Backblaze, Inc.

Good day and welcome to the Backblaze second quarter 2022 earnings call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. And to withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Mr. James Kistner, Vice President and Investor Relations. Please go ahead, sir.

Thank you. Good afternoon and welcome to Backblaze's second quarter of fiscal year 2022 earnings call. On the call with me today are Gleb Budman, co-founder, CEO, and chairperson of the board, and Frank Patrell, chief financial officer. Today, Backblaze will discuss the financial results that were distributed earlier this afternoon. Statements on this call include forward-looking statements about our future financial results use of our IPO proceeds, results from new products, partner announcements in sales and marketing initiatives, our ability to compete effectively, acquire new customers, and retain and expand our business with existing customers, hire and retain key personnel, and effectively manage our growth. These statements are subject to risks and uncertainties that could cause actual results to differ materially. including those described in our risk factors that are included in our Form 10-Q for the quarter ended June 30, 2022, and our other financial filings. You should not rely on our forward-looking statements as predictions of future events. All forward-looking statements that we make on this call are based on assumptions and beliefs as of today, and we undertake no obligation to update them except as required by law. Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to, and not as a substitute for, our GAAP results. Reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our Form 8K filed today with the SEC. You can also find a slide presentation related to our comments in the webcast, which will also be posted to our investor relations page after the call. Before I turn the call over to Gleb, I'd also like to mention that in the latter portion of our call, As in prior calls, we will be addressing questions from investors that we gathered through the state technologies platform. I would now like to turn the call over to Gleb. Gleb?

