Summary
Backblaze closed the second quarter of fiscal 2025 with revenue of $36.3 million, up 16.0% from the prior-year quarter. B2 Cloud Storage revenue grew 29% and Computer Backup revenue grew 4%. Gross profit climbed to $23.0 million, up 33.7%, while gross margin expanded to 63.5% from 55.1%. The GAAP net loss narrowed to $7.1 million from $10.3 million, and diluted loss per share narrowed to -$0.13 from -$0.25. Operating loss narrowed to $6.7 million from $9.8 million, and operating margin improved to -18.5% from -31.4%. Revenue for the six months ended June 30, 2025 was $70.9 million, up 15.8%.
The margin gain leans on cost discipline and an accounting change. Management extended the useful life of its infrastructure equipment effective April 1, 2025, which reduced depreciation inside cost of revenue. Research and development spending rose 24% as the company funded storage cloud features and new offerings. Sales and marketing fell 7% on lower headcount and tighter customer targeting. General and administrative costs rose 19%, helped along by stock-based compensation and foreign exchange expense on leases denominated in foreign currencies. Adjusted EBITDA was $6.6 million, or 18% of revenue, against $2.7 million, or 9% of revenue, a year earlier. Non-GAAP net income was $0.8 million, compared with a non-GAAP net loss of $4.8 million in the prior-year quarter.
Cash generation improved. Operating cash flow was $3.5 million for the quarter, up 59.2%, and $8.5 million for the six months ended June 30, 2025, up 50.4%. Adjusted free cash flow for the six months was negative $6.0 million, better than negative $11.6 million a year earlier. Capital expenditures were $0.8 million in the quarter, up 189.3%. Cash and marketable securities totaled $50.5 million at June 30, 2025. Deferred revenue was $35.5 million, up 4.3%, and remaining performance obligations were $44.9 million, up 19.1%.
Annual recurring revenue was $145.9 million, up 16%. B2 ARR reached $80.7 million, up 29%, and Computer Backup ARR was $65.2 million, up 3%. Net revenue retention slipped to 109% from 114%, and B2 NRR fell to 112% from 126%, which management tied to the lapped October 2023 price increase. Computer Backup NRR edged to 106% from 105%. Gross customer retention held at 90%. Customers contributing more than $50,000 in ARR grew 53% year over year, and three of the top ten customers are AI companies. Backblaze signed its first B2 Overdrive customer in early Q3, a six-figure deal, and scaled one AI customer past several million dollars in ARR during the quarter.
Guidance points to steady growth. For the third quarter of 2025, the company expects revenue of $36.7 million to $37.1 million and an adjusted EBITDA margin of 17% to 19%. For the full fiscal year 2025, revenue guidance was raised to $145.0 million to $147.0 million from $144.0 million to $146.0 million, with an adjusted EBITDA margin of 17% to 19%. B2 growth is guided at 28% to 30% for the third quarter, raised from 25% to 28%, and 30% or more for the fourth quarter. Backblaze also secured a $20 million revolving credit facility with Citizens Bank, with no borrowings outstanding at June 30, 2025, and authorized a share repurchase program of up to $10 million through August 1, 2026, funded by stock option exercises and ESPP purchases.
