Summary
Backblaze closed fiscal 2025 with fourth-quarter revenue of $37.8 million, up 11.8% from the prior-year quarter, and full-year revenue of $145.8 million, up 14.3%. Growth is coming almost entirely from B2 Cloud Storage, where revenue rose 24% year over year. Total annual recurring revenue rose 13% year over year, with B2 ARR up 27%. The mix shift matters because B2 is the product the company is building its AI narrative around.
Margins expanded sharply, though part of that comes from accounting. Gross profit was $23.4 million, or 62.0% of revenue, and gross margin rose 7.3 percentage points from the prior-year quarter. Full-year gross profit reached $88.8 million, up 28.0%. A useful-life study completed in the second quarter of 2025 extended the life of infrastructure equipment and cut depreciation expense by roughly $5.2 million in 2025, with another $2.8 million of reduction expected in 2026. That is a real cash benefit, but it is not a pricing gain.
Operating loss narrowed to $4.7 million from a loss of $13.8 million in the prior-year quarter, and operating margin improved 28.4 percentage points to -12.4%. Net loss narrowed to $5.4 million from a loss of $14.4 million. For the full year, net loss narrowed to $25.6 million from a loss of $48.5 million, and diluted loss per share was $0.46, narrowed from $1.11.
Cash generation was the cleanest signal. Operating cash flow was $9.3 million in the quarter, up from $2.2 million, and $23.5 million for the year, up from $12.5 million. Adjusted free cash flow, a non-GAAP measure, turned positive at $4.1 million in the quarter, a first since the company went public, against negative $4.5 million a year earlier. Capital expenditures on property and equipment fell to $265,000 in the quarter, down 67.9%, and reached $4.69 million for the year, up 174.3%. Deferred revenue of $35.9 million rose 1.0%. Remaining performance obligations of $66.2 million rose 60.3%, the clearest evidence that bigger contracts are being signed.
That backlog sits on top of a customer base that is shrinking at the low end. Total customers stood at 503,866 versus 507,647 a year earlier, while B2 customers grew to 119,154 from 107,616. Trailing net revenue retention slipped to 105% from 116%. B2 net revenue retention fell to 111% from 123%, and Computer Backup net revenue retention dropped to 98% from 109%. Gross customer retention held at 91%. The offset is the upmarket push. Customers spending more than $50,000 a year grew 35% to 168 accounts, and their ARR rose 73% to $26 million, or 17% of total ARR. Backblaze also signed its first eight-figure total contract value neocloud deal, described as the largest in company history at more than $15 million in TCV, and launched B2 Neo, a white-label storage offering that runs at up to 1 TB per second against a neocloud storage market the company sizes at $14 billion by 2030.
Management guides to an adjusted EBITDA margin of 18% to 20% for the first quarter of 2026 and 19% to 21% for the full fiscal year 2026. The November 2025 restructuring and transformation plan, aimed at sales and marketing efficiency, cost about $2.5 million in 2025, and another $4.7 million to $7.5 million of charges is expected through the first quarter of 2027. Cash, cash equivalents and marketable securities totaled $51.4 million at December 31, 2025, and the $20.0 million revolving credit facility had no borrowings outstanding. The risks management flags are familiar: executing the go-to-market transformation, attracting and retaining larger customers, competing with better-resourced rivals, scaling the platform as AI-related demand grows, and cyberattacks or disruption to service.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q4 FY2025 | Q3 FY2025 | QoQ | Q4 FY2024 | YoY |
|---|---|---|---|---|---|
| Revenue | $37.8M | $37.2M | +1.6% | $33.8M | +11.8% |
| Gross profit | $23.4M | $23.1M | +1.5% | $18.5M | +26.6% |
| Gross margin | 62.0% | 62.1% | -0.0 pp | 54.8% | +7.3 pp |
| Research & development | $11.1M | $11.2M | -0.8% | $12.0M | -7.4% |
| Sales & marketing | $9.0M | $9.0M | -0.3% | $11.7M | -23.4% |
| General & administrative | $8.0M | $6.2M | +29.6% | $8.5M | -6.5% |
| Total operating expenses | $28.1M | $26.4M | +6.4% | $32.3M | -13.0% |
| Operating income (loss) | -$4.7M | -$3.3M | -40.5% | -$13.8M | +66.1% |
| Operating margin | -12.3% | -8.9% | -3.4 pp | -40.8% | +28.4 pp |
| Net income (loss) | -$5.4M | -$3.8M | -43.3% | -$14.4M | +62.3% |
| Net margin | -14.3% | -10.2% | -4.2 pp | -42.5% | +28.2 pp |
| Diluted EPS | -$0.10 | -$0.07 | -$0.03 | -$0.33 | +$0.23 |
| Customers | 500,000 | 500,000 | ±0.0% | 500,000 | ±0.0% |
| Net retention rate | 105.0% | 106.0% | -1.0 pp | — | — |
Risks
A significant and growing part of the growth strategy is serving AI model builders and neocloud platforms through Powered by Backblaze and B2 Neo. The filing states that revenue from these customers can be concentrated among a small number of large agreements, so the loss of even one significant neocloud customer could have a disproportionate effect on results.
