Backblaze: Fiscal 2Q23 Financial Results

Backblaze, Inc. announced results for its second quarter ended June 30, 2023.

“In 2Q we were pleased to continue moving up-market, growing the number of customers generating over $50,000 in annual recurring revenue by 54% Y/Y and increasing engagement with other larger potential customers. We also signed our biggest computer backup deal ever with a leading global social media company,” said Gleb Budman, CEO. “We are excited to assist more businesses in moving out of the walled gardens of traditional cloud providers to an open cloud where customers are empowered to store and use data as they choose.”

2FQ23 Highlights:
• Revenue of $24.6 million, an increase of 19% Y/Y.

• B2 Cloud Storage revenue was $10.8 million, an increase of 39% Y/Y.
• Computer Backup revenue was $13.8 million, an increase of 7% Y/Y.

• Gross profit of $12.1 million, or 49% of revenue, compared to $11.1 million and 54% of revenue, in 2FQ22.
• Adjusted gross profit of $18.4 million, or 75% of revenue, compared to $15.9 million and 77% of revenue in 2FQ22.
• Net loss of $14.3 million compared to a net loss of $11.6 million in 2FQ22.
• Net loss per share of $0.41 compared to a net loss per share of $0.37 in 2FQ22.
• Adjusted EBITDA of $(1.8) million, or (7%) of revenue, compared to $(1.9) million and (9%) of revenue in 2FQ22.
• Non-GAAP net loss of $8.3 million compared to non-GAAP net loss of $7.2 million in 2FQ22.
• Non-GAAP net loss per share of $0.24 compared to a non-GAAP net loss per share of $0.23 in 2FQ22.
• Cash, short-term investments and restricted cash, non-current totaled $44.7 million as of June 30, 2023.

2FQ23 Operational Highlights:
• ARR was $97.3 million, an increase of 18% Y/Y.

• B2 Cloud Storage ARR was $43.5 million, an increase of 39% Y/Y.
• Computer Backup ARR was $53.8 million, an increase of 5% Y/Y.

• Net revenue retention (NRR) rate was 110% compared to 114% in 2FQ22.

• B2 Cloud Storage NRR was 121% compared to 127% in 2FQ22.
• Computer Backup NRR was 103% compared to 107% in 2FQ22.

• Gross customer retention rate was 91% in 2FQ23 and 2FQ22.

• B2 Cloud Storage gross customer retention rate was 90% in Q2 2023 and 2FQ22.
• Computer Backup gross customer retention rate was 91% in 2FQ23 and 2FQ22.

Eliminated Dual-Class Share Structure
In July 2023, following approval by the company’s Class B stockholders, all outstanding shares of Class B common stock were converted into shares of Class A common stock (on a 1:1 basis), thereby eliminating the company’s dual-class share structure and providing all shareholders equal voting rights. The change underscores Backblaze’s commitment to good corporate governance and being a shareholder-friendly company by simplifying the capital structure and administration processes.

Recent Business Highlights:
• Drove Up-Market Momentum: Customers contributing over $50,000 in ARR grew 54% to 74% as of 2FQ23 from 48% as of 2FQ22
• Won Largest Computer Backup Customer: Most initial licenses purchased in a single contract, with a leading global social media company
• Overhauled Website: Launched new Content Management System to enable rapid optimization, enhance the customer onboarding experience, and help increase self-serve conversion rates
• Upgraded Developer Experience: Updated over 300 articles in newly-developed resource hub, with upgraded API documentation to further support developers innovating on Backblaze’s Storage Cloud
• Enabled Disaster Recovery Solution: Built on Backblaze B2, Cloud Instant Business Recovery was developed with DR partner Continuity Centers to allow Veeam users access to enterprise grade disaster recovery services

Financial Outlook:

For 3FQ22:
• Revenue between $25.0 million to $25.4 million
• Adjusted EBITDA margin between (8)% to (4)%
• Basic weighted average shares outstanding of 36.5 million to 37.5 million shares

For FY23:
• Revenue between $98 million to $102 million (unchanged)
• Adjusted EBITDA margin between (8.5)% to (4.5)% (improved versus the prior range of (10)% to (6)%)