[Part I - Financial Information](index=5&type=section&id=Part%20I%20-%20Financial%20Information) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Condensed Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited condensed consolidated financial statements, including balance sheets, statements of operations, equity changes, and cash flows, with accompanying notes [Condensed Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets%20(Unaudited)) Presents the company's financial position, including assets, liabilities, and equity, at specific reporting dates Condensed Consolidated Balance Sheets Summary | Metric | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :-------------------------------- | :------------------------------ | :------------------------------- | | Cash and cash equivalents | $40,606 | $45,776 | | Marketable securities | $12,626 | $9,139 | | Total current assets | $65,016 | $65,748 | | Total assets | $170,164 | $168,558 | | Total current liabilities | $59,475 | $59,803 | | Total liabilities | $92,396 | $90,936 | | Total stockholders' equity | $77,768 | $77,622 | - Total assets increased by **$1.6 million** from December 31, 2024, to March 31, 2025, primarily driven by an increase in property and equipment, net, and capitalized internal-use software, net[16](index=16&type=chunk) - Cash and cash equivalents decreased by **$5.17 million**, while marketable securities increased by **$3.487 million** during the three months ended March 31, 2025[16](index=16&type=chunk) [Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(Unaudited)) Details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations Summary | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change (YoY) | % Change (YoY) | | :-------------------- | :-------------------------------- | :-------------------------------- | :----------- | :------------- | | Revenue | $34,613 | $29,968 | $4,645 | 15.5% | | Cost of revenue | $15,357 | $14,157 | $1,200 | 8.5% | | Gross profit | $19,256 | $15,811 | $3,445 | 21.8% | | Operating expenses | $28,176 | $26,321 | $1,855 | 7.0% | | Loss from operations | $(8,920) | $(10,510) | $1,590 | -15.1% | | Net loss | $(9,324) | $(11,053) | $1,729 | -15.6% | | Net loss per share | $(0.17) | $(0.27) | $0.10 | -37.0% | - The company reported a reduced net loss of **$9.3 million** for Q1 2025, an improvement from **$11.1 million** in Q1 2024, driven by a **15% increase in revenue** and a **higher gross margin**[17](index=17&type=chunk) - **Gross profit increased by 21.8% year-over-year**, reaching **$19.3 million**, and **gross margin improved from 53% to 56%**[17](index=17&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity (Unaudited)](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity%20(Unaudited)) Outlines changes in the company's equity components, including net loss and additional paid-in capital Condensed Consolidated Statements of Changes in Stockholders' Equity Summary | Item (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------ | :-------------------------------- | :-------------------------------- | | Net loss | $(9,324) | $(11,053) | | Additional Paid-in Capital | $9,470 | $13,569 | | Total Stockholders' Equity | $77,768 | $47,454 | - Stockholders' equity increased slightly from **$77.6 million** at December 31, 2024, to **$77.8 million** at March 31, 2025, primarily due to stock-based compensation and issuance of common stock, partially offset by net loss[19](index=19&type=chunk) [Condensed Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows%20(Unaudited)) Reports cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows Summary | Cash Flow Activity (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $4,943 | $3,416 | | Net cash used in investing activities | $(6,132) | $(8,781) | | Net cash used in financing activities | $(3,981) | $(264) | | Net decrease in cash and cash equivalents | $(5,170) | $(5,629) | | Cash and cash equivalents, end of period | $40,606 | $11,001 | - **Net cash provided by operating activities increased to $4.9 million** in Q1 2025 from **$3.4 million** in Q1 2024, primarily due to a reduced net loss and higher non-cash adjustments[22](index=22&type=chunk) - **Net cash used in investing activities decreased to $6.1 million** in Q1 2025 from **$8.8 million** in Q1 2024, mainly due to lower net purchases of marketable securities and reduced capitalized internal-use software costs[22](index=22&type=chunk) [Notes to Condensed Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [Note 1. Organization and Description of Business](index=9&type=section&id=Note%201.%20Organization%20and%20Description%20of%20Business) Backblaze, Inc. is a Delaware-incorporated storage cloud platform providing data storage solutions for businesses and consumers through web-scale software on commodity hardware - Backblaze, Inc. provides cloud services for data storage and usage to businesses and consumers, utilizing purpose-built, web-scale software on commodity hardware[25](index=25&type=chunk) [Note 2. Basis of Presentation and Summary of Significant Accounting Policies](index=9&type=section&id=Note%202.%20Basis%20of%20Presentation%20and%20Summary%20of%20Significant%20Accounting%20Policies) The condensed consolidated financial statements are prepared in accordance with GAAP and SEC rules for interim reporting, consolidating wholly-owned subsidiaries - The Company is an **Emerging Growth Company (EGC)** and has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[28](index=28&type=chunk) - The effective tax rate for the three months ended March 31, 2025, and 2024, was **zero** due to continuous operating losses[32](index=32&type=chunk) Concentration Risks | Concentration Type | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------- | :----- | :-------------------------------- | :-------------------------------- | | Cash Disbursement | Number of vendors | 2 | 2 | | | Total cash disbursements represented by vendors listed above | 27% | 24% | | Accounts Payable | Number of vendors | 4 | 1 | | | Total accounts payable balance represented by vendors listed above | 70% | 14% | | Accounts Receivable| Number of customers | 2 | 2 | | | Total accounts receivable balance represented by customers listed above | 34% | 35% | [Note 3. Revenues](index=12&type=section&id=Note%203.