8-K/A: Backblaze Q2 2025: Strong B2 Cloud Storage Growth

Backblaze, Inc. announced strong second quarter 2025 financial results, highlighted by 29% year-over-year revenue growth in B2 Cloud Storage and a raised full-year 2025 revenue outlook.

Summary

• Revenue for Q2 2025 was $36.3 million, an increase of 16% year-over-year.
• B2 Cloud Storage revenue reached $19.8 million, growing 29% year-over-year.
• Computer Backup revenue was $16.5 million, up 4% year-over-year.
• Gross profit for Q2 2025 was $23.0 million, or 63% of revenue, compared to $17.2 million (55% of revenue) in Q2 2024.
• Adjusted gross profit was $28.8 million, or 79% of revenue, up from $24.5 million (78% of revenue) in Q2 2024.
• Net loss improved to $7.1 million from $10.3 million in Q2 2024.
• Net loss per share was $0.13, an improvement from $0.25 in Q2 2024.
• Adjusted EBITDA was $6.6 million, or 18% of revenue, significantly up from $2.7 million (9% of revenue) in Q2 2024.
• Non-GAAP net income was $0.8 million, a positive shift from a non-GAAP net loss of $4.8 million in Q2 2024.
• Cash flow from operations for the six months ended June 30, 2025, was $8.5 million, compared to $5.6 million in the prior year period.
• Adjusted free cash flow for the six months ended June 30, 2025, was $(6.0) million, an improvement from $(11.6) million in the prior year period.
• Cash and marketable securities totaled $50.5 million as of June 30, 2025.
• Annual recurring revenue (ARR) was $145.9 million, a 16% year-over-year increase.
• B2 Cloud Storage ARR was $80.7 million, increasing 29% year-over-year.
• Computer Backup ARR was $65.2 million, up 3% year-over-year.
• Net revenue retention rate (NRR) was 109%, down from 114% in Q2 2024.
• B2 Cloud Storage NRR was 112%, down from 126% in Q2 2024.
• Computer Backup NRR was 106%, up from 105% in Q2 2024.
• Gross customer retention rate remained consistent at 90% in both Q2 2025 and Q2 2024.
• Customers contributing over $50,000 in ARR grew 30% year over year in Q2.
• Signed the first six-figure B2 Overdrive customer in early Q3, two months after product launch.
• Scaled an AI customer to over several million dollars in ARR in Q2.
• Launched a suite of enterprise cyber security features in Q2 and Q3, including AI-powered Anomaly Alerts, Enterprise Web Console with role-based access control, and Bucket Access Logs.
• An independent analyst firm, Enterprise Strategy Group, found B2 to be up to 3.2x more cost-effective and easy-to-use compared to alternatives.
• Authorized a cash-neutral stock repurchase program of up to $10 million.
• Secured a new $20 million credit facility.

Sentiment

Score: 8

Explanation: The company reported strong financial results, particularly in its high-growth B2 Cloud Storage segment, and raised its full-year revenue guidance. Significant improvements in profitability metrics (Adjusted EBITDA, Non-GAAP Net Income) and cash flow from operations indicate a positive financial trajectory. Strategic initiatives like the new credit facility and stock repurchase program further bolster confidence. While the NRR saw a slight decline, the overall momentum and future outlook are very positive.

Positives

• Overall revenue grew 16% year-over-year to $36.3 million.
• B2 Cloud Storage revenue growth accelerated to 29% year-over-year, reaching $19.8 million.
• Net loss significantly improved to $7.1 million from $10.3 million in Q2 2024.
• Achieved non-GAAP net income of $0.8 million in Q2 2025, a substantial improvement from a non-GAAP net loss of $4.8 million in Q2 2024.
• Adjusted EBITDA more than doubled to $6.6 million (18% of revenue) from $2.7 million (9% of revenue) in Q2 2024.
• Cash flow from operations for the six months ended June 30, 2025, increased to $8.5 million from $5.6 million in the prior year.
• Adjusted free cash flow deficit reduced to $(6.0) million for the six months ended June 30, 2025, from $(11.6) million in the prior year.
• B2 Cloud Storage Annual Recurring Revenue (ARR) grew 29% year-over-year to $80.7 million.
• Customers contributing over $50,000 in ARR grew 30% year-over-year in Q2, indicating strong up-market momentum.
• Signed the first six-figure B2 Overdrive customer in early Q3, demonstrating strong product-market fit for AI workloads.
• Successfully scaled an AI customer to over several million dollars in ARR in Q2, showcasing platform scalability and performance.
• Launched new enterprise cyber security features, enhancing data protection for customers.
• An independent analysis confirmed B2 is up to 3.2x more cost-effective and easy-to-use compared to alternatives.
• Raised the full-year 2025 revenue outlook to $145.0 million $147.0 million.
• Secured a new $20 million credit facility, enhancing financial flexibility and strategic capital access.

Negatives

• Overall Net Revenue Retention Rate (NRR) decreased to 109% from 114% in Q2 2024.
• B2 Cloud Storage NRR decreased significantly to 112% from 126% in Q2 2024.
• Computer Backup revenue growth was modest at 4% year-over-year.
• Computer Backup ARR growth was low at 3% year-over-year.
• Still reported a GAAP net loss of $7.1 million.
• Adjusted free cash flow remains negative at $(6.0) million for the six months ended June 30, 2025.
• Cash and cash equivalents decreased to $32.2 million as of June 30, 2025, from $45.8 million at December 31, 2024.

