0001628280-25-038603
SEC filingRevenue grew 16% YoY driven by B2 Cloud Storage, gross margin expanded to 63% on depreciation extension, and net loss narrowed.
For the three months ended June 30, 2025, total revenue increased 16% year-over-year to $36.3 million from $31.3 million. B2 Cloud Storage revenue grew 29% to $19.8 million, driven by a $1.9 million increase from higher storage usage and $2.5 million from new customers. Computer Backup revenue rose 4% to $16.5 million, reflecting a $1.3 million benefit from price increases offset by a $0.9 million decline in license counts.
Gross margin expanded to 63% from 55%, primarily due to a $2.4 million reduction in depreciation expense from extending the useful life of infrastructure equipment. Cost of revenue decreased 6% to $13.3 million. Operating expenses totaled $29.8 million, with research and development up 24% due to higher personnel and stock-based compensation, sales and marketing down 7% from headcount reductions and efficiency gains, and general and administrative up 19% driven by stock-based compensation and foreign exchange.
Net loss improved to $7.1 million from $10.3 million, representing a 20% net loss margin versus 33% in the prior year.
B2 Cloud Storage remains the primary growth engine, with 29% revenue growth and net revenue retention of 112%. The segment's ARR reached $80.7 million, up 29% year-over-year. The October 2023 price increase continues to benefit Computer Backup, but its ARR growth slowed to 3% as license counts declined. Overall company net revenue retention fell to 109% from 114% due to lapping the price increase.
Management expects operating expenses (excluding depreciation, amortization, and stock-based compensation) to remain relatively flat in 2025 as efficiencies from restructuring offset increased R&D investments. Capital expenditures are expected to increase in coming quarters to support up-market initiatives. The company highlighted its new B2 Overdrive product and enterprise features as drivers to expand addressable market. Adjusted EBITDA margin improved to 18% from 9%, indicating operating leverage.
As of June 30, 2025, Backblaze held $32.2 million in cash and cash equivalents and $18.4 million in marketable securities, totaling $50.5 million in liquid assets. The company had no outstanding borrowings on its newly established $20.0 million revolving credit facility (entered into June 4, 2025), providing significant additional liquidity. Total assets stood at $186.0 million, up from $168.6 million at year-end 2024, driven largely by increases in property and equipment (net) and operating lease right-of-use assets. Stockholders' equity increased modestly to $79.6 million from $77.6 million, as the $16.4 million net loss was offset by $14.0 million in stock-based compensation and $1.9 million from stock option exercises.
The Notes detail $44.9 million in remaining performance obligations (RPOs) as of June 30, 2025, with 77% expected to be recognized over the next 12 months. Non-cancellable service agreement commitments total $1.2 million for the remainder of 2025, with $2.7 million in 2026, $1.9 million in 2027, and $0.7 million in 2028. Finance lease and lease financing obligations amount to $34.4 million (undiscounted $39.3 million), with maturities through 2029. Operating lease commitments (including non-lease components) total $49.3 million (undiscounted), with a weighted-average remaining lease term of 5.8 years. A June 2025 lease amendment for a data center facility added approximately $34.5 million in undiscounted minimum lease payments, including $17.5 million for expanded space expected to commence in Q2 2026.
In August 2025, the Board authorized a $10.0 million share repurchase program, intended to offset dilution from stock-based compensation and to be funded by cash from option exercises and ESPP purchases, aiming to be cash-neutral. No dividends were declared. Capital expenditures (purchases of property and equipment) totaled $1.3 million for the six months ended June 30, 2025, or 1.8% of revenue, while capitalized internal-use software costs were $4.2 million. The company had no debt outstanding as of June 30, 2025, following the termination of its prior RCA facility in December 2024 and the establishment of the new $20.0 million credit facility.
The company operates as a single reportable segment. Revenue is disaggregated into two product lines: B2 Cloud Storage ($19.8 million, +28.7% YoY) and Computer Backup ($16.5 million, +3.7% YoY) for Q2 2025. By timing of recognition, consumption-based arrangements generated $19.2 million, subscription-based $17.0 million, and physical media $0.1 million. Geographically, the United States contributed $25.8 million (71% of total), the United Kingdom $1.9 million, Canada $1.6 million, and other countries $7.0 million. The CODM uses consolidated net loss as the primary measure of segment profit or loss, with adjusted cost of revenue and operating expenses reviewed separately.
Operating cash flow (CFO) of $8.5M for the six months ended June 30, 2025, improved significantly from $5.6M in the prior year period, despite a net loss of $16.4M (vs. $21.4M loss in H1 2024). The primary driver was a reduction in net loss and favorable working capital changes, particularly a $3.9M swing in deferred revenue and other liabilities (from +$4.0M to +$0.1M) and a $1.5M improvement in accounts payable and accrued expenses. Non-cash charges (depreciation, stock-based compensation, and noncash lease expense) totaled $29.9M, providing a substantial cushion over the net loss.
Capital expenditure intensity remained moderate: purchases of property and equipment were $1.3M, and capitalized internal-use software costs were $4.2M, totaling $5.5M. This is down from $7.5M in H1 2024. Free cash flow (CFO minus capex) was approximately $3.0M, positive for the period.
Financing activities used $7.4M, driven by $9.3M in principal payments on finance leases and $0.6M in debt issuance costs, partially offset by $1.9M in stock option exercises and $1.4M in ESPP proceeds. No share repurchases or dividends were reported.
Anomalies: The company recorded a $0.1M impairment loss on right-of-use assets and a $0.2M gain on disposal of assets. Working capital swings included a $1.7M increase in other current assets and a $2.1M reduction in operating lease liabilities, which modestly pressured CFO.