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    BLZE
    Earnings call· Jun 2026(Q2 FY26)

    Backblaze Q2 FY26 earnings call BLZE

    Aug 3, 2026 Source

    Executive summary

    Backblaze Q2 FY26 — Record Contract and Strong AI-Driven Growth

    Backblaze delivered a strong quarter, significantly exceeding financial expectations driven by broad momentum across its B2 cloud storage business, particularly from its AI strategy. The company secured its largest contract to date with CoreWeave and expanded its managed storage offering, positioning itself as a key capacity tier for AI infrastructure. Management highlighted efficient growth and operating leverage, while also preparing for increased capital expenditures to support future demand.

    Highlights

    5

    • Revenue came in at $42.7 million, $2.5 million above the high end of guidance.

    • Adjusted EBITDA margin was 30%, 700 basis points above the high end of guidance.

    • B2 growth accelerated to 34% year over year, its strongest in seven quarters.

    • Signed the largest contract in Backblaze's history, a $335 million multi-year agreement with CoreWeave.

    • Customers contributing more than $50,000 each in ARR increased 57% year-over-year to 235.

    Concerns

    2

    • Computer backup revenue declined 2% year-over-year, despite churn mitigation efforts.

    • CapEx for the full year 2026 is expected to be between 55% and 65% of revenue due to accelerated investments for committed demand.

    Guidance & targets

    6
    CategoryTargetConfidence
    Q3 Revenue
    $44.4 million to $44.8 million
    high materiality
    High
    Q3 Adjusted EBITDA margin
    27% to 29%
    medium materiality
    High
    Full-year Revenue
    $172 million to $174 million
    high materiality
    High
    Full-year Adjusted EBITDA margin
    27% to 29%
    high materiality
    High
    Full-year Adjusted Free Cash Flow
    neutral
    medium materiality
    Medium
    B2 Revenue growth
    over 40% year over year
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    B2 Cloud Storage
    Achieved its strongest growth rate in seven quarters, driven by broad-based performance across all routes to market. The May 1 price increase contributed 8 percentage points to growth, with no anticipated churn.
    B2 ARR: $113 millionB2 ARR growth: 39% year-over-yearB2 net revenue retention: 113%
    		—34%——
    Computer Backup
    Performed better than expected due to churn initiatives and targeted customer acquisitions. This business continues to generate recurring revenue and cash flow, but faces overall market headwinds and is expected to remain in single-digit decline.
    		—-2%——

    Operational metrics

    17
    Adjusted EBITDA margin
    30%up 1200 basis points year-over-year
    Q2 FY26

    Exceeded the high end of guidance by 700 basis points.

    Operating expenses as percentage of revenue
    73%improved by 800 basis points
    Q2 FY26

    Demonstrates continued operating leverage, with operating expenses increasing 6% year-over-year, well below revenue growth.

    Adjusted Free Cash Flow margin
    8%
    Q2 FY26

    Achieved despite continued investment in infrastructure for 2027's committed demand.

    Cash and marketable securities balance
    $50 millionup from $45 million in the prior quarter
    Q2 FY26

    Ending balance for the quarter.

    Available capital lease lines
    over $150 million
    Q2 FY26

    Increased available and unused capital lease lines, generally at lower interest rates.

    CapEx as percentage of revenue
    55% to 65%
    FY26

    Expected for the full year, driven by accelerated CapEx to build capacity for signed customer commitments.

    Rule of 40
    42%up from 18% a year ago
    Q2 FY26

    Combined B2 revenue growth and adjusted free cash flow margin.

    Price increase contribution to B2 growth
    8 percentage points
    Q2 FY26

    Impact of the price increase implemented on May 1.

    Price increase contribution to sequential B2 ARR
    $9 million
    Q2 FY26

    Portion of the $20 million sequential B2 ARR increase driven by the price increase.

    Sequential B2 ARR increase
    $20 million
    Q2 FY26

    Total sequential increase in B2 Annual Recurring Revenue.

    Customers contributing over $50,000 ARR
    235up 57% year-over-year
    Q2 FY26

    Reflects continued move upmarket.

    ARR from >$50,000 cohort growth
    67%year over year
    Q2 FY26

    Growth in ARR from the cohort of larger customers.

    Deals valued over $500,000
    4
    Q2 FY26

    Number of large deals closed in the quarter.

    Managed storage approach
    —
    ongoing

    Represents a capital light service model that brings technology and operating expertise directly into a customer's infrastructure.

    CapEx break-even
    less than 24 months
    ongoing

    Indicates the efficiency of capital investments.

    Hardware asset useful life
    well over six years
    ongoing

    Demonstrates the longevity and value of the company's infrastructure assets.

    Neocloud demand for capacity tier storage market opportunity
    $14 billion
    by 2031

    Estimated market opportunity for Backblaze's capacity tier storage in the neocloud sector.

    Industry KPIs

    5
    MetricValueDetails
    Rpo current rpo$320 millionUSD
    Customer logo metrics235customers
    Large customer cohorts4deals
    Software recurring arr$113 millionUSD
    Net revenue dollar retention113%%

    Orderbook & backlog

    2
    Total RPO added$320 millionQ2 FY26

    Approximately $320 million in RPO added during the quarter.

