Financial Data and Key Metrics Changes - Revenue grew 18% year-over-year to $33.8 million in Q4 2024, slightly ahead of guidance [35] - Adjusted EBITDA margin improved to 14%, more than doubling from the previous year [39] - Net revenue retention (NRR) increased to 116% compared to 109% last year, benefiting from a price increase [38] - Average revenue per user (ARPU) rose to $268, an 18% increase year-over-year [39] Business Line Data and Key Metrics Changes - B2 Cloud Storage revenue reached $17.1 million, representing a 22% year-over-year growth, driven by customer expansion and new acquisitions [35] - Computer Backup revenue was $16.7 million, reflecting a 13% year-over-year growth primarily due to a price increase [35] - B2 annual recurring revenue (ARR) increased by $5 million sequentially, marking the largest organic sequential increase since the IPO [37] Market Data and Key Metrics Changes - The company has seen a nearly tenfold increase in data stored by AI customers, with three out of the top ten customers now being AI companies [30] - The average deal size from channel leads nearly doubled year-over-year, indicating strong growth in partnerships [18] Company Strategy and Development Direction - The company aims to become a "Rule of 40" company, focusing on both growth and profitability [11] - A go-to-market transformation is underway, emphasizing B2 growth and aiming for adjusted free cash flow positivity by Q4 2025 [12][45] - The company is expanding its partnerships and sales strategies, including co-build, co-market, and co-sell initiatives [18] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the acceleration in B2 growth, expecting it to exceed 30% by the end of 2025 [46] - The company anticipates adjusted EBITDA margins to exceed 20% by Q4 2025, with a focus on operational efficiency [47] - Management highlighted the importance of flexibility and data mobility in the evolving AI landscape, positioning Backblaze as a key player [28] Other Important Information - The company completed a secondary offering for $37 million in net proceeds to strengthen its balance sheet [33] - Cash flow from operations improved significantly, showing a $20 million improvement year-over-year [44] Q&A Session Summary Question: Key metrics for partners in 2025 - Management monitors pipeline and sales productivity for channel partners, while alliance metrics focus on co-build, co-market, and co-sell initiatives [51][52] Question: Long-term growth outlook for B2 and Computer Backup - B2 is expected to grow over 30% year-over-year by the end of 2025, while Computer Backup may see flattish growth due to consumer decline [55][56] Question: Progress of gross margins - Management expects adjusted gross margins to remain stable at 78% [59] Question: AI use cases and their impact on growth - AI customers utilize Backblaze for data collection, processing, model training, and inference, indicating a direct correlation between their growth and Backblaze's growth [66][70] Question: Competitive landscape update - The competitive landscape remains similar, with major players like Amazon, Google, and Microsoft still present, but new partnerships have emerged [118][120]

Financial Performance - Q4 2024 revenue was $33.8 million, an increase of 18% year-over-year, with B2 Cloud Storage revenue growing 22% to $17.1 million[4] - Adjusted EBITDA for Q4 2024 was $4.6 million, representing a margin of 14%, more than doubling from 6% in Q4 2023[4] - Annual recurring revenue (ARR) reached $136.7 million, a 16% increase year-over-year, with B2 Cloud Storage ARR growing 22% to $70.2 million[7] - Net loss for Q4 2024 was $14.4 million, compared to a net loss of $12.2 million in Q4 2023, while net loss per share improved to $0.30 from $0.32[4] - The net loss for the year ended December 31, 2024, was $48,531,000, an improvement from a net loss of $59,713,000 in 2023[32] - Non-GAAP net loss for the year ended December 31, 2024, was $17.534 million, improving from a non-GAAP net loss of $30.511 million in 2023[40] Customer Metrics - Gross customer retention rate was 90% in Q4 2024, slightly down from 91% in Q4 2023, with B2 Cloud Storage retention at 89%[7] - The number of customers decreased to 507,647 from 511,942 in Q4 2023, while B2 Cloud Storage customers increased to 107,616 from 97,842[7] - The net revenue retention rate (NRR) for the company is 120%, reflecting a 1% decrease from the previous quarter due to a refined customer definition[23] Cash Flow and Expenses - Adjusted free cash flow for the year ended December 31, 2024, was $(20.1) million, an improvement from $(43.2) million in 2023[4] - Adjusted Free Cash Flow for the three months ended December 31, 2024, was $(4.528) million, with an Adjusted Free Cash Flow margin of (13)%, compared to (19)% in the same period of 2023[41] - The company provided $2.233 million in net cash from operating activities for the three months ended December 31, 2024, compared to $3.248 million in 2023[41] - Operating expenses for the year ended December 31, 2024, totaled $115,632,000, compared to $107,762,000 in 2023, indicating an increase of approximately 7.3%[30] - Total stock-based compensation expense for the three months ended December 31, 2024, was $9.133 million, up from $6.507 million in 2023[42] Future Outlook - The company expects Q1 2025 revenue growth of 21-23% and full-year 2025 revenue between $144.0 million to $146.0 million[7] - The company expects to continue its restructuring efforts, which include $3.9 million in severance and benefits related to impacted employees as part of the 2024 Restructuring Plan[38] Asset Growth - The total assets of the company increased to $168,558,000 in 2024 from $131,687,000 in 2023, representing a growth of approximately 27.9%[28] - Cash and cash equivalents at the end of the period increased to $45,776,000 from $16,630,000, marking a significant increase[32] AI Business Impact - AI-related business saw a nearly 10-fold increase in data, with 3 AI companies now among the top 10 customers[6]

