Backblaze reported third‑quarter 2025 results that surpassed consensus estimates, with total revenue of $37.2 million—up 0.8 million or 1.0% from the $36.3 million reported in Q2 2025—and a non‑GAAP earnings per share of $0.03, beating the $‑0.01 consensus by $0.04. Gross margin expanded to 62% from 55% in the same quarter a year earlier, while B2 Cloud Storage revenue rose 28% year‑over‑year to $20.7 million, driven by a seven‑figure expansion with an existing customer and growing demand for AI‑centric workloads.
Backblaze’s two main revenue streams—B2 Cloud Storage and Computer Backup—contributed $20.7 million and $16.5 million respectively, a 19% increase in the former and flat growth in the latter. The flat Computer Backup performance reflects headwinds from variable usage by large AI customers, while the B2 surge is a result of the company’s pricing advantage and open‑platform strategy that appeals to data‑center operators and AI developers.
The 7‑percentage‑point lift in gross margin is largely attributable to cost efficiencies in commodity‑hardware procurement and a reassessment of the hardware’s useful life, which lowered depreciation expense. Management also highlighted disciplined operating costs and a higher mix of high‑margin B2 contracts, which together offset modest increases in support and service expenses.
Backblaze guided for Q4 revenue of $37.3 million to $37.9 million, a 25%–28% year‑over‑year growth that is slightly below analyst consensus of $38.28 million. The company remains on track to be free‑cash‑flow positive in Q4 and has initiated a restructuring plan expected to incur $4.4 million to $6.0 million in charges, aimed at improving efficiency. Net revenue retention fell to 106% from 118% in Q3 2024, and B2 NRR dropped to 110% from 128%, signaling a modest slowdown in upsell momentum.
CEO Gleb Budman said the quarter “exceeded the high end of our revenue and adjusted EBITDA guidance and expanded gross margin by ~700 basis points YoY to 62%.” He added that the company’s “high‑performance, low‑cost storage platform” continues to win new business from AI and data‑intensive workloads. Investors reacted cautiously, focusing on the slightly softer Q4 guidance and the declining NRR, while noting the company’s strong margin trajectory and ongoing restructuring efforts.
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