Backblaze(BLZE) - 2025 Q2 - Quarterly Results

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