Backblaze NASDAQ: BLZE Chief Executive Gleb Budman said the cloud storage company is seeing a material shift in demand tied to artificial intelligence workloads, as customers seek alternatives to hyperscaler platforms and newer AI-focused cloud providers look to add storage capabilities.
Speaking at a BofA technology investment banking event, Budman described Backblaze as a company that began nearly 20 years ago in cloud backup and later built its own cloud infrastructure after determining that using Amazon Web Services would make its original backup service uneconomic.
“Our original plan was to store that on AWS,” Budman said. “We did the math, realized we were going to lose money on every single customer.”
Backblaze wrote its own file system and built its own infrastructure stack, initially to support its computer backup product. Budman said customers later asked to use that infrastructure for other storage needs, leading to the launch of Backblaze B2, which he said is now the dominant part of the business. The company still operates its Computer Backup product and has about half a million paying customers, according to Budman.
AI Workloads Driving Storage Demand
Budman said Backblaze has historically attracted customers with a simple value proposition: cloud storage at roughly one-fifth the price of Amazon S3. But he said AI has created new demand as companies increasingly use multiple providers for graphics processing unit capacity, model training, inferencing and content delivery.
Budman said many customers no longer want their data locked inside a single hyperscaler because AI workloads often require access to different GPU providers or “Neoclouds.” He said Backblaze offers an independent storage location with free egress and connectivity to the infrastructure providers customers want to use.
“In order to stay innovative and in order to do the AI workloads I need, I also want to use that Neocloud, this Neocloud, and that Neocloud,” Budman said, describing the customer mindset.
He also said Backblaze is serving Neoclouds directly through a white-label version of B2. Budman said some Neoclouds are moving beyond renting GPUs and want to offer storage as part of a broader AI workflow.
Bookings and Customer Examples
The BofA moderator referenced recent AI traction, including 76% growth in AI customers. Budman added that Backblaze has said one in three new bookings came from AI, calling it a “material change for the business.”
Budman cited one example of a customer that signed a roughly $1 million annual recurring revenue contract within 11 days after clicking on an ad. He said the short sales cycle reflected urgency among companies needing storage infrastructure for AI.
Budman also described a generative AI media company that moved tens of petabytes of training data from a hyperscaler to Backblaze. He said the customer had been using multiple Neoclouds and a hyperscaler for model building, and the cost and friction of moving data between platforms limited how often it could run training iterations.
By shifting data to Backblaze, Budman said, the company created a single data lake and could send data to different GPU locations without egress fees, allowing it to run more training cycles. He said the same customer is now discussing storage needs tied to inferencing, where generated videos may be stored indefinitely and distributed to end users.
Budman said Backblaze has also signed multiple Neoclouds, including six-figure, seven-figure and recently announced eight-figure deals. For some, he said Backblaze improved an existing storage offering; for another, it enabled a new product.
New Products Focus on Throughput and Neoclouds
Budman highlighted several technologies aimed at AI-related storage workflows. He discussed Shard Stash, a patent-pending technology designed to improve the upload of small files by optimizing the acknowledgement process from the hard drive back to the user.
He also pointed to B2 Overdrive, which he described as an extremely high-throughput offering of up to a terabit per second. Budman said the product was developed after customers said they needed to move large data sets quickly once expensive GPU capacity became available.
Another product, B2 Neo, is a dedicated white-label offering for Neoclouds. Budman said it provides throughput and durability as well as management controls for rate limits, users and related functions.
Financial Position and Capital Needs
Budman said Backblaze does not intend to raise capital to run the business. He said the company had targeted its first adjusted free cash flow positive quarter in the fourth quarter of 2025 and then set a goal for 2026 to be its first adjusted free cash flow positive year.
However, he said larger Neocloud opportunities could require additional capital to support infrastructure buildouts. Budman said Backblaze has about $100 million of equipment lease capacity and generally funds equipment through lease lines aligned with revenue.
“We don’t need money to run the business,” Budman said. “If the business materially accelerates, that’s always a possibility.”
Investor Perception and Infrastructure
Budman said investors sometimes underestimate the software and infrastructure stack behind Backblaze by viewing it as “just a bunch of hard drives.” He said the company operates 300,000 hard drives and stores five exabytes of customer data.
He also addressed concerns that AWS could lower storage prices, saying Backblaze has remained at about one-fifth of AWS’ price point for roughly two decades.
In response to an analyst question about infrastructure age and supply constraints, Budman said Backblaze regularly cycles out inventory and migrates data as drives age. He said the company’s hard drive reliability data showed drives tend to last longer than the useful life Backblaze applies for depreciation, even after a recent useful-life adjustment.
Budman said hard drives are not seeing the same level of constraint or price increases as memory and some compute components. He added that rising costs for flash-based systems have prompted some customers to keep only necessary workloads on flash and move other data to a data lake layer where Backblaze can serve as an alternative.
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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