Risks are familiar but real. Competition from larger cloud providers, cyberattacks, supply chain disruption, tariffs, and the work of remediating material weaknesses in internal controls all sit in the company's risk disclosures. The B2 NRR decline and the 3% growth in Computer Backup ARR show expansion inside the base is cooling even as AI workloads scale. Capital expenditures should rise as data center capacity grows, and a June 2025 lease amendment adds a data center expansion that starts in the second quarter of 2026 under a term of roughly seven years.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2025 | Q1 FY2025 | QoQ | Q2 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $36.3M | $34.6M | +4.9% | $31.3M | +16.0% |
| Gross profit | $23.0M | $19.3M | +19.7% | $17.2M | +33.7% |
| Gross margin | 63.5% | 55.6% | +7.8 pp | 55.1% | +8.4 pp |
| Research & development | $11.9M | $11.9M | +0.2% | $9.6M | +23.9% |
| Sales & marketing | $10.2M | $9.3M | +9.8% | $11.0M | -7.5% |
| General & administrative | $7.7M | $7.1M | +9.2% | $6.5M | +19.4% |
| Total operating expenses | $29.8M | $28.2M | +5.6% | $27.0M | +10.1% |
| Operating income (loss) | -$6.7M | -$8.9M | +24.7% | -$9.8M | +31.5% |
| Operating margin | -18.5% | -25.8% | +7.3 pp | -31.4% | +12.8 pp |
| Net income (loss) | -$7.1M | -$9.3M | +23.9% | -$10.3M | +31.4% |
| Net margin | -19.6% | -26.9% | +7.4 pp | -33.1% | +13.5 pp |
| Diluted EPS | -$0.13 | -$0.17 | +$0.04 | -$0.25 | +$0.12 |
| Customers | 500,000 | 500,000 | ±0.0% | 500,000 | ±0.0% |
| Net retention rate | 109.0% | 113.0% | -4.0 pp | 114.0% | -5.0 pp |
Risks
The cloud storage market is intensely competitive, with larger rivals including Amazon Web Services, Google Cloud Platform, Microsoft Azure, EMC/Dell, and NetApp. Competitors may bundle services or cut prices, and competition may intensify as Backblaze moves up-market and targets larger customers.
MD&A reports total net revenue retention was 109% as of June 30, 2025 and 114% as of June 30, 2024, and B2 Cloud Storage net revenue retention was 112% and 126%, respectively. The filing states the decrease in B2 NRR is largely driven by the lapped impact of the October 2023 price increase and warns future price increases could cause churn or reduce data stored.
The filing highlights risks from overestimating or underestimating data center capacity and from multi-year leases and infrastructure investments incurred ahead of revenue. MD&A states capital expenditures are expected to increase in coming quarters to support new offerings and up-market expansion.
B2 Cloud Storage and Computer Backup account for substantially all total revenue, so any decline in demand for cloud storage or backup has limited offset from other offerings. Computer Backup ARR grew 3% year over year as of June 30, 2025, while B2 Cloud Storage ARR grew 29%, concentrating growth in one offering.
Backblaze launched B2 Overdrive in April 2025 for AI/ML training, high-performance computing, analytics, and media workloads, and MD&A notes an increasing number of artificial intelligence technology companies using the platform. The AI market is described as evolving rapidly, with customer volatility and substantial infrastructure investment ahead of corresponding revenue.
The filing states the business is substantially dependent on mid-market organizations, which can be more vulnerable to economic downturns, have limited budgets, and may be harder and more expensive to acquire and retain. It also notes moving up-market may bring longer sales cycles and increased demands from larger customers.
The risk factors cite rapid and significant changes in tariffs and trade restrictions, including technology-related goods, that could raise hardware and service costs, create supply delays, and reduce customer demand. Backblaze sources some products or components from foreign countries and relies on global suppliers and data center partners.
For the three months ended June 30, 2025, approximately 29% of revenue came from outside the United States, and for the six months it was 28%. The company opened a Toronto data center region and Canadian subsidiary in January 2025, increasing compliance, tax, immigration, and operational complexity.
The filing emphasizes data privacy laws including GDPR, CCPA, CPRA, and HIPAA, with potential fines such as up to 20 million euros or up to 4% of total worldwide annual group turnover under GDPR. Noncompliance could lead to enforcement, litigation, reputational damage, and loss of customers.
In June 2025 Backblaze entered a $20.0 million senior secured revolving credit facility with quarterly covenants including minimum liquidity of $10.0 million, a minimum consolidated EBITDA threshold, and a maximum total leverage ratio of 2.75 to 1.00. Failure to comply could materially affect financial condition and liquidity.
SaaS KPIs
All quarters →Adjusted Gross Margin
Adjusted EBITDA Margin
B2 Cloud Storage Gross Customer Retention Rate
Computer Backup Gross Customer Retention Rate
Gross Customer Retention Rate
Adjusted EBITDA
Annual Recurring Revenue (ARR)
Net Revenue Retention (NRR)
Total Customers
B2 Cloud Storage Net Revenue Retention (NRR)
Computer Backup Net Revenue Retention (NRR)
B2 Cloud Storage ARR
Computer Backup ARR
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q2 FY2025 (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.