%20Revenues) Total revenue increased by 15.5% year-over-year to $34.6 million for Q1 2025, primarily driven by B2 Cloud Storage Revenue Disaggregation | Revenue Disaggregation (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------ | :-------------------------------- | :-------------------------------- | | **By Product:** | | | | B2 Cloud Storage | $18,048 | $14,622 | | Computer Backup | $16,565 | $15,346 | | Total Revenue | $34,613 | $29,968 | | **By Timing of Recognition:** | | | | Consumption-based arrangements | $17,413 | $14,278 | | Subscription-based arrangements | $17,108 | $15,567 | | Physical Media (point in time) | $92 | $123 | | Total Revenue | $34,613 | $29,968 | | **By Geographic Area:** | | | | United States | $25,381 | $21,927 | | United Kingdom | $1,752 | $1,628 | | Canada | $1,654 | $1,398 | | Other | $5,826 | $5,015 | | Total Revenue | $34,613 | $29,968 | - Remaining performance obligations (RPOs) were **$44.9 million** as of March 31, 2025, with approximately **79%** expected to be recognized over the next 12 months[42](index=42&type=chunk) Deferred Contract Costs and Amortization | Deferred Contract Costs (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------------------------- | :------------- | :---------------- | | Marketing affiliates | $558 | $542 | | Sales commission | $1,144 | $972 | | **Amortization (Q1 2025 vs Q1 2024):** | | | | Marketing affiliates | $295 | $281 | | Sales commission | $98 | $0 | [Note 4. Marketable Securities](index=14&type=section&id=Note%204.%20Marketable%20Securities) The Company's marketable securities primarily consist of U.S. treasury, corporate debt, and money market funds, totaling $12.6 million as of March 31, 2025 Marketable Securities Portfolio | Investment Category (in thousands) | Amortized Cost (March 31, 2025) | Fair Value (March 31, 2025) | Unrealized Gains (March 31, 2025) | Unrealized Losses (March 31, 2025) | | :--------------------------------- | :------------------------------ | :-------------------------- | :-------------------------------- | :--------------------------------- | | Money market funds | $19,182 | $19,182 | $0 | $0 | | U.S. treasury securities | $998 | $999 | $1 | $0 | | Corporate debt securities | $997 | $996 | $0 | $(1) | | Total cash equivalents | $21,177 | $21,177 | $1 | $(1) | | U.S. treasury securities (investments) | $4,972 | $4,975 | $3 | $0 | | Corporate debt securities (investments) | $7,654 | $7,654 | $0 | $0 | | Total investments | $12,626 | $12,629 | $3 | $0 | - As of March 31, 2025, the majority of marketable securities (**$14.6 million amortized cost**) are scheduled to mature within one year[48](index=48&type=chunk) [Note 5. Fair Value Measurements](index=15&type=section&id=Note%205.%20Fair%20Value%20Measurements) The Company classifies its marketable securities within the fair value hierarchy, with U.S. treasury securities and money market funds in Level 1 Fair Value Hierarchy Classification | Investment Category (in thousands) | Level 1 (March 31, 2025) | Level 2 (March 31, 2025) | Total (March 31, 2025) | | :--------------------------------- | :----------------------- | :----------------------- | :--------------------- | | Money market funds | $19,182 | $0 | $19,182 | | U.S. treasury securities | $999 | $0 | $999 | | Corporate debt securities | $0 | $996 | $996 | | U.S. treasury securities (investments) | $4,975 | $0 | $4,975 | | Corporate debt securities (investments) | $0 | $7,654 | $7,654 | | Total | $25,156 | $8,650 | $33,806 | - U.S. treasury securities and money market funds are classified within **Level 1**, while corporate debt securities are classified within **Level 2** of the fair value hierarchy[51](index=51&type=chunk) [Note 6. Property and Equipment, Net](index=16&type=section&id=Note%206.%20Property%20and%20Equipment,%20Net) Property and equipment, net, increased to $45.7 million as of March 31, 2025, with the majority located in the United States Property and Equipment, Net Summary | Asset Category (in thousands) | March 31, 2025 | December 31, 2024 | | :---------------------------- | :------------- | :---------------- | | Data center equipment | $57,079 | $54,552 | | Leased and financed data center equipment | $68,496 | $65,037 | | Total property and equipment, net | $45,661 | $42,949 | Property and Equipment by Geographic Area | Geographic Area (in thousands) | March 31, 2025 | December 31, 2024 | | :----------------------------- | :------------- | :---------------- | | United States | $49,967 | $47,930 | | Canada | $3,145 | $3,309 | | The Netherlands | $7,514 | $7,583 | | Total | $60,626 | $58,822 | [Note 7. Capitalized Internal-Use Software, Net](index=17&type=section&id=Note%207.%20Capitalized%20Internal-Use%20Software,%20Net) Capitalized internal-use software, net, increased to $42.2 million as of March 31, 2025, with amortization expense of $2.4 million for Q1 2025 Capitalized Internal-Use Software, Net | Item (in thousands) | March 31, 2025 | December 31, 2024 | | :------------------ | :------------- | :---------------- | | Developed software | $62,235 | $59,435 | | Accumulated amortization | $(20,226) | $(17,778) | | Total capitalized internal-use software, net | $42,153 | $41,801 | Amortization Expense for Capitalized Internal-Use Software | Amortization Expense (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenue | $2,446 | $1,424 | | General and administrative | $2 | $2 | | Total amortization expense | $2,448 | $1,426 | [Note 8. Leases](index=17&type=section&id=Note%208.%20Leases) The Company utilizes both finance and operating leases for data center equipment and facilities, with total finance lease obligations of $32.5 million Lease Terms and Discount Rates | Lease Type | March 31, 2025 | December 31, 2024 | | :--------- | :------------- | :---------------- | | Operating leases - Remaining lease term | 4.2 years | 4.4 years | | Operating leases - Discount rate | 7.0 % | 7.2 % | | Finance Leases - Remaining lease term | 2.0 years | 1.9 years | | Finance Leases - Discount rate | 11.7 % | 11.9 % | Lease Expense Components | Lease Expense Component (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :------------------------------------- | :-------------------------------- | :-------------------------------- | | Finance lease depreciation expense | $2,840 | $3,564 | | Finance lease interest expense | $755 | $593 | | Operating lease rental expense | $1,186 | $691 | | Total operating lease costs | $3,378 | $2,983 | - Future minimum commitments for finance leases and lease financing obligations totaled **$36.5 million** as of March 31, 2025, with **$15.3 million** due in the remainder of 2025[61](index=61&type=chunk) [Note 9. Commitments and Contingencies](index=19&type=section&id=Note%209.