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Backblaze, Inc. (BLZE)·Q1 2025 Earnings Summary

Executive Summary

  • Beat vs. Street and guidance: Q1 revenue $34.6M vs $34.2M consensus; non-GAAP EPS ($0.03) vs ($0.06) consensus. Management also said revenue and adjusted EBITDA margin exceeded the high end of company guidance; Street beat underpinned by B2 strength and cost control . Revenue and EPS consensus values retrieved from S&P Global*.
  • B2 momentum and upmarket proof: B2 revenue grew 23% YoY to $18.0M; company signed its largest multi‑year, multi‑million TCV deal, displacing AWS—evidence the go‑to‑market (GTM) transformation is working .
  • Guidance: FY25 revenue maintained at $144–$146M; FY25 adjusted EBITDA margin raised to 17–19% (from 16–18%). Q2 guide: revenue $35.2–$35.6M and adjusted EBITDA margin 14–16% .
  • Stock reaction catalysts: accelerating B2 growth path (targeting 30%+ by Q4), Overdrive launch for AI/HPC (higher price point, performance), and raised profitability guide; AWS displacement highlights competitive wins vs hyperscalers .

What Went Well and What Went Wrong

What Went Well

  • Accelerating growth with margin improvement: B2 up 23% YoY; adjusted gross margin 79% (from 77% LY); adjusted EBITDA margin 18% (from 6% LY). CEO: “revenue and adjusted EBITDA margin beat the high end of guidance” .
  • Upmarket sales wins and GTM progress: “Doubled bookings” YoY, completed build‑out of sales team; signed largest TCV deal with AWS displacement; CFO: “operating leverage… 75% of incremental revenue dollars flowing to the bottom line” (from prior quarter context) .
  • AI traction: AI customer count +66% YoY and data +25x; “AI use cases represented the fastest‑growing piece of our business in Q1” .

What Went Wrong

  • Profitability and cash still below target: GAAP net loss ($9.3M); adjusted free cash flow ($2.1M), though improving YoY and sequentially .
  • Normalizing retention metrics: B2 NRR 117% vs 126% LY due to lapping price increases; management expects it to stabilize and improve with customer success motion .
  • Elongated sales cycles for some customers amid macro: “some customers are taking more time to make decisions,” partially offset by strong self‑serve and bookings momentum .

Financial Results

Core P&L metrics

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$32.6 $33.8 $34.6
Gross Margin %55% 55% 56%
Adjusted Gross Margin %78% 78% 79%
GAAP Net Loss ($M)($12.8) ($14.4) ($9.3)
GAAP EPS (Loss)($0.29) ($0.30) ($0.17)
Adjusted EBITDA ($M)$3.7 $4.6 $6.4
Adjusted EBITDA Margin %12% 14% 18%

Segment revenue

Segment Revenue ($M)Q3 2024Q4 2024Q1 2025
B2 Cloud Storage$16.2 $17.1 $18.0
B2 YoY Growth39% 22% 23%
Computer Backup$16.4 $16.7 $16.6
Computer Backup YoY Growth20% 13% 8%

KPIs

KPIQ3 2024Q4 2024Q1 2025
ARR – Total ($M)$130.5 $136.7 $140.8
ARR – B2 ($M)$64.9 $70.2 $73.8
ARR – Computer Backup ($M)$65.6 $66.5 $67.0
NRR – Total118% 116% 113%
NRR – B2128% 123% 117%
NRR – Computer Backup109% 109% 108%
Gross Customer Retention90% 90% 90%

Non‑GAAP definitions and reconciliations provided by the company .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($M)Q2 2025—$35.2–$35.6 New quarterly guide
Adjusted EBITDA MarginQ2 2025—14–16% New quarterly guide
Revenue ($M)FY 2025$144–$146 $144–$146 Maintained
Adjusted EBITDA MarginFY 202516–18% 17–19% Raised
Basic Shares (M)Q2 2025—55.6–55.9 New quarterly guide
B2 YoY Growth Outlook2025 by qtrQ1: 21–23; Q2: 23–25; Q3: 25–28; Q4: 30%+ Same ranges; Q1 actual 23% Maintained trajectory; confirmed Q1 actual

