Backblaze(US:BLZE)2025-02-26 03:32Financial Data and Key Metrics Changes - Revenue grew 18% year-over-year to $33.8 million in Q4 2024, slightly ahead of guidance [35] - Adjusted EBITDA margin improved to 14%, more than doubling from the previous year [39] - Net revenue retention (NRR) increased to 116% compared to 109% last year, benefiting from a price increase [38] - Average revenue per user (ARPU) rose to $268, an 18% increase year-over-year [39] Business Line Data and Key Metrics Changes - B2 Cloud Storage revenue reached $17.1 million, representing a 22% year-over-year growth, driven by customer expansion and new acquisitions [35] - Computer Backup revenue was $16.7 million, reflecting a 13% year-over-year growth primarily due to a price increase [35] - B2 annual recurring revenue (ARR) increased by $5 million sequentially, marking the largest organic sequential increase since the IPO [37] Market Data and Key Metrics Changes - The company has seen a nearly tenfold increase in data stored by AI customers, with three out of the top ten customers now being AI companies [30] - The average deal size from channel leads nearly doubled year-over-year, indicating strong growth in partnerships [18] Company Strategy and Development Direction - The company aims to become a "Rule of 40" company, focusing on both growth and profitability [11] - A go-to-market transformation is underway, emphasizing B2 growth and aiming for adjusted free cash flow positivity by Q4 2025 [12][45] - The company is expanding its partnerships and sales strategies, including co-build, co-market, and co-sell initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acceleration in B2 growth, expecting it to exceed 30% by the end of 2025 [46] - The company anticipates adjusted EBITDA margins to exceed 20% by Q4 2025, with a focus on operational efficiency [47] - Management highlighted the importance of flexibility and data mobility in the evolving AI landscape, positioning Backblaze as a key player [28] Other Important Information - The company completed a secondary offering for $37 million in net proceeds to strengthen its balance sheet [33] - Cash flow from operations improved significantly, showing a $20 million improvement year-over-year [44] Q&A Session Summary Question: Key metrics for partners in 2025 - Management monitors pipeline and sales productivity for channel partners, while alliance metrics focus on co-build, co-market, and co-sell initiatives [51][52] Question: Long-term growth outlook for B2 and Computer Backup - B2 is expected to grow over 30% year-over-year by the end of 2025, while Computer Backup may see flattish growth due to consumer decline [55][56] Question: Progress of gross margins - Management expects adjusted gross margins to remain stable at 78% [59] Question: AI use cases and their impact on growth - AI customers utilize Backblaze for data collection, processing, model training, and inference, indicating a direct correlation between their growth and Backblaze's growth [66][70] Question: Competitive landscape update - The competitive landscape remains similar, with major players like Amazon, Google, and Microsoft still present, but new partnerships have emerged [118][120]