%20Commitments%20and%20Contingencies) The Company has non-cancellable contractual commitments totaling $2.8 million through 2027 and is involved in legal claims not expected to be material - Contractual commitments for service agreements total **$0.8 million** for the remainder of 2025, **$1.3 million** for 2026, and **$0.7 million** for 2027[62](index=62&type=chunk) - The Company contributed **$0.5 million** to its 401(k) plan for both the three months ended March 31, 2025, and 2024[64](index=64&type=chunk) - The Company believes that current legal proceedings are not likely to have a **material adverse effect** on its financial position, results of operations, or cash flows[65](index=65&type=chunk) [Note 10. Debt](index=20&type=section&id=Note%2010.%20Debt) The Company voluntarily terminated its revolving credit agreement with City National Bank on December 10, 2024 - The Company voluntarily terminated its revolving credit agreement with City National Bank on **December 10, 2024**[67](index=67&type=chunk) [Note 11. Stockholders' Equity](index=20&type=section&id=Note%2011.%20Stockholders'%20Equity) As of March 31, 2025, the Company had reserved 18.6 million shares of common stock for future issuance under its equity incentive plans Equity Incentive Plan Summary | Equity Plan Item | March 31, 2025 | December 31, 2024 | | :--------------- | :------------- | :---------------- | | Options outstanding (2011 Plan) | 4,783,610 | 5,264,351 | | Options outstanding (2021 Plan) | 1,111,155 | 1,114,620 | | Restricted stock units outstanding (2021 Plan) | 6,311,667 | 4,351,393 | | Shares available for future grants (2021 Plan) | 3,963,750 | 6,933,867 | | Shares available for future purchases (2021 ESPP) | 2,033,281 | 965,766 | | Restricted stock units outstanding (2024 Inducement Plan) | 412,740 | 412,740 | | Total reserved shares | 18,618,203 | 19,044,737 | [Note 12. Stock-Based Compensation](index=20&type=section&id=Note%2012.%20Stock-Based%20Compensation) Total stock-based compensation expense increased to $7.4 million in Q1 2025, with $40.2 million in unrecognized RSU costs Restricted Stock Unit (RSU) Activity | RSU Activity | RSUs (shares) | Weighted-average grant date fair value per unit | | :----------- | :------------ | :---------------------------------------------- | | Unvested as of December 31, 2024 | 4,764,133 | $6.18 | | Granted | 3,234,491 | $6.99 | | Vested | (1,159,608) | $6.17 | | Forfeited | (114,609) | $6.23 | | Unvested as of March 31, 2025 | 6,724,407 | $6.57 | - Total unrecognized compensation cost related to RSUs was **$40.2 million**, to be recognized over a weighted-average period of **2.3 years**[74](index=74&type=chunk) Stock-Based Compensation Expense | Stock-Based Compensation Expense (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :---------------------------------------------- | :-------------------------------- | :-------------------------------- | | Cost of revenue | $420 | $386 | | Research and development | $3,467 | $2,108 | | Sales and marketing | $1,797 | $1,822 | | General and administrative | $1,675 | $1,213 | | Total stock-based compensation expense | $7,359 | $5,529 | [Note 13. Net Loss per Share Attributable to Common Stockholders](index=22&type=section&id=Note%2013.%20Net%20Loss%20per%20Share%20Attributable%20to%20Common%20Stockholders) Basic and diluted net loss per share was $(0.17) for Q1 2025, an improvement from $(0.27) in Q1 2024 Net Loss per Share Details | Metric | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----- | :-------------------------------- | :-------------------------------- | | Net loss attributable to common stockholders | $(9,324) | $(11,053) | | Weighted average common shares outstanding | 54,060,249 | 40,225,239 | | Net loss per share, basic and diluted | $(0.17) | $(0.27) | - Potential common shares (RSUs, stock options, ESPP shares, Bonus Plan shares) were excluded from diluted net loss per share calculation as their effect was **antidilutive**[84](index=84&type=chunk) [Note 14. Restructuring](index=23&type=section&id=Note%2014.%20Restructuring) The 2024 Restructuring Plan, completed by December 31, 2024, resulted in $4.9 million in charges, primarily for employee severance and benefits - The 2024 Restructuring Plan, completed by **December 31, 2024**, involved a **12% workforce reduction** and reduced corporate headquarters footprint[85](index=85&type=chunk) - Total restructuring charges were **$4.9 million**, including **$3.9 million** for employee severance and benefits and **$0.9 million** for operating right-of-use asset impairment[86](index=86&type=chunk) Restructuring Liability | Restructuring Liability (in thousands) | Amount | | :------------------------------------- | :----- | | Balance as of December 31, 2024 | $355 | | Cash payments during the period | $(115) | | Balance as of March 31, 2025 | $240 | [Note 15. Segment Reporting](index=23&type=section&id=Note%2015.%20Segment%20Reporting) The Company operates as a single operating and reportable segment, with the CEO serving as the chief operating decision maker - The Company operates in **one operating and reportable segment**, deriving revenue from its storage platform services[88](index=88&type=chunk) Adjusted Segment Expenses | Adjusted Segment Item (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :----------------------------------- | :-------------------------------- | :-------------------------------- | | Adjusted cost of revenue | $7,293 | $6,997 | | Adjusted research and development | $8,330 | $7,574 | | Adjusted sales and marketing | $7,426 | $8,153 | | Adjusted general and administrative | $5,212 | $5,331 | [Note 16. Subsequent Events](index=24&type=section&id=Note%2016.