Core Viewpoint - Backblaze, Inc. (BLZE) has received a Zacks Rank 2 (Buy) upgrade, indicating a positive outlook on its earnings estimates, which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Performance - The Zacks rating system emphasizes the correlation between changes in earnings estimates and stock price movements, suggesting that rising earnings estimates can lead to increased buying pressure and higher stock prices [4][5]. - Backblaze is projected to earn -$0.43 per share for the fiscal year ending December 2024, reflecting a year-over-year change of 49.4% [8]. Zacks Rank System - The Zacks Rank system categorizes stocks based on earnings estimate revisions, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - Backblaze's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, indicating strong potential for market-beating returns in the near term [10]. Analyst Sentiment - Analysts have been consistently raising their earnings estimates for Backblaze, with the Zacks Consensus Estimate increasing by 0.3% over the past three months [8].

Core Viewpoint - Backblaze, Inc. (BLZE) shares have increased by 16.4% recently, with analysts suggesting a potential upside of 57% based on a mean price target of $11.60 [1][9]. Price Targets and Analyst Estimates - The mean estimate for BLZE comprises five short-term price targets, with a standard deviation of $1.52, indicating variability among analysts [2]. - The lowest price target is $10, suggesting a 35.3% increase, while the highest target is $14, indicating an 89.5% potential increase [2]. - A low standard deviation among price targets suggests strong agreement among analysts regarding the stock's price movement [7]. Earnings Estimates and Analyst Agreement - Analysts show strong agreement in revising earnings per share (EPS) estimates higher, which correlates with potential stock price increases [9]. - The Zacks Consensus Estimate for the current year has risen by 0.4% over the past month, with one estimate increasing and no negative revisions [10]. - BLZE holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates [11]. Caution on Price Targets - Solely relying on price targets for investment decisions may not be wise, as analysts' price targets can often be overly optimistic due to business incentives [3][6]. - While price targets can provide some guidance, they should be approached with skepticism, and further research is recommended to identify fundamental drivers [8][12].

Group 1 - Backblaze, Inc. (BLZE) shares increased by 10.5% to $6.96 in the last trading session, contrasting with a 1.4% loss over the past four weeks [1] - The company is undergoing a significant go-to-market transformation led by new executives, focusing on upskilling, partnerships, and sales strategies, which is driving revenue growth, especially in the B2 Cloud Storage segment [2] - Backblaze is expected to report a quarterly loss of $0.09 per share, reflecting a year-over-year improvement of 40%, with revenues projected at $33.75 million, a 17.4% increase from the previous year [3] Group 2 - The consensus EPS estimate for Backblaze has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [4] - Backblaze holds a Zacks Rank of 3 (Hold), indicating a neutral outlook, while another company in the same industry, Weave Communications, has also maintained a Zacks Rank of 3 [4][5] - Weave Communications is expected to report an EPS of $0.03, representing a 400% increase from the previous year, with its stock finishing the last trading session slightly higher [5]

Group 1 - The stock market is experiencing a significant rise towards the end of 2024, suggesting that investors should focus on careful stock-picking, especially in lesser-known value stocks [1] - There is an emphasis on identifying stocks with specific catalysts that can enhance their fundamental performance [1] Group 2 - Gary Alexander has extensive experience in the technology sector, having worked on Wall Street and in Silicon Valley, and has been an adviser to several seed-round startups [2] - Since 2017, Gary Alexander has been a regular contributor to Seeking Alpha and has been featured in various web publications, with his articles also appearing on popular trading apps like Robinhood [2]

