Summary
Backblaze started FY2024 Q2 with $31.3 million of revenue, up 27.2% from the prior-year quarter. Gross profit rose 43.0% to $17.2 million, and gross margin expanded to 55.1%, up 6.1 percentage points. The company still posted an operating loss of $9.8 million, but that was narrower than the prior-year quarter. Operating margin was -31.4%, up 25.2 percentage points. Net loss narrowed to $10.3 million, and diluted EPS loss narrowed to $0.25 per share. On a non-GAAP basis, adjusted gross profit was $24.5 million, or 78% of revenue, compared with $18.4 million, or 75% of revenue, in the prior-year quarter. Adjusted EBITDA was $2.7 million, or 9% of revenue, compared with negative $1.8 million, or negative 7% of revenue, in the prior-year quarter. Non-GAAP net loss was $4.8 million, compared with $8.3 million in the prior-year quarter.
The quarter showed steady operating momentum. Annual recurring revenue reached $126.3 million, up 30% year over year. B2 Cloud Storage ARR was $62.8 million, up 44%, and Computer Backup ARR was $63.5 million, up 18%. Net revenue retention was 114%, compared with 110% in the prior-year quarter. B2 Cloud Storage net revenue retention was 126%, and Computer Backup net revenue retention was 105%. Gross customer retention was 90%, compared with 91% a year earlier. Customers contributing more than $50,000 in ARR grew more than 55% year over year. Deferred revenue rose 31.9% to $34.0 million, and remaining performance obligations stood at $37.7 million. Capital expenditures were $0.3 million, down 84.0% from the prior-year quarter. Operating cash flow was $2.2 million, up from a negative prior-year quarter. The company launched Backblaze B2 Live Read, added Internet2 peering, was selected for the Russell 2000 Index, and named a new Chief Revenue Officer and Chief Financial Officer.
Guidance points to continued growth. For the third quarter of 2024, management guided revenue between $32.4 million and $32.8 million, an adjusted EBITDA margin between 9% and 11%, and basic shares outstanding of 43.0 million to 43.5 million. For full-year 2024, management guided revenue between $126.5 million and $128.5 million and an adjusted EBITDA margin between 9% and 11%. The company said its existing cash, cash equivalents, and short-term investments, together with cash from operations and its revolving debt facility, should support working capital and capital expenditure requirements for at least the next 12 months. The revolving credit agreement matures in December 2025, and management may need additional equity or debt financing. The outlook depends on retaining customers, expanding use cases, and managing infrastructure spending.
The results highlight a business that is growing quickly and improving margins, but still unprofitable on a GAAP basis. The revenue increase came from a price increase that began in October 2023, higher storage consumption, and B2 Reserve sales. Retention remains high, though gross customer retention slipped slightly. Risks include competition from larger cloud providers, service disruptions, cyberattacks, the ability to attract and retain larger customers, material weaknesses in internal controls, hiring and retaining key employees, supply chain disruption, litigation, and broader economic and geopolitical conditions. The company also faces execution risk around new products and moving up-market. Adjusted EBITDA turned positive, and operating cash flow improved, which gives management more room to invest while it works toward sustained profitability.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $31.3M | $30.0M | +4.4% | $24.6M | +27.2% |
| Gross profit | $17.2M | $15.8M | +9.0% | $12.1M | +43.0% |
| Gross margin | 55.1% | 52.8% | +2.3 pp | 49.0% | +6.1 pp |
| Research & development | $9.6M | $9.7M | -1.6% | $9.9M | -3.4% |
| Sales & marketing | $11.0M | $10.0M | +9.7% | $9.9M | +11.3% |
| General & administrative | $6.5M | $6.6M | -1.4% | $6.2M | +4.8% |
| Total operating expenses | $27.0M | $26.3M | +2.7% | $26.0M | +4.1% |
| Operating income (loss) | -$9.8M | -$10.5M | +6.7% | -$13.9M | +29.5% |
| Operating margin | -31.4% | -35.1% | +3.7 pp | -56.6% | +25.2 pp |
| Net income (loss) | -$10.3M | -$11.1M | +6.4% | -$14.3M | +27.8% |
| Net margin | -33.1% | -36.9% | +3.8 pp | -58.3% | +25.2 pp |
| Diluted EPS | -$0.25 | -$0.27 | +$0.02 | -$0.41 | +$0.16 |
| Customers | 500,000 | 500,000 | ±0.0% | 500,000 | ±0.0% |
| Net retention rate | 114.0% | 112.0% | +2.0 pp | 110.0% | +4.0 pp |
Risks
The company disclosed material weaknesses in internal controls over financial reporting. Failure to achieve and maintain effective internal controls could harm the business and negatively impact the value of Class A common stock.
