Business context and reporting period
Backblaze, Inc. filed its Form 10-K for the fiscal year ended December 31, 2023. Although the request references 2023 Q4, this filing reports annual results; the supplied text does not provide a clear standalone fourth-quarter income statement or cash-flow summary. Backblaze provides B2 Cloud Storage and Computer Backup services. It reported more than 500,000 customers across 175+ countries, with approximately 76% of 2023 revenue from self-service customers.
Key financial metrics
Amounts below are in millions of dollars unless otherwise noted. Fiscal-year comparisons are 2023 versus 2022.
| Metric | 2023 | 2022 |
|---|---|---|
| Revenue | $102.0 | $85.2 |
| Gross profit / margin | $49.9 / 49% | $43.9 / 52% |
| Operating loss | $(57.9) | $(48.1) |
| Net loss | $(59.7) | $(51.4) |
| Net loss per share, basic and diluted | $(1.66) | $(1.62) |
| Adjusted EBITDA (non-GAAP) | $(3.9) | $(9.4) |
| Cash used in operating activities | $(7.4) | $(13.8) |
| Cash and cash equivalents | $12.5 | $6.7 |
| Short-term investments | $16.8 | $58.7 |
Revenue by offering: B2 Cloud Storage was $46.4 million, up 40%; Computer Backup was $55.6 million, up 7%. At year-end, total assets were $131.7 million, total liabilities $86.7 million, and stockholders’ equity $44.9 million. The company had $4.1 million outstanding under its revolving credit facility, with $15.9 million available; the outstanding borrowing was collateralized by an equal amount of restricted cash. Finance lease and lease-financing liabilities totaled $31.8 million, including imputed interest; operating lease liabilities totaled $10.0 million.
Material changes versus the prior year
- Revenue rose 20%, driven mainly by B2 customer storage growth, price changes, and B2 Reserve sales.
- Gross margin declined from 52% to 49%, as data-center operating costs and infrastructure depreciation increased faster than revenue.
- Net loss widened by $8.3 million. Stock-based compensation increased to $25.2 million from $17.0 million.
- Operating cash use improved by $6.4 million, while year-end cash and short-term investments together fell to $29.3 million from $65.4 million.
- B2 ARR increased 49% to $57.6 million; Computer Backup ARR rose 12% to $60.0 million. Total net revenue retention decreased from 113% to 109%, primarily reflecting weaker Computer Backup retention expansion; Computer Backup NRR was 100%, versus 108%.
Outlook, risks, and unusual items
Management said it expects a favorable revenue and gross-margin effect from the October 2023 price increases over the following 12 months, but noted uncertainty about their full effect. No numerical full-year 2024 guidance is provided in the supplied text. Management expects to continue investing in infrastructure at a magnitude similar to the prior 12 months and expects research and development expense to rise; it expects general and administrative expense to decrease in 2024. The company says it does not expect to be profitable for the foreseeable future.
- Price increases: B2 pay-as-you-go storage rose from $5 to $6 per TB per month; Computer Backup pricing also increased. Management reported no material retention impact by year-end, but cautioned that effects may emerge later.
- Workforce actions: 2023 restructuring was substantially completed by June, with $3.6 million in charges.
- Other notable items: a $0.2 million software impairment; an additional $0.9 million of ESPP stock-compensation expense recorded in Q4; and a $1.5 million SAFE-holder settlement recorded in 2022, not 2023.
- Controls: management concluded disclosure controls and internal control over financial reporting were ineffective at December 31, 2023, citing three unremediated material weaknesses involving accounting reviews and reconciliations, equity accounting, and going-concern assessment. The auditor did not attest to internal-control effectiveness.
- Key risks include sustained losses and financing needs, intense competition, customer churn or lower usage after price increases, data-center and hardware supply constraints, service outages or cybersecurity incidents, and execution of international growth. The company reported no current legal proceeding it believes is likely to have a material adverse effect.
The independent auditor gave an unqualified opinion on the consolidated financial statements.
Important facts for investors to verify
- Whether price increases translate into durable revenue and margin gains without increased churn or reduced customer usage.
- Whether B2 growth can offset slowing Computer Backup retention expansion and customer-count trends.
- Infrastructure spending, lease obligations, available liquidity, and the company’s path to lower operating cash use and eventual profitability.
- Progress in remediating all three material weaknesses and whether controls operate effectively over a sufficient period.
- How stock-based compensation, including ESPP expense, affects reported losses and potential shareholder dilution.