Backblaze(US:BLZE)2022-05-10 20:28Customer Base and Market Potential - As of December 31, 2021, Backblaze had approximately 500,000 customers using its Storage Cloud platform across more than 175 countries, managing around 2 exabytes of data[131] - For the year ended December 31, 2021, 28% of Backblaze's revenue originated outside the United States, indicating significant international market potential[142] - Backblaze's strategy includes international expansion to tap into new markets, with a focus on key geographies that offer significant return on investment opportunities[142] Revenue and Growth Metrics - The annual recurring revenue (ARR) for Backblaze's B2 Cloud Storage was $28.4 million as of March 31, 2022, up from $19.3 million a year earlier, reflecting a growth of 47.5%[145] - The net revenue retention rate (NRR) for B2 Cloud Storage was 129% as of March 31, 2022, slightly down from 133% a year earlier, indicating strong customer retention and expansion[145] - Revenue for the three months ended March 31, 2022, was $19.49 million, an increase of $4.18 million or 27% compared to $15.31 million for the same period in 2021[182] - B2 Cloud Storage revenue increased by $2.27 million or 48% to $6.99 million, while Computer Backup revenue rose by $1.92 million or 18% to $12.31 million[182] Financial Performance and Expenses - Cost of revenue for the three months ended March 31, 2022, was $9.68 million, an increase of $1.85 million or 24% compared to $7.83 million in the same period in 2021[183] - Gross margin improved to 50% for the three months ended March 31, 2022, compared to 49% for the same period in 2021[185] - Research and development expenses increased by $3.67 million or 86% to $7.94 million, primarily due to increased headcount and stock-based compensation[187] - Sales and marketing expenses rose by $4.25 million or 113% to $8.03 million, driven by increased personnel-related expenses and advertising costs[188] - General and administrative expenses increased by $3.28 million or 145% to $5.53 million, mainly due to higher personnel costs and professional fees[189] - Interest expense for the three months ended March 31, 2022, was $0.95 million, an increase of $0.08 million or 9% compared to $0.87 million in the same period in 2021[190] Net Loss and Operational Performance - The net loss for the three months ended March 31, 2022, was $12.53 million, compared to a net loss of $3.69 million for the same period in 2021[178] - Adjusted EBITDA for the three months ended March 31, 2022, was $(2.99) million, compared to $2.1 million for the same period in 2021, indicating a decline in operational performance[200] - Net loss for the three months ended March 31, 2022, was $12.5 million, compared to a net loss of $3.7 million for the same period in 2021[200] Cash Flow and Financial Position - Cash used in operating activities for the three months ended March 31, 2022, was $0.9 million, a decrease from cash provided of $2.5 million in the same period of 2021[211] - Cash used in investing activities was $81.5 million for the three months ended March 31, 2022, primarily due to the purchase of short-term maturity investments of $79.8 million[213] - Cash used in financing activities for the three months ended March 31, 2022, was $3.2 million, mainly due to principal payments on finance lease agreements[215] - As of March 31, 2022, the company had cash, cash equivalents, and short-term investments totaling $99.1 million[202] - The company completed its IPO in November 2021, resulting in net proceeds of approximately $103.0 million after costs[202] - The company believes existing cash and cash equivalents will be sufficient to support operations for at least the next 12 months[203] - As of March 31, 2022, the company had cash and cash equivalents of $19.3 million and short-term investments of $79.8 million[229] Risk Factors and Future Considerations - The company does not believe that a 100 basis point change in interest rates would materially affect its operating results or financial condition[229] - The credit facility with City National Bank is at a variable interest rate, initially entered into in October 2021[230] - The company currently has minimal foreign currency exchange rate risk as sales and most operating expenses are denominated in U.S. dollars[231] - Future international sales growth may expose the company to foreign currency exchange risks, which could adversely affect operating results[231] - The company may consider entering into derivatives or financial instruments to hedge foreign currency exchange risk in the future[231] Strategic Initiatives - Backblaze plans to continue investing in sales and marketing to grow its customer base and enhance its self-serve acquisition model, which has been effective in attracting new customers[135] - The company aims to expand its ecosystem of partners to drive new customer acquisition and enhance use cases for its Storage Cloud solutions[137] - Backblaze is committed to ongoing platform investment and new product launches to maintain product quality and drive revenue growth[140] - The company expects to continue investing in infrastructure and personnel to support business growth, which may affect gross margin due to fluctuations in revenue timing[166] - The company has experienced some impact from the COVID-19 pandemic, but it believes its operations and financial condition have not been materially adversely affected to date[156]