Cloud storage provider Backblaze has surpassed its financial revenue forecast for the first quarter of 2026, despite a slight revenue decline within its backup storage division.
The company posted a quarterly revenue of $38.7 million, marking a 12% year-over-year increase. While it recorded a GAAP net loss of $6.1 million, the figure represented a notable improvement compared to the $9.3 million deficit from the same period last year. Its B2 cloud storage segment generated $22.4 million in revenue, reflecting a 24% annual growth rate. In contrast, the backup storage business brought in $16.2 million, down 2.4% year over year. CFO Marc Suidan commented that the downward trend of backup storage revenue was milder than the originally projected decline.
Gleb Budman, Co-founder and Chief Executive Officer of Backblaze, stated: “We exceeded the upper limit of our revenue and Adjusted EBITDA guidance in Q1, backed by a solid 24% year-over-year growth in the B2 business. Our AI customer base continues to gain momentum. We have onboarded an AI training data firm and a generative AI video creation vendor, jointly contributing approximately $1.5 million to annual contract value. Meanwhile, our AI client count surged by 76% year over year.” Over one-third of the company’s newly signed business bookings came from AI-industry customers.
Backblaze revenues by quarter by year to Q1 2026.
Budman further added: “We have successfully doubled our average transaction deal size, alongside a 72% year-over-year expansion in high-value clients with over $50,000 Annual Recurring Revenue (ARR). As we keep moving toward the mid-to-high-end market, we are on track to achieve full-year positive free cash flow for the first time since going public.”
Financial summary
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Gross margin: 61%, compared with 56% in the prior-year period
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Operating cash flow: $3.4 million, down from $4.9 million year over year
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Adjusted free cash flow: -$1.8 million, an improvement versus $2.1 million in the same period last year
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Cash, cash equivalents, and marketable securities: $45.5 million, lower than the previous quarter’s $51.4 million
Backblaze confirmed that its go-to-market strategic transformation is yielding tangible results, with the existing customer business pipeline nearly doubling year over year. The transformation strategy consists of three core pillars: enhancing brand exposure, stabilizing sales pipelines, and expanding revenue from existing clients. The Flamethrower startup initiative serves as clear proof of rising brand awareness, attracting 100 new enterprises to join the program within the past three months.
The company is heavily prioritizing disk-based cloud storage solutions tailored for emerging neocloud AI platforms. During the earnings briefing, Budman explained: “Certain neocloud vendors previously adopted flash-based cloud storage for its fast performance. However, as business scales up and AI workloads proliferate, the economic drawbacks of flash storage have become prominent. The per-terabyte cost of flash memory is roughly ten times higher than traditional hard drives. Although flash suits low-latency and small-scale data scenarios, it becomes economically unsustainable at the exabyte level. For this reason, neocloud operators are actively deploying cost-effective hard drive storage tiers to balance infrastructure performance and operational expenditure.”
ARR from large customers to Q1 2026.
High-value clients with an ARR exceeding $50,000 achieved a 72% year-over-year ARR increase. The total number of such enterprise clients reached 187, representing a 51% annual uptick.
Backblaze rolled out a pay-as-you-go price increase for its B2 cloud storage service to fund continuous performance optimization upgrades. Meanwhile, the firm abolished API transaction fees to streamline its pricing structure. Its consumer computer backup segment is projected to decline by 5% year over year, and the company intends to maintain a passive stance toward this shrinking business.
For the second quarter, Backblaze forecasts a revenue range of $40.0 million ± $200,000, equivalent to a 10.2% year-over-year growth at the midpoint. Its full-year 2026 revenue guidance has been raised by $5 million, revised from $157.5 million ± $1 million to $162 million ± $1 million, marking an 11% annual increase. The enterprise expects to achieve consistent positive cash flow starting from the second half of 2026.
Beijing Qianxing Jietong Technology Co., Ltd.
Sandy Yang/Global Strategy Director
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Email: yangyd@qianxingdata.com
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