0001628280-25-038603
SEC filingRevenue grew 16% YoY driven by B2 Cloud Storage (29% growth) and gross margin expanded to 63% from 55% due to equipment life extension.
For the three months ended June 30, 2025, total revenue increased 16% year-over-year to $36.3 million, driven by strong B2 Cloud Storage performance (up 29% to $19.8 million) and Computer Backup growth of 4% to $16.5 million. The B2 segment benefited from both upsell of existing customers ($1.9 million) and new customer wins ($2.5 million). Computer Backup revenue was lifted by the October 2023 price increase ($1.3 million) but partially offset by declining license counts ($0.9 million).
Gross profit rose 34% to $23.0 million, with gross margin expanding to 63% from 55% in the prior year. The primary driver was a $2.4 million reduction in depreciation expense due to the extension of useful lives of infrastructure equipment, effective April 1, 2025. This had a 7 percentage point positive impact on gross margin. Additionally, scale benefits in cost of personnel contributed, partially offset by higher amortization and data center costs.
Operating loss improved to $(6.7 million) from $(9.8 million), as revenue growth and gross margin expansion outpaced a 10% increase in operating expenses. Research and development spending grew 24% (to $11.9 million) due to higher personnel and stock-based compensation, while sales and marketing declined 7% (to $10.2 million) from headcount reductions and more efficient advertising. General and administrative expenses increased 19% (to $7.7 million) on higher stock-based compensation and foreign exchange losses.
B2 Cloud Storage remains the growth engine, with revenue accelerating 29% YoY in Q2 2025. The segment's net revenue retention rate (NRR) stood at 112% as of June 30, 2025, down from 126% a year earlier, reflecting the lapped impact of the October 2023 price increase. Annual Recurring Revenue (ARR) for B2 grew 29% to $80.7 million. Computer Backup showed slower growth (4% revenue, 3% ARR to $65.2 million), but maintained high retention (NRR 106%, gross retention 90%). The overall company NRR was 109%, down from 114%.
The launch of B2 Overdrive (ultra-high-throughput storage) and enterprise security features in spring 2025 positions the company for up-market expansion, targeting AI and enterprise workloads. Management expects capital expenditures to increase in coming quarters to support this strategy.
While no specific numerical guidance is provided, management outlines several expectations: operating expenses (excluding depreciation, amortization, and stock-based compensation) are expected to remain relatively flat in 2025 compared to 2024, as efficiencies from 2024 restructuring offset increased R&D investment. Sales and marketing may increase as hiring ramps. Capital expenditures are expected to rise to support the up-market transformation. The company also entered into a new senior secured revolving credit facility of $20 million in June 2025, with no borrowings outstanding as of quarter end, providing additional liquidity. Adjusted EBITDA improved to $6.6 million (18% margin) in Q2 from $2.7 million (9%) a year ago, reflecting operational leverage. The company continues to invest in platform innovation and international expansion, exemplified by a new data center region in Canada launched in January 2025.
As of June 30, 2025, Backblaze held $32.2M in cash and $18.4M in marketable securities, totaling $50.6M in liquid assets. Total assets stood at $186.0M. The company has no outstanding bank debt; the only debt is finance lease liabilities of $34.4M (current $15.3M, non-current $19.2M). Operating lease liabilities totaled $27.2M. Shareholders' equity was $79.6M. A new $20M revolving credit facility was signed in June 2025, undrawn as of quarter-end.
Backblaze has $6.5M in non-cancellable service agreements over the next four years. Finance lease commitments total $39.3M ($34.4M on-balance-sheet), with maturities through 2029. Operating lease commitments (data centers and office) are $33.1M, plus $16.2M for non-lease components. Additionally, a June 2025 lease amendment added $34.5M in undiscounted future payments for expanded data center capacity.
The company operates as a single segment (Storage Cloud Platform). Revenue disaggregation shows B2 Cloud Storage ($37.9M in H1) and Computer Backup ($33.0M). Geographic mix: US 72%, UK 5%, Canada 5%, Other 18%. Consumption-based revenue ($36.6M) slightly exceeds subscription-based ($34.1M).