Backblaze, Inc.

Previous wording

We are a leading specialized storage cloud platform, providing businesses and consumers with cloud services to store, use, and protect their data in an easy and affordable manner. We provide these cloud services through a purpose-built, web-scale software infrastructure built on commodity hardware. We believe that by offering an easy-to-use, cost-effective, performant cloud storage solution, and thereby substantially reducing the cost, complexity and frustration of storing, using, and protecting data, we can empower customers to focus on their core business operations. Customers use us to support their artificial intelligence (“AI”) workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and information technology (“IT”) needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates. Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, combined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers, and our direct sales activities have historically supported us in acquiring larger customers. As we seek to move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of these customers. Our customers use our Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 5 billion gigabytes of data storage under management.

Current wording

We are a leading specialized storage cloud platform, providing businesses and consumers with cloud services to store, use, and protect their data in an easy and affordable manner. We provide these cloud services through a purpose-built, web-scale software infrastructure built on commodity hardware. We believe that by offering an easy-to-use, cost-effective, performant cloud storage solution, and thereby substantially reducing the cost, complexity and frustration of storing, using, and protecting data, we can empower customers to focus on their core business operations. Customers use us to support their artificial intelligence (“AI”) workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and information technology (“IT”) needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates. Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, combined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers, and our direct sales activities have historically supported us in acquiring larger customers. As we move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of these customers. Our customers use our Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 5 billion gigabytes of data storage under management.

Previous wording

We focus on specialized storage and an open cloud ecosystem that integrates smoothly with a broad range of partners. Ongoing investment in our technology platform and related features has driven customer, community, and product miles tones. Starting in the second half of 2024, we initiated a go-to-market transformation that is actively moving the company up-market, which has been evidenced by the signing of multiple deals with total contract values over $1.0 million each and an acceleration of revenue growth for B2 Cloud Storage to 29% year-over-year.

Current wording

We focus on specialized storage and an open cloud ecosystem that integrates smoothly with a broad range of partners. Ongoing investment in our technology platform and related features has driven customer, community, and product miles tones. Starting in the second half of 2024, we initiated a go-to-market transformation that is actively moving the company up-market, which has been evidenced by the signing of multiple deals with total contract values over $1.0 million each and revenue growth for B2 Cloud Storage of 28% for the current quarter compared to the same period in the prior year.

Previous wording

To support our up-market expansion and evolving customer needs, we recently launched B2 Overdrive, our premium-priced, ultra high-throughput performance cloud storage solution, designed to meet the demands of data-intensive workloads including AI and machine-learning training, large-scale analytics, high-performance computing, and media processing. We also introduced a suite of enterprise cyber security features including AI-powered anomaly alerts, mandatory multifactor authentication, bucket access logging, and Enterprise Web Console which streamlines roles-based administrative control in complex environments to help with cybersecurity and account management. These launches expand our addressable market among enterprise and AI-driven customers and lay the groundwork for further innovation to drive differentiated value for these customers.

Current wording

To support our up-market expansion and evolving customer needs, we recently launched B2 Overdrive, our premium-priced, ultra high-throughput performance cloud storage solution, designed to meet the demands of data-intensive workloads including AI and machine-learning training, large-scale analytics, high-performance computing, and media processing. We also introduced a suite of enterprise cyber security features including AI-powered anomaly alerts, mandatory multifactor authentication, bucket access logging, and Enterprise Web Console which streamlines role-based administrative control in complex environments to help with cybersecurity and account management. These launches expand our addressable market among enterprise and AI-driven customers and lay the groundwork for further innovation to drive differentiated value for these customers.

Previous wording

We are committed to continued investment in capital and research and development activities to meet the performance requirements of modern enterprise and AI workloads. In April 2025, we launched B2 Overdrive, a premium priced high-performance cloud storage solution for data-intensive workloads such as AI and machine-learning training, high-performance computing, large-scale analytics, and media processing. In May 2025, we released the Enterprise Web Console for B2 Cloud Storage, which streamlines role-based administration in complex enterprise environments. These launches build on our up-market go-to-market transformation and are expected to broaden our addressable market, deepen cross-sell and upsell potential, and position us to capture incremental growth in enterprise and AI-driven customers. To support these new offerings and our up-market strategy, we expect capital expenditures to increase in the coming quarters.

