8-K: Backblaze Q3 Revenue Jumps 14%, B2 Cloud Storage Up 28%

Backblaze, Inc. announced strong third-quarter 2025 financial results, exceeding revenue and Adjusted EBITDA guidance, driven by 28% growth in B2 Cloud Storage revenue and a new restructuring plan.

Summary

• Total revenue for Q3 2025 was $37.2 million, an increase of 14% year-over-year (YoY).
• B2 Cloud Storage revenue reached $20.7 million, growing 28% YoY.
• Computer Backup revenue remained flat YoY at $16.5 million.
• Gross profit for the quarter was $23.1 million, representing 62% of revenue, an expansion from 55% in Q3 2024.
• Adjusted EBITDA was $8.4 million, or 23% of revenue, significantly up from $3.7 million (12% of revenue) in Q3 2024.
• The company reported a net loss of $3.8 million, a substantial improvement from a net loss of $12.8 million in Q3 2024.
• Non-GAAP net income was $1.9 million, compared to a non-GAAP net loss of $4.1 million in Q3 2024.
• Annual Recurring Revenue (ARR) stood at $147.2 million, a 13% increase YoY, with B2 Cloud Storage ARR growing 26% YoY to $81.8 million.
• Net Revenue Retention (NRR) was 106%, down from 118% in Q3 2024, with B2 Cloud Storage NRR at 110% and Computer Backup NRR at 101%.
• Gross customer retention rate improved to 91% in Q3 2025 from 90% in Q3 2024.
• Backblaze initiated a 2025 Restructuring Plan in November 2025 to improve efficiency, primarily in sales and marketing, expecting total charges of approximately $4.4 million to $6.0 million, mainly in Q4 2025.
• These restructuring charges include an estimated impairment of $0.9 million to $1.2 million related to reducing the company's office facilities footprint.

Sentiment

Score: 8

Explanation: The company delivered strong Q3 results, exceeding guidance for revenue and Adjusted EBITDA, significantly reduced net loss, and achieved non-GAAP net income. The B2 Cloud Storage segment showed robust growth, and the company is on track for positive free cash flow. While Net Revenue Retention (NRR) declined, the overall financial trajectory and strategic focus on AI-driven data infrastructure are positive. The restructuring plan, while incurring charges, is aimed at improving efficiency.

Positives

• Exceeded the high end of revenue and Adjusted EBITDA guidance for Q3 2025.
• Overall revenue increased 14% YoY to $37.2 million.
• B2 Cloud Storage revenue grew robustly by 28% YoY to $20.7 million.
• Gross margin expanded significantly by approximately 700 basis points YoY to 62%.
• Adjusted gross margin increased to 79% from 78% YoY.
• Net loss was substantially reduced to $3.8 million from $12.8 million in Q3 2024.
• Adjusted EBITDA more than doubled to $8.4 million (23% of revenue) from $3.7 million (12% of revenue) YoY.
• Achieved Non-GAAP net income of $1.9 million, a significant turnaround from a non-GAAP net loss in the prior year.
• Cash flow from operations for the nine months ended September 30, 2025, increased to $14.2 million from $10.3 million in the prior year.
• Adjusted free cash flow improved to $(9.5) million from $(15.6) million for the nine months ended September 30, 2025.
• Secured a seven-figure expansion deal with an existing AI-powered video surveillance customer.
• B2 Overdrive was recognized as the 'Best in Enterprise Tech Innovation' by SiliconANGLE's TechForward Buyers Guide.
• Received the 'Cloud Computing Security Excellence Award' for Backblaze B2 Object Lock.
• Raised full-year 2025 Adjusted EBITDA margin guidance to 18%-20% from the previous 17%-19%.
• Remains on track to be free-cash-flow positive in Q4 2025, achieving a 20%+ Adjusted EBITDA margin a quarter early.

Negatives

• Computer Backup revenue was flat YoY at $16.5 million.
• Net Revenue Retention (NRR) decreased to 106% from 118% in Q3 2024.
• B2 Cloud Storage NRR decreased to 110% from 128% in Q3 2024.
• Computer Backup NRR decreased to 101% from 109% in Q3 2024.
• Initiated a restructuring plan expecting $4.4 million to $6.0 million in charges, including $0.9 million to $1.2 million for office facilities impairment.

Risks

• The impact of the go-to-market transformation and the ability to attract and retain customers, including increasingly larger customers.
• The continued growth of data stored by customers and the growth of AI-related business.
• Realizing the anticipated benefits from 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 features, B2 Overdrive, and geographic expansion.
• Disruption in service or loss of availability of customer data, and the threat of cyberattacks.
• Ability to continue to scale the business and the impact of pricing and other product offering changes.
• Material defects or errors in software and potential supply chain disruption.
• Ability to maintain existing relationships with partners and to enter into new partnerships.
• 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 its customers, vendors, supply chain, and partners.
• Litigation and other disputes, and the availability of additional capital.
• General market, political, economic, and business conditions.

