Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Backblaze Inc (BLZE, Financial) reported a strong revenue growth of 29% year-over-year, with B2 cloud storage revenue increasing by 39%.
- The company achieved an adjusted EBITDA margin of 12%, showing significant improvement from the previous year.
- Backblaze Inc (BLZE) has implemented a go-to-market transformation, focusing on upskilling, partnerships, and sales plays, which has already resulted in a record pipeline and significant deals.
- The company announced the opening of a new data center region in Canada, expanding its geographical reach and meeting data sovereignty requirements.
- Backblaze Inc (BLZE) is on track to be free cash flow positive by Q4 2025, with a focus on becoming a 'rule of 40' company over time.
Negative Points
- Despite strong growth, B2 cloud storage revenue was lower than expected due to early churn and late deal closures.
- The company underwent a 12% reduction in workforce as part of cost-cutting measures, indicating potential challenges in managing expenses.
- Gross customer retention slightly decreased to 90% from 91% in the previous year.
- The company is still facing challenges in accelerating revenue growth, particularly in the B2 segment, which is crucial for future performance.
- Backblaze Inc (BLZE) is still in the process of transforming its go-to-market strategy, which may take time to fully realize benefits and could impact short-term performance.
Q & A Highlights
Q: Can you elaborate on the churn in the B2 segment and discuss the potential for moving upmarket with B2?
A: Gleb Budman, CEO, explained that the churn occurred earlier in the quarter than expected, but overall retention remained strong. Regarding moving upmarket, there is no specific limit; Backblaze has already signed significant multi-year deals and aims to continue this trajectory by building repeatability into their go-to-market strategy.
Q: Are you expecting overall revenue growth or specifically B2 growth to accelerate post-Q2 2025?
A: Marc Suidan, CFO, clarified that while the overall revenue growth is expected, the focus is on B2 growth. The company aims to grow faster than the market rate of 19%, especially after the price increase effects subside. The transformation in go-to-market strategy is expected to show results by Q2 2025.
Q: Can you provide more details on the 12% workforce reduction and its impact on different areas?
A: Marc Suidan, CFO, stated that the reduction was part of a zero-based budgeting exercise, with a significant focus on marketing. The aim is to shift from headcount to demand generation, aligning resources with future strategy and sales capacity.
Q: How will the new data center in Canada affect gross margins, and what is the impact of recent pipeline growth?
A: Marc Suidan, CFO, mentioned that the new data center would not significantly impact gross margins due to the nature of co-location and hardware leasing. Gleb Budman, CEO, added that the pipeline's quality and size have improved under new leadership, indicating positive future growth.
Q: How does the partnership with Opt Nine facilitate market expansion, and are there plans to further build out the sales team?
A: Gleb Budman, CEO, explained that Opt Nine, a major MSP in Canada, will use Backblaze for data storage, aiding regional and partnership expansion. Marc Suidan, CFO, noted that savings from cost efficiencies would be reinvested into expanding the sales team, focusing on sales reps to drive growth.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