Current wording

We are committed to continued investment in capital and research and development activities to meet the performance requirements of modern enterprise and AI workloads. In April 2025, we launched B2 Overdrive, a premium priced high-performance cloud storage solution for data-intensive workloads such as AI and machine-learning training, high-performance computing, large-scale analytics, and media processing. In May 2025, we introduced the Enterprise Web

Previous wording

While our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more than 175 countries, with 29% and 28%of our total revenue originating outside of the United States for thethree and six months ended June 30, 2025, respectively. We believe international expansion may represent a meaningful opportunity. We may invest in our operations internationally to reach new customers by expanding into targeted key geographies where we believe there are opportunities for significant return on investment. In January 2025, for example, we collaborated with a leading hybrid cloud solutions provider in Canada to extend our market reach in this region. This collaboration led to the launch of a new data center region in Canada in January 2025.

Current wording

While our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more than 175 countries, with 29% and 28%of our total revenue originating outside of the United States for thethree and nine months ended September 30, 2025, respectively. We believe international expansion may represent a meaningful opportunity. We may invest in our operations internationally to reach new customers by expanding into targeted key geographies where we believe there are opportunities for significant return on investment. In January 2025, for example, we collaborated with a leading hybrid cloud solutions provider in Canada to extend our market reach in this region. This collaboration led to the launch of a new data center region in Canada in January 2025.

Previous wording

We believe the growth in the use of our platform by our existing customers is an important measure of the health of our business and our future growth prospects. We measure this growth by monitoring our overall net revenue retention rate, which measures our ability to retain and expand revenue from existing customers. Our continued focus on our customers is driving significant revenue retention, as evidenced by our overall net revenue retention rates (“NRRs”) of 109%and 114% as of June 30, 2025 and June 30, 2024, respectively. The enhancement of our B2 Cloud Storage offerings is a key contributor to this success, resulting in NRRs of 112%and 126% for the same periods. The decrease in the NRR for B2 is largely driven by the lapped impact of the October 2023 price increase, which we announced during the third quarter of 2023, and resulted in pricing increases across our Computer Backup and B2 Cloud Storage products.

Current wording

We believe the growth in the use of our platform by our existing customers is an important measure of the health of our business and our future growth prospects. We measure this growth by monitoring our overall net revenue retention rate, which measures our ability to retain and expand revenue from existing customers. Our continued focus on our customers is driving significant revenue retention, as evidenced by our overall net revenue retention rates (“NRRs”) of 106%and 118% as of September 30, 2025 and September 30, 2024, respectively. The enhancement of our B2 Cloud Storage offerings is a key contributor to this success, resulting in NRRs of 110%and 128% for the same periods. The decrease in the NRR for B2 Cloud Storage is largely driven by the lapped impact of the October 2023 price increase, which we announced during the third quarter of 2023, and resulted in pricing increases across our Computer Backup and B2 Cloud Storage products.

Previous wording

To calculate the NRR for a specific quarter, we determine the revenue recognized in that quarter from customers who generated revenue during the same quarter of the previous year. This revenue is then divided by the revenue generated in the prior year quarter. Our overall NRR rate is calculated as the average of these quarterly rates over the past four quarters to provide a comprehensive view of revenue trends.

Current wording

To calculate the NRR for a specific quarter, we determine the revenue recognized in that quarter from customers who generated revenue during the last month of the same quarter of the previous year. This revenue is then divided by the revenue generated from those same customers in the prior year quarter. Our overall NRR rate is calculated as the average of these quarterly rates over the past four quarters to provide a comprehensive view of revenue trends.

Previous wording

We define ARR as the annualized value of all B2 Cloud Storage and Computer Backup arrangements as of the end of a period. Given the renewable nature of our business, we view ARR as an important indicator of our financial performance and operating results, and we believe it is a useful metric for internal planning and analysis. ARR is calculated based on multiplying the monthly revenue from all B2 Cloud Storage and Computer Backup arrangements, which represent greater than 98% of our total revenue for the periods presented (and excludes Physical Media revenue), for the last month of a period by 12. Our annual recurring revenue for each of B2 Cloud Storage and Computer Backup is calculated in the same manner as our overall ARR based on the revenue from our B2 Cloud Storage and Computer Backup solutions, respectively. See Note 3 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on revenue from B2 Cloud Storage and Computer Backup arrangements.

Current wording

We define ARR as the annualized value of all B2 Cloud Storage and Computer Backup arrangements as of the end of a period. Given the renewable nature of our business, we view ARR as an important indicator of our financial performance and operating results, and we believe it is a useful metric for internal planning and analysis. ARR is calculated based on multiplying the monthly revenue from all B2 Cloud Storage and Computer Backup arrangements for the last month of a period by 12. Our annual recurring revenue for each of B2 Cloud Storage and Computer Backup is calculated in the same manner as our overall ARR based on the revenue from our B2 Cloud Storage and Computer Backup solutions, respectively. See Note 3 to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for more information on revenue from B2 Cloud Storage and Computer Backup arrangements.

