Backblaze, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021, compared with FY2020. The filing provides annual results and year-end operating metrics, but does not provide a clear standalone Q4 income statement or cash flow.
Business context
Backblaze provides cloud storage and computer-backup services through consumption-based B2 Cloud Storage and subscription-based Computer Backup. At year-end, it reported approximately 499,000 customers in more than 175 countries and approximately 2 exabytes of data under management. More than 80% of FY2021 revenue came from self-serve customers; substantially all revenue was recurring.
Financial and operating performance
| Metric | FY2021 | FY2020 |
|---|---|---|
| Revenue | $67.5 million | $53.8 million |
| Gross profit / gross margin | $34.3 million / 51% | $28.0 million / 52% |
| Operating expenses | $53.1 million | $31.7 million |
| Loss from operations | $18.8 million | $3.7 million |
| Net loss | $21.7 million | $6.6 million |
| Adjusted EBITDA (non-GAAP) | $3.2 million | $11.1 million |
| Cash from operations | $3.5 million | $12.8 million |
| Cash used in investing activities | $11.2 million | $5.0 million |
- Revenue increased 25%. B2 Cloud Storage revenue rose 59% to $22.6 million, primarily from existing-customer expansion; Computer Backup revenue grew 13% to $44.1 million, reflecting customer additions and a price increase effective September 2021.
- Cost of revenue grew 28%, faster than revenue, as infrastructure spending increased; gross margin declined one percentage point. Research and development, sales and marketing, and general and administrative expenses increased 57%, 65%, and 92%, respectively.
- Total company net revenue retention was 110%, down from 114%. B2 retention was 130% versus 136%; Computer Backup retention was 102% versus 107%. Gross customer retention was 91%, compared with 90%.
- Cash and cash equivalents were $104.8 million at year-end, versus $6.1 million. The increase primarily reflected the November IPO, which generated approximately $103 million in net proceeds.
- Capital lease and lease-financing liabilities totaled $33.2 million; future minimum payments were $38.2 million. The company also disclosed $21.0 million of future operating lease payments. It had no revolver borrowings outstanding and $9.5 million available under its facility at year-end, subject to collateral requirements before advances.
Outlook, risks and unusual items
- Management expects continued investment in sales and marketing, product development, infrastructure, and operations, and does not expect profitability for the foreseeable future. It expects operating expenses and investing needs to rise as the business scales; no specific revenue or earnings guidance is stated in the supplied filing text.
- Management said existing cash, operating cash flow, and the revolving facility should support working capital and capital expenditure needs for at least 12 months. Future capital requirements depend on growth, infrastructure costs, hiring, and product investment.
- FY2021 included a $2.3 million gain from full forgiveness of the PPP loan and a $1.4 million realized loss upon conversion of $10 million of SAFE notes at the IPO. The SAFE converted into Class A shares.
- Infrastructure expansion and supply constraints are key risks: the company depends on third-party data centers, hard drives, and semiconductors. Capital leases support equipment purchases; shortages or higher costs could pressure service capacity, cash needs, and margins.
- Other material risks include competition, service outages or data loss, cybersecurity and privacy incidents, customer retention and acquisition costs, economic and pandemic-related disruption, and international regulatory exposure. The filing discusses the Russia-Ukraine conflict and related sanctions and energy-cost uncertainty as developments after year-end.
- Management concluded disclosure controls were not effective at December 31, 2021. Several previously identified material weaknesses remained unremediated, and an additional weakness involved IT access and segregation of duties for systems supporting expenditure reporting. The auditor did not attest to internal-control effectiveness; the financial statements received an unmodified audit opinion.
- Following the IPO, the company had a dual-class structure: Class B shares carry ten votes each versus one vote for Class A. Management also disclosed no expectation of dividends in the foreseeable future.
Key facts for investors to verify
- Whether revenue growth and customer expansion can continue as retention rates have declined, particularly in Computer Backup.
- Whether infrastructure investment and cost growth can stabilize or improve gross margin and operating cash flow.
- Progress and testing evidence for remediation of all material weaknesses in financial reporting controls.
- Actual cash deployment, equipment commitments, and lease obligations compared with the stated liquidity runway.
- The effect of increased stock-based compensation and the dual-class voting structure on dilution and shareholder influence.