Backblaze: Fiscal 1Q23 Financial Results

(in $ million)	1Q22	1Q23	Growth
Revenue	19.5	23.4	*20%*
Net income (loss)	(12.5)	(17.1)

Backblaze, Inc. announced results for its first quarter ended March 31, 2023.

“We were pleased to deliver 42% year-on-year revenue growth for B2 Cloud Storage in 2FQ23 – well above that of our competitors like Amazon Web Services (AWS). Additionally, our Q1 results support our goal to approach adjusted EBITDA breakeven in 4FQ23,” said Gleb Budman, CEO. “We’re delighted that more businesses are using Backblaze to significantly reduce their data storage spend by shifting away from high-cost cloud providers.”

1FQ23 Financial Highlights:

Revenue of $23.4 million, an increase of 20% Y/Y.
B2 Cloud Storage revenue was $10.0 million, an increase of 42% Y/Y.
Computer Backup revenue was $13.4 million, an increase of 8% Y/Y.
Gross profit of $11.0 million, or 47% of revenue, compared to $9.8 million and 50% of revenue, in 1FQ22.
Adjusted gross profit of $17.0 million, or 72% of revenue, compared to $14.8 million and 76% of revenue in 1FQ22.
Net loss of $17.1 million compared to a net loss of $12.5 million in 1FQ22.
Net loss per share of $0.50 compared to a net loss per share of $0.41 in 1FQ22.
Cash, short-term investments and restricted cash, non-current totaled $56.9 million as of March 31, 2023.
Adjusted EBITDA of $(2.9) million, or (12)% of revenue, compared to $(3.0) million and (15)% of revenue in 1FQ22.
Non-GAAP net loss of $9.0 million compared to non-GAAP net loss of $8.7 million in 1FQ22.
Non-GAAP net loss per share of $0.26 compared to a non-GAAP net loss per share of $0.28 in 1FQ22.

1FQ23 Operational Highlights:

Annual recurring revenue (ARR) was $95.9 million, an increase of 21% Y/Y.
B2 Cloud Storage ARR was $41.7 million, an increase of 47% Y/Y.
Computer Backup ARR was $54.2 million, an increase of 7% Y/Y.
Net revenue retention (NRR) rate was 111% compared to 113% in 1FQ22.
B2 Cloud Storage NRR was 120% compared to 131% in 1FQ22.
Computer Backup NRR was 106% compared to 105% in 1FQ22.
Gross customer retention rate was 91% in 1FQ23 and 1FQ22.
B2 Cloud Storage gross customer retention rate was 90% in 1FQ23 and 1FQ22.
Computer Backup gross customer retention rate was 90% compared to 91% in 1FQ22.

Outlook for 2FQ23:

Revenue between $24.1 million to $24.5 million
Adjusted EBITDA margin between (11)% to (7)%
Basic weighted average shares outstanding of 34.5 million to 36.5 million shares

Outlook for FY23

Revenue between $98 million to $102 million
Adjusted EBITDA margin between (10)% to (6)%

Comments

For each financial quarter since FY19, it's about always the same song: sales increasing regularly and net loss never ending.

Cumulative losses since inception reached more than $159 million.

For the most recent quarter, revenue was $23.4 million up 20% Y/Y and 2% Q/Q. It was predicted between $23.1 and $23.5 million at the end of last 3-month period.

For FY23, outlook has been changed from between $81 million to $102 million to between $98 million to $102 million, or up 15% to 20% Y/Y.

Now the question is: when the cloud backup company will be finally profitable?

(in $ million)

Revenue

Y/Y growth

Net income (loss)

FY19

40.748

(1.0)

1FQ20

12.4

2FQ20

13,0

(1,4)

3FQ20

13.8

(1.9)

4FQ20

14.6

(3,4)

FY20

53.8

32%

(6.6)

1FQ21

15.3

23%

(3.7)

2FQ21

16.2

24%

(2,4)

3FQ21

17,3

25%

(6.5 to 7.5)

4FQ21

18.7

28%

(9.6)

FY21

67.5

25%

(21.6)

1FQ22

19.5

27%

(12.5)

2FQ22

20.7

28%

(11.6)

3FQ22

22.1

27%

(12.8)

4FQ22

22.9

23%

(14.8)

FY22

85.2

26%

(51.7)

1FQ23

23.4

20%

(17.1)

2FQ23 (estim.)

24.1-24.5

18%

FY23 (estim.)

98-102

15%-20%