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24, Q4’24)Current Period (Q1’25)Trend
AI / Technology initiativesQ3: Won new AI customers; doubled AI data; B2 fastest growth . Q4: 3 of top 10 customers AI; ~10x AI data; AI a multi‑year driver .AI fastest‑growing piece in Q1; AI customers +66% YoY; data +25x; Overdrive launched for AI/HPC .Strengthening
Go‑to‑market transformationQ3: Launched GTM revamp, cost saves . Q4: Record bookings; doubled sales productivity; CRO rebuild .Bookings more than doubled YoY; expanded sales capacity; added VP CS; upmarket TCV win .Improving execution
Tariffs / Macro—10% tariff on imports would raise cost of sales ~1.5%, phased over 6 years; minimal near‑term impact .Managed risk
Product performanceQ3: Preparing Canada region . Q4: Platform enhancements .B2 Overdrive: terabit throughput, $15/TB, free egress; early Fortune 500 interest .New premium tier; positive
Regional trendsCanada region opening Q1’25 .Cologix TOR3 deployment in Toronto for data sovereignty .Expansion
Regulatory / LegalQ4: Balance sheet strengthening; SOX focus .2024 10‑K confirmed SOX remediation; Deloitte appointed; response to short‑seller claims with independent review finding no issues .Strengthened controls
R&D executionOngoing innovation; security & workflow features .Overdrive built largely on existing IP; efficient R&D leverage .Efficient leverage

Management Commentary

  • “Revenue and adjusted EBITDA margin beat the high end of guidance… B2… achieving 23%… adjusted EBITDA margin tripled… to 18%” – CEO Gleb Budman .
  • “Signed our largest TCV deal ever… AWS displacement” – GTM slide; CEO elaboration in Q&A .
  • “We plan to implement [hardware] useful life of six years in Q2… would benefit gross margins by 200–300 bps” – CFO Marc Suidan .
  • “Adjusted free cash flow margin improved… we expect to be adjusted free cash flow positive in Q4 2025” – CFO .
  • “B2 Overdrive… terabit‑speed throughput… starting at $15 per TB… unlimited free egress” – product release .

Q&A Highlights

  • AI revenue drivers and pipeline: AI became the fastest‑growing part of business; largest customer is an AI company; Overdrive pipeline building with multi‑PB opportunities .
  • Upmarket momentum and AWS displacement: Record TCV deal moved entire dataset from AWS; performance, cost and support cited as key differentiators .
  • Retention and NRR dynamics: B2 NRR decrease to 117% due to lapping price increases; management expects stabilization and improvement as CS motion ramps .
  • Macro and sales cycles: Some enterprise decisions taking longer; offset by strong self‑serve and doubled bookings; April trends consistent with Q1 .
  • Margins and tariffs: Hardware life extension to 6 years benefits GAAP gross margin by 200–300 bps starting Q2; 10% broad tariff would be ~1.5% cost of sales impact over life of assets .

Estimates Context

  • Q1 2025 vs S&P Global consensus: Revenue $34.6M vs $34.2M estimate (beat); non‑GAAP EPS ($0.03) vs ($0.06) estimate (beat). Actuals: revenue $34.613M; non‑GAAP EPS −$0.0336.
  • Q2 2025 guidance vs consensus: Revenue guide $35.2–$35.6M vs consensus ~$35.4M*; midpoint roughly in line .
    Values retrieved from S&P Global*.
MetricQ1 2025 ActualQ1 2025 ConsensusDelta
Revenue ($M)34.613 34.217*+0.396
Non‑GAAP EPS(0.0336)*(0.0600)*+0.0264

Key Takeaways for Investors

  • Execution is improving: two consecutive quarters of accelerating B2 growth into Q1; pathway reiterated to 30%+ B2 YoY exit rate by Q4 alongside positive adjusted FCF in Q4 .
  • Upmarket proof points: record multi‑year, multi‑million TCV win displacing AWS demonstrates competitiveness on performance, economics, and support .
  • Product monetization lever: Overdrive introduces a higher‑priced performance tier ($15/TB) aimed at AI/HPC with free egress—expands TAM and mix tailwinds .
  • Profitability trajectory: FY25 adjusted EBITDA margin raised to 17–19% while maintaining revenue outlook, reflecting cost discipline and operating leverage .
  • Manageable macro risks: decision cycles lengthened at the margin, but diversified self‑serve engine and bookings growth mitigate; tariff sensitivity modest and phased .
  • Retention normalization: NRR headwinds from price lapping should fade as CS initiatives and upmarket expansion compound .
  • Near‑term watch items: Q2 delivery vs guide, Overdrive customer conversions/POCs, B2 growth cadence, margin benefit from depreciation life change, and cash burn trend toward Q4 FCF breakeven .

Appendix: Additional Relevant Press Releases (Q1 2025 timeframe)

  • Canada data sovereignty expansion: Deployment at Cologix TOR3 in Toronto enhances in‑country storage options for regulated verticals .
  • B2 Overdrive launch (April 29): Terabit‑speed throughput, free egress aimed at AI/ML and HPC workloads; generally available for multi‑PB sales‑assisted customers .

Notes:

  • Non‑GAAP metrics and definitions per company disclosures .
  • Company addressed a short‑seller report; independent review found no wrongdoing or financial reporting issues .

*Values retrieved from S&P Global.