Previous wording

While ARR is not a guarantee of future revenue, we consider substantially all of our revenue as recurring in nature for the periods presented. As noted above, our gross customer retention rate has been consis tent over the periods presented at approximately 90%. Although B2 Cloud Storage is generally consumption-based and paid for by customers in arrears, we recognize revenue in the month these storage services are delivered and consider this revenue recurring as customers are charged as long as their data is stored with us. Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage net revenue retention rate of 112% as of June 30, 2025. Computer Backup (subscription-based arrangements) revenue is recognized on a straight-line basis over the contractual term of the arrangement beginning on the date that the service commences, provided that all other revenue recognition criteria have been met. See Note 2 to our audited consolidated financial statements included in our Annual Report for details on our revenue recognition policy. Additional limitations of ARR include the fact that consumption-based revenue is not guaranteed for future periods, although we believe that our high historic gross customer retention rate is indicative of ARR, and the fact that our subscription terms can be on a monthly basis, although the significant majority of our customers have subscription terms of one year or longer during the periods presented above.

Current wording

While ARR is not a guarantee of future revenue, we consider substantially all of our revenue as recurring in nature for the periods presented. As noted above, our gross customer retention rate has been consis tent over the periods presented at approximately 90%. Although B2 Cloud Storage is generally consumption-based and paid for by customers in arrears, we recognize revenue in the month these storage services are delivered and consider this revenue recurring as customers are charged as long as their data is stored with us. Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage net revenue retention rate of 110% as of September 30, 2025. Computer Backup (subscription-based arrangements) revenue is recognized on a straight-line basis over the contractual term of the arrangement beginning on the date that the service commences, provided that all other revenue recognition criteria have been met. See Note 2 to our audited consolidated financial statements included in our Annual Report for details on our revenue recognition policy. Additional limitations of ARR include the fact that consumption-based revenue is not guaranteed for future periods, although we believe that our high historic gross customer retention rate is indicative of ARR, and the fact that our subscription terms can be on a monthly basis, although the significant majority of our customers have subscription terms of one year or longer during the periods presented above.

Previous wording

Changes to recurring revenue may result from the expansion of our offerings to our existing customers, as well as new customer acquisition and the timing of customer renewals. Our ARR increased by $17.9 million for B2 Cloud Storage and $1.7 millionfor Computer Backupas of June 30, 2025 compared to June 30, 2024, representing 29% and 3% growth, respectively. While growth in Computer Backup ARR has declined, the offering continues to serve as a stable source of recurring revenue, supported by multi-year subscription commitments and increased demand from business environments.

Current wording

Changes to recurring revenue may result from the expansion of our offerings to our existing customers, as well as new customer acquisition and the timing of customer renewals. Our ARR increased by $16.9 million for B2 Cloud Storage as of September 30, 2025 compared to September 30, 2024, representing 26% growth. ARR for Computer Backup experienced a slight decline of$0.2 million compared to the prior year, but continues to serve as a stable source of recurring revenue, supported by multi-year subscription commitments and increased demand from business environments.

Previous wording

We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to our customers primarily through either a consumption or committed contract basis or a subscription-based arrangement through B2 Cloud Storage and Computer Backup, respectively. Our subscription arrangements generally range in duration from one month to five years, forwhich we bill our customers up front for the entire period.

Current wording

We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to customers primarily through two pricing models: a consumption- or committed-contract basis for B2 Cloud Storage, and a subscription-based arrangement for Computer Backup. Our subscription arrangements generally range in duration from one month to five years, forwhich we bill our customers up front for the entire period.

Previous wording

Consumption-based revenue is variable and is related to fees charged for our customers’ use of our platform and is recognized as revenue in the period in which the consumption occurs. For our subscription arrangements, we provide our cloud services evenly over the contractual period, for which revenue is recognized on a straight-line basis over the contract term beginning on the date that the service is made available to the customer.

Current wording

Consumption-based revenue is recognized based on fees charged for customer usage of our platform, with fees recorded as revenue in the period in which the consumption occurs. For our subscription arrangements, we provide our cloud services evenly over the contractual period, for which revenue is recognized on a straight-line basis over the contract term beginning on the date that the service is made available to the customer.