%20Subsequent%20Events) In Q2 2025, the Company extended the useful life of its Data center equipment to 6 years, expected to reduce depreciation by $5.0 million - The Company extended the useful life of its Data center equipment and Machinery and equipment from **3-5 years to a uniform 6 years**, effective **April 1, 2025**[91](index=91&type=chunk) - This change is anticipated to result in a reduction in depreciation expense of approximately **$5.0 million** for the remainder of 2025[91](index=91&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the Company's financial condition and results of operations, highlighting key business developments, performance drivers, and financial metrics [Overview](index=25&type=section&id=Overview) Backblaze is a leading specialized storage cloud platform offering B2 Cloud Storage and Computer Backup solutions to over 500,000 customers - Backblaze is a leading specialized storage cloud platform offering B2 Cloud Storage (IaaS) and Backblaze Computer Backup (SaaS) solutions to over **500,000 customers** across **175+ countries**, managing approximately **4 billion gigabytes of data**[95](index=95&type=chunk)[96](index=96&type=chunk) - The Company initiated a **go-to-market transformation** in H2 2024, moving up-market and signing multiple deals valued over **$1.0 million** each[97](index=97&type=chunk) - A recent study in Q2 2025 extended the useful life of infrastructure equipment, expected to reduce depreciation expense by approximately **$5.0 million** for the remainder of the year[98](index=98&type=chunk) [Factors Affecting Our Performance](index=26&type=section&id=Factors%20Affecting%20Our%20Performance) Discusses key drivers of future growth, including sales efforts, customer acquisition, expansion, platform investment, and international presence - Future growth depends on scaling direct sales efforts for larger customers and expanding the partner ecosystem[100](index=100&type=chunk)[101](index=101&type=chunk) - Continued investment in self-service customer acquisition through blog content, case studies, social sharing, and optimizing conversion rates is crucial[102](index=102&type=chunk) - Expansion within existing customers is driven by new features (e.g., Enterprise Control, multi-region selection), Customer Success initiatives, and natural data growth[103](index=103&type=chunk) - Ongoing platform investment and new product launches, such as B2 Overdrive for AI use cases, are key to maintaining market leadership and driving cross-sell/upsell opportunities[104](index=104&type=chunk) - International expansion, including a new data center in Canada in **January 2025**, represents a meaningful growth opportunity[105](index=105&type=chunk) [Key Business Metrics](index=27&type=section&id=Key%20Business%20Metrics) Presents critical performance indicators such as net revenue retention rate and annual recurring revenue for both B2 Cloud Storage and Computer Backup Key Business Metrics Summary | Metric | March 31, 2025 | March 31, 2024 | | :-------------------------- | :------------- | :------------- | | **B2 Cloud Storage:** | | | | Net revenue retention rate | 117 % | 126 % | | Gross customer retention rate | 89 % | 89 % | | Annual recurring revenue (in millions) | $73.8 | $59.5 | | **Computer Backup:** | | | | Net revenue retention rate | 108 % | 101 % | | Gross customer retention rate | 90 % | 91 % | | Annual recurring revenue (in millions) | $67.0 | $62.6 | | **Total Company:** | | | | Net revenue retention rate | 113 % | 112 % | | Gross customer retention rate | 90 % | 91 % | | Annual recurring revenue (in millions) | $140.8 | $122.1 | - Total Company Net Revenue Retention Rate (NRR) increased to **113%** as of March 31, 2025, from **112%** in the prior year, indicating strong revenue expansion from existing customers[109](index=109&type=chunk) - Annual Recurring Revenue (ARR) for B2 Cloud Storage grew by **24% to $73.8 million**, and for Computer Backup by **7% to $67.0 million**, year-over-year[115](index=115&type=chunk) [Key Components of Results of Operations](index=28&type=section&id=Key%20Components%20of%20Results%20of%20Operations) Explains the primary sources of revenue and the composition of cost of revenue and operating expenses - Revenue is primarily generated from B2 Cloud Storage (consumption-based) and Computer Backup (subscription-based), with subscription arrangements typically ranging from **one month to five years**[117](index=117&type=chunk)[118](index=118&type=chunk) - Cost of revenue includes colocation facilities, network costs, depreciation of equipment, personnel-related costs, credit card fees, and amortization of capitalized internal-use software[119](index=119&type=chunk) - Operating expenses, excluding depreciation, amortization, and stock-based compensation, are expected to remain relatively flat in **2025** due to **2024 restructuring activities**, though sales and marketing may increase with business growth[122](index=122&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) Analyzes the company's financial performance, including revenue, gross profit, and operating expenses, for the reported periods [Comparison of the Three Months Ended March 31, 2025 and 2024](index=31&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20March%2031,%202025%20and%202024) Total revenue increased by 15% to $34.6 million, driven by a 23% increase in B2 Cloud Storage revenue and an 8% increase in Computer Backup revenue Revenue Comparison | Revenue (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :--------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | B2 Cloud Storage revenue | $18,048 | $14,622 | $3,426 | 23 % | | Computer Backup revenue | $16,565 | $15,346 | $1,219 | 8 % | | Total revenue | $34,613 | $29,968 | $4,645 | 15 % | - B2 Cloud Storage revenue increased by **$3.4 million**, primarily due to a **$2.4 million** increase from higher storage usage by existing customers and **$1.0 million** from new customer sales[135](index=135&type=chunk)[138](index=138&type=chunk) - Computer Backup revenue increased by **$1.2 million**, influenced by a **$2.1 million** increase from October 2023 price adjustments, partially offset by a **$0.9 million** decrease due to declining license counts[135](index=135&type=chunk) Expense and Gross Margin Comparison | Expense (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | Change | % Change | | :--------------------- | :-------------------------------- | :-------------------------------- | :----- | :------- | | Cost of revenue | $15,357 | $14,157 | $1,200 | 8 % | | Gross margin | 56 % | 53 % | 3 pp | |\ | Research and development | $11,855 | $9,746 | $2,109 | 22 % | | Sales and marketing | $9,263 | $10,022 | $(759) | (8)% | | General and administrative | $7,058 | $6,553 | $505 | 8 % | [Non-GAAP Financial Measures](index=33&type=section&id=Non-GAAP%20Financial%20Measures) Presents financial