0001628280-26-029797
SEC filingRevenue grew 12% YoY driven by B2 Cloud Storage, while gross margin expanded 500 bps to 61% on lower depreciation.
For the three months ended March 31, 2026, total revenue increased 12% year-over-year to $38.7 million, driven by 24% growth in B2 Cloud Storage revenue ($22.4 million) partially offset by a 2% decline in Computer Backup revenue ($16.2 million). The B2 Cloud Storage growth was fueled by $2.7 million from new customers and $1.7 million from higher storage usage by existing customers. Computer Backup revenue declined $0.3 million due to lower license counts, partially offset by $0.3 million from price increases and $0.3 million from increased utilization.
Gross margin expanded 500 basis points to 61% from 56%, primarily due to a $1.5 million reduction in depreciation expense from extending infrastructure equipment useful lives (effective April 1, 2025) and improved economies of scale. Cost of revenue decreased 1% to $15.1 million.
Operating expenses increased 3% to $28.9 million, driven by a $1.0 million increase in sales and marketing (restructuring costs and advertising) and a $0.4 million increase in general and administrative (restructuring costs), partially offset by a $0.6 million decrease in research and development (lower stock-based compensation and personnel costs). Net loss improved 34% to $6.1 million from $9.3 million.
B2 Cloud Storage remains the primary growth engine, with revenue up 24% YoY and ARR reaching $93.0 million (28% growth). The segment's net revenue retention rate improved to 110% from 105% a year ago, indicating strong expansion from existing customers. Computer Backup continues to be a stable, albeit declining, revenue source with ARR of $65.2 million (down 2% YoY) and a net revenue retention rate of 95% (down from 103%). Total Company ARR reached $158.2 million, up 13.5% from $139.4 million.
Management expects operating expenses (excluding depreciation, amortization, restructuring, and stock-based compensation) to remain relatively flat in 2026 compared to 2025, as efficiencies from restructuring offset increased R&D investments. Sales and marketing expenses are expected to increase in absolute dollars as the company invests in go-to-market initiatives, including the B2 Neo white-label storage solution and the Flamethrower startup program. The company implemented B2 Cloud Storage pricing changes effective May 1, 2026, including increased pay-as-you-go storage pricing and elimination of API transaction fees, which are expected to impact revenue mix and level in future periods. The 2025 Restructuring and Transformation Plan is expected to incur additional charges of $2.1 million to $4.3 million through Q1 2027. The company believes existing cash, cash equivalents, marketable securities ($45.5 million), operating cash flows, and its $20.0 million revolving credit facility (undrawn) will be sufficient for at least the next 12 months.
As of March 31, 2026, Backblaze held $26.3M in cash and equivalents and $19.2M in marketable securities, totaling $45.5M in liquidity. The company has no outstanding borrowings under its $20M revolving credit facility (amended in April 2026 to extend maturity to 2028). Shareholders' equity stands at $84.6M, slightly up from $83.2M at year-end 2025, driven by stock-based compensation and equity issuances partially offset by net loss and treasury stock purchases.
Total remaining performance obligations (RPOs) were $76.5M, of which $42.9M is expected within one year. Deferred revenue was $36.3M. Finance lease liabilities totaled $38.8M ($15.2M current) with weighted average discount rate of 12.9% and remaining term of 2.7 years. Operating lease liabilities were $23.5M ($4.5M current) with 6.9% discount rate and 5.3-year term. Non-cancelable purchase commitments for service agreements amount to $5.1M through 2029. Additionally, the company expects $17.5M in undiscounted future lease payments from a data center expansion commencing in Q2 2026.
During Q1 2026, Backblaze repurchased 189,229 shares for $0.8M under its $10M buyback program, leaving $7.2M available. No dividends were paid. Capital expenditures totaled $2.8M ($0.7M for property and equipment, $2.1M for capitalized software), representing 7.1% of revenue. The company also incurred $2.2M in restructuring costs under its 2025 Restructuring Plan, primarily for sales and marketing realignment.
Backblaze operates as a single segment. Revenue is disaggregated by product: B2 Cloud Storage ($22.4M, up 24%) and Computer Backup ($16.2M, down 2%). By timing, consumption-based arrangements contributed $21.7M (56%), subscription-based $16.8M (43%), and point-in-time $0.1M. Geographically, 72% of revenue came from the United States, with the UK, Canada, and other regions making up the balance.