Backblaze Inc (BLZE, Financial) released its 8-K filing on November 7, 2024, showcasing a robust third quarter performance that exceeded analyst revenue estimates. The company, known for its cloud storage services, reported a revenue of $32.6 million, surpassing the estimated $32.44 million. Despite a net loss, the company demonstrated significant improvements in key financial metrics, indicating a positive trajectory in its business operations.
Company Overview
Backblaze Inc provides cloud storage services, offering solutions such as Backblaze B2 Cloud Storage and Backblaze Computer Backup. These services cater to a variety of use cases, including data storage, application development, and ransomware protection. The company primarily derives its revenue from the United States, with additional contributions from the United Kingdom, Canada, and other regions.
Performance and Challenges
In the third quarter of 2024, Backblaze Inc reported a 29% year-over-year increase in revenue, reaching $32.6 million. This growth was driven by a 39% increase in B2 Cloud Storage revenue and a 20% rise in Computer Backup revenue. However, the company faced a net loss of $12.8 million, which, although an improvement from the $16.1 million loss in Q3 2023, highlights ongoing challenges in achieving profitability.
Financial Achievements
Backblaze Inc's financial achievements in Q3 2024 are noteworthy, particularly the improvement in its Adjusted EBITDA Margin to 12%, up from a negative 3% in the previous year. This 1,500 basis point improvement underscores the company's focus on enhancing profitability and operational efficiency. The company's gross profit also increased to $17.8 million, representing 55% of revenue, compared to 46% in Q3 2023.
Key Financial Metrics
Key metrics from Backblaze Inc's financial statements reveal important insights into its operational health:
| Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Revenue | $32.6 million | $25.3 million |
| Net Loss | $(12.8) million | $(16.1) million |
| Adjusted EBITDA | $3.7 million | $(0.8) million |
| Gross Profit Margin | 55% | 46% |
Operational Highlights and Strategic Initiatives
Backblaze Inc's operational highlights include a 29% increase in Annual Recurring Revenue (ARR) to $130.5 million, with B2 Cloud Storage ARR growing by 39%. The company's Net Revenue Retention (NRR) rate improved to 118%, indicating strong customer retention and expansion. The company also launched a Go-to-Market Transformation and Cost Savings Initiatives, aiming to become adjusted free cash flow positive by Q4 2025.
“I’m excited that we have kicked off a go-to-market transformation and continue to build our upmarket momentum with two multi-year deals each totaling approximately $1 million,” said Gleb Budman, CEO of Backblaze.
Analysis and Outlook
Backblaze Inc's Q3 2024 results reflect a positive trend in revenue growth and operational efficiency, positioning the company well within the competitive cloud storage industry. The strategic initiatives and focus on cost efficiencies are expected to drive future profitability. However, the ongoing net losses highlight the need for continued focus on achieving sustainable financial health.
For the fourth quarter of 2024, Backblaze Inc anticipates revenue between $33.5 million to $33.9 million, with an Adjusted EBITDA margin of 12% to 14%. The company's full-year 2024 revenue is projected to be between $127.0 million to $128.0 million, aligning closely with analyst estimates.
Explore the complete 8-K earnings release (here) from Backblaze Inc for further details.