Financial Data and Key Metrics Changes - Revenue for Q3 2024 was $32.6 million, representing a 29% year-over-year growth, in line with guidance [22] - B2 Cloud Storage revenue was $16.2 million, reflecting a 39% increase year-over-year [22] - Adjusted EBITDA margin reached 12%, the highest since going public, compared to a negative 3% in the prior year [24] - Net Revenue Retention (NRR) improved to 118% from 108% year-over-year, while gross customer retention was 90% [23] Business Line Data and Key Metrics Changes - B2 Cloud Storage showed strong growth at 39%, although it was lower than expected due to early churn and large deals closing later in the quarter [22][8] - Computer Backup revenue totaled $16.4 million, reflecting a 20% growth, exceeding expectations due to better retention [22] Market Data and Key Metrics Changes - The company announced the opening of a new data center region in Canada, enhancing its service offerings for Canadian customers [15] - The amount of data stored by AI customers has more than doubled year-over-year, with three AI customers contributing an annual revenue run rate of over $0.5 million [17] Company Strategy and Development Direction - The company is focusing on two major initiatives: driving revenue growth, particularly in B2 Cloud Storage, and achieving cost efficiencies [8] - A go-to-market transformation is underway, emphasizing upskilling, partnerships, and streamlined sales plays to enhance sales productivity [12][13] - The company aims to become a Rule of 40 company over time, balancing revenue growth and free cash flow margin [14][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to capture the $55 billion cloud storage opportunity [19] - The company plans to be free cash flow positive by Q4 2025, with an adjusted EBITDA margin of approximately 20% by the end of 2025 [28][29] - Management acknowledged the challenges of churn but highlighted strong NRR and customer retention as indicators of product importance [32][23] Other Important Information - A comprehensive zero-based budgeting exercise is being implemented, resulting in a projected year-over-year cost reduction of over $8 million [21] - The company is on track to end the year with at least $20 million in cash, with significant improvements in cash flow from operations [25][27] Q&A Session Summary Question: Discussion on B2 churn and NRR improvement - Management noted that churn occurred earlier in the quarter than expected, but strong NRR and gross retention were still achieved [32] Question: Upmarket potential for B2 - Management indicated no specific limit to how far B2 can go, with significant storage capacity already in place and recent large deals signed [34] Question: Revenue growth expectations post-price increase - Management expects B2 revenue growth to accelerate after the price increase lapses, with leading indicators suggesting positive momentum [41] Question: Details on workforce reduction - The 12% workforce reduction was part of a zero-based budgeting exercise, with cuts made across various departments, particularly in marketing [43] Question: Gross margin outlook with new data center investment - Management does not anticipate a significant impact on gross margin from the new data center, as it involves colocation and leased hardware [53] Question: Quality of the sales pipeline post-Jason's arrival - Management confirmed that the quality and size of the sales pipeline have improved under the new leadership, with more rigorous controls implemented [54] Question: Sales team expansion amidst cost efficiency initiatives - Management plans to reinvest savings from cost reductions into expanding the sales team to enhance revenue generation [58]

Company Performance - Backblaze, Inc. reported a quarterly loss of $0.10 per share, better than the Zacks Consensus Estimate of a loss of $0.11, and an improvement from a loss of $0.21 per share a year ago, representing an earnings surprise of 9.09% [1] - The company posted revenues of $32.59 million for the quarter ended September 2024, surpassing the Zacks Consensus Estimate by 0.16% and showing an increase from $25.3 million in the same quarter last year [2] - Over the last four quarters, Backblaze has exceeded consensus EPS estimates four times and has also topped consensus revenue estimates four times [2] Stock Outlook - Backblaze shares have increased by approximately 5.3% since the beginning of the year, while the S&P 500 has gained 24.3% [3] - The company's earnings outlook will be crucial for future stock performance, with current consensus EPS estimates at -$0.08 for the coming quarter and -$0.44 for the current fiscal year [4][7] Industry Context - The Internet - Software industry, to which Backblaze belongs, is currently ranked in the top 25% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact Backblaze's stock performance [5]

