Backblaze(US:BLZE)2024-11-07 22:02Customer Base and Revenue Growth - As of September 30, 2024, Backblaze has over 500,000 customers and manages over 3 billion gigabytes of data storage across more than 175 countries[131]. - The Annual Recurring Revenue (ARR) for B2 Cloud Storage increased by $18.1 million, or 39%, to $64.9 million as of September 30, 2024, compared to $46.8 million in the prior year[144][153]. - The ARR for Computer Backup increased by $11.5 million, or 21%, to $65.6 million as of September 30, 2024, compared to $54.1 million in the prior year[144][153]. - Total revenue for Q3 2024 was $32,589,000, a 29% increase from $25,299,000 in Q3 2023[174]. - B2 Cloud Storage revenue increased by $4,574,000 (39%) in Q3 2024, driven by a price increase and increased storage[178]. - Computer Backup revenue rose by $2,716,000 (20%) in Q3 2024, primarily due to price increases implemented in October 2023[178]. Customer Retention and Market Expansion - The Net Revenue Retention Rate (NRR) for B2 Cloud Storage improved to 128% as of September 30, 2024, up from 120% a year earlier, primarily due to a price increase[144][147]. - Backblaze's total company NRR reached 118% as of September 30, 2024, compared to 108% a year earlier[144]. - The Gross Customer Retention Rate for B2 Cloud Storage decreased to 89% as of September 30, 2024, down from 90% in the previous year[144][149]. - Approximately 27% of Backblaze's total revenue for the nine months ended September 30, 2024, originated outside the United States, indicating significant international expansion opportunities[143]. - Backblaze plans to open a new data region in Canada as part of a partnership with a leader in hybrid cloud solutions, aiming to extend market reach[134]. Financial Performance and Cost Management - Gross profit margin improved to 55% in Q3 2024, compared to 46% in Q3 2023[177]. - Operating expenses totaled $29,998,000 in Q3 2024, up from $27,319,000 in Q3 2023[174]. - The net loss for Q3 2024 was $12,753,000, an improvement from a net loss of $16,055,000 in Q3 2023[174]. - The company expects a favorable impact on gross margin over the remainder of 2024 due to recent price increases[162]. - Operating expenses are anticipated to decrease in the near term due to the 2024 Restructuring Plan[163]. - The company is focused on cost-saving initiatives and margin growth, including a restructuring plan approved in November 2024 to improve cost structure and operating efficiency[135]. Research and Development Investments - The company continues to invest in research and development to maintain product quality and drive revenue growth through new product launches[141]. - Research and development expenses were $10,734,000 in Q3 2024, compared to $9,639,000 in Q3 2023[174]. - Investment in research and development is expected to increase in absolute dollars as the company focuses on enhancing its platform and cloud services[165]. - Research and development expenses rose by $1.1 million, or 11%, for the three months ended September 30, 2024, mainly due to increased personnel-related expenses[184]. Cash Flow and Financing - Cash provided by operating activities for the nine months ended September 30, 2024, was $10.3 million, compared to cash used of $10.6 million in the same period of 2023[218][219]. - The company had cash and cash equivalents of $3.0 million and short-term investments of $17.9 million as of September 30, 2024[232]. - The outstanding balance under the revolving credit agreement was $4.7 million, with $15.3 million available for borrowing[208]. - Cash used in investing activities for the nine months ended September 30, 2024, was $11.9 million, primarily due to the purchase of short-term maturity investments of $32.5 million[220]. - The company may seek additional equity or debt financing in the future, but there is no guarantee that it will be able to raise such financing on acceptable terms[204]. Risk Management and Accounting - The company has minimal foreign currency risk as most sales and operating expenses are denominated in U.S. dollars[233]. - Future international sales increases may expose the company to foreign currency exchange rate fluctuations[233]. - The company has not used derivative financial instruments to manage interest rate risk exposure[232]. - There have been no material changes to critical accounting estimates compared to the previous Annual Report[227]. - The company does not believe that a 100 basis point change in interest rates would materially affect its operating results or financial position[232].