The cloud storage market is intensely competitive, with larger competitors such as AWS, Google Cloud Platform, Microsoft Azure, EMC/Dell and NetApp. Competitors may offer lower prices or bundle services, creating pricing pressure and potential customer churn.
Revenue and gross margin gains for the three months ended June 30, 2024 were driven in part by price increases for Computer Backup and B2 Cloud Storage that took effect in October 2023. The filing notes some incremental decline in the rate customers increase storage and in new customer counts after the increase, and future price increases or competitor price cuts could cause customers not to renew, reduce data stored, or lower new customer additions.
The company depends on a limited number of third-party data centers and hard drive providers. A prior third-party data center bankruptcy in 2022 was resolved without disruption, but future bankruptcies or supply disruptions could make customer data unavailable or lost and take significant time to resume services.
Backblaze depends on B2 Cloud Storage and Computer Backup offerings for substantially all revenue. Any general or industry decline in demand for cloud storage solutions could reduce revenue without meaningful offset from other market sectors.
The company has faced cyber incidents and vulnerabilities, including the Log4j zero-day in December 2021, DDoS attacks, false account creation, and a 2021 marketing campaign misconfiguration that may have shared certain file metadata with Facebook for less than 2% of customers. It notes generative AI could increase the likelihood of cybersecurity incidents.
Backblaze is substantially dependent on mid-market organizations, which may have limited budgets and be more vulnerable to economic downturns, inflation, and recession concerns. Weak economic conditions could reduce cloud storage spending, lengthen sales cycles, and increase churn.
Backblaze must manage data center capacity and costs. If it underestimates capacity needs, it may not be able to service customers; if it overestimates, capital expenditures and operating margins could be materially hurt. MD&A states it plans to purchase additional infrastructure equipment over the remainder of 2024.
The company faces intense competition for software developers, sales and operations personnel, especially in the San Francisco Bay Area. It implemented a new sales commission structure in 2024, and if the program does not effectively incentivize the sales team, it may fail to retain or hire qualified sales personnel.
For the six months ended June 30, 2024, approximately 27% of revenue came from customers outside the United States. International expansion increases compliance burdens under privacy laws such as GDPR, CCPA/CPRA and HIPAA, and exposes the company to sanctions, data sovereignty and geopolitical risks.
The revolving credit agreement with City National Bank matures in December 2025, had $4.7 million outstanding and $15.3 million available as of June 30, 2024, and its maximum borrowing was reduced from $30 million to $20 million in December 2023. Banking industry disruption could reduce access to capital or increase costs.
Backblaze is targeting larger businesses and organizations, which may have longer sales cycles, less predictability, higher volatility in stored data, increased pricing leverage, and greater demands for customization and support. The loss of any larger customer would have a greater impact on financial results than the loss of a smaller customer.
SaaS KPIs
All quarters →Adjusted Gross Margin
Adjusted EBITDA Margin
B2 Cloud Storage Gross Customer Retention Rate
Computer Backup Gross Customer Retention Rate
Adjusted EBITDA
Annual Recurring Revenue (ARR)
B2 Cloud Storage ARR
Computer Backup ARR
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q2 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.