Previous wording

We intend to continue to invest additional resources in our infrastructure to support the growth of our business. Some of these investments, including costs of infrastructure equipment (including related depreciation) and expansion, and software development costs and related amortization are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period.

Current wording

We plan to continue investing in our infrastructure to support the growth of our business. These investments include the purchase and expansion of infrastructure equipment (and related depreciation) as well as software development activities and associated amortization. Because these costs are often incurred ahead of revenue generation, delays in realizing anticipated revenue or fluctuations in the timing of revenue could adversely affect our gross margin from period to period.

Previous wording

As discussed above, during the second quarter of 2025, we completed a study on the useful lives of our property and equipment, resulting in an extension of the useful life of our infrastructure equipment. This update resulted in a reduction in depreciation expense of approximately $2.4 million for the three months ended June 30, 2025 and is anticipated to result in further reduction of approximately $2.8 million for the remainder of the year.

Current wording

As discussed above, during the second quarter of 2025, we completed a study on the useful lives of our property and equipment, resulting in an extension of the useful life of our infrastructure equipment. This update resulted in a reduction in depreciation expense of approximately $1.7 million and $4.1 million for the three and nine months ended September 30, 2025, respectively, and is anticipated to result in further reduction of approximately $1.1 million for the remainder of the year ending December 31, 2025.

Previous wording

The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation. We expect that our operating expenses, excluding depreciation, amortization and stock-based compensation expenses, to remain relatively flat in 2025 compared to the prior year, as efficiencies from our restructuring activities in 2024 offset increased investments in research and development and other growth-related costs; however, some of our sales and marketing expenses may increase as we continue to ramp up our hiring and external marketing spend over time in absolute dollars as we grow our business.

Current wording

The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation. We expect our operating expenses, excluding depreciation, amortization and stock-based compensation expenses, to remain relatively flat in 2025 compared to the prior year, as efficiencies from our restructuring activities in 2024 offset increased investments in research and development and other growth-related costs. However, sales and marketing expenses may increase in absolute dollars as we expand our workforce and invest in marketing initiatives to support business growth.

Previous wording

General and administrative expenses consist primarily of personnel costs for our accounting, finance, legal, security, human resources, and administrative support personnel and executives. General and administrative expenses also include costs related to legal and other professional services fees, sales and other taxes; depreciation and amortization; and an allocation of our general overhead expenses. While we expect general and administrative expenses to increase as the business scales, we anticipate that these costs will decline as a percentage of revenue over time, as incremental investments are concentrated in research and development and cost of revenue functions that more directly support business growth.

Current wording

General and administrative expenses consist primarily of personnel costs for our accounting, finance, legal, security, human resources, and administrative support personnel and executives. General and administrative expenses also include costs related to legal and other professional services fees, sales and other taxes; depreciation and amortization; and an allocation of our general overhead expenses. While we expect general and administrative expenses to increase in absolute dollars as the business scales, we anticipate that these costs will decline as a percentage of revenue over time.

Previous wording

Investment income consists primarily of interest earned on our cash balances and investments.

Current wording

Investment income consists primarily of interest earned on our cash, cash equivalents and investments in marketable securities.

Previous wording

Comparison of the Three and Six Months Ended June 30, 2025 and 2024

Current wording

Comparison of the Three and Nine Months Ended September 30, 2025 and 2024

Previous wording

Total revenue increased by $5.0 million, or 16%, for the three months ended June 30, 2025 compared to the same period in 2024.

Current wording

Total revenue increased by $4.6 million, or 14%, for the three months ended September 30, 2025 compared to the same period in 2024.

Previous wording

Primary factors influencing the$4.4 million increase in B2 Cloud Storage revenue include the following:

Current wording

Primary factors influencing the$4.5 million increase in B2 Cloud Storage revenue include the following:

Previous wording

•a $1.9 million increase driven by higher storage usage as a result of upselling and organic data growth by existing customers; and

Current wording

•a $2.3 million increase driven by higher storage usage as a result of upselling and organic data growth by existing customers; and

Previous wording

•a $4.2 million increase in sales to new customers.

Current wording

•a $2.2 million increase in B2 sales to new customers.

Previous wording

Primary factors influencing the $0.6 million increase in Computer Backup revenue include the following:

Current wording

Primary factors influencing the $0.1 million increase in Computer Backup revenue include the following:

Previous wording

•a $3.2 million increase due to price increases that went into effect in October 2023; and

Current wording

•a $0.7 million increase due to price increases that went into effect in October 2023;

Previous wording

•a $1.7 million decrease from a decline in license count.

