AI-driven demand boosts Backblaze's performance, with strong cloud storage business helping to achieve profitability.

Cloud storage platform Backblaze (BLZE.US) released its third quarter financial report for the quarter ending September 30, 2025 on Thursday before the market opened. The data shows that Q3 revenue was $37.2 million, a 14% increase compared to the same period last year, exceeding market average expectations. Non-GAAP earnings per share were $0.03, exceeding market average expectations, compared to a loss of $0.10 per share in the same period last year. Backblaze CEO Gleb Budman stated, "Third quarter financial performance exceeded revenue and adjusted EBITDA guidance, with gross margin increasing by approximately 700 basis points to 62% year-over-year. I am pleased with this. We still expect to achieve positive free cash flow in the fourth quarter." "Our B2 cloud storage business grew by 28% year-over-year, and we closed another seven-figure expansion deal with existing customers, demonstrating our core value in terms of cost-effectiveness and an open platform. As customers build AI and data-intensive workflows, they need solutions that are high-performance, cost-predictable, S3-compatible, and unrestricted, and this is where Backblaze's differentiation lies." The company's Q3 B2 cloud storage revenue was $20.7 million, a 28% increase year-over-year; computer backup business revenue was $16.5 million, remaining flat year-over-year. Q3 adjusted gross profit was $29.4 million, accounting for 79% of revenue, compared to $25.5 million, or 78% of revenue in the same period last year. Adjusted EBITDA was $8.4 million, accounting for 23% of revenue, compared to $3.7 million, or 12% of revenue in the same period last year. Non-GAAP net profit was $1.9 million, compared to a loss of $4.1 million in Q3 of 2024. For the nine months ending September 30, 2025, the company's operating cash flow was $14.2 million, compared to $10.3 million in the same period in 2024. Adjusted free cash flow was -$9.5 million, compared to -$15.6 million in the same period in 2024. As of September 30, 2025, the company had total cash, cash equivalents, and securities of $50.3 million. In terms of operations, the company's Q3 annual recurring revenue (ARR) was $147.2 million, a 13% increase year-over-year. Net revenue retention rate (NRR) was 106%, compared to 118% in the same period last year. Q3 customer total retention rate was 91%, compared to 90% in the same period last year. On the business side, the company recently closed a seven-figure total contract value (TCV) expansion deal. A high-growth AI-driven video surveillance customer significantly expanded its use of B2 cloud storage, demonstrating customer recognition of product value and the potential for expansion among existing customers. Additionally, non-GAAP net profit and adjusted EBITDA profit margins reached new highs. Achieving profitability marks a new milestone for the company in achieving positive free cash flow and maintaining financial discipline. Looking ahead, the company expects fourth quarter revenue to be between $37.3 million and $37.9 million; adjusted EBITDA profit margin to be between 20% and 22%; and weighted average basic shares outstanding to be between 58 million and 58.2 million. The full-year revenue forecast for 2025 is expected to be between $145.4 million to $146 million, narrowing from the previous range of $145 million to $147 million; adjusted EBITDA profit margin is expected to be between 18% and 20%, up from the previous range of 17% to 19%.