performance metrics adjusted for non-cash and non-recurring items, including adjusted gross profit, EBITDA, and free cash flow [Adjusted Gross Profit and Margin](index=33&type=section&id=Adjusted%20Gross%20Profit%20and%20Margin) Adjusted gross profit excludes stock-based compensation, depreciation, amortization, and restructuring charges from cost of revenue Adjusted Gross Profit and Margin Reconciliation | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Gross profit | $19,256 | $15,811 | | Stock-based compensation | $420 | $386 | | Depreciation and amortization | $7,644 | $6,774 | | Adjusted gross profit | $27,320 | $22,971 | | Gross margin | 56 % | 53 % | | Adjusted gross margin | 79 % | 77 % | [Adjusted EBITDA and Adjusted EBITDA Margin](index=34&type=section&id=Adjusted%20EBITDA%20and%20Adjusted%20EBITDA%20Margin) Adjusted EBITDA excludes non-cash and non-recurring items from net loss, showing a significant increase to $6.4 million (18%) in Q1 2025 Adjusted EBITDA Reconciliation | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net loss | $(9,324) | $(11,053) | | Depreciation and amortization | $7,764 | $6,912 | | Stock-based compensation | $7,359 | $5,529 | | Interest expense and investment income, net | $320 | $537 | | Income tax provision | $84 | $6 | | Foreign exchange loss (gain) | $149 | $(18) | | Adjusted EBITDA | $6,352 | $1,913 | | Adjusted EBITDA Margin | 18 % | 6 % | [Adjusted Free Cash Flow and Adjusted Free Cash Flow Margin](index=34&type=section&id=Adjusted%20Free%20Cash%20Flow%20and%20Adjusted%20Free%20Cash%20Flow%20Margin) Adjusted Free Cash Flow is derived from net cash provided by operating activities, adjusted for capital expenditures, principal payments on leases, and restructuring payments Adjusted Free Cash Flow Reconciliation | Metric (in thousands) | Three Months Ended March 31, 2025 | Three Months Ended March 31, 2024 | | :-------------------- | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $4,943 | $3,416 | | Capital expenditures | $(2,626) | $(3,746) | | Principal payments on finance leases and lease financing obligations | $(4,543) | $(4,802) | | Payment of workforce reduction and related severance charges | $115 | $0 | | Adjusted Free Cash Flow | $(2,111) | $(5,132) | | Adjusted Free Cash Flow Margin | (6)% | (17)% | [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) Examines the company's ability to generate and manage cash, focusing on operating, investing, and financing activities [Operating Activities](index=36&type=section&id=Operating%20Activities) Net cash provided by operating activities increased to $4.9 million in Q1 2025, driven by reduced net loss and higher non-cash adjustments - Cash provided by operating activities was **$4.9 million** in Q1 2025, resulting from a net loss of **$9.3 million**, adjusted for **$16.0 million** in non-cash charges and a **$1.8 million** net cash outflow from changes in operating assets and liabilities[169](index=169&type=chunk) - Non-cash charges primarily included **$7.8 million** for depreciation and amortization and **$7.4 million** for stock-based compensation[169](index=169&type=chunk) - The increase in cash provided by operations in Q1 2025 was primarily driven by a strategy to secure larger contracts and cost savings from recent restructuring efforts, partially offset by increased R&D investment[170](index=170&type=chunk) [Investing Activities](index=37&type=section&id=Investing%20Activities) Net cash used in investing activities decreased to $6.1 million in Q1 2025, mainly due to lower purchases of marketable securities and reduced capitalized software costs - Cash used in investing activities was **$6.1 million** in Q1 2025, primarily due to **$18.3 million** in marketable securities purchases, **$2.1 million** in capitalized internal-use software costs, and **$0.5 million** in property and equipment purchases, partially offset by **$14.8 million** from marketable securities maturities[172](index=172&type=chunk) [Financing Activities](index=37&type=section&id=Financing%20Activities) Net cash used in financing activities increased significantly to $4.0 million in Q1 2025, primarily due to principal payments on finance leases and taxes for equity awards - Cash used in financing activities was **$4.0 million** in Q1 2025, primarily due to **$4.5 million** in principal payments on finance leases and lease financing obligations, and **$0.5 million** for taxes paid for net share settlements of equity awards, partially offset by **$1.1 million** in proceeds from stock option exercises[172](index=172&type=chunk) [Critical Accounting Estimates](index=37&type=section&id=Critical%20Accounting%20Estimates) Highlights key accounting judgments and assumptions that significantly impact the financial statements - No material changes to critical accounting estimates were reported compared to the Annual Report[175](index=175&type=chunk) - Significant estimates include costs capitalized as internal-use software (determining new/additional functionality) and valuation of Employee Stock Purchase Plan (ESPP) expense[30](index=30&type=chunk)[174](index=174&type=chunk) [JOBS Act Accounting Election](index=38&type=section&id=JOBS%20Act%20Accounting%20Election) Explains the Company's election to use the extended transition period for new accounting standards as an emerging growth company - The Company is an **emerging growth company (EGC)** and has elected to use the extended transition period under the JOBS Act for adopting new or revised accounting standards[178](index=178&type=chunk) - This election means the Company's financial statements may not be comparable to public companies not utilizing this extended transition period[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Company is exposed to market risks primarily from fluctuations in interest rates and foreign currency exchange rates, though foreign currency risk is currently minimal - The Company's exposure to interest rate risk primarily relates to finance lease arrangements and interest income from cash, cash equivalents, and marketable securities[180](index=180&type=chunk) - Due to the short-term nature of investments and intent to hold to maturity, a **100 basis point change** in interest rates is not expected to materially affect operating results or financial position[180](index=180&type=chunk) - Foreign currency exchange rate risk is minimal as most sales and operating