BLZE

• Core AI-focused Strategic Progress

  • Secured the largest contract in Backblaze history: a $335 million multi-year agreement with CoreWeave, a leading AI infrastructure cloud, making Backblaze CoreWeave's preferred hard drive-based capacity storage tier. This is the fourth major AI cloud infrastructure provider to partner with Backblaze.
  • The deal introduced a new capital-light managed storage offering, where Backblaze deploys its software and manages storage on customer-owned hardware in customer data centers, enabling support for regional and sovereign cloud requirements.
  • Strong traction across the AI market: added multiple new AI customers, including a leading frontier AI model developer (the company's largest B2 Overdrive deal to date with seven-figure ARR), and saw expansion from existing AI customers (one customer added a $1 million incremental commitment 11 days after an initial nearly $1 million deal).
  • Estimates the total addressable market for neocloud capacity tier storage will reach $14 billion by 2031.

• Upmarket Expansion

  • Ended Q2 with 235 customers generating more than $50,000 in annual recurring revenue (ARR), up 57% year-over-year. ARR from this cohort grew 67% YoY.
  • Closed four deals valued at over $500,000 in Q2, three of which were AI-related. Added $320 million in remaining performance obligations (RPO) in the quarter, $313 million of which came from the CoreWeave agreement (net of $22 million in warrant value).

• Product and GTM Updates

  • Shipped new developer tools: a TypeScript SDK for AI coding agents, the GenBlaze generative media SDK, and new tools for AI agent data storage. Hosted a generative media hackathon to drive awareness of B2 as a Gen AI storage layer.
  • Completed core leadership hiring for the go-to-market (GTM) transformation, including a new CRO, head of sales development, head of revenue operations, and head of GTM operational strategy. Completed most core GTM system overhauls, and is adding AI-enabled tools to improve execution.

• Q3 2026: Revenue is projected between $44.4 million and $44.8 million, with adjusted EBITDA margin expected between 27% and 29%.
• Full-year 2026: Management raised full-year guidance significantly, increasing the revenue range to $172 million to $174 million, up more than $10 million from the prior range of $161.5 million to $163.5 million. At the midpoint, this represents 19% full-year YoY revenue growth, up from the prior 11% projection. The full-year adjusted EBITDA margin guidance was raised to 27% to 29%, from the prior 23% to 25% range.
• 2027 directional outlook: Backblave expects B2 revenue will grow over 40% year-over-year, driven by strong underlying business fundamentals and contracted minimum revenue from CoreWeave. This is preliminary commentary, not formal full guidance, which will be released in February 2027.
• Capital expenditure: CapEx for full-year 2026 is expected to equal 55% to 65% of total revenue, as the company accelerates capacity build-out to meet signed customer commitments. The company expects to remain adjusted free cash flow neutral for 2026 even with the higher CapEx, using capital leases to fund purchases. No CapEx is required for the managed storage portion of the CoreWeave agreement, as hardware is owned by the customer.

Backblaze has two core product segments: 1. B2 Cloud Storage: Total B2 ARR reached $113 million, growing 39% year-over-year, with 34% YoY revenue growth (the fastest growth in 7 quarters). B2 contributed 70.3% of total Q2 revenue. The May 1 price increase added 8 percentage points to B2's growth, and drove $9 million of the $20 million sequential increase in B2 ARR. B2 net revenue retention was 113%. 2. Computer Backup: Revenue declined 2% year-over-year, which was better than management's expectations. This segment contributed 29.7% of total Q2 revenue, and continues to generate stable recurring revenue and positive cash flow to support B2 growth. Consolidated Q2 2026 results: Total revenue was $42.7 million, up 18% year-over-year (the strongest growth in six quarters). Adjusted EBITDA was $13 million (nearly doubling YoY) with a 30% margin, up 1200 basis points year-over-year. Total company gross margin was 63%, benefiting from the B2 price increase and operating efficiency, partially offset by higher hardware costs.

• Forward-looking statements (including growth projections, demand expectations, and capital expenditure plans) are subject to risks and uncertainties that could cause actual results to differ materially from projections, including general economic conditions, supply volatility and pricing for hardware infrastructure, competitive pressures, and the ability to manage profitable growth.
• Near-term gross margin may see a 200-300 basis point headwind in the next two quarters as new capacity for large contracted deals is built before revenue ramps fully, after which margin is expected to recover.
• The Computer Backup segment continues to face market headwinds and is expected to deliver a low single-digit revenue decline for full-year 2026, despite stabilization efforts.

Q: How much of the 2026 guidance raise comes from the CoreWeave ramp versus broad business outperformance, and how does the CoreWeave ramp progress? / A: The 2026 guidance increase reflects a balanced, broad-based mix of better underlying business performance, the impact of the May 1 price increase, and the CoreWeave ramp, with no single factor dominating. CoreWeave's minimum commitment ramps over the coming year and hits its steady minimum run rate around mid-2027, which is already reflected in current guidance. Management maintains its consistent guidance approach of only including contracted minimum spend, excluding projected usage above minimums and potential large deals over $500,000.

Q: Has the CoreWeave deal hurt or helped new customer conversations, especially with competitors to CoreWeave? What is the pipeline for the new managed storage offering? / A: The CoreWeave deal has served as strong third-party validation of Backblaze's AI storage technology, and has generated increased interest from a wide range of AI companies and neocloud providers, even CoreWeave competitors. Managed storage is still early, with roughly half a dozen active conversations currently. It is expected to be an offering for larger, more sophisticated customers, not a high-volume product, but will represent larger average deal sizes.

Q: What are the expected gross margins for the CoreWeave deal and the managed storage offering, and does Backblaze have enough capital to meet upcoming CapEx needs? / A: CoreWeave is priced to deliver gross margins in line with Backblaze's existing B2 business, around the current 63% level. There may be a temporary 200-300 basis point gross margin headwind over the next two quarters as new capacity is depreciated before full revenue ramp, after which margins will recover. Managed storage has similar gross margins currently, and may deliver higher margins over the long term as a capital-light offering. Backblaze has sufficient capital for current build-out needs, with $50 million in cash, over $150 million in available capital leases, and improving operating cash flow from operating leverage.

Q: What is the use case and competitive landscape for the large B2 Overdrive deal with the frontier AI model developer? / A: The customer switched to Backblaze from another major cloud provider, after hitting storage quota limits and needing higher throughput to move training data between storage and GPU instances. The customer stores large training datasets long-term on Backblaze's capacity tier, and moves data to high-performance flash tier adjacent to GPUs only when running training jobs. It was an initial opening commitment that the customer expects to expand significantly as its model development grows.