BLZE — Backblaze, Inc.

Summary of Backblaze Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: $42.7 million, up 18% year-over-year, exceeding guidance by $2.5 million.
• Adjusted EBITDA: $13 million, nearly doubled year-over-year, with a margin of 30%, up 1,200 basis points.
• B2 Revenue Growth: Accelerated to 34% year-over-year, the strongest growth in seven quarters.
• Annual Recurring Revenue (ARR): B2 ARR reached $113 million, a 39% increase year-over-year.
• Customer Growth: 235 customers contributing over $50,000 in ARR, up 57% year-over-year.
• Gross Margin: 63%, benefiting from a price increase and operational efficiencies.
• Operating Expenses: Increased by 6% year-over-year, but improved as a percentage of revenue to 73%.

2. Strategic Updates and Business Highlights

• CoreWeave Contract: Signed the largest contract in company history, a $335 million multi-year agreement, marking a significant milestone in Backblaze's strategy to cater to AI infrastructure needs.
• AI Market Focus: Continued traction with AI companies, including new features and tools tailored for AI workloads, emphasizing scalability, architectural freedom, and performance.
• Managed Storage Approach: Introduced a capital-light service model allowing Backblaze to operate within customer-owned data centers, expanding its service offerings.
• Product Development: Launched new SDKs and tools for developers, enhancing Backblaze's position in the AI and developer community.

3. Forward Guidance and Outlook

• Q3 Revenue Guidance: Expected to be between $44.4 million and $44.8 million.
• Full Year Revenue Guidance: Raised to $172 million to $174 million, reflecting a 19% year-over-year growth outlook.
• Adjusted EBITDA Margin Guidance: Increased to 27%-29% for the full year.
• 2027 Outlook: Early commentary suggests B2 revenue growth could exceed 40% year-over-year, driven by contracted demand.

4. Bad News, Challenges, or Points of Concern

• Computer Backup Revenue: Declined by 2% year-over-year, indicating ongoing challenges in this segment.
• Churn from Price Increase: While churn was anticipated from a recent price increase, it did not materialize as expected, but could pose risks if customer sentiment shifts.
• CapEx Needs: High capital expenditures expected (55%-65% of revenue) to support growth, raising concerns about future cash flow and capital requirements.

5. Notable Q&A Insights

• CoreWeave Deal Impact: The deal is seen as a validation of Backblaze's capabilities, generating interest from other neocloud providers and enhancing market positioning.
• Go-to-Market Transformation: Executives noted significant progress in their go-to-market strategy, with new leadership in place and a focus on larger customer commitments.
• Managed Storage Demand: While the managed storage offering is gaining traction, it is not expected to dominate the customer base but could lead to larger opportunities.
• Visibility into Customer Needs: Improved visibility into customer requirements and future needs due to a shift towards a more sales-led approach, enhancing strategic planning.

Overall, Backblaze's Q2 2026 results reflect strong growth and strategic positioning in the AI infrastructure market, despite some challenges in specific segments and high capital expenditure requirements.