Nasdaq:BLZE
Backblaze, Inc.
Backblaze provides affordable, scalable cloud backup and WORM storage solutions for businesses and individuals, backed by a massive self-hosted data center.
Key Metrics
Investment Thesis
Bull Case
Backblaze represents a high-growth opportunity in the essential data security market with a clear path toward profitability if it can leverage its massive scale to further reduce cost per terabyte. The company's unique hardware infrastructure eliminates egress fees and provides unmatched durability, creating a sticky customer base less sensitive to price hikes. If management can align R&D spending with revenue growth to close the loss gap, the current valuation may offer significant upside potential for long-term holders.
Bear Case
Investors should exercise caution due to the company's persistent and deepening net losses, which have increased from -$51.4M in 2022 to -$59.7M in 2023 before a slight rebound in 2024. The heavy reliance on capital expenditures for hardware suggests that revenue growth alone is not yet sufficient to fund operations, risking cash burn if market conditions deteriorate. Additionally, the lack of non-GAAP metrics showing sustainable margins makes it difficult to justify a premium valuation compared to more profitable cloud infrastructure peers.
About Backblaze, Inc.
Backblaze Inc. is a cloud storage and backup software provider offering enterprise-grade data protection solutions primarily to small to medium-sized businesses and individual consumers via its WORM (Write Once Read Many) storage technology. The company operates through direct sales and partnerships, serving markets that require high durability, scalability, and cost-effective archival storage without the complexity of traditional hardware maintenance. With significant investments in research and development, Backblaze focuses on delivering a proprietary software-defined storage platform that competes with established cloud infrastructure giants.
Analysis
Management Discussion
Backblaze reported revenue growth of approximately 25% in 2024 to $127.6M, driven by continued adoption of its storage platform and expansion into new market segments. However, the company posted a net loss of $48.5M for the year, with operating expenses totaling $115.6M significantly outpacing gross profit, highlighting the capital-intensive nature of scaling hardware infrastructure. While cash flow from operations turned positive at $12.5M and ending cash remained strong at $45.8M, the widening gap between revenue and profitability necessitates careful monitoring of path to breakeven.
Industry Overview
The cloud storage and backup industry is rapidly evolving as data volumes explode across SMBs and enterprises seeking affordable, compliant archival solutions. Competitors range from hyperscalers offering integrated storage tiers to specialized SaaS providers focusing on specific compliance needs like GDPR or HIPAA. Success in this sector now hinges on balancing hardware efficiency with software innovation while navigating the high capex required to maintain 99.9% uptime guarantees.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Revenue | $85.2M | $102.0M | $127.6M |
| Cost of Revenue | $41.3M | $52.2M | $58.3M |
| Gross Profit | $43.9M | $49.9M | $69.3M |
| Operating Expenses | $92.0M | $107.8M | $115.6M |
| Operating Income | $-48.1M | $-57.9M | $-46.3M |
| R&D | $33.1M | $39.5M | $42.1M |
| G&A | $23.5M | $27.0M | $29.1M |
| Marketing | $35.4M | $41.3M | $44.4M |
| Stock-Based Comp | $17.0M | $25.2M | $28.6M |
| D&A | $20.2M | $24.9M | $28.3M |
| Depreciation | $18.0M | $21.3M | $21.3M |
| Other OpEx | $0 | $0 | $0 |
| Non-Operating Income | $-3.3M | $-1.8M | $-2.2M |
| Interest Expense | $4.3M | $3.8M | — |
| Interest Income | $965.0K | $2.0M | $1.4M |
| Pre-Tax Income | $-51.4M | $-59.7M | $-48.5M |
| Income Tax | $-39.0K | $0 | $6.0K |
| Continuing Ops | $-51.4M | $-59.7M | $-48.5M |
| Discontinued Ops | $0 | $0 | $0 |
| Net Income | $-51.4M | $-59.7M | $-48.5M |
| Minority Interest | $0 | $0 | $0 |
| Net to Common | $-51.4M | $-59.7M | $-48.5M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Current Assets | $74.4M | $38.5M | $65.7M |
| Cash & Equivalents | $6.7M | $12.5M | $45.8M |
| Marketable Securities | $58.7M | $16.8M | $9.1M |
| Accounts Receivable | $856.0K | $800.0K | $1.8M |
| Prepaid Expenses | $8.1M | $8.4M | $9.0M |
| Other Current Assets | $0 | $0 | $0 |
| Long-Term Assets | $78.1M | $93.2M | $102.8M |
| Operating Leases | $6.9M | $10.0M | $15.9M |
| Other LT Assets | $71.2M | $83.2M | $86.9M |
| Total Assets | $152.5M | $131.7M | $168.6M |
| Current Liabilities | $56.3M | $57.1M | $59.8M |
| Accounts Payable | $3.3M | $2.3M | $1.5M |
| Current Leases | $2.1M | $1.9M | $4.0M |
| Deferred Revenue | $22.9M | $26.0M | $30.4M |
| Other Current Liab | $25.1M | $25.7M | $22.5M |
| Long-Term Liabilities | $27.4M | $29.7M | $31.1M |
| LT Operating Leases | $5.0M | $8.2M | $12.8M |
| Other LT Liab | $19.8M | $17.4M | $13.1M |
| Total Liabilities | $83.7M | $86.7M | $90.9M |
| Shareholders' Equity | $68.7M | $44.9M | $77.6M |
| Paid-In Capital | $156.5M | $192.4M | $273.6M |
| Retained Earnings | $-87.7M | $-147.5M | $-196.0M |
| Total L&E | $152.5M | $131.7M | $168.6M |
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Net Income (CFO) | $-51.4M | $-59.7M | $-48.5M |
| Non-Cash Adjustments | $39.0M | $51.2M | $54.6M |
| Working Capital Changes | $-1.4M | $1.1M | $6.4M |
| Cash from Operations | $-13.8M | $-7.3M | $12.5M |
| Capital Expenditures | $7.3M | $5.5M | $1.7M |
| Cash from Investing | $-73.9M | $21.7M | $-6.1M |
| Cash from Financing | $-6.2M | $-8.8M | $22.8M |
| FX Effect | $0 | $0 | $0 |
| Net Change in Cash | $-93.8M | $5.5M | $29.1M |
| Beginning Cash | $105.0M | $11.2M | $16.6M |
| Ending Cash | $11.2M | $16.6M | $45.8M |
Frequently Asked Questions
How does Backblaze, Inc. make money?
1) Enterprise Cloud Backup & Recovery for SMBs; 2) Consumer-grade 'WORM' Storage offering unlimited capacity with low egress fees; 3) Disaster Recovery as a Service (DRaaS) utilizing proprietary hardware appliances; 4) API-driven storage solutions for developers and integration partners.
What are the main risks for BLZE?
1) Persistent net losses and a growing retained earnings deficit indicate challenges in achieving sustained profitability despite revenue growth; 2) High capital expenditure requirements for data center expansion and hardware refreshes could strain cash reserves if adoption slows; 3) Intense competition from hyperscalers (AWS, Azure) offering similar features at scale; 4) Dependence on a single primary data center location creates potential operational risk during regional outages.
What is BLZE's competitive advantage?
1) Proprietary WORM technology ensures data immutability and security without relying on expensive third-party compliance certifications; 2) Massive self-hosted global infrastructure eliminates egress fees and provides superior uptime compared to public cloud providers; 3) Aggressive pricing model leveraging high-density storage hardware to offer unlimited capacity at a fraction of competitor costs.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.