Risks

• The impact of go-to-market transformation and the ability to attract and retain customers, including increasingly larger customers.
• The continued growth of data stored by customers.
• The continued growth of AI-related business.
• Realizing the anticipated benefits relating to cost savings initiatives and the re-investment of savings in additional sales capacity.
• Market competition, including competitors that may have greater size, offerings, and resources.
• Effectively managing growth and scaling of the platform.
• Ability to offer new features and other offerings on a timely basis, including new enterprise cyber security features, B2 Overdrive offering, and geographic expansion, and achieve desired market adoption.
• Disruption in service or loss of availability of customer data.
• Cyberattacks.
• Maintaining growth consistent with historical levels.
• The impact of pricing and other product offering changes.
• Material defects or errors in software.
• Supply chain disruption.
• Ability to maintain existing relationships with partners and to enter into new partnerships.
• Ability to remediate and prevent material weaknesses in internal controls over financial reporting.
• Hiring and retention of key employees.
• The impact of changes to global trade and tariff policies, on the company or its vendors, partners, and customers.
• War or hostilities, and other significant world or regional events on the business and the business of customers, vendors, supply chain, and partners.
• Litigation and other disputes.
• Third-party attempts to generate negative news regarding the company, regardless of accuracy.
• Availability of additional capital.
• General market, political, economic, and business conditions.

Future Outlook

For the third quarter of 2025, revenue is expected to be between $36.7 million to $37.1 million, with an Adjusted EBITDA margin between 17% to 19%. For the full-year 2025, revenue is now expected to be between $145.0 million to $147.0 million, raised from the previous guidance of $144.0 million to $146.0 million, with an Adjusted EBITDA margin range of 17%-19%. The B2 business year-over-year growth outlook for Q3 2025 was raised to 28-30% (from 25-28% previously), and for Q4 2025, it is expected to be 30%+. The company is solidifying its journey to be Adjusted Free Cash Flow positive in Q4 2025.

Management Comments

• "Pleased with our continued strong quarterly performance, with B2 revenue growth accelerating from 23% to 29% sequentially and solidifying our journey to be Adjusted Free Cash Flow positive in Q4."
• "Drove innovation with a suite of new cyber security data offerings announced in Q2 and Q3, including AI-powered Anomaly Alerts, functionality designed to help customers detect potential suspicious activity."
• "Signed our first six-figure B2 Overdrive customer in early Q3, just two months after product launch, demonstrating the clear value our solutions bring to AI workloads."
• "Through product innovation, go-to-market transformation, and the power of AI, we are expanding our role as the leading independent cloud storage provider shaping the AI-driven future."

Industry Context

The company positions itself as a cloud storage innovator offering a modern alternative to traditional cloud providers, emphasizing its role in the AI-driven future. The strong growth in B2 Cloud Storage, particularly with AI-related customer wins and the launch of B2 Overdrive for AI workloads, aligns with the increasing industry demand for scalable and cost-effective storage solutions for artificial intelligence and machine learning applications. The focus on being up to 3.2x more cost-effective directly challenges the pricing models of larger, more traditional cloud providers, aiming to capture market share by offering a specialized and affordable alternative.

Comparison to Industry Standards

• The company positions itself as a "modern alternative to traditional cloud providers," directly competing with hyperscalers such as Amazon Web Services (AWS) S3, Google Cloud Storage, and Microsoft Azure Blob Storage.
• An independent analyst firm, Enterprise Strategy Group, found Backblaze B2 to be up to 3.2x more cost-effective and easy-to-use compared to alternatives, indicating a strong competitive advantage on price and usability against established players.
• The signing of a first six-figure B2 Overdrive customer for AI workloads and scaling an AI customer to over several million dollars in ARR demonstrates the platform's capability to support high-growth, data-intensive AI use cases, a segment where hyperscalers are also heavily focused.
• The 109% Net Revenue Retention Rate (NRR), while a decrease from 114% in Q2 2024, still indicates existing customers are expanding their usage, which is a positive sign for a SaaS/cloud service, though some hyperscalers might report higher NRR due to broader service portfolios.
• The 90% gross customer retention rate is robust for a cloud service provider, indicating strong customer stickiness and satisfaction, comparable to leading SaaS and cloud infrastructure companies.

Stakeholder Impact

• Shareholders: Positive financial results, raised guidance, stock repurchase program, and progress towards free cash flow positivity could positively impact share price and shareholder value.
• Customers: New cybersecurity features, B2 Overdrive for AI workloads, and continued cost-effectiveness (3.2x more cost-effective) enhance value proposition and data security.
• Employees: Continued growth and strategic initiatives suggest stability and potential for growth opportunities.
• Creditors: Securing a new $20 million credit facility indicates improved financial standing and access to capital.

Next Steps

• Continue journey to be Adjusted Free Cash Flow positive in Q4 2025.
• Host a conference call on August 7, 2025, at 5:00 a.m. PT (8:00 a.m. ET) to review financial results.
• Continue product innovation, go-to-market transformation, and leveraging AI to expand role as a cloud storage provider.

Key Dates

Recommendation

The company demonstrated robust growth in its key B2 Cloud Storage segment, significantly improved profitability metrics (Adjusted EBITDA, Non-GAAP Net Income), and raised its full-year revenue guidance. The strategic focus on AI workloads, evidenced by new customer wins and product launches, positions it well for future growth in a high-demand area. While the NRR saw a slight dip, the overall financial trajectory towards positive adjusted free cash flow in Q4, coupled with enhanced financial flexibility from the new credit facility and a stock repurchase program, indicates strong operational execution and a positive outlook for investors.

Keywords

Cloud Storage, B2 Cloud Storage, Computer Backup, Data Storage, AI Workloads, Cybersecurity, Enterprise Storage, SaaS, Cloud Computing, Data Management, Backblaze, BLZE