Backblaze (BLZE) Q3 2026 Earnings Call Transcript

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DATE

Mon, Nov. 2, 2026

CALL PARTICIPANTS

• Director of investor relations and corporate development – Mimi Kong
• Co Founder, CEO and Chairperson of the Board – Gleb Budman
• Chief Financial Officer – Marc Suidan

TAKEAWAYS

• Total Revenue — $46.7 million, representing 26% year-over-year growth and exceeding the high end of guidance by $2 million.
• B2 Cloud Storage Revenue — $30.5 million, up 47% year over year reflecting broad-based momentum across self-serve and sales-led segments.
• B2 Annual Recurring Revenue — $127 million, growing 53% year over year and adding $14 million sequentially from the second quarter.
• Adjusted EBITDA — $15.2 million, with margins expanding 10 percentage points year over year to 33%.
• B2 Organic Growth — 35% excluding the impact of the May pricing increase, up from 26% on the same basis in the second quarter.
• $50,000-plus ARR Customers — 254 accounts, representing 57% year-over-year growth in this upmarket segment.
• B2 Net Revenue Retention — 115%, up from 113% in the previous quarter due to higher expansion and lower churn.
• Large Sales Bookings — four agreements over $500,000 in annual recurring revenue signed in the quarter, including three expansions with existing AI builders.
• Cash Reserves — $230.2 million in cash and marketable securities, bolstered by a $201 million convertible debt offering.
• B2 Self-Serve Momentum — fourfold increase in net new self-serve customer additions compared with the same period last year.
• Full Year Revenue Guidance — $177.8 million to $178.2 million, reflecting a $5 million raise at the midpoint.
• Fourth Quarter Revenue Guidance — $49.8 million to $50.2 million, anticipating B2 growth to accelerate to approximately 60% year over year.
• Capital Expenditures — $33 million year-to-date, with full year guidance of 55% to 65% of revenue to fund capacity for contracted demand.
• GAAP Gross Margin — 64%, up from 62% last year, supported by the May 1 pricing update.
• Computer Backup Revenue — $16.2 million, a decrease of 2% year over year despite a slight sequential increase from the second quarter.
• Non-GAAP Net Income — $6.7 million, more than triple the $1.9 million reported in the third quarter of 2025.
• AI Search Visits — 230% year-over-year growth in traffic from AI search engines, which convert to accounts at more than twice the rate of organic search.
• B2 ARR from Large Customers — $50 million, up 109% year over year from customers contributing over $50,000 annually.
• Operating Leverage — total operating expenses fell to 67% of revenue from 72% in the prior year as revenue growth outpaced the expense base.

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RISKS

• CFO Suidan warned that adding capacity ahead of customer ramps would lead to a temporary GAAP gross margin reduction of 3 to 6 percentage points as depreciation begins before associated revenue.
• CFO Suidan stated, “The data center, I mean, no secret. It is a tough logistics issue,” noting the company is actively monitoring capacity to sustain growth.

SUMMARY

Backblaze, Inc. (BLZE -2.50%) reported accelerated revenue growth driven by significant expansion in its B2 Cloud Storage segment and the initial execution of major artificial intelligence infrastructure contracts. Management indicated that the company is transitioning from a period of platform development to one of large-scale capacity deployment, particularly for NeoCloud partners and high-growth AI builders. The company raised its full year guidance based on broad-based demand and improving operating leverage while securing capital through a recent convertible debt offering to fund accelerated infrastructure investments.

• CEO Budman reported that one large NeoCloud customer, originally expected to begin loading data in early 2027, started several months ahead of schedule due to engineering development finishing early.
• Management stated that the company’s contract with CoreWeave is valued at $135 million over five years, including a two-way minimum commitment through July 2027.
• CFO Suidan noted that for every $1 of annual recurring revenue added, the company typically invests $2 in capital expenditures, with a historical payback period of approximately two years.
• The pipeline of new AI builders entering the sales process doubled in the third quarter compared with the second quarter of 2026.
• Management reported that AI search engine traffic now results in new account creation or sales contact at more than twice the rate of traditional organic search.

INDUSTRY GLOSSARY

• B2 Cloud Storage: The company’s consumption-based, S3-compatible cloud storage service for developers and businesses.
• ARR: Annual Recurring Revenue, a measure of the annualized value of active customer arrangements.
• NRR: Net Revenue Retention, representing the percentage of recurring revenue retained from existing customers, including expansion and churn.
• NeoCloud: Specialized cloud infrastructure providers focused on high-performance compute and GPU workloads for artificial intelligence.
• MCP Server: Model Context Protocol server, a tool enabling AI agents to interact directly with storage systems.
• IaaS: Infrastructure-as-a-Service, a form of cloud computing that provides virtualized computing resources over the internet.
• SaaS: Software-as-a-Service, a software licensing and delivery model in which software is licensed on a subscription basis.

Full Conference Call Transcript

Operator: Hello, everyone. Thank you for joining us, and welcome to the Backblaze Third Quarter 2026 Financial Earnings Call. After today’s prepared remarks, we will host a question and answer session. If you would like to ask a question, please press *1 to raise your hand. Withdraw your question, please press *1 again. I will now hand the conference over to Mimi Kong, director of investor relations and corporate development. Mimi, please go ahead.

Mimi Kong: Thank you. Good afternoon, and welcome to Backblaze’s third quarter 2026 Earnings Call. On the call with me today are Gleb Budman, Co Founder, CEO and Chairperson of the Board and Marc Suidan, Chief Financial Officer. Today, Backlaze will discuss the financial results that were distributed earlier. Statements on this call include forward looking statements about our future financial results. The impact of our sales and marketing initiatives, cost saving initiatives, results from new features, the impact of price changes, supply volatility, and pricing, our ability to compete effectively and manage our growth, and our strategy to acquire new customers, and retain and expand our business with existing customers.

These statements are subject to risks and uncertainties that could cause actual results to differ materially, including those described in our Risk Factors that are included in our most recent quarterly report on Form

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