Thank you, James, and thanks to all of you for joining us. We delivered a strong second quarter with 28% year-on-year revenue growth, which is an acceleration over both Q1 2022 and Q2 of last year. Our B2 cloud storage business grew a strong 45% and now makes up 37% of total revenue. And our computer backup business grew a healthy 20%. AR for the company reached approximately $83 million, with B2 contributing over $31 million and computer backup over $51 million. As a reminder for those on the call that may be newer to the story, Backblaze is the leading independent cloud for data storage. And our mission is to make it astonishingly easy to store, use, and protect data. We have two cloud service offerings that operate on our storage cloud platform. First, our B2 cloud storage service provides developers and IT personnel cloud storage that is dramatically easier to use and is one fifth the price of Amazon Web Services S3 and others. And second, our computer backup service provides unlimited cloud backup for laptops and desktops for companies and individuals. While the computer backup business remains the larger of our two cloud service offerings at the moment, our strategy and increasing investments center around capitalizing on the approximately $100 billion total combined 2025 addressable markets for B2 cloud storage based on projections from IDC and company analysis. The second quarter was an exciting one for B2 cloud storage. Overall, the amount of data added by Backblaze B2 customers was greater in Q2 than for any other quarter in the history of the company. We also added a customer who signed the largest purchase over for B2 in our company's history for approximately $1 million, a win that came through the efforts of our sales assisted team. Turning to key developments in sales and marketing. In July, We hired a well-regarded and experienced chief marketing officer. Kevin Gavin is a versatile marketing executive and strategy-focused leader who brings more than 30 years of industry experience to Backblaze, having led marketing teams as CMO at five companies, including public companies Five9 and Shortel. Kevin is our first CMO at Backblaze, and we are pleased to welcome him to lead our marketing efforts and drive further growth for our company. We were very active in Q2 on the partnership front. Partnerships are very important to us, and a significant amount of the data stored in B2 has come through our partners. I'd like to highlight two key partnerships that we recently announced, starting with Kerasoft. Kerasoft allows resellers, system integrators, and consultants sell Backblaze products to public sector organizations across federal, state, and local government agencies, as well as education and healthcare markets. While we are early in our journey with highly regulated industries, this partnership helps to open up a customer segment that has been largely untapped for Backblaze to date. A second key partnership we announced is with Veritas. which enables small and medium businesses using Veritas' Backup Exec service to tier their backups to B2 cloud storage. Backup Exec is a small and medium-sized business offering that supports backups for tape, workloads, Office 365, and G Suite. We believe B2 is a great fit for Backup Exec customers. In addition, in May, we announced our channel partner program, a suite of tools, resources, incentives, and benefits to help the channel bring our easy, affordable, and trusted services to a broader group of businesses. Channel partners have shown enthusiasm for our new platform offering, B2 Reserve, which is our predictable, capacity-based pricing program for B2. B2 Reserve also includes premium support and use of our recently launched universal data migration program. which makes it easy and free for eligible customers to move data from a wide variety of sources. On the platform front, our cloud replication feature became generally available in June as we committed to during our IPO. Cloud replication makes it easy for customers to keep a copy of their data geographically distributed to support disaster recovery, compliance objectives, or move data closer to end users for faster access. You can learn more about all of these topics on our blog at backblaze.com slash blog. Our blog, which attracts millions of visitors per year, remains an important driver of awareness, brand equity, and customer engagement for Backblaze. For example, our recent blog on Python coding language had more than 30 times the unique visitors of an average new blog post. And the Q1 2022 edition of our hard drive reliability stats blog had doubled the number of visitors of previous blogs on this topic, both quarter and quarter and year on year. These examples demonstrate how we are successfully scaling our blog to increase awareness for an engagement with our cloud service offerings. Before handing over to Frank, I'd like to highlight two customer use cases that demonstrate the value that B2 Cloud Storage can bring for businesses. First, I'd like to talk about a competitive win against Amazon S3 with a developer customer. DevChain is a blockchain software developer, and one of their most successful projects is a social commerce site with over 200,000 users called YourStyle. YourStyle faced massive unexpected invoices when their AWS startup credits ran out, threatening the financial viability of the project. With up to 20,000 images processed each day, they needed an efficient, affordable, storage offering to act as a centralized repository for distribution of the images to users. Moving YourStyle's data from S3 to Backblaze B2 dramatically reduced its storage costs, including reducing egress costs to zero because Backblaze charges zero egress fees to YourStyle's CDN provider and other Backblaze developer partners. Additionally, by using Backblaze's free universal data migration service to transfer their data. It was easy and free to move your style data out of S3. Finally, because of B2's S3 compatible APIs, the migration was seamless and required zero code changes. This is another example of how Backblaze B2 can dramatically improve and enable the business models of developers at SaaS and internet companies. Second, I'd like to highlight a leading global ad agency with tens of thousands of employees at 100 offices around the world that recently chose B2 Cloud Storage to replace an on-premise solution. When this agency moved one of their biggest offices to a green building, their power and space-hungry LTO tape storage system conflicted with their new sustainability goals. But that's not the only reason they wanted to eliminate tape. Tape management occupied a tremendous amount of the IT team's time, invaluable time that could have been spent better supporting their business. They designated Backblaze B2 Cod Storage as their active storage and disaster recovery destination. And B2 now safely stores and protects 20 years of client work and backups of active production data central to the daily operations of the firm. Moving to Backwards B2 helped the agency's IT team eliminate hardware and meet sustainability goals. It also increased the trust and confidence they have in data recovery versus dealing with degraded tape or drive issues. Most importantly, their worldwide team now has instant access to mission-critical assets, absolutely essential when you're developing campaigns for some of the biggest brands in the world. These examples highlight just a portion of the variety of use cases for B2 cloud storage. And we continue to see a large market opportunity as the leading independent cloud for data storage. I want to take a moment to again thank our talented and dedicated team of employees who make all of this possible. Based on their feedback, Backblaze achieved a number of additional awards in the last few months. including being named one of the best workplaces 2022 by Inc. Magazine and as one of Fortune Magazine's best workplaces in the Bay Area. Comparably.com gave Backblaze awards for best company leadership and company culture among small and mid-sized companies and even rated our culture an A+. I was also very honored that Comparably named me as one of the best CEOs for diversity and for women. We continue to view our culture, as a differentiating factor and competitive advantage in attracting the best talent, and we look forward to welcoming many more people to our team. I'll now turn the call over to Frank Patchell, who can review the financial results of the quarter in more detail. Frank?