Total company net revenue retention rate was 105% as of December 31, 2025 compared with 116% as of December 31, 2024, and the filing states the NRR for B2 Cloud Storage and Computer Backup decreased. Computer Backup ARR experienced a slight decline of $1.0 million compared to the prior year, and customers can generally terminate at will with little to no advance notice.
Competition for data center space, infrastructure, and equipment has intensified significantly due to increased demand from AI and other compute-intensive workloads. The company states available capacity in key markets is limited, vendors have implemented more stringent qualification requirements that may favor larger companies, and MD&A expects capital expenditures to increase in early 2026 to support platform development and up-market strategy.
The markets are intensely competitive, with named competitors including Amazon Web Services, Google Cloud Platform, Microsoft Azure, EMC/Dell, NetApp, Cloudflare, CoreWeave, DigitalOcean, and Vultr. Competitors may offer lower prices or bundled services, which could result in pricing pressures, customer churn, and lower margins.
EU Data Act requirements effective September 2025 impose enhanced data portability, interoperability, customer switching rights, early termination rights, and restrictions on data transfer and access by non-EU authorities. The EU AI Act and state AI laws such as those in California and Colorado could affect how customers train or deploy AI models using data stored on the platform.
The go-to-market transformation is moving the company up-market to larger enterprise and AI/neocloud customers. Those customers may have longer sales cycles, less predictability or higher volatility in stored data, increased pricing or negotiation leverage, and the loss of any larger customer will have a greater impact on financial results than the loss of smaller customers.
The 2025 Restructuring and Transformation Plan initiated in November 2025 incurred approximately $2.5 million of charges in fiscal 2025, and the company expects additional charges of approximately $4.7 million to $7.5 million through the first quarter of 2027. Headcount reductions and a hiring freeze create risks of losing institutional knowledge, reduced execution capacity, and challenges retaining key employees.
During the second quarter of 2025 the company extended the useful life of its infrastructure equipment, reducing depreciation expense by approximately $5.2 million for the year ended December 31, 2025 and expected to reduce depreciation by approximately $2.8 million for the year ending December 31, 2026. If assumptions underlying useful lives or capitalized internal-use software change, future gross margin and operating results could be materially impacted.
The company recently launched B2 Overdrive, Enterprise Web Console, and AI-related features, and states it cannot be certain whether these features will achieve desired market adoption and return on investment. Limited internal resources require selective prioritization, and enhancements generally require upfront investment before any potential return.
The senior secured revolving credit facility with Citizens Bank contains quarterly financial 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 limit access to borrowings or result in acceleration of repayments.
In 2025, approximately 28% of revenue came from customers outside the United States across more than 175 countries, and the company opened a data center region in Toronto, Canada in January 2025. International expansion increases compliance costs, foreign exchange, tax, data sovereignty, immigration, and operational risks.
SaaS KPIs
All quarters →Adjusted Gross Margin
Adjusted EBITDA Margin
Adjusted EBITDA
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
Annual Recurring Revenue (Total Company)
Remaining Performance Obligations (RPO)
Summary, forecast, risks and KPIs are extracted from Backblaze, Inc.'s SEC filings for Q4 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.