Backblaze: Fiscal 3Q22 Financial Results

(in $ million)	3Q21	3Q22	9 mo. 21	9 mo. 22
Revenue	17.3	22.1	48.8	62.2
*Growth*		27%		*27%*
Net income (loss)	(6.0)	(12.8)	(12.1)	(36.0)

Backblaze, Inc. announced results for its third quarter ended September 30, 2022.

“As highlighted in our October 24, 2022 preliminary results, we had a strong 3FQ22. We had 48% revenue growth in B2 Cloud Storage, and total company revenue grew 27%,” said Gleb Budman, Backblaze. “We also made significant progress in our channel program, including the launch of our channel partner portal and signing of several new national resellers. We are pleased to continue to scale in an uneven macro-economic environment.”

3FQ22 Financial Highlights:

Revenue of $22.1 million, an increase of 27% Y/Y.
- B2 Cloud Storage revenue was $8.8 million, an increase of 48% Y/Y.
- Computer Backup revenue was $13.1 million, an increase of 17% Y/Y.
Gross profit of $11.2 million, or 51% of revenue, compared to $8.8 million and 51% of revenue, in 3FQ21.
Adjusted gross profit of $16.7 million, or 76% of revenue, compared to $12.8 million and 74% of revenue in 3FQ21.
Net loss of $(12.8) million compared to a net loss of $(6.0) million in 3FQ21.
Net loss per share of $(0.40) compared to a net loss per share of $(0.32) in 3FQ21.
Adjusted EBITDA of $(1.9) million, or (8)% of revenue, compared to $0.8 million and 5% of revenue in 3FQ21.
Non-GAAP net loss of $(8.0) million compared to non-GAAP net loss of $(4.2) million in 3FQ21.
Non-GAAP net loss per share of $(0.25) compared to a non-GAAP net loss per share of $(0.22) in 3FQ21.
Cash, short-term investments and restricted cash, non-current totaled $80.0 million as of September 30, 2022.

3FQ22 Operational Highlights:

Annual recurring revenue (ARR) was $88.0 million, an increase of 24% Y/Y.
- B2 Cloud Storage ARR was $35.7 million, an increase of 45% Y/Y.
- Computer Backup ARR was $52.3 million, an increase of 13% Y/Y.
Net revenue retention (NRR) rate was 114% compared to 110% in 3FQ21 B2 Cloud Storage NRR was 123% compared to 131% in 3FQ21.
- Computer Backup NRR was 108% compared to 101% in 3FQ21.
Gross customer retention rate was 91% in 3FQ22 and 3FQ21.
- B2 Cloud Storage gross customer retention rate was 90% compared to 89% in 3FQ21.
- Computer Backup gross customer retention rate was 90% compared to 91% in 3FQ21.

Financial Outlook for 4FQ22:
• Revenue between $22.5 million to $22.9 million.
• Adjusted EBITDA margin between (14)% to (10)%.
• Basic weighted average shares outstanding of 32.5 million to 34.5 million shares.

For FY22:
• Revenue between $84.7 million to $85.1 million (vs. prior guidance of $83 million to $86 million).
• Adjusted EBITDA margin between (12)% to (11)% (vs. prior guidance of (17)% to (13)%).

Comments

Company changes recently guidance for 3Q22 revenue from $21.4-$21.8 million to $22.0-$22.1 million. It's finally on top of that: $22.1 million, an historical record, to be compared to $20.7 million in 2FQ22 or +7%.

The small cloud storage company is growing fast (+27% Y/Y) but net loss is doubling at another historical record of $12.8 million, and never was profitable.

Financial and operational 2FQ22 highlights
F2

Backblaze expects revenue up 20% to 22% Y/Y for next quarter and 25% to 26% for FY22, and is not going to be profitable in the next future.

(in $ million)

Revenue

Y/Y growth

Net income (loss)

FY19

40,748

(996)

1FQ20

12.4

2FQ20

13,0

(1,4)

3FQ20

13.8

(1.9)

4FQ20

14.6

(3,4)

FY20

53.8

32%

(6.6)

1FQ21

15.3

(3.7)

2FQ21

16.2

(2,4)

3FQ21

17,3

5%-7%

(6.5 to 7.5)

4FQ21

18.7

28%

(9.6)

FY21

67.5

25%

(21.6)

1FQ22

19.5

27%

(12.5)

2FQ22

20.7

28%

(11.6)

3FQ22

22.1

27%

(12.8)

4FQ22 (estim.)

22.5-22.9

20%-22%

FY22 (estim.)

84.7-85.1

25%-26%