expenses are U.S. dollar-denominated, but international expansion could increase this exposure[181](index=181&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the Company's disclosure controls and procedures were effective as of March 31, 2025, with no material changes in internal control over financial reporting [Evaluation of Disclosure Controls and Procedures](index=38&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Management's assessment of the effectiveness of the company's disclosure controls and procedures - As of **March 31, 2025**, the Company's chief executive officer and chief financial officer concluded that its disclosure controls and procedures are **effective**[184](index=184&type=chunk) [Changes in Internal Control over Financial Reporting](index=39&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) Reports on any material changes in the company's internal control over financial reporting during the quarter - No changes in internal control over financial reporting materially affected, or are reasonably likely to to materially affect, the Company's internal control over financial reporting during the quarter ended **March 31, 2025**[185](index=185&type=chunk) [Inherent Limitations on Effectiveness of Controls](index=39&type=section&id=Inherent%20Limitations%20on%20Effectiveness%20of%20Controls) Acknowledges that any control system has inherent limitations and can only provide reasonable assurance - A control system, no matter how well conceived and operated, can provide only **reasonable, not absolute, assurance** that its objectives are met, acknowledging inherent limitations[186](index=186&type=chunk) [Part II - Other Information](index=40&type=section&id=Part%20II%20-%20Other%20Information) This section covers legal proceedings, risk factors, equity sales, other information, and exhibits [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently a party to any legal proceedings that are likely to have a material adverse effect on its business, financial condition, or operating results - The Company is not presently a party to any legal proceedings likely to have a **material adverse effect** on its business, financial condition, or operating results[188](index=188&type=chunk) [Item 1A. Risk Factors](index=40&type=section&id=Item%201A.%20Risk%20Factors) This section outlines various factors that could materially and adversely affect the Company's business, financial condition, and results of operations [Risk Factors Summary](index=40&type=section&id=Risk%20Factors%20Summary) Summarizes the key risks facing the company, including operational, competitive, and financial challenges - Key risks include a history of **cumulative losses**, intense market competition, potential service disruptions, maintaining brand and reputation, cybersecurity attacks, cost-effective customer acquisition, successful product enhancements, software defects, reliance on third-party vendors, strategic relationships, and maintaining effective internal controls[190](index=190&type=chunk) [Risks Related to Our Business and Our Industry](index=41&type=section&id=Risks%20Related%20to%20Our%20Business%20and%20Our%20Industry) Details risks associated with the company's operations, market competition, service disruptions, and growth management - The Company has a history of cumulative losses (**$205.3 million accumulated deficit** as of March 31, 2025) and does not expect to be profitable in the foreseeable future due to ongoing investments in scaling the business[191](index=191&type=chunk) - The markets are intensely competitive, with larger competitors like **Amazon Web Services, Google Cloud Platform, and Microsoft Azure**, posing risks of pricing pressures and potential customer loss from future price increases[192](index=192&type=chunk) - Significant service disruptions, data loss, or cybersecurity attacks could damage reputation, harm business, and lead to substantial costs, despite incident response plans[193](index=193&type=chunk)[197](index=197&type=chunk)[198](index=198&type=chunk) - Failure to effectively manage rapid growth, including workforce fluctuations and strain on infrastructure, could negatively affect service quality, brand, and ability to retain/attract customers and employees[204](index=204&type=chunk)[206](index=206&type=chunk) - The business is dependent on retaining and increasing revenue from existing customers, with many able to terminate services with little notice, and future financial performance relies on successful adoption of new features and additional paid products[208](index=208&type=chunk)[209](index=209&type=chunk) - International operations (**27% of Q1 2025 revenue** from outside the U.S.) are subject to increased business, regulatory, and economic risks, including compliance costs, cultural differences, and geopolitical instability[220](index=220&type=chunk)[221](index=221&type=chunk) [Risks Related to Reliance on Infrastructure and Third Parties](index=54&type=section&id=Risks%20Related%20to%20Reliance%20on%20Infrastructure%20and%20Third%20Parties) Addresses risks stemming from dependence on third-party data centers, suppliers, channel partners, and payment processors - The Company relies on a limited number of third-party data centers and suppliers for key components like hard drives and semiconductors, exposing it to potential supply chain disruptions, increased costs, and service interruptions[241](index=241&type=chunk)[242](index=242&type=chunk)[244](index=244&type=chunk) - Success depends on strategic relationships with channel partners and integrators; failure to maintain these relationships or interoperability could impair competitiveness and revenue growth[245](index=245&type=chunk) - Exposure to risks associated with online payment processing methods, including increased fees, changes in regulations, or disruptions in payment systems, could adversely impact revenue and operating expenses[246](index=246&type=chunk) - Reliance on third-party software for essential financial and operational services (e.g., HubSpot, NetSuite) means failures or disruptions in these services could materially affect business management and financial reporting[247](index=247&type=chunk) [Risks Related to Accounting and Tax Matters](index=56&type=section&id=Risks%20Related%20to%20Accounting%20and%20Tax%20Matters) Covers risks related to internal controls, revenue recognition, net operating