Neocloud opportunity estimated at $14 billion for Backblaze; ~200 neoclouds exist; hyperscalers are not key competitors as they compete with neoclouds.
B2 Neo is a white-label offering with API integration, single sign-on; leverages 17 years of technology.
Large neocloud deal (~$15 million+ TCV, not $50M — corrected later) will take ~1 year to start revenue; work is broadly useful for other neoclouds.
Computer backup expected to decline 5% year-over-year in 2026; Q1 decline ~3%, builds to -5% by year-end.
Mgmt stance: Bullish on neocloud opportunity — well-positioned, but cautious on computer backup stabilization (too early to predict flat/slight growth).
Q4 B2 missed due to deals expected in November closing very late; guidance philosophy changed to exclude swing deals.
B2 2026 year-over-year growth guided to 20%; quarterly range 12%-19% due to high-variable customer comps (Q2 low end, Q3 high end).
Excluding one monthly customer, B2 growth has stabilized at low ~20% for 5 years.
Large neocloud win: customer had own storage; internal leaders familiar with Backblaze from prior roles; chosen for high performance, predictable economics, low cost, trust.
Mgmt stance: Neutral — B2 growth deceleration largely driven by one customer; GTM transformation making progress (73% ARR growth from customers >$50K, 8-figure deals).
Gross margin headwind of a few hundred basis points driven by: data center cost/equipment increases, accelerated CapEx for large neocloud deal.
White-label model generally has lower gross margin but lower OpEx (less sales/marketing spend), netting to same economics.
Derisked guide: only underwriting minimum contract commitments; not solely tied to neoclouds but applies broadly.
Mgmt stance: Neutral — proactively managing gross margin via optimization initiative; guidance philosophy derisks but requires explanation.
Q4 — Michael Cikos (follow-up)
Topic: Sales cycle length, NRR outlook for 2026
Key points:
8-figure deal took ~1 year; $50K-$200K deals move quickly (~sub-90 days); others take ~6 months.
NRR for 2026: could dip to ~100% for 1-2 quarters (Q2/Q3) due to large customer lumpiness; year-over-year NRR expected ~110% (plus or minus 200-300 bps).
AI customer count grew 75%; their growth rate is 3x faster than average customer, supporting NRR upside over time.
Mgmt stance: Bullish on AI customer trends driving future NRR improvement; neutral on near-term NRR volatility.
Q5 — Eric Martinuzzi
Topic: Large deal revenue timing, free cash flow neutral guidance, neocloud vs B2 Overdrive
Key points:
8-figure deal ($15 million+ TCV, 3-year duration): bulk revenue in 2027-2028; nothing factored into 2026.
Adjusted free cash flow neutral for 2026 (improvement from -$5M in 2025, -$20M in 2024); Q2 worst (low computer backup renewals); second half better.
B2 Overdrive: original offering for end customers (not white-label); B2 Neo: white-label for neoclouds; both serve AI/HPC but different market sides.
Large TCV deal is a net new customer; half of $1M+ deals over past year are net new, half are expansions.
Pipeline grew from $15M (2024) to ~$30M (2025); aim to double that run rate.
Mgmt stance: Bullish on pipeline and large deal potential; confident in exiting cash burn phase (neutral for 2026 free cash flow).