Backblaze, Inc., the cloud storage innovator delivering a modern alternative to traditional cloud providers, today announced results for its third quarter ended September 30, 2024.

"I'm excited that we have kicked off a go-to-market transformation and continue to build our upmarket momentum with two multi-year deals each totaling approximately $1 million," said Gleb Budman, CEO of Backblaze. "We are also aggressively executing cost efficiencies throughout the organization to accelerate being adjusted free cash flow positive by Q4 2025."

"I'm proud to share that our Adjusted EBITDA Margin for the quarter was 12%, which improved dramatically from (3%) last year, representing a 1,500 basis point improvement," said Marc Suidan, CFO of Backblaze. "Our focus on growth and profitability will position us towards being a Rule of 40 company over time."

Third Quarter 2024 Financial Highlights:

• Revenue of $32.6 million, an increase of 29% year-over-year (YoY).
  • B2 Cloud Storage revenue was $16.2 million, an increase of 39% YoY.
  • Computer Backup revenue was $16.4 million, an increase of 20% YoY.
• Gross profit of $17.8 million, or 55% of revenue, compared to $11.8 million or 46% of revenue, in Q3 2023.
• Adjusted gross profit of $25.5 million, or 78% of revenue, compared to $18.7 million or 74% of revenue in Q3 2023.
• Net loss was $12.8 million compared to a net loss of $16.1 million in Q3 2023.
• Net loss per share was $0.29 compared to a net loss per share of $0.44 in Q3 2023.
• Adjusted EBITDA was $3.7 million, or 12% of revenue, compared to $(0.8) million or (3%) of revenue in Q3 2023.
• Non-GAAP net loss of $4.3 million compared to non-GAAP net loss of $7.8 million in Q3 2023.
• Non-GAAP net loss per share of $0.10 compared to a non-GAAP net loss per share of $0.21 in Q3 2023.
• Net cash from operating activities during the nine months ended September 30, 2024 was $10.3 million, compared to cash used in operating activities of $10.6 million in the nine months ended September 30, 2023.
• Adjusted free cash flow during the nine months ended September 30, 2024 was $(15.6) million, compared to $(38.0) million in the nine months ended September 30, 2023.
• Cash, short-term investments and restricted cash, non-current totaled $25.6 million as of September 30, 2024.

Third Quarter 2024 Operational Highlights:

• Annual recurring revenue (ARR) was $130.5 million, an increase of 29% YoY.
  • B2 Cloud Storage ARR was $64.9 million, an increase of 39% YoY.
  • Computer Backup ARR was $65.6 million, an increase of 21% YoY.
• Net revenue retention (NRR) rate was 118% compared to 108% in Q3 2023.
  • B2 Cloud Storage NRR was 128% compared to 120% in Q3 2023.
  • Computer Backup NRR was 109% compared to 100% in Q3 2023.
• Gross customer retention rate was 90% in Q3 2024 compared to 91% in Q3 2023.
  • B2 Cloud Storage gross customer retention rate was 89% in Q3 2024 compared to 90% in Q3 2023.
  • Computer Backup gross customer retention rate was 90% in Q3 2024 compared to 91% in Q3 2023.

Recent Business Highlights:

• Launched Go-to-Market Transformation and Cost Savings Initiatives: Revamping sales and marketing and hired new key senior sales leadership to accelerate growth. Launched Zero-Based-Budgeting program to realize cost savings and expect to be adjusted free cash flow positive by Q4 2025 with the goal of heading toward being a ‘Rule of 40' growth company.
• Unveiled Canadian Data Center Region Expansion: New data region expected to open in the first quarter of 2025 to expand Backblaze opportunity to customers wanting their data in Canada to meet their data sovereignty and compliance requirements.
• Joined Forces with Opti9, the Largest Veeam MSP in Canada: Opti9 helps customers with managed cloud services that include security, backup, and disaster recovery, and Backblaze is positioned to support Opti9's customers in both Canada and globally.
• Won 3 New AI Customers Totaling $500k in Annual Revenue Run Rate: Large AI customer noted that "Backblaze is an amazing solution for AI training data. We looked at a number of options and Backblaze is seriously the best."
• Doubled the Data Stored by AI Customers: Backblaze continues to lean into the long-term tailwind created by GenAI by selling the underlying storage platform to support the industry.
• Signed Two Approximately $1 Million Deals: Total contract value multi-year deals demonstrate momentum moving up-market with larger enterprise-grade customers.

Financial Outlook:

Based on information available as of the date of this press release,

For the fourth quarter of 2024 we expect:

• Revenue between $33.5 million to $33.9 million
• Adjusted EBITDA margin between 12% to 14%
• Basic weighted average shares outstanding of 44.9 million to 45.4 million shares

For full-year 2024 we expect:

• Revenue between $127.0 million to $128.0 million
• Adjusted EBITDA margin between 9% to 11%