loss carryforwards, and changes in tax laws - Failure to maintain effective internal controls over financial reporting could harm the business and negatively impact stock value, as the Company has previously identified and remediated material weaknesses[250](index=250&type=chunk)[251](index=251&type=chunk)[253](index=253&type=chunk) - Revenue from subscription services is recognized ratably over the term, meaning downturns or upturns in new business may not be immediately reflected in operating results[255](index=255&type=chunk) - The Company's ability to use its net operating loss carryforwards (**$123.3 million federal, $95.6 million state** as of Dec 31, 2024) and other tax attributes may be limited by ownership changes under Sections 382 and 383 of the Code[257](index=257&type=chunk)[258](index=258&type=chunk) - Changes in U.S. federal, state, local, and international tax laws could materially affect financial condition, results of operations, and cash flows, potentially increasing tax liabilities[259](index=259&type=chunk)[261](index=261&type=chunk) [Risks Related to Intellectual Property](index=58&type=section&id=Risks%20Related%20to%20Intellectual%20Property) Discusses risks concerning intellectual property infringement claims, limited protection, and the use of open-source software - Assertions by third parties that the Company's cloud services infringe intellectual property rights could lead to costly litigation, diversion of management attention, and substantial monetary damages[263](index=263&type=chunk)[264](index=264&type=chunk) - The Company relies on trademark, copyright, and trade secret laws, as it does not currently own any issued patents, which provides limited protection and may not prevent unauthorized use or misappropriation of technologies[266](index=266&type=chunk)[267](index=267&type=chunk) - Use of 'open-source' software could subject the Company to unfavorable license conditions, potential litigation, or requirements to release proprietary source code, impacting its ability to sell cloud services[268](index=268&type=chunk)[269](index=269&type=chunk) [Risks Related to Ownership of Our Common Stock](index=60&type=section&id=Risks%20Related%20to%20Ownership%20of%20Our%20Common%20Stock) Outlines risks affecting common stock ownership, including anti-takeover provisions, stock price volatility, and lack of dividends - Anti-takeover provisions in the Company's charter and Delaware law could delay or prevent an acquisition, limiting stockholders' opportunity to receive a premium for their shares[270](index=270&type=chunk)[272](index=272&type=chunk) - The market price of the common stock has been, and is likely to remain, volatile due to various factors, including operating performance, market conditions, and competitor actions, potentially leading to investment losses[273](index=273&type=chunk)[274](index=274&type=chunk) - Sales of a substantial number of common stock shares in the public market, or future issuances of equity, could cause the share price to fall and dilute existing investors[278](index=278&type=chunk)[279](index=279&type=chunk) - The Company does not anticipate declaring any cash dividends in the foreseeable future, requiring investors to rely on stock price appreciation for gains[282](index=282&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section states that there were no unregistered sales of equity securities and no use of proceeds to report for the period - No unregistered sales of equity securities were reported[290](index=290&type=chunk) - No use of proceeds from unregistered sales of equity securities was reported[291](index=291&type=chunk) [Item 5. Other Information](index=64&type=section&id=Item%205.%20Other%20Information) Gleb Budman, the CEO, adopted a Rule 10b5-1 Trading Plan on March 7, 2025, for the sale of up to 360,000 shares, but subsequently terminated the plan on May 5, 2025, prior to any trading - On **March 7, 2025**, CEO Gleb Budman adopted a Rule 10b5-1 Trading Plan for the sale of up to **360,000 shares** of common stock[293](index=293&type=chunk) - Mr. Budman terminated the Rule 10b5-1 Trading Plan on **May 5, 2025**, before any trading occurred under the plan[294](index=294&type=chunk) [Item 6. Exhibits](index=65&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Quarterly Report on Form 10-Q, including certifications from the Principal Executive Officer and Principal Financial Officer, and Inline XBRL documents - Exhibits include certifications from the Principal Executive Officer (**31.1, 32.1**) and Principal Financial Officer (**31.2, 32.2**) as required by the Securities Exchange Act and Sarbanes-Oxley Act[295](index=295&type=chunk) - The report also includes various Inline XBRL taxonomy extension documents (**101.INS, 101.SCH, 101.CAL, 101.DEF, 101.LAB, 101.PRE**) and the Cover Page Interactive Data File (**104**)[295](index=295&type=chunk) [Signatures](index=66&type=section&id=Signatures) The report is duly signed on behalf of Backblaze, Inc. by its Chief Executive Officer and Chairperson, Gleb Budman, and its Chief Financial Officer, Marc Suidan, on May 7, 2025 - The report is signed by **Gleb Budman**, Chief Executive Officer and Chairperson, and **Marc Suidan**, Chief Financial Officer, on **May 7, 2025**[299](index=299&type=chunk)

Revenue Growth - Revenue for Q1 2025 was $34.6 million, representing a 15% year-over-year growth[3] - B2 Cloud Storage revenue reached $18.0 million, an increase of 23% year-over-year[3] - Annual recurring revenue (ARR) was $140.8 million, up 15% year-over-year, with B2 Cloud Storage ARR at $73.8 million, a 24% increase[8] - For Q2 2025, the company expects revenue growth of 21-23%[7] - Revenue for Q1 2025 was $34,613, an increase of 15% from $29,968 in Q1 2024[31] Profitability and Loss - Net loss for Q1 2025 was $9.3 million, improved from a net loss of $11.1 million in Q1 2024[3] - Adjusted EBITDA for Q1 2025 was $6.4 million, or 18% of revenue, compared to $1.9 million or 6% of revenue in Q1 2024[3] - Non-GAAP net loss for Q1 2025 was $1,816,000, an improvement from a loss of $5,542,000 in Q1 2024, representing a 67.2% reduction[39] - Non-GAAP net loss per share decreased to $0.03 in Q1 2025 from $0.14 in Q1 2024, indicating a significant improvement in per-share performance[39] - Adjusted Free Cash Flow for Q1 2025 was $(2,111,000), compared to $(5,132,000) in Q1 2024, reflecting a 