Customer Base and Revenue Growth - As of September 30, 2024, Backblaze has over 500,000 customers and manages over 3 billion gigabytes of data storage across more than 175 countries[131]. - The Annual Recurring Revenue (ARR) for B2 Cloud Storage increased by $18.1 million, or 39%, to $64.9 million as of September 30, 2024, compared to $46.8 million in the prior year[144][153]. - The ARR for Computer Backup increased by $11.5 million, or 21%, to $65.6 million as of September 30, 2024, compared to $54.1 million in the prior year[144][153]. - Total revenue for Q3 2024 was $32,589,000, a 29% increase from $25,299,000 in Q3 2023[174]. - B2 Cloud Storage revenue increased by $4,574,000 (39%) in Q3 2024, driven by a price increase and increased storage[178]. - Computer Backup revenue rose by $2,716,000 (20%) in Q3 2024, primarily due to price increases implemented in October 2023[178]. Customer Retention and Market Expansion - The Net Revenue Retention Rate (NRR) for B2 Cloud Storage improved to 128% as of September 30, 2024, up from 120% a year earlier, primarily due to a price increase[144][147]. - Backblaze's total company NRR reached 118% as of September 30, 2024, compared to 108% a year earlier[144]. - The Gross Customer Retention Rate for B2 Cloud Storage decreased to 89% as of September 30, 2024, down from 90% in the previous year[144][149]. - Approximately 27% of Backblaze's total revenue for the nine months ended September 30, 2024, originated outside the United States, indicating significant international expansion opportunities[143]. - Backblaze plans to open a new data region in Canada as part of a partnership with a leader in hybrid cloud solutions, aiming to extend market reach[134]. Financial Performance and Cost Management - Gross profit margin improved to 55% in Q3 2024, compared to 46% in Q3 2023[177]. - Operating expenses totaled $29,998,000 in Q3 2024, up from $27,319,000 in Q3 2023[174]. - The net loss for Q3 2024 was $12,753,000, an improvement from a net loss of $16,055,000 in Q3 2023[174]. - The company expects a favorable impact on gross margin over the remainder of 2024 due to recent price increases[162]. - Operating expenses are anticipated to decrease in the near term due to the 2024 Restructuring Plan[163]. - The company is focused on cost-saving initiatives and margin growth, including a restructuring plan approved in November 2024 to improve cost structure and operating efficiency[135]. Research and Development Investments - The company continues to invest in research and development to maintain product quality and drive revenue growth through new product launches[141]. - Research and development expenses were $10,734,000 in Q3 2024, compared to $9,639,000 in Q3 2023[174]. - Investment in research and development is expected to increase in absolute dollars as the company focuses on enhancing its platform and cloud services[165]. - Research and development expenses rose by $1.1 million, or 11%, for the three months ended September 30, 2024, mainly due to increased personnel-related expenses[184]. Cash Flow and Financing - Cash provided by operating activities for the nine months ended September 30, 2024, was $10.3 million, compared to cash used of $10.6 million in the same period of 2023[218][219]. - The company had cash and cash equivalents of $3.0 million and short-term investments of $17.9 million as of September 30, 2024[232]. - The outstanding balance under the revolving credit agreement was $4.7 million, with $15.3 million available for borrowing[208]. - Cash used in investing activities for the nine months ended September 30, 2024, was $11.9 million, primarily due to the purchase of short-term maturity investments of $32.5 million[220]. - The company may seek additional equity or debt financing in the future, but there is no guarantee that it will be able to raise such financing on acceptable terms[204]. Risk Management and Accounting - The company has minimal foreign currency risk as most sales and operating expenses are denominated in U.S. dollars[233]. - Future international sales increases may expose the company to foreign currency exchange rate fluctuations[233]. - The company has not used derivative financial instruments to manage interest rate risk exposure[232]. - There have been no material changes to critical accounting estimates compared to the previous Annual Report[227]. - The company does not believe that a 100 basis point change in interest rates would materially affect its operating results or financial position[232].

Exhibit 99.1 Backblaze Announces Record Adjusted EBITDA Margin as Part of Third Quarter 2024 Financial Results 39% Revenue Growth in B2 Cloud Storage, 29% Revenue Growth Overall in Q3 2024 San Mateo, CA (November 7, 2024)—Backblaze, Inc. (Nasdaq: BLZE), the cloud storage innovator delivering a modern alternative to traditional cloud providers, today announced results for its third quarter ended September 30, 2024. "I'm excited that we have kicked off a go-to-market transformation and continue to build our u ...