Backblaze, Inc.

Please stand by. Good day, everyone. Welcome to the Backblaze fourth quarter and full year 2025 earnings call. Just a reminder, this call is being recorded. I would now like to hand the call over to Ms. Mimi Kong. Please go ahead.

Thank you. Good morning and welcome to Backblaze's fourth quarter and full year 2025 earnings call. On the call with me today are Gleb Budman, co-founder, CEO, and chairperson of the board, and Mark Sweetan, chief financial officer. Today, Backblaze will discuss the financial results that were distributed earlier. Statements on this call include forward-looking statements about our future financial results, the impact of our go-to-market transformation, sales and marketing initiatives, cost savings initiatives, results from new features, the impact of price changes, our ability to compete effectively and manage our growth, and our strategy to acquire new customers, retain and expand our business with existing customers. 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 quarterly report on Form 10Q 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 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. Please also see our press release or presentation for definitions of additional metrics, such as NRR, growth customer retention rate, and adjusted free cash flows. And finally, we will be participating in the Citizens Technology Conference on March 2 in San Francisco. Thank you for joining us and I would now like to turn the call over to Gleb.

Thank you, Mimi, and welcome everyone to the call. We finished 2025 with solid fourth quarter results. Revenue came in line with guidance and adjusted EBITDA margin reached 28%, doubling over the prior year. We also deliver adjusted free cash flow profitability for the first time as a public company, a major milestone demonstrating the inherent operating leverage in our business model. For the full year, total company revenue grew 14% year-over-year, with B2 cloud storage growing 26%. Today, I want to focus on three things. First, the strength and durability of our core business. Second, an update on the meaningful progress of our go-to-market transformation. And third, how we're positioning Backblaze to take advantage of the AI opportunity. Let me start with the core of our business. As data creation accelerates exponentially, Backblaze addresses a large and growing market where long-term demand for scalable, cost-effective storage compounds over time. Our business compounds within that market as we add new customers and retain them for an average of nine years. B2 net revenue retention of 111% reflects consistent expansion within our installed base, reinforcing durable, long-term growth. We've proven our ability to grow in that market, delivering an annualized growth rate of 21% since IPO. Being a cash-generating business is an important financial milestone. Year over year, we meaningfully improved profitability, demonstrating how we are building a sustainably durable company one that can invest in growth while maintaining financial strength. Now, let me talk about our investment in growth and the progress on our go-to-market transformation. While we didn't achieve our budgeted Q4B2 growth rate, we made meaningful progress and have positioned ourselves for success. More importantly, the underlying fundamentals of the business remain stable, and the investments we've made position us for durable growth going forward. Including the highly variable growth of the large AI customer we previously mentioned, we stabilized on a baseline of around 20% B2 revenue growth in each of the last five quarters. Now we've shared our goal of moving up market. We ended the year with 168 customers generating more than $50,000 in ARR each, up 35% year on year. The ARR of this cohort increased 73% year-on-year to $26 million of ARR. We're very proud of this upmarket progress. We've also launched three key initiatives. Number one, increasing awareness. We launched Flamethrower, our startup program designed to engage high-growth companies early and establish back blades as their long-term storage infrastructure partner. Number two, driving greater pipeline consistency. We're upgrading our top of funnel systems and scaling demand generation programs to drive higher velocity sales motion. Number three, expanding revenue within our installed base. We are implementing processes to proactively identify and capture additional share of wallet across our more than 119,000 B2 customers. People are the cornerstone of our success and we continue to strengthen our leadership bench to support these initiatives. We have already hired the co-founder of an edge compute company to drive our flamethrower program, a business systems leader for our systems work and a head of customer success to build out that expansion effort. We will keep up leveling our leadership and talent. For instance, We are also in the final stages of hiring a sales development leader to drive pipeline and a revenue operations leader to drive tighter coordination and accountability across the entire go-to-market organization. Scaling into this next phase requires even greater execution discipline. To support that, Elias Mendoza joined us as strategic transformation leader. He previously served as partner and COO at private equity firm Cirrus Capital and held leadership roles at IBM and Morgan Stanley. In these roles, he's helped companies drive strong strategy to execution. Under his leadership, we also established a go-to-market advisory committee of operators who have scaled enterprise and platform businesses to a billion in revenue and beyond at companies such as Okta, Snowflake, ZoomInfo, and Carta. Their role is to bring pattern recognition, pressure test key decisions, and provide external perspective as we scale. We have made meaningful progress in our go-to-market transformation, and I'm excited about the team we're putting in place to drive it forward. Now let's talk about how we're positioning Backboys to take advantage of the massive AI opportunity ahead. We all understand there's a lot happening in AI today, but sometimes the scale is still hard to fully comprehend. I saw a report recently that capital spending on AI as a percent of GDP by just the hyperscalers in 2026 is forecast to be five times larger than the entire spend to create the U.S. interstate system. Ten times larger than the Apollo space program. AI capex spending accounted for 92% of all U.S. GDP growth. it's hard to hyperbolize AI. With AI, a big focus is who's disrupting and who's getting disrupted. We believe Backblaze is one of the disruptors, participating in this infrastructure replatforming as a storage backbone for the next wave of cloud infrastructure. So while like any major new innovation, there will be market volatility, We are firm believers in the long-term growth opportunity and are leaning into it. We're doing that with two growth vectors. Number one, on the supply side of AI, Neal Clouds and other AI tooling companies are building the platforms for AI workflows. Our opportunity is to be the storage backbone of those platforms. And number two, on the demand side of AI, Companies are using AI to build everything from anomaly detection to zonal forecasting. These companies are using and generating large data sets. Our opportunity is to be the storage of choice for their developers and use cases. And we are uniquely positioned to be the glue between these, creating a virtuous cycle. Developing a platform that can deliver massive performance with large scale data sets while providing that cost efficiently is a significant technical challenge. Backblaze has done that and AI is driving an increasing need for this technology. On the supply side, roughly 200 neoclubs have sprung up and industry estimates project that market to reach $237 billion within the next five years. These companies provide GPUs as a service, and most will need cloud storage to fully service their customers. We've already signed multiple of these multibillion-dollar neoclouds with not only six- and seven-figure deals, but our company's first eight-figure TCV deal, an over $15 million deal. And we believe all of these have material upside potential and we're in discussions with more than half a dozen others. By our estimates, NEO cloud storage for our solution alone represents a $14 billion opportunity by 2030. To further pursue our NEO cloud opportunity, this morning we launched B2NEO, a high-performance white label storage offering specifically designed for NEO clouds. Developed in collaboration with our Neo Cloud customers, B2 Neo allows Neo Clouds to offer a top tier storage solution without the massive capital costs or years