Backblaze, Inc. reported fourth‑quarter 2025 results that surpassed analyst expectations, with revenue rising 12% to $37.8 million and earnings per share of $0.06 beating the consensus estimate of $0.01 by $0.05, a 500% surprise. The revenue increase was driven by a 24% year‑over‑year jump in B2 Cloud Storage revenue, which reached $21.3 million, and by modest growth in other segments that offset a slight decline in legacy storage sales.
Adjusted free‑cash‑flow margin climbed to 11% of revenue, a lift from 8% in the prior year, reflecting disciplined cost management and the inherent operating leverage of Backblaze’s commodity‑hardware platform. Adjusted EBITDA margin expanded to 28% of revenue, up from 14% in Q4 2024, largely due to a higher mix of high‑margin AI‑related contracts and the impact of non‑recurring savings from variable‑compensation alignment and office‑restructuring initiatives. Gross margin also improved to 62% from 55% year‑over‑year, underscoring the company’s pricing power in the AI‑driven storage market.
Backblaze closed its first eight‑figure total‑contract‑value neocloud agreement, valued at over $15 million, marking a significant win in the rapidly expanding neocloud market. The deal, while not generating revenue until 2027, signals strong demand for Backblaze’s low‑cost, transparent storage platform and positions the company to compete with hyperscalers in the AI space. Management highlighted that the B2 Neo offering, launched alongside the deal, is expected to accelerate future growth in the high‑margin AI segment.
Guidance for 2026 was updated to a revenue range of $156.5 million to $158.5 million and an adjusted EBITDA margin of 19% to 21%, a modest lift from the prior year’s guidance. The company reiterated its confidence in maintaining profitability while scaling its AI‑centric services, noting that the Rule of 40 score improved from 9% to 35% in Q4 2025. Management emphasized that the company is “de‑risking” its outlook by anchoring projections on predictable opportunities rather than large swing deals.
Market reaction was tempered by investor focus on the delayed revenue recognition from the new neocloud contract and anticipated gross‑margin pressure from rising data‑center costs. Despite the earnings beat, the market’s cautious stance reflects concerns about the timing of the new deal’s revenue impact and the potential for margin compression in the near term. Nonetheless, the strong operational performance and clear guidance signal a positive trajectory for Backblaze’s AI‑driven growth strategy.
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