58.8% improvement[40] - Adjusted Free Cash Flow Margin improved to -6% in Q1 2025 from -17% in Q1 2024, indicating better cash flow management[40] Customer Metrics - The net revenue retention rate (NRR) was 113%, compared to 112% in Q1 2024[8] - Gross customer retention rate reflects the company's ability to retain customers, calculated as a trailing four-quarter average[25] - In Q4 2023, the number of customers was refined to include end-user customers purchasing through resellers, resulting in a 1% decrease in the 120% NRR metric reported for Q3 2023[26] Cash and Assets - Cash and marketable securities totaled $53.2 million as of March 31, 2025[3] - Cash and cash equivalents at the end of Q1 2025 were $40,606, down from $45,776 at the beginning of the period[33] - Total assets as of March 31, 2025, were $170,164, compared to $168,558 as of December 31, 2024[30] Stock-Based Compensation - Total stock-based compensation expense increased to $7,359,000 in Q1 2025 from $5,529,000 in Q1 2024, a rise of 33.1%[41] - Research and development stock-based compensation rose to $3,467,000 in Q1 2025, up from $2,108,000 in Q1 2024, marking a 64.4% increase[41] Shareholder Metrics - The weighted average common shares outstanding increased to 54,060,249 in Q1 2025 from 40,225,239 in Q1 2024, reflecting a 34.4% increase in shares[39] Operating Activities - Net cash provided by operating activities for Q1 2025 was $4,943,000, compared to $3,416,000 in Q1 2024, showing a 44.8% increase[40] - Capital expenditures decreased to $2,626,000 in Q1 2025 from $3,746,000 in Q1 2024, a reduction of 29.9%[40] New Initiatives - The company signed its largest contractual commitment, a multi-million dollar contract over a multi-year period[2] - B2 Cloud Storage Overdrive was launched, optimized for AI customer demands[3]

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, which accused Backblaze of financial missteps and questionable accounting practices since its IPO in November 2021 [3]. - Following the release of the Morpheus Research report, Backblaze's stock experienced a decline of 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].

NEW YORK, May 05, 2025 (GLOBE NEWSWIRE) -- Pomerantz LLP is investigating claims on behalf of investors of Backblaze, Inc. (“Backblaze” or the “Company”) (NASDAQ: BLZE). Such investors are advised to contact Danielle Peyton at newaction@pomlaw.com or 646-581-9980, ext. 7980. The investigation concerns whether Backblaze and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices.  [Click here for information about joining the class action] On April 24, 2 ...

Core Viewpoint - Backblaze, Inc. is under investigation for potential violations of federal securities laws and unlawful business practices following a negative report from Morpheus Research that highlighted financial missteps and questionable accounting practices [1][2]. Group 1: Investigation and Legal Actions - Bragar Eagel & Squire, P.C. is investigating potential claims against Backblaze on behalf of its stockholders [1]. - The investigation is focused on whether Backblaze has engaged in unlawful business practices and violated federal securities laws [1]. - Stockholders who have suffered losses or have information regarding these claims are encouraged to contact the law firm [3]. Group 2: Financial Performance and Market Reaction - Backblaze's stock experienced a significant decline following the release of a critical report from Morpheus Research, which detailed alleged financial missteps since the company's IPO in November 2021 [2]. - The report accused Backblaze of questionable accounting practices, including financial manipulations and inflated forecasts [2]. - The stock price dropped during intraday trading on April 24, 2025, in response to the report [2].

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud and unlawful business practices by Backblaze, Inc. following a critical report from Morpheus Research that accused the company of failing to disclose key metrics and improper financial practices [1][2]. Group 1: Investigation and Allegations - Pomerantz LLP is representing investors of Backblaze, Inc. in an investigation regarding possible securities fraud and misconduct by the company's officers and directors [1]. - Morpheus Research published a report on April 24, 2025, alleging that Backblaze did not consistently disclose important financial metrics and engaged in improper capitalization of expenses [2]. - The report characterized Backblaze's leadership as lacking transparency and suggested that they may have taken aggressive and potentially illegal actions to create a misleading financial performance [2]. Group 2: Market Impact - Following the release of the Morpheus report, Backblaze's stock price experienced a significant decline during intraday trading, negatively impacting investors [2].

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, which accused Backblaze of financial missteps and questionable accounting practices since its IPO in November 2021 [3]. - Following the release of the Morpheus Research report, Backblaze's stock experienced a decline of 2.1% on April 24, 2025 [3]. Group 2: Class Action Information - 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 significant settlements, including the largest securities class action settlement against a Chinese company at the time [4]. - The firm has consistently ranked among the top firms for securities class action settlements and has recovered hundreds of millions of dollars for investors [4].

Core Viewpoint - The Schall Law Firm is investigating Backblaze, Inc. for potential violations of securities laws following a significant drop in its stock price due to a negative report from Morpheus Research [1][2]. Group 1: Investigation Details - The investigation centers on whether Backblaze made false or misleading statements and failed to disclose important information to investors [2]. - The company's stock experienced a sharp decline attributed to a critical report from Morpheus Research, which highlighted alleged financial missteps and questionable practices since its IPO in November 2021 [2]. Group 2: Allegations from the Report - The Morpheus Research report claims that Backblaze engaged in questionable accounting practices, including financial manipulations and inflated forecasts to meet audit thresholds [2].

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