Backblaze lands first eight-figure neocloud deal as revenue climbs 12%

Cloud storage provider Backblaze is pushing upmarket into the AI-first, GPU-as-a-Service "neocloud" sector, landing its first eight-figure deal as it posted quarterly earnings.

Revenues in its fourth calendar 2025 quarter were $37.8 million, up 12 percent year-on-year and above its midpoint guidance, with a GAAP loss of $5.4 million, much improved from the year-ago $14.4 million loss. Full year revenues were $145.8 million, up 14 percent year-on-year, with a loss of $25.6 million, again better than the year-ago $48.5 million loss. The B2 Cloud Storage segment racked up $21.3 million in the quarter, 24 percent higher year-on-year, while the Computer Backup segment recorded $16.5 million. Backblaze also achieved its first positive adjusted free cash flow quarter.

CEO Gleb Budman said Backblaze was moving upmarket, citing the big neocloud win. "We drove diversified growth across AI, cyber resilience, and application storage use cases," he said. "At the same time, we achieved 11 percent in adjusted free cash flow margin in the quarter, reflecting continued operating discipline. Looking ahead, we see Backblaze increasingly serving as the storage backbone for neocloud providers and as a trusted platform for developers building data-intensive and AI-driven applications."

Financial summary

• Gross margin: 62 percent vs year-ago 55 percent
• Operating cash flow: $9.3 million vs year-ago $2.2 million
• Adjusted free cash flow: $4.1 million vs -$4.5 million last year
• Cash, cash equivalents, and marketable securities: $51.4 million

Budman talked about Backblaze's go-to-market (GTM) transformation in the earnings call, saying: "While we didn't achieve our budgeted Q4 B2 growth rate, we made meaningful progress and have positioned ourselves for success. More importantly, the underlying fundamentals of the business remain stable and the investments we've made position us for durable growth going forward."

"We've shared our goal of moving upmarket. We ended the year with 168 customers generating more than $50,000 in ARR each, up 35 percent year-on-year. The ARR of this cohort increased 73 percent year-on-year to $26 million of ARR. We're very proud of this upmarket progress."

The upmarket move is based on increasing customer awareness. Witness the Flamethrower initiative, a storage service for startups and developers, Backblaze launched this month. Then there is "greater pipeline consistency. We're upgrading our top-of-funnel systems and scaling demand generation programs to drive higher velocity sales motion," plus expanding revenue within its installed base. 

Budman said: "We are implementing processes to proactively identify and capture additional share of wallet across our more than 119,000 B2 customers."

CFO Marc Suidan said: "We made meaningful progress towards becoming a Rule of 40 company, with our combined B2 revenue growth and free cash flow margin improving from 9 percent to 35 percent... Our platform is already built. Our infrastructure scales with discipline and incremental revenue increasingly translates into profitability and cash generation."

Backblaze is pinning its growth hopes on the neocloud market, saying there are roughly 200 such businesses  with a total addressable market estimated to be $14 billion by 2030. Backblaze says it has "multiple neoclouds signed as customers." The big neocloud win in the quarter was in excess of $15 million total contract value, Backblaze's largest ever deal. 

The company has just launched its white label B2 Neo service aimed at this market, differentiating it from competitors such as Wasabi. Backblaze and Wasabi compete with the hyperscaler CSP giants AWS, Azure, and Google Cloud, with both offering cheaper and more flexible object storage. 

Budman pointed out: "The hyperscalers are not key competitors here because they are competing with the neoclouds as opposed to being vendors for them, the way that we are. So it's a good opportunity, which we're well positioned for."

Backblaze says it added 12,000 self-serve B2 customers in 2025, and it wants to be known as the (cloud) AI storage platform.

The outlook for current quarter (Q1 2026) is $37.8 million ± $200,000 , up 16 percent at the midpoint but flat sequentially. The full 2026 revenue guide is $157.5 million ± $1 million, up 8 percent at the midpoint. Backblaze has deliberately de-risked its outlook by "excluding large swing deals and anchoring guidance on opportunities with more predictable demand characteristics," Suidan said.

It's also assuming the computer backup business could slowly decline by about 3 percent despite programs in place to revive it.

Bootnote

Backblaze adjusted free cash flow is not a GAAP measure. It's said to exclude non-recurring items to give a better view of recurring cash flow. The big neocloud win means the customer is transitioning from their own on-premises storage to Backblaze's cloud storage.