    CoreWeave RPO$313 millionQ2 FY26

    RPO from CoreWeave, net of $22 million in warrant values.

    Product announcements

    4
    ProductTypeDetails
    Cloud storage in customer-owned data centersexpansion
    SDK for TypeScriptlaunch
    Genblazelaunch
    New tools for AI agent data storagelaunch

    Deals & partnerships

    1
    CoreWeaveMulti-year agreement for capacity tier storage for AI infrastructure, including a managed storage approach.$335 millionmore than five year

    CoreWeave is the fourth major AI cloud infrastructure company to contract with Backblaze. The agreement introduces a new managed storage approach where Backblaze provides its technology and operating expertise on customer-owned hardware.

    Risks & headwinds

    2
    Computer Backup revenue declineQ2 FY26

    declined 2% year-over-year

    Mitigation: churn initiatives, and targeted customer acquisitions help stabilize performance

    Increased CapEx needsFY26

    CapEx for the year will be between 55% and 65% of revenue

    Mitigation: Leveraging capital leases, aiming for adjusted free cash flow neutral for the full year.

    What to watch in Q3 FY26

    5

    B2 Revenue Growth

    FY27
    Current34% YoY
    Targetover 40% YoY

    Why it matters

    Indicates the sustained impact of AI demand and the CoreWeave deal on the core business.

    Looking ahead to 2027, based on the B2 underlying business fundamentals, CoreWeave's minimum RAB, and the previously announced $15 million plus TCV deal, we expect B2 revenue to grow over 40% year over year.

    Q&A highlights

    5

    How much of the FY26 guidance raise is due to CoreWeave vs. other factors, and how does the CoreWeave ramp impact the 40%+ B2 growth outlook for FY27?

    The FY26 raise is a healthy mix of business outperformance, Q2 beat, price increase, and CoreWeave ramp, with no single dominant factor. Guidance remains conservative, based on contracted minimums. CoreWeave specifically ramps over the coming year, hitting minimums by mid-2027, which is baked into the FY27 B2 growth outlook.

    “The $10.5 million raise is benefiting from a broad base of things. The business performing better, the Q2 beat of $2.7 million, the price increase and the CoreWeave ramp. None of them have a dominant role in that. It's a healthy mix of all that.”

    asked by Michael Cikos · answered by Marc Suidan

    2 min read6 chapters

    Detailed Narrative

    01

    AI Strategy and Market Opportunity

    Backblaze's decision to lean into AI is translating directly into strong financial performance and momentum. The company identifies a $14 billion market opportunity by 2031 for neocloud demand for capacity tier storage, driven by the need for scalable, affordable, and performant storage for AI workloads. Customers consistently require the ability to scale with fast-growing data, architectural freedom across clouds, and optimized storage performance, all at an affordable price point.

    02

    CoreWeave Partnership and Managed Storage

    The $335 million multi-year agreement with CoreWeave, the largest contract in Backblaze's history, serves as clear proof of its capability to be the capacity tier for AI infrastructure. This partnership also introduces a new capital-light managed storage approach, where Backblaze provides its technology and operating expertise directly into a customer's infrastructure. This model expands the company's opportunity to service customers in their regional data centers and sovereign cloud needs, with about half a dozen active conversations already underway for this offering.

    03

    Upmarket Traction and Customer Expansion

    Backblaze continues to demonstrate significant progress moving upmarket, ending the quarter with 235 customers contributing more than $50,000 each in ARR, marking a 57% year-over-year increase. ARR from this cohort grew 67% year-over-year. The company closed four deals valued at over $500,000 this quarter, including three AI-related wins, indicating a trend towards larger and longer-duration customer commitments and increased contracted demand.

    04

    B2 Performance and Price Increase Impact

    The B2 segment accelerated its growth to 34% year-over-year, representing its strongest growth rate in seven quarters. This strong performance was broad-based, with almost every route to market overperforming. The price increase implemented on May 1 contributed approximately 8 percentage points to B2 growth, and notably, the anticipated churn from this increase did not materialize, indicating underlying strength in the business.

    05

    Go-to-Market Transformation Success

    The ongoing go-to-market transformation, including the appointment of a new CRO and investments in sales development, RevOps, and operational strategy, is yielding positive results. The addition of almost 50 customers to the >$50,000 ARR group this quarter, a number historically achieved over a full year, suggests improved execution and broad-based repeatability in the sales process. This transformation is enabling the company to effectively pursue larger opportunities.

    06

    Capital Investment and Financial Health

    Backblaze is accelerating CapEx in the second half of 2026 and into 2027 to build required capacity for signed customer commitments, with CapEx for 2026 expected to be 55% to 65% of revenue. Despite these investments, the company expects to be adjusted free cash flow neutral for the full year by leveraging capital leases and its strong cash balance of $50 million. The CapEx break-even period is less than 24 months, and hardware assets have a useful life of over six years.

    AI-generated summary of the company’s earnings call. Not investment advice.