, while net loss per share improved to $0.30 from $0.32[4] - The net loss for the year ended December 31, 2024, was $48,531,000, an improvement from a net loss of $59,713,000 in 2023[32] - Non-GAAP net loss for the year ended December 31, 2024, was $17.534 million, improving from a non-GAAP net loss of $30.511 million in 2023[40] Customer Metrics - Gross customer retention rate was 90% in Q4 2024, slightly down from 91% in Q4 2023, with B2 Cloud Storage retention at 89%[7] - The number of customers decreased to 507,647 from 511,942 in Q4 2023, while B2 Cloud Storage customers increased to 107,616 from 97,842[7] - The net revenue retention rate (NRR) for the company is 120%, reflecting a 1% decrease from the previous quarter due to a refined customer definition[23] Cash Flow and Expenses - Adjusted free cash flow for the year ended December 31, 2024, was $(20.1) million, an improvement from $(43.2) million in 2023[4] - Adjusted Free Cash Flow for the three months ended December 31, 2024, was $(4.528) million, with an Adjusted Free Cash Flow margin of (13)%, compared to (19)% in the same period of 2023[41] - The company provided $2.233 million in net cash from operating activities for the three months ended December 31, 2024, compared to $3.248 million in 2023[41] - Operating expenses for the year ended December 31, 2024, totaled $115,632,000, compared to $107,762,000 in 2023, indicating an increase of approximately 7.3%[30] - Total stock-based compensation expense for the three months ended December 31, 2024, was $9.133 million, up from $6.507 million in 2023[42] Future Outlook - The company expects Q1 2025 revenue growth of 21-23% and full-year 2025 revenue between $144.0 million to $146.0 million[7] - The company expects to continue its restructuring efforts, which include $3.9 million in severance and benefits related to impacted employees as part of the 2024 Restructuring Plan[38] Asset Growth - The total assets of the company increased to $168,558,000 in 2024 from $131,687,000 in 2023, representing a growth of approximately 27.9%[28] - Cash and cash equivalents at the end of the period increased to $45,776,000 from $16,630,000, marking a significant increase[32] AI Business Impact - AI-related business saw a nearly 10-fold increase in data, with 3 AI companies now among the top 10 customers[6]

Core Viewpoint - Backblaze, Inc. (BLZE) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that rising earnings estimates can lead to increased buying pressure and higher stock prices [4][5]. - Backblaze is projected to earn -$0.43 per share for the fiscal year ending December 2024, reflecting a year-over-year change of 49.4% [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - Backblaze's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Analyst Sentiment - Analysts have been consistently raising their earnings estimates for Backblaze, with the Zacks Consensus Estimate increasing by 0.3% over the past three months [8].

Core Viewpoint - Backblaze, Inc. (BLZE) shares have increased by 16.4% recently, with analysts suggesting a potential upside of 57% based on a mean price target of $11.60 [1][9]. Price Targets and Analyst Estimates - The mean estimate for BLZE comprises five short-term price targets, with a standard deviation of $1.52, indicating variability among analysts [2]. - The lowest price target is $10, suggesting a 35.3% increase, while the highest target is $14, indicating an 89.5% potential increase [2]. - A low standard deviation among price targets suggests strong agreement among analysts regarding the stock's price movement [7]. Earnings Estimates and Analyst Agreement - Analysts show strong agreement in revising earnings per share (EPS) estimates higher, which correlates with potential stock price increases [9]. - The Zacks Consensus Estimate for the current year has risen by 0.4% over the past month, with one estimate increasing and no negative revisions [10]. - BLZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11]. Caution on Price Targets - Solely relying on price targets for investment decisions may not be wise, as analysts' price targets can often be overly optimistic due to business incentives [3][6]. - While price targets can provide some guidance, they should be approached with skepticism, and further research is recommended to identify fundamental drivers [8][12].

Group 1 - Backblaze, Inc. (BLZE) shares increased by 10.5% to $6.96 in the last trading session, contrasting with a 1.4% loss over the past four weeks [1] - The company is undergoing a significant go-to-market transformation led by new executives, focusing on upskilling, partnerships, and sales strategies, which is driving revenue growth, especially in the B2 Cloud Storage segment [2] - Backblaze is expected to report a quarterly loss of $0.09 per share, reflecting a year-over-year improvement of 40%, with revenues projected at $33.75 million, a 17.4% increase from the previous year [3] Group 2 - The consensus EPS estimate for Backblaze has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - Backblaze holds a Zacks Rank of 3 (Hold), indicating a neutral outlook, while another company in the same industry, Weave Communications, has also maintained a Zacks Rank of 3 [4][5] - Weave Communications is expected to report an EPS of $0.03, representing a 400% increase from the previous year, with its stock finishing the last trading session slightly higher [5]

Group 1 - The stock market is experiencing a significant rise towards the end of 2024, suggesting that investors should focus on careful stock-picking, especially in lesser-known value stocks [1] - There is an emphasis on identifying stocks with specific catalysts that can enhance their fundamental performance [1] Group 2 - Gary Alexander has extensive experience in the technology sector, having worked on Wall Street and in Silicon Valley, and has been an adviser to several seed-round startups [2] - Since 2017, Gary Alexander has been a regular contributor to Seeking Alpha and has been featured in various web publications, with his articles also appearing on popular trading apps like Robinhood [2]