Date of Call: May 4, 2026

Financials Results

  • Revenue: $38.7 million, a 12% year-over-year increase.
  • Gross Margin: 61%, versus 56% in the prior year.

Guidance:

  • Q2 revenue expected in the range of $39.8M-$40.2M, with B2 growth closer to 20% YOY.
  • Q2 adjusted EBITDA margin expected in the range of 21%-23%.
  • Full-year revenue guidance raised to $161.5M-$163.5M, up $5M from prior midpoint.
  • Full-year adjusted EBITDA margin guidance raised by 400 basis points to a range of 23%-25%.

Business Commentary:

Revenue and B2 Growth:

  • Backblaze reported $38.7 million in revenue for Q1 2026, up 12% year-over-year, with B2 growing 24%.
  • The growth was driven by increased customer data consumption on the B2 Cloud platform and successful sales execution.

AI Customer Engagement:

  • More than one-third of all new bookings came from AI, with AI customers using the platform growing by 76% year-over-year.
  • This trend is attributed to AI's increasing importance and Backblaze's ability to provide cost-efficient storage solutions for AI infrastructure and workflows.

Go-to-Market Transformation:

  • Backblaze's Flamethrower startup program welcomed approximately 100 companies in under 3 months, and pipeline sourced from existing customers nearly doubled year-over-year.
  • The transformation focused on increasing awareness, driving pipeline consistency, and expanding revenue within the installed base.

Neocloud Opportunity:

  • Backblaze estimates its opportunity to support Neoclouds at $14 billion by 2030, with several signed deals ranging from 6 to 8 figures.
  • The demand is driven by Neoclouds needing a cost-efficient hard drive tiered storage solution to manage AI workloads alongside their existing Flash-based infrastructure.

Pricing and Packaging Update:

  • Effective May 1, Backblaze introduced updated B2 pricing and packaging, which is expected to be accretive to revenue and margins.
  • The update reflects investments in platform performance, simplification of pricing by removing API transaction fees, and rising hardware costs.

Sentiment Analysis:

Overall Tone: Positive

  • CEO states 'Q1 was a strong quarter' and 'we beat revenue and adjusted EBITDA guidance.' Mentions 'raised guidance,' 'on track for our first full year of free cash flow positivity,' and 'AI is making everything we have built more valuable.'

Q&A:

  • Question from Mike Cikos (Needham): Could you talk to the improved visibility you have for AI customers in the pipe? Are you noticing a significant departure in cohort behavior or sales cycles as these customers begin to season?
    Response: Management cites two AI customer examples won through new GTM motions (outbound targeting, referrals from existing AI customers) and notes AI companies are growing about three times faster than the average customer due to inherent data growth from AI use cases.

  • Question from Mike Cikos (Needham): Can you unpack the B2 NRR of 110% to get evidence of go-to-market initiatives driving adoption (cross-sell, up-sell) versus consumption growth?
    Response: CFO states the best evidence of GTM working is the sequential increase in committed contracts (RPO). NRR moved to in-quarter reporting; the year-over-year improvement from 105% to 110% was partly due to one large customer leaving a year ago. Expansion sales (cross/up-sell) fluctuate, while organic growth is stable.

  • Question from Ittai Kidron (Oppenheimer): Can you give more color on the pricing update magnitude, how much you can capture, and how the outlook would look without it?
    Response: CFO states the $5M raise for the year is split evenly between the pricing/packaging change and organic business strength. Without the price change, the raise would be half as much. For Q2, the improved B2 growth guidance (to ~20% YOY) is more anchored on organic health, as the price change (effective May 1) is not a full quarter.

  • Question from Ittai Kidron (Oppenheimer): For Computer Backup, with NRR well below 100%, should we model this business for decline going forward? For GTM, what remains to be done by year-end?
    Response: CFO confirms Backblaze Computer Backup is still forecasted to decline ~5% year-over-year. CEO states GTM progress is good but there is still work to be done, including focusing resources on the Neocloud opportunity, expanding awareness via programs like Flamethrower, and ensuring developer awareness.

  • Question from Eric Potvin (B. Riley Securities): What portion of the Neocloud market are you servicing or engaged with? Are you adding more sales people?
    Response: CEO estimates engagement with around a quarter of the ~200 Neoclouds, including most top ones, and they are providing the data lake layer (hard disk equivalent) for them. On sales, key roles (CRO, rev ops, sales development) are filled, and the team build-out is strong.

  • Question from Jeff Van Rhee (Craig-Hallum): Was the May 1 price increase already in the prior guidance? Did you see a substantial improvement in close rates in March/April?
    Response: CFO confirms the price increase was not in the prior guidance. The $5M raise is half from price, half from organic momentum. CEO notes Q1 was more back-ended with a strong close, pipeline building strongly, and enhanced conviction from both data and execution. Demand signals are strong.

  • Question from Jeff Van Rhee (Craig-Hallum): What is the outlook for CapEx and stock comp for 2026?
    Response: CFO expects CapEx to be around mid-30s as a % of revenue due to a large customer commitment, strong demand signals, and higher equipment costs. Stock comp should be stable in dollar terms, improving as a % of revenue over time due to efficiency gains.

  • Question from Jason Ader (William Blair): Can you give more detail on Neocloud deal sizes and the risk that Neoclouds add a lower-cost storage tier and insource it?
    Response: CEO cites an estimated $14B opportunity in the Neocloud data lake tier by 2030. Signed deals (6-, 7-, 8-figure) are initial deals with potential to scale. He argues it is not easy for Neoclouds to replicate Backblaze's 2-decade-old, scale-optimized IP, making it faster for them to use Backblaze instead of building in-house.

  • Question from Jason Ader (William Blair): With higher CapEx, are you still guiding for free cash flow positivity this year?
    Response: CFO confirms full-year adjusted free cash flow should be positive, with Q1 negative, Q2 neutral, and the second half positive. The accelerated CapEx is being funded to handle strong demand without declining revenue opportunities.

  • Question from Jason Ader (William Blair): What caused the significant increase in gross margin last year and what are the puts and takes going forward?
    Response: CFO cites the review of fixed asset useful life (depreciation moved to 6 years) and tight cost management as drivers of the gross margin improvement. Going forward, the price increase benefits gross margin, but accelerated CapEx may pressure it; no major changes are guided for the near term.

  • Question from Eric Martinuzzi (Lake Street Capital Markets): What prompted the timing of the B2 price increase after ~2.5 years? Does it shrink the cost gap vs. competitors?
    Response: CEO cites platform performance investments, the need to simplify pricing by removing transaction fees, and rising component costs. He asserts Backblaze is still dramatically more cost-efficient than alternatives, highlighting a customer example where the prior provider was more than 5x more expensive due to egress and transaction fees.

  • Question from Rustam Kanga (Citizens): As workloads shift more towards inferencing from training, will that lead to improving predictability? What % of Neocloud business represents inference vs. training?
    Response: CEO confirms inferencing workloads are more predictable. Currently, larger workloads are related to model building (training), where Backblaze excels for large dataset storage and movement. Inferencing (e.g., video generation outputs) is growing on the platform but represents a smaller current share.