Backblaze Q2 Earnings Call Highlights

Key Points

• Backblaze exceeded Q2 expectations: Revenue rose 18% year over year to $42.7 million, while adjusted EBITDA nearly doubled to $13 million and the margin reached 30%.
• B2 Cloud Storage accelerated: B2 revenue grew 34%, ARR increased 39% to $113 million, and larger-customer momentum strengthened, including four deals above $500,000 and three AI-related wins.
• CoreWeave deal boosts visibility and investment needs: The more-than-five-year, $335 million agreement added about $313 million in remaining performance obligations, prompting increased infrastructure spending but supporting raised 2026 revenue guidance of $172 million to $174 million and adjusted EBITDA margin guidance of 27% to 29%.

Backblaze NASDAQ: BLZE reported second-quarter 2026 results that exceeded its guidance, supported by accelerating B2 cloud-storage growth, improved profitability and a new multi-year agreement with AI cloud provider CoreWeave.

Revenue totaled $42.7 million, up 18% from a year earlier and $2.5 million above the high end of the company’s guidance range. Adjusted EBITDA was $13 million, nearly double the prior-year level, while adjusted EBITDA margin reached 30%, exceeding the high end of guidance by 700 basis points.

Chief Executive Officer Gleb Budman said the quarter reflected “broad momentum across the business,” including an acceleration in B2 growth, larger customer commitments and AI-related customer wins. The company also announced what it described as the largest contract in its history: a $335 million, more-than-five-year agreement with CoreWeave.

B2 Growth Accelerates as Larger Customers Expand

B2 revenue grew 34% year over year, its strongest growth rate in seven quarters, according to Chief Financial Officer Marc Suidan. B2 annual recurring revenue reached $113 million, up 39% year over year, while sequential B2 ARR increased by $20 million. The company said its May 1 price increase accounted for $9 million of that sequential ARR increase and approximately eight percentage points of B2 growth.

Suidan said the company had anticipated churn following the price increase, but that churn “did not materialize.” B2 net revenue retention was 113%, compared with 114% a year earlier.

Backblaze continued to move upmarket during the quarter. It ended the period with 235 customers contributing more than $50,000 in ARR, up 57% from a year earlier. ARR from that group increased 67% year over year. The company closed four deals valued above $500,000 during the quarter, including three AI-related wins.

Budman said the company added nearly 50 customers to the $50,000-plus ARR category from the prior quarter, which he characterized as evidence of broader go-to-market progress beyond the CoreWeave agreement. He said Backblaze has added a chief revenue officer, a sales-development leader, a head of revenue operations, a customer-success leader and other go-to-market personnel as part of its sales transformation.

CoreWeave Agreement Adds Contracted Demand

The CoreWeave agreement includes two components: use of Backblaze’s platform and a managed-storage service delivered on customer-owned hardware. Backblaze said the contract represents a multi-exabyte commitment and positions the company as a capacity-storage provider for AI infrastructure companies that need hard-drive-based storage alongside flash storage used for higher-performance workloads.

During the quarter, Backblaze added approximately $320 million in remaining performance obligations, including $313 million related to CoreWeave after accounting for $22 million in warrant value. Suidan said the CoreWeave agreement’s platform-related portion is roughly 70% of the net contract amount and is expected to ramp to its minimum commitment approximately 12 months after the agreement began, or around mid-2027. The managed-service component is expected to ramp later.

The company said CoreWeave is its fourth major AI cloud infrastructure customer. Budman said the announcement has led to additional discussions with AI infrastructure providers, including conversations around the new managed-storage approach. He said Backblaze was actively engaged in roughly half a dozen managed-storage discussions, though he noted the offering is intended for larger and more sophisticated customers rather than every customer.

Under the managed-storage model, customers provide data-center space and purchase equipment, while Backblaze supplies the build materials and manages the designated storage environment with its software and personnel. Budman said the approach may be useful for customers seeking regional deployments, sovereign cloud environments or asset ownership on their own balance sheets.

Margins, Capital Spending and Outlook

Total company gross margin was 63% in the second quarter, benefiting from the B2 price increase and operational efficiency, partly offset by higher hardware infrastructure costs. Operating expenses rose 6% year over year, below revenue growth, and declined by 800 basis points as a percentage of revenue to 73%.

Adjusted free cash flow margin was 8% for the quarter. Backblaze ended the period with $50 million in cash and marketable securities, compared with $45 million in the previous quarter, and said it had more than $150 million in available and unused capital-lease lines.

The company plans to accelerate capital expenditures in the second half of 2026 and into 2027 to support signed customer commitments. Suidan said capital expenditures are expected to equal 55% to 65% of revenue for full-year 2026. Using capital leases, Backblaze expects to be adjusted free-cash-flow neutral for the full year despite the increased infrastructure investment.

Management said the added investment could result in a temporary gross-margin decline of a few hundred basis points as depreciation begins before customer capacity ramps, though it expects margins to recover afterward. The managed portion of the CoreWeave agreement does not require Backblaze capital expenditures because it is delivered on customer-owned hardware.

• Third-quarter revenue is expected to be between $44.4 million and $44.8 million.
• Third-quarter adjusted EBITDA margin is projected at 27% to 29%.
• Full-year 2026 revenue guidance was raised to $172 million to $174 million, from $161.5 million to $163.5 million previously.
• Full-year adjusted EBITDA margin guidance was increased to 27% to 29%, from 23% to 25%.

At the midpoint, the revised full-year revenue outlook implies approximately 19% year-over-year growth, compared with the company’s prior expectation of about 11%. Suidan said the outlook reflects second-quarter results and greater visibility from contracted demand, while excluding variable usage above customer minimum commitments and potential deals larger than $500,000.

Looking into 2027, Backblaze said it expects B2 revenue to grow more than 40% year over year based on underlying B2 performance, CoreWeave’s minimum commitment and a previously announced deal with total contract value above $15 million. The company emphasized that the 2027 figure is early directional commentary rather than formal guidance.

Computer Backup revenue declined 2% year over year, a result the company said was better than expected. Management said it remains focused on retention, customer acquisition efforts, operating efficiency and margin improvement in that business, while continuing to expect low-single-digit declines.

About Backblaze (NASDAQ:BLZE)

Backblaze, Inc, a storage cloud platform, provides businesses and consumers cloud services to store, use, and protect data in the United States and internationally. The company offers cloud services through a web-scale software infrastructure built on commodity hardware. It also provides Backblaze B2 Cloud Storage, which enables customers to store data, developers to build applications, and partners to expand their use cases. This service is offered as a consumption-based Infrastructure-as-a-Service (IaaS) and serves use cases, such as public, hybrid, and multi-cloud data storage; application development and DevOps; content delivery and edge computing; security and ransomware protection; media management; backup, archive, and tape replacement; repository for analytics, artificial intelligence and machine learning; and Internet of Things.

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