Backblaze, Inc. Class A Common Stock 2026 Q2 Earnings Call

Good afternoon and welcome to Backblaze's second quarter 2026 earnings call. On the call with me today are Gleb Budman, Co-founder, CEO, and Chairperson of the Board, and Marc Suidan, Chief Financial Officer. Today, Backblaze will discuss the financial results that were distributed earlier. Statements on this call include forward-looking statements about our future financial results, the impact of our sales and marketing initiatives, cost savings initiatives, results from new features, the impact of price changes, supply volatility in pricing, our ability to compete effectively and manage our growth, and our strategy to acquire new customers, retain and expand our business with existing customers. These statements are subject to risks and uncertainties that could cause actual results to differ materially, including those described in our risk factors that are included in our most recent quarterly report on Form 10-Q and our other financial filings.

All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by law. Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for our GAAP results. Reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8-K filed today with the SEC. You can also find a slide presentation related to our comments in the webcast, which will also be posted to our investor relations page after the call. Please also see our press release or presentation for definitions of additional metrics such as NRR, gross customer retention rate, and adjusted free cash flows.

Finally, we will be hosting an investor day on Wednesday, September 9th in New York City. Please reach out to ir@backblaze.com to RSVP for the in-person event. A live webcast will also be accessible from the Backblaze investor relations website. Thank you for joining us, and I will now like to turn the call over to Gleb.

Thank you, Mimi, and thank you everyone for joining us today. We had a fantastic second quarter. Revenue came in at $42.7 million, $2.5 million above the high end of our guidance range. Adjusted EBITDA margin was 30%, 700 basis points above the high end of our guidance range, and B2 growth accelerated to 34% year over year. These results reflect broad momentum across the business. We also signed the largest contract in Backblaze's history, a $335 million multi-year agreement with CoreWeave, which I'll come back to in a moment. We continued to move upmarket and ended the quarter with 235 customers contributing more than $50,000 each in ARR, up 57% year over year. ARR from this cohort grew 67% year over year.

We signed numerous AI companies, including a leading frontier model developer, introduced the ability to run our cloud storage in customer-owned data centers to support regional and sovereign workloads, and expanded our AI startup outreach and agentic developer tooling. This quarter's results are proof that our AI strategy is working. The decision to lean into AI is translating directly into the financial performance you just heard and into the momentum I'll walk you through now. To understand our strategy, consider this. Every training data set, checkpoint, inference output, and GenAI asset has to be stored and used. Customers consistently tell us they have three needs to support that. Number 1, the ability to scale with fast-growing data. Number 2, architectural freedom to use their cloud of choice. Number 3, storage performance that optimizes their AI workloads. All of that needs to be affordable so that AI scales efficiently.

The combination of those three requirements are why they choose Backblaze. Let's talk first about how that plays out with NeoClouds and inferencing clouds. Many of these initially focused on GPUs as a service, but quickly recognized that their customers also needed storage. Some of them began by building flash-based storage tiers to support high-performance workloads. However, as data scaled and flash prices spiked, it became clear that flash storage should only be used where it's necessary. As NeoClouds scale, they need a more complete storage stack. Flash where maximum performance is required, and a hard drive-based capacity tier for everything else. With five exabytes of storage and almost two decades of technical optimization, we believe Backblaze has built the most efficient hard drive-based capacity storage platform available. NeoClouds wanting to get performant scale efficiently are choosing Backblaze.

We estimate that this NeoCloud demand for capacity tier storage represents a $14 billion market opportunity by 2031. Our strategic agreement with CoreWeave, a more than five-year multi-exabyte deal and the largest contract in Backblaze's history, is the clearest proof this quarter that Backblaze can be the capacity tier for AI infrastructure. CoreWeave is recognized as the essential cloud for AI and runs many of the most demanding AI workloads in the world. As its platform expands, it is adding a variety of storage tiers that can scale rapidly and perform reliably and efficiently at massive scale. CoreWeave evaluated the available options and chose Backblaze for the software platform and operating expertise we have developed through years of managing large-scale hard drive-based storage infrastructure. CoreWeave is now the fourth major AI cloud infrastructure company to contract with Backblaze. We're in conversations with many of the leading other ones.

As these AI infrastructure companies scale to broaden support of their workloads, we become increasingly relevant to them. Part of the CoreWeave agreement also introduces a new way for us to deliver that value. For Backblaze, this managed storage approach represents a capital-light service model that brings our technology and operating expertise directly into a customer's infrastructure. This approach expands our opportunity to service customers in their regional data centers and sovereign cloud needs. Beyond AI infrastructure companies and to the broader AI market, we continue to see strong traction with AI-native companies like HeyGen, Hume AI, Mirage, and many more. This quarter, we continue to add to that list. AI companies are choosing Backblaze for our ability to scale fast. Last quarter, we highlighted a training data provider that signed a nearly $1 million deal in just 11 days.

Less than a quarter later, as its business grew faster than expected, it added another $1 million commitment. AI customers also choose Backblaze for architectural freedom. It used to be that companies were okay just building inside one cloud, but AI technology is evolving rapidly. AI-native builders are choosing from an increasingly fragmented set of cloud infrastructure that requires the ability to use and move data to whichever hyperscaler, neo cloud, inferencing cloud, or other AI infrastructure they need. Backblaze enables that through a combination of free egress, high-performance throughput, and optimized networking between us and these clouds. The need for architectural freedom resulted in a six-figure deal with a customer building conversational AI models. They needed a cloud-agnostic home for their training data. Expensive egress fees from their prior provider kept their data captive and limited what they could achieve.

With Backblaze, they were then able to freely move their data to whatever cloud they wanted without the headache of calculating and worrying if egress fees will break them. AI companies choose Backblaze for performance. We signed our largest B2 Overdrive deal to date, a seven-figure ARR deal with a frontier AI model developer. At the scale of data they work with, performance is critical, and B2 delivers high throughput at efficient price points. Together, scale, architectural freedom, and performance, all at an affordable price, are why AI companies are choosing Backblaze. While AI is making this need especially urgent, it extends to nearly every company using storage at scale. In addition to making great strides moving upmarket, we also know the biggest companies start small, and we're building for them. Our technology advantage is one part of how we are strengthening our position.

We're also working to make Backblaze the natural platform for developers and their AI agents to build on. This quarter, we shipped our SDK for TypeScript, the emerging language of choice for AI coding agents; released GenBlaze, a generative media SDK; and built out a new set of tools after seeing developers turn to B2 to store their AI agent data. We also launched our multimodal-focused generative media hackathon, which drove awareness of B2 as the storage layer for gen AI applications. In closing, we exceeded our financial expectations, announced the largest agreement in our history, and delivered new wins and expansions across the AI market, including our largest B2 Overdrive deal to date. We also introduced a new managed storage approach that brings our software and operating expertise into customer-owned infrastructure. The bigger point is this: when AI scales, data grows, and that is good for us.

When companies look to control AI costs, they come to us for that too. Growth or discipline, either way, we are well positioned to benefit and continue building a durable growth business. With that, I'll turn it over to Marc.

Thanks, Gleb, and good afternoon, everyone. Q2 was a pivotal quarter, reflecting both strong operating results and the significance of our strategic relationship with CoreWeave. Revenue was $42.7 million, up 18% year-over-year, and representing our strongest growth in six quarters. Adjusted EBITDA nearly doubled year-over-year to $13 million, with the margin expanding by 1,200 basis points to 30%. Both results exceeded the high end of our guidance. These results demonstrate the benefits of our strategy. Based on our Q2 performance and the outlook for the remainder of the year, we are raising full year guidance again. Turning to revenue. B2 accelerated to 34% year-over-year, our strongest growth rate in seven quarters. B2's strong performance was broad-based with almost every route to market and GTM lever over-performing, with strong performance in direct sales bookings, continued self-service momentum, and increased usage from larger customers.