Current wording

•a $0.9 million decrease from a decline in license counts.

Previous wording

Total revenue increased by $9.7 million, or 16%, for the six months ended June 30, 2025 compared to the same period in 2024.

Current wording

Total revenue increased by $14.2 million, or 15%, for the nine months ended September 30, 2025 compared to the same period in 2024.

Previous wording

Primary factors influencing the $7.9 million increase in B2 Cloud Storage revenue include the following:

Current wording

Primary factors influencing the $12.4 million increase in B2 Cloud Storage revenue include the following:

Previous wording

•a $3.7 million increase related to higher storage usage as a result of upselling and organic growth by existing customers; and

Current wording

•a $4.7 million increase driven by higher storage usage as a result of upselling and organic growth by existing customers; and

Previous wording

•a $2.5 million increase in sales to new customers.

Current wording

•a $7.6 million increase in sales to new customers.

Previous wording

Primary factors influencing the $1.8 million increase in Computer Backup revenue include the following:

Current wording

Primary factors influencing the $1.9 million increase in Computer Backup revenue include the following:

Previous wording

•a $1.3 million increase due to price increases that went into effect in October 2023; partially offset by a $0.9 million decrease from a decline in license counts.

Current wording

•a $4.1 million increase due to price increases that went into effect in October 2023;

Previous wording

Primary factors influencing the$0.8 million, or 6%, decrease in cost of revenue for the three months ended June 30, 2025 compared to the same period in 2024 include the following:

Current wording

Primary factors influencing the$0.7 million, or 5%, decrease in cost of revenue for the three months ended September 30, 2025 compared to the same period in 2024 include the following:

Previous wording

Primary factors influencing the $0.4 million, or 1%, increase in cost of revenue for the six months ended June 30, 2025 compared to the same period in 2024 include the following:

Current wording

Primary factors influencing the $0.3 million, or 1%, decrease in cost of revenue for the nine months ended September 30, 2025 compared to the same period in 2024 include the following:

Previous wording

•a $1.9 million increase in amortization expense related to capitalized investments in platform enhancements and new software features;

Current wording

•a $2.8 million increase in amortization expense related to capitalized investments in platform enhancements and new software features; and

Previous wording

Gross margin was 63% and 60% for the three and six months ended June 30, 2025, respectively, compared to 55% and 54% for the same period in 2024, respectively. The growth in our gross margin for both periods is primarily driven by the decrease in depreciation expense due the extension of the useful life of our infrastructure equipment, effective April 1, 2025, which contributed 7% and 3% for the three and six months ended June 30, 2025, as well as improved benefits of scale relative to the cost of personnel to support our cost of sales, and partially offset by increases related to the expansion of our data center spaces.

Current wording

Gross margin was 62% and 60% for the three and nine months ended September 30, 2025, respectively, compared to 55% and 54% for the same period in 2024, respectively. The growth in our gross margin for both periods is primarily driven by the decrease in depreciation expense due the extension of the useful life of our infrastructure equipment, effective April 1, 2025, which resulted in increases of 5% and 4% for the three and nine months ended September 30, 2025, respectively, as well as improved benefits of scale relative to the cost of personnel to support our cost of sales, and partially offset by increases related to the expansion of our data center spaces.

Previous wording

•an increase of $1.3 million related to personnel-related expenses, net of capitalization for internal-use software, to support our storage cloud features and offerings; and

Current wording

•an increase of $0.8 million related to personnel-related expenses, net of capitalization for internal-use software, to support our storage cloud features and infrastructure; and

Previous wording

•an increase of $0.5 million related to foreign exchange expense related to leases denominated in foreign currencies.

Current wording

•a decrease of $0.4 million related to foreign exchange expense related to leases denominated in foreign currencies; and

Previous wording

Primary factors influencing the change in operating expe nses for the six months ended June 30, 2025 compared to the same period in 2024 include the following:

Current wording

Primary factors influencing the change in operating expe nses for the nine months ended September 30, 2025 compared to the same period in 2024 include the following:

Previous wording

•an increase of $2.2 million related to personnel-related expenses, net of capitalization for internal-use software, to support our storage cloud features and offerings.

Current wording

•an increase of $3.0 million related to personnel-related expenses, net of capitalization for internal-use software, to support our storage cloud features and infrastructure; and

Previous wording

•a decrease of $0.6 million due to compensation expense related to a reduction in headcount; and

Current wording

•a decrease of $2.2 million due to compensation expense related to a reduction in headcount;