Backblaze, Inc. (BLZE) - Q1 2026 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended March 31, 2026. Backblaze, Inc. operates a high-performance cloud storage platform offering B2 Cloud Storage (IaaS) and Computer Backup (SaaS). The company serves over 500,000 customers across 175+ countries, managing approximately 5 billion gigabytes of data. Backblaze is classified as an Emerging Growth Company (EGC) and an Accelerated Filer.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $38.7 million | $34.6 million |
| Gross Profit | $23.5 million | $19.3 million |
| Gross Margin | 61% | 56% |
| Net Loss | $(6.1) million | $(9.3) million |
| Adjusted EBITDA | $10.1 million | $6.4 million |
| Operating Cash Flow | $3.4 million | $4.9 million |
| Cash & Marketable Securities | $45.5 million | $67.8 million (implied) |
| Annual Recurring Revenue (ARR) | $158.2 million | $139.4 million |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 12% year-over-year, driven primarily by a 24% increase in B2 Cloud Storage revenue ($22.4M vs $18.0M). Computer Backup revenue declined slightly by 2% ($16.2M vs $16.6M) due to a decrease in license counts, partially offset by price increases and higher utilization.
- Margin Expansion: Gross margin improved to 61% from 56%. This was driven by higher revenue, reduced depreciation expense (due to an extension of infrastructure useful life estimates), and improved economies of scale, partially offset by higher variable data center costs.
- Restructuring Costs: The company incurred $2.2 million in restructuring charges in Q1 2026 related to the "2025 Restructuring and Transformation Plan," primarily impacting Sales & Marketing and General & Administrative expenses. No such charges were recorded in Q1 2025.
- Profitability: Net loss narrowed to $6.1 million from $9.3 million. Adjusted EBITDA turned positive at $10.1 million, up from $6.4 million, reflecting improved operational efficiency despite restructuring costs.
Guidance, Outlook, and Risks
- Strategic Initiatives: Management is executing a go-to-market transformation to target larger enterprise and "neocloud" customers. New launches include B2 Neo (white-label storage for neoclouds) and the Flamethrower startup program for AI developers.
- Pricing Changes: Effective May 1, 2026, the company implemented price increases for B2 Cloud Storage pay-as-you-go plans and eliminated API transaction fees.
- Restructuring Outlook: The company expects to incur an additional $2.1 million to $4.3 million in restructuring charges through Q1 2027 to complete the transformation plan.
- Liquidity: The company maintains $45.5 million in cash and marketable securities and has a $20.0 million revolving credit facility with no outstanding borrowings. On April 30, 2026, the credit agreement was amended to extend the maturity to 2028 and increase share repurchase limits.
- Risks: Key risks include intense competition from major cloud providers (AWS, Azure, Google), reliance on third-party data centers and hardware suppliers, cybersecurity threats, and the volatility of the AI market which the company is targeting for growth.
Investor Verification Checklist
- Revenue Mix: Verify the sustainability of B2 Cloud Storage growth versus the decline in Computer Backup license counts.
- Restructuring Impact: Monitor the execution of the 2025 Restructuring Plan and the realization of expected cost savings in future quarters.
- Capital Expenditures: Review future capital requirements for data center expansion, particularly given the competitive landscape for AI infrastructure.
- Customer Concentration: Assess the risk of revenue concentration as the company pivots toward larger enterprise and neocloud customers.
- Debt Covenants: Confirm continued compliance with the Credit Agreement's financial covenants (minimum liquidity, EBITDA thresholds, and leverage ratios).