Future Outlook

For the fourth quarter of 2025, Backblaze expects revenue between $37.3 million to $37.9 million and an Adjusted EBITDA margin between 20% to 22%. For the full-year 2025, the company narrowed its revenue guidance to $145.4 million to $146.0 million and raised its Adjusted EBITDA margin guidance to 18%-20%. The B2 business is projected to grow 25%-28% YoY in Q4 2025. The company remains on track to achieve positive free cash flow in Q4 2025.

Management Comments

• "I am pleased with our third quarter financial results exceeding the high end of our revenue and Adjusted EBITDA guidance and expanding gross margin by ~700 bps YoY to 62%."
• "We remain on track to be free-cash-flow positive in Q4."
• "B2 Cloud Storage grew 28% YoY and we won another seven-figure expansion with an existing customer, reinforcing the value of our price-performance and open platform."
• "As customers build AI and data-intensive workflows, they need high performance, predictable costs, and S3-compatibility without lock-in, a combination that sets Backblaze apart."

Industry Context

Backblaze positions itself as a high-performance cloud storage platform crucial for the burgeoning AI economy. The strong 28% YoY growth in B2 Cloud Storage revenue, coupled with significant customer expansions in AI-powered video surveillance and vision-language AI, underscores the increasing demand for specialized, cost-effective, and interoperable cloud storage solutions. The company's emphasis on 'price-performance and open platform' with 'S3-compatibility without lock-in' directly addresses key pain points for businesses engaged in data-intensive AI workflows, differentiating it from larger, potentially more restrictive, or higher-cost cloud providers. This strategy aligns with broader industry trends favoring flexible and efficient data infrastructure to support advanced analytics and AI development.

Comparison to Industry Standards

• The company highlights its 'price-performance and open platform' and 'S3-compatibility without lock-in' as key differentiators, implicitly comparing its offerings to larger cloud storage providers like Amazon S3, Google Cloud Storage, or Microsoft Azure Blob Storage, suggesting a competitive advantage in cost and flexibility.
• Secured a seven-figure expansion deal with an existing AI-powered video surveillance customer and a six-figure win with a vision-language AI startup, demonstrating success in attracting and expanding high-value customers in the rapidly growing AI sector.
• B2 Overdrive was recognized as the 'Best in Enterprise Tech Innovation' by SiliconANGLE's TechForward Buyers Guide, indicating strong product innovation compared to industry peers.
• Backblaze B2 Object Lock received a 'Cloud Computing Security Excellence Award,' validating its commitment to security features in a competitive cloud storage market.

Corporate Governance

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, exceeding guidance, improved profitability, and raised full-year EBITDA outlook. The new stock ownership policy aims to align management interests with shareholders.
• Employees: Potential impact from the 2025 Restructuring Plan, which includes 'employee termination expenses' as part of efficiency improvements.
• Customers: Continued benefit from B2 Cloud Storage growth, new features like B2 Overdrive, and enhanced security with B2 Object Lock. The focus on 'price-performance and open platform' aims to attract and retain customers, especially those with AI and data-intensive workflows.
• Creditors: Improved financial health and a clear path to positive free cash flow could be viewed favorably, enhancing creditworthiness.

Next Steps

• Implement the 2025 Restructuring Plan, with charges primarily expected in Q4 2025, to improve efficiency in sales and marketing functions.
• Continue go-to-market transformation initiatives, including streamlining AI-use case adoption, deepening developer relationships, upgrading GtM systems, engaging experienced GTM advisors, increasing direct sales efficiency, and driving self-serve momentum.
• Achieve free-cash-flow positive status in Q4 2025.
• Host a conference call on November 6, 2025, to review the financial results.

Key Dates

Recommendation

Backblaze delivered a strong Q3 2025, surpassing revenue and Adjusted EBITDA expectations, and significantly improving profitability to achieve non-GAAP net income. The B2 Cloud Storage segment, critical for future growth, continues its robust expansion, particularly in the high-growth AI sector. The company's strategic focus on AI data infrastructure, coupled with its commitment to efficiency through the restructuring plan and a clear path to positive free cash flow in Q4, positions it favorably. Despite a decline in NRR, the overall trajectory indicates strong operational execution and a compelling value proposition in a growing market. The raised full-year EBITDA guidance further reinforces confidence in its financial outlook, making it an attractive investment.

Keywords

Cloud Storage, B2 Cloud Storage, AI, Data Infrastructure, SaaS, Object Storage, Financial Results, Earnings, Q3 2025, Backblaze, BLZE, Restructuring, Adjusted EBITDA, Revenue Growth, Net Revenue Retention, Corporate Governance