Summary
Backblaze closed FY2026 Q2 with revenue of $42.7 million, up 17.7% year over year. Gross profit was $26.8 million, up 16.5%. Gross margin was 62.8%, down 0.7 percentage points from the prior-year quarter. The company reported an operating loss of $4.2 million, an improvement of 33.1% as the loss narrowed. Net loss was $5.1 million, narrowing 28.3%. Diluted EPS was -$0.08, up 38.5%. Operating margin was -9.8%, up 7.4 percentage points. On a non-GAAP basis, Adjusted EBITDA was $12.8 million, or 30% of revenue, compared with $6.6 million, or 18% of revenue, in the prior-year quarter. Non-GAAP net income was $5.0 million compared with $0.8 million. The gap between GAAP and non-GAAP results remains wide because of stock-based compensation and other adjustments.
Operational momentum centered on B2 Cloud Storage. Total annual recurring revenue was $177.3 million, up 21%. B2 ARR was $113.3 million, up 39%, and Computer Backup ARR was $64.0 million, relatively flat. Net revenue retention was 103%, down from 106%. B2 NRR was 113% compared with 114%, and Computer Backup NRR was 94% compared with 99%. Gross customer retention was 91% compared with 90%. Backblaze added large accounts: ARR from customers generating $50,000 or more grew 67% year over year, and the number of those customers rose 57%. The company signed a 5+ year, $335 million strategic agreement with CoreWeave, which includes warrants valued at approximately $22 million. RPO reached $396 million, up 782.0% from the prior-year quarter, driven by CoreWeave and demand from AI-native companies. Backblaze also won its largest B2 Overdrive deal to date, a seven-figure ARR contract with a frontier AI model developer.
Guidance points to continued growth. For the third quarter of 2026, Backblaze expects revenue between $44.4 million and $44.8 million. The company guides adjusted EBITDA margin to 27% to 29% for the third quarter and basic weighted average shares outstanding of 62.3 million to 62.5 million. For full-year 2026, the revenue outlook was raised to $172.0 million to $174.0 million from $161.5 million to $163.5 million. Full-year adjusted EBITDA margin guidance was raised to 27% to 29% from 23% to 25%. The investor presentation also points to a B2 revenue directional growth outlook of 40% or more in 2027, tied to signed commitments. That outlook depends on deployment schedules and consumption from the CoreWeave agreement.
Cash generation improved. Operating cash flow for the six months ended June 30, 2026 was $13.8 million, up 62.4% from the same period in 2025. Capital expenditures for the same six-month period were $1.45 million, up 12.9%. Adjusted free cash flow for the six months was $1.4 million compared with negative $6.0 million in the prior-year period. Deferred revenue was $35.4 million, flat with a decline of 0.4% year over year. Risks remain concentrated around the CoreWeave relationship. The agreement is subject to customer concentration, ramp timing, consumption levels, and the company's ability to scale operations. AI customer revenue is early-stage, and broad adoption is uncertain. Backblaze also faces competition from larger cloud providers, execution risk in its go-to-market transformation, supply chain and data center cost pressure, and the need to manage restructuring and operating efficiency. The growth outlook relies on converting signed commitments into revenue while keeping cost discipline.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2026 | Q1 FY2026 | QoQ | Q2 FY2025 | YoY |
|---|---|---|---|---|---|
| Revenue | $42.7M | $38.7M | +10.5% | $36.3M | +17.7% |
| Gross profit | $26.8M | $23.5M | +14.0% | $23.0M | +16.5% |
| Gross margin | 62.8% | 60.9% | +2.0 pp | 63.5% | -0.7 pp |
| Research & development | $11.0M | $11.3M | -2.5% | $11.9M | -7.4% |
| Sales & marketing | $10.2M | $10.3M | -0.7% | $10.2M | +0.4% |
| General & administrative | $9.8M | $7.3M | +33.9% | $7.7M | +27.0% |
| Total operating expenses | $31.0M | $28.9M | +7.4% | $29.8M | +4.2% |
| Operating income (loss) | -$4.2M | -$5.4M | +22.0% | -$6.7M | +37.9% |
| Operating margin | -9.8% | -13.8% | +4.1 pp | -18.5% | +8.7 pp |
| Net income (loss) | -$5.1M | -$6.1M | +17.2% | -$7.1M | +28.3% |
| Net margin | -11.9% | -15.9% | +4.0 pp | -19.6% | +7.6 pp |
| Diluted EPS | -$0.08 | -$0.10 | +$0.02 | -$0.13 | +$0.05 |
| Customers | 500,000 | 500,000 | ±0.0% | 500,000 | ±0.0% |
| Net retention rate | 113.0% | 110.0% | +3.0 pp | 109.0% | +4.0 pp |
Risks
In June 2026 the company entered a multi-year Master Strategic Agreement with CoreWeave, and MD&A states CoreWeave is anticipated to become one of its largest customers while results become more dependent on a limited number of customers. The two initial order forms have five- and seven-year terms and an aggregate estimated total contract value of approximately $335.1 million, less approximately $21.7 million attributable to warrants; reported remaining performance obligations were $396.0 million in FY2026 Q2, up 782.0% versus FY2025 Q2.
The filing states competition for data center space, infrastructure and equipment has intensified significantly due to AI and compute-intensive workloads, with limited capacity in key markets and recent significant inflation in data center equipment pricing. MD&A notes continued investment in data center footprint and infrastructure; gross margin was 62.8% in FY2026 Q2, down 0.7 pp versus FY2025 Q2.
An updated risk factor says AI technologies, including models capable of autonomously identifying software vulnerabilities at scale, may enable threat actors to discover and exploit zero-day and unpatched vulnerabilities in the company's software, open-source or third-party components, and infrastructure more rapidly than they can be remediated. This may compress the time between vulnerability emergence and exploitation and increase vulnerability monitoring, patch management and remediation burdens.
MD&A describes increased focus on AI customer opportunities, neocloud platforms, B2 Neo and the Flamethrower startup program, while risk factors state the AI market is characterized by rapid innovation cycles that could render solutions obsolete, intense competition, high volatility, and workloads requiring higher performance, lower latency and greater storage utilization. Those demands can increase infrastructure costs, accelerate hardware wear and require additional capacity investment.
A risk factor marked as updated states that as the company targets larger enterprise, neocloud and AI-focused customers, it may face longer sales cycles, less predictability, higher volatility in stored data, increased pricing and negotiation leverage, and greater customization and support demands. It also says revenue may become increasingly concentrated among a smaller number of large customers, causing more significant fluctuations and outsized risk from loss or reduced usage by any single customer.
An updated risk factor states the company has initiated headcount reductions, hiring freezes and cost-efficiency actions, which risk loss of institutional knowledge, reduced capacity to execute strategic initiatives, challenges retaining key employees and lower morale. MD&A says the 2025 Restructuring and Transformation Plan has incurred approximately $6.1 million from inception to date and expects additional charges of approximately $2.4 million to $3.7 million through Q1 2027.
The managed storage model is in early stages and operates on customer-owned infrastructure, limiting control over the hardware environment and physical security; outages, performance degradation or security incidents originating in a customer's infrastructure could impair service delivery or expose the company to claims and reputational harm. MD&A says revenue recognition under managed storage arrangements is expected to begin in Q3 2026 and no related revenue was recognized during the three and six months ended June 30, 2026.
International operations face new compliance obligations, including the EU Data Act effective September 2025, which imposes enhanced data portability, interoperability, customer switching rights and early termination rights, as well as restrictions on data transfer and access by non-EU authorities. Compliance requires changes to customer contracts and internal processes and could increase operational costs; non-U.S. revenue was approximately 28% of total revenue in the six months ended June 30, 2026.
Effective May 1, 2026, the company increased B2 Cloud Storage pay-as-you-go storage pricing from $6.00 to $6.95 per terabyte per month and eliminated API transaction fees. Risk factors state price increases could make it harder to attract new customers, retain existing customers, or cause customers to reduce the amount of data they store with the company, and MD&A says the May 2026 price increase contributed $1.5 million of B2 Cloud Storage revenue growth in the quarter and year to date.
SaaS KPIs
All quarters →Adjusted Gross Margin
Adjusted EBITDA Margin
Adjusted EBITDA
Total Customers
Adjusted Free Cash Flow
Adjusted Free Cash Flow Margin
Annual Recurring Revenue (B2 Cloud Storage)
Annual Recurring Revenue (Computer Backup)
Non-GAAP Net Income
Non-GAAP Net Income Margin
Net Revenue Retention (B2 Cloud Storage)
Net Revenue Retention (Computer Backup)
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q2 FY2026 (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.