Backblaze — Q3 2026 Earnings Summary

Financial Performance:

• Total revenue was $46.7 million, a 26% increase year-over-year (YoY).
• B2 Cloud Storage revenue was $30.5 million, a 47% increase YoY.
• Computer Backup revenue was $16.2 million, a 2% decrease YoY.
• Gross profit was $29.8 million (64% of revenue), compared to $23.1 million (62% of revenue) in Q3 2025.
• Net loss was $2.4 million, compared to a net loss of $3.8 million in Q3 2025.
• Net loss per share was $0.04, compared to $0.07 in Q3 2025.
• Adjusted EBITDA was $15.2 million (33% of revenue), compared to $8.4 million (23% of revenue) in Q3 2025.
• Non-GAAP net income was $6.7 million, compared to $1.9 million in Q3 2025.
• Cash flow from operations for the nine months ended September 30, 2026, was $22.8 million, compared to $14.2 million for the same period in 2025.
• Adjusted free cash flow for the nine months ended September 30, 2026, was $1.9 million, compared to $(9.5) million for the same period in 2025.
• Cash, cash equivalents, and marketable securities totaled $230.2 million as of September 30, 2026.
• Long-term debt, net, was $194.5 million as of September 30, 2026, compared to $0 in December 31, 2025.
• Deferred revenue, current, was $29.8 million as of September 30, 2026, compared to $30.5 million as of December 31, 2025.

Guidance and Future Outlook:

• For Q4 2026, revenue is expected between $49.8 million and $50.2 million.
• For Q4 2026, adjusted EBITDA margin is expected between 32% and 34%.
• For Q4 2026, basic weighted average shares outstanding are expected between 63.6 million and 63.8 million.
• Full-year 2026 revenue outlook raised to between $177.8 million and $178.2 million (previously $172.0 million to $174.0 million).
• Full-year 2026 adjusted EBITDA margin range raised to 30% to 31% (previously 27% to 29%).

Business Segments and Product Lines:

• Annual recurring revenue (ARR) was $190.7 million, a 29% increase YoY.
• B2 Cloud Storage ARR was $126.8 million, a 53% increase YoY.
• Computer Backup ARR was $63.9 million, a 2% decrease YoY.
• Net revenue retention rate (NRR) was 105% (115% for B2 Cloud Storage, 94% for Computer Backup).
• Gross customer retention rate was 91% for the total company (89% for B2 Cloud Storage, 91% for Computer Backup).
• Signed four large agreements, including a $4 million AI builder expansion; three supported AI workloads and one supported a core workload.
• Net new B2 self-serve customer additions reached a record, quadrupling YoY.
• The number of customers contributing more than $50,000 each in ARR grew 57% YoY to 254.
• Established a collaboration with WEKA to pair high-performance data storage with extended GPU memory and Backblaze B2's scalable capacity.
• Introduced the Backblaze B2 MCP Server to enable AI agents to use B2 storage directly within developers' existing tools.

Market and Competitive Landscape:

• Management described Q3 2026 as having "broad-based momentum across our customer base."
• Backblaze is solidifying its role as the capacity tier for AI infrastructure companies and AI builders as AI customers scale.
• The company serves more than 500,000 customers across 175 countries.

Risks and Challenges:

• Forward-looking statements involve risks including the ability to attract and retain customers, particularly larger ones.
• Risks include market competition from competitors with greater size, offerings, and resources.
• Potential challenges include rapidly evolving technological developments in AI and the ability to offer new features timely.
• Risks include disruption in service, loss of data availability, cyberattacks, and supply chain disruptions.
• Risks include the impact of pricing changes, such as the May 1, 2026, pay-as-you-go storage pricing increase.
• Risks include material defects, errors in software, and the ability to maintain partner relationships.
• Risks include global trade and tariff policies, war, hostilities, and general market, political, and economic conditions.

Management Commentary and Tone:

• CEO Gleb Budman stated, "Q3 2026 was another strong quarter, with B2 revenue growth accelerating to 47% year over year, up from 28% a year ago."
• Management highlighted the record number of net new B2 self-serve customers and the growth in high-value customers.
• The tone reflects confidence in Backblaze's positioning as the capacity tier for AI infrastructure.

Other Key Points:

• Completed a $201 million convertible notes offering consisting of 0% convertible senior notes due 2031.
• Entered into related capped call transactions associated with the convertible notes offering.
• Proceeds from the notes offering are expected to be used for capital expenditures supporting contracted growth and general corporate purposes.
• The company issued 0% convertible senior notes due 2031.
• The press release includes reconciliations of non-GAAP financial measures to GAAP measures.
• Conference call for Q3 2026 results was held on November 2, 2026.