Summary
Backblaze's third quarter revenue was $37.2 million, up 14% from the prior-year quarter. Gross profit rose 29.6% to $23.1 million. Gross margin expanded to 62.1% from 54.6%. The operating loss narrowed to $3.32 million from $12.2 million. Net loss narrowed to $3.78 million from $12.8 million. Diluted loss per share was $0.07 compared with $0.29. Operating margin improved to -8.9% from -37.4%. Management tied much of the margin gain to a $2.1 million reduction in depreciation expense after extending the useful life of infrastructure equipment effective April 1, 2025. Lower personnel costs and benefits of scale also helped.
For the nine months ended September 30, 2025, revenue was $108.1 million, up 15.2%. Gross profit was $65.4 million, up 28.6%, at a gross margin of 60.5%. The operating loss narrowed to $19.0 million from $32.5 million. Net loss narrowed to $20.2 million from $34.2 million, and diluted loss per share was $0.36 compared with $0.81. Operating margin for the nine months was -17.5%. Operating cash flow for the nine months was $14.2 million, up 38.5% from $10.3 million. Capital expenditures for the nine months were $4.4 million, up 400.5%. On a quarterly basis, operating cash flow was $5.7 million, up 24.1%, while capital expenditures were $3.1 million, up 1545.0%. Adjusted free cash flow for the nine months was $(9.5) million compared with $(15.6) million. Deferred revenue was $35.7 million, up 1.1%, and remaining performance obligations were $46.1 million, up 19.4%.
Annual recurring revenue reached $147.2 million, up 13%. B2 Cloud Storage ARR was $81.8 million, up 26%, while Computer Backup ARR was $65.4 million and flat. B2 Cloud Storage revenue was $20.7 million, up 28%, and Computer Backup revenue was $16.5 million, flat. Net revenue retention was 106% compared with 118%. B2 Cloud Storage NRR was 110% compared with 128%, and Computer Backup NRR was 101% compared with 109%. The B2 decline largely reflects the lapped impact of the October 2023 price increase. Gross customer retention was 91% compared with 90%, with B2 at 89% and Computer Backup at 90% in both periods. Adjusted EBITDA was $8.4 million, or 23% of revenue, compared with $3.7 million, or 12% of revenue. Non-GAAP net income was $1.9 million compared with a non-GAAP net loss of $4.1 million, and non-GAAP net income per share was $0.03 compared with a non-GAAP net loss per share of $0.10.
Guidance for the fourth quarter of 2025 points to an adjusted EBITDA margin of 20% to 22%. For full-year 2025, the adjusted EBITDA margin range was raised to 18% to 20%, and the revenue outlook was narrowed from the prior range. The B2 Cloud Storage growth outlook for the fourth quarter of 2025 is 25% to 28%, trimmed from a prior expectation of 30% or more. Backblaze says it remains on track to be free-cash-flow positive in the fourth quarter. Capital expenditures are expected to increase in early 2026, and international revenue was 29% and 28% of total revenue for the three and nine months ended September 30, 2025.
In November 2025 the company started a restructuring plan expected to cost $4.4 million to $6.0 million, mostly in the fourth quarter of 2025, including an estimated impairment of $0.9 million to $1.2 million tied to office space reductions. Management flagged competition from larger rivals, cyberattacks, the ability to attract and retain larger customers, supply chain disruption, and tariffs as risks. The B2 Overdrive launch and new enterprise security features are the main bets behind the up-market push.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2025 | Q2 FY2025 | QoQ | Q3 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.2M | $36.3M | +2.4% | $32.6M | +14.0% |
| Gross profit | $23.1M | $23.0M | +0.1% | $17.8M | +29.6% |
| Gross margin | 62.1% | 63.5% | -1.4 pp | 54.6% | +7.5 pp |
| Research & development | $11.2M | $11.9M | -5.4% | $10.7M | +4.7% |
| Sales & marketing | $9.0M | $10.2M | -11.6% | $11.7M | -23.3% |
| General & administrative | $6.2M | $7.7M | -20.1% | $7.5M | -18.3% |
| Total operating expenses | $26.4M | $29.8M | -11.3% | $30.0M | -12.0% |
| Operating income (loss) | -$3.3M | -$6.7M | +50.6% | -$12.2M | +72.8% |
| Operating margin | -8.9% | -18.5% | +9.6 pp | -37.4% | +28.5 pp |
| Net income (loss) | -$3.8M | -$7.1M | +46.8% | -$12.8M | +70.4% |
| Net margin | -10.2% | -19.6% | +9.4 pp | -39.1% | +29.0 pp |
| Diluted EPS | -$0.07 | -$0.13 | +$0.06 | -$0.29 | +$0.22 |
| Customers | 500,000 | 500,000 | ±0.0% | 500,000 | ±0.0% |
| Net retention rate | 106.0% | 109.0% | -3.0 pp | 118.0% | -12.0 pp |
Risks
The company is focusing on AI customers and launched B2 Overdrive for AI and machine learning workloads, but this subjects it to rapid technological obsolescence, intense competition from established and new entrants, and higher infrastructure demands that could increase costs.
Competition for data center space and equipment has intensified significantly due to AI demand, making it harder or more costly to secure capacity; the company expects capital expenditures to increase in early 2026 to support its up-market strategy.
The go-to-market transformation aims to move up-market to larger enterprise customers, which may involve longer sales cycles, greater customization demands, and higher costs, and the loss of any larger customer would have a greater impact on financial results.
Overall net revenue retention rate declined to 106% as of September 30, 2025 from 118% a year earlier, and B2 Cloud Storage NRR decreased to 110% from 128%, largely due to the lapped October 2023 price increase.
In November 2025 the company initiated a restructuring plan expected to incur total charges of approximately $4.4 million to $6.0 million, primarily in Q4 2025, including facility impairment, which could disrupt operations and cause employee turnover.
The EU Data Act effective September 2025 imposes new requirements on cloud service providers, including enhanced data portability and customer switching rights, which will require changes to customer contracts and internal processes and could increase operational costs.
A data center cooling problem due to equipment failure occurred in October 2025, and while resolved without significantly impacting customer data, similar events could disrupt service and harm reputation.
Changes in global trade policies, including tariffs, could increase costs for hardware and data center partners and reduce customer demand, with potential impact on small-cap stocks like Backblaze.
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
Total Customers
Non-GAAP Net Income
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q3 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.