Backblaze(US:BLZE)2024-03-30 01:35Customer Base and Market Growth - As of December 31, 2023, the company has attracted over 500,000 customers across more than 175 countries, utilizing over 3 billion gigabytes of data storage under management [188]. - As of December 31, 2023, Backblaze had over 500,000 customers in over 175 countries, including approximately 432,000 customers using Computer Backup services and about 98,000 customers using B2 Cloud Storage [257]. - The worldwide market for Public Cloud IaaS Storage is expected to grow to $91.0 billion by 2025, while the DPaaS market is projected to reach $18.4 billion by the same year [228]. - The mid-market opportunity for Public Cloud IaaS Storage is estimated to grow to $54.6 billion by 2025, with mid-market businesses expected to represent approximately 60% of worldwide IaaS spending [228]. Revenue and Financial Performance - Backblaze B2 Cloud Storage revenue grew by 40% during the year ended December 31, 2023, while Computer Backup cloud service revenue grew by 7% during the same period [250]. - Approximately 76% of total revenue in 2023 came from self-serve customers, highlighting the effectiveness of the self-serve model [249]. - The Company derives substantially all of its revenue from its Backblaze Storage Cloud platform, which includes B2 Cloud Storage and Computer Backup offerings [612]. - The Company recognizes revenue net of expected customer cancellations, returns, and discounts, which involves inherent uncertainties [615]. - Revenue from subscription-based arrangements is recognized on a straight-line basis over the contractual term, while fees from consumption-based arrangements are recognized as services are delivered [644]. - Substantially all of the Company's revenue is reported on a gross basis, as the Company is the principal in arrangements involving third parties [645]. Product and Service Development - The company has implemented price increases and product updates for its Computer Backup and B2 Cloud Storage products, effective October 2023, with no material impact on customer retention [202]. - The company emphasizes continuous product release cycles, typically releasing updates on a weekly basis based on customer collaboration [261]. - Backblaze's cloud services are positioned to support a wide range of use cases, including AI and machine learning workflows, media management, and ransomware protection [256]. - The company has invested significantly in research and development, resulting in innovations such as shard stash, which improves small file uploads by up to 30% faster than competitors [292]. Sales and Marketing Strategy - The company employs a land-and-expand model that drives additional revenue from existing customers as their data storage needs grow [225]. - The company’s sales and marketing strategy includes a self-service model complemented by a growing sales team focused on larger customers [234]. - The company has established a Developer Evangelism function to support developers and applications storage use cases, enhancing its sales and marketing capabilities [234]. - The company has launched the "Powered By Backblaze" program to support technology partners and managed service providers, enhancing integration and customer offerings [252]. - Backblaze's website modernization in 2023 aimed to improve user experience and increase traffic through search engine optimization, contributing to lead generation [259]. Infrastructure and Operations - The company operates a global physical infrastructure of more than 300,000 hard drives and one terabit per second of network capacity across multiple data centers [255]. - The company has a globally distributed storage platform that offers customers multi-region geographic choice for their data, currently between East and West Coast regions in the United States and Europe [286]. - The company’s software infrastructure is built on commodity hardware, aimed at reducing the complexity and frustration of data storage for customers [188]. Financial Health and Risks - The Company reported a net loss of $59.7 million for the year ended December 31, 2022, compared to a net loss of $51.4 million for the year ended December 31, 2021 [600]. - The Company believes its existing cash, cash equivalents, and short-term investments will be sufficient to support its working capital and capital expenditure requirements for at least the next 12 months [610]. - The aggregate market value of Backblaze's Class A common stock held by non-affiliates was approximately $98.2 million as of June 30, 2023 [239]. - Approximately 92% of the company's revenue was generated from customers paying via credit card in 2023, indicating a low risk of non-payment [588]. - The company maintains a cash disbursement concentration of 21% with two vendors, down from 25% in 2022 [583]. - The company’s accounts payable concentration is 30% with two vendors, an increase from 26% in 2022 [583]. Accounting and Compliance - The Company adopted the CECL model on January 1, 2023, leading to an estimated allowance for expected credit losses based on future collection probabilities [630]. - The Company measures financial assets and liabilities at fair value at each reporting date, with fair value measurements reported under a three-level valuation hierarchy [628]. - The Company evaluates long-lived assets for impairment whenever events indicate that the carrying amount may not be recoverable, measuring recoverability against estimated future net cash flows [635]. - The Company has elected the short-term lease practical expedient for all asset classes, allowing for simplified accounting for leases with terms of 12 months or less [637]. - The FASB issued ASU 2023-09 in December 2023, requiring enhanced income tax disclosures, effective for fiscal years beginning after December 15, 2024 [639]. Employee and Workforce - As of December 31, 2023, the company had 381 full-time employees, reflecting a relatively stable workforce [296]. - The total balance of stock-based compensation was $27.1 million, an increase from $17.9 million as of December 31, 2022 [600].