Backblaze (BLZE) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 29% year-over-year to $32.6 million, with B2 Cloud Storage up 39% and Computer Backup up 20%.

• Achieved record adjusted EBITDA margin of 12%, up 1,500 basis points year-over-year, reflecting improved operating leverage and cost structure.

• Signed two multi-year enterprise deals of ~$1 million each and added three new AI customers generating $500,000 in annual revenue run rate; AI customer data stored more than doubled year-over-year.

• Launched go-to-market transformation, workforce reduction of 12%, and new executive hires to drive growth and efficiency.

• Opened a new data center region in Canada and formed a partnership with Opti9, expanding regional reach and managed cloud services.

Financial highlights

• Q3 2024 revenue was $32.6 million, up 29% year-over-year; adjusted EBITDA was $3.7 million (12% margin), compared to $(0.8) million (-3%) in Q3 2023.

• Adjusted gross margin improved to 78% from 74% last year; GAAP gross margin was 55%, up from 46% in Q3 2023.

• Net loss narrowed to $12.8 million from $16.1 million year-over-year; non-GAAP net loss was $4.3 million, improved from $7.8 million.

• Cash, investments, and restricted cash totaled $25.6 million at quarter end; net cash from operating activities for the nine months was $10.3 million.

• Adjusted free cash flow for the nine months was negative $15.6 million, a $22 million improvement year-over-year.

Outlook and guidance

• Q4 2024 revenue expected between $33.5–$33.9 million; full-year 2024 revenue guidance at $127–$128 million.

• Q4 adjusted EBITDA margin expected at 12%–14%; full-year margin at 9%–11%.

• Targeting adjusted EBITDA margin of ~20% and positive adjusted free cash flow by Q4 2025.

• Long-term goal to achieve Rule of 40 status based on revenue growth and adjusted free cash flow margin.

• Management expects continued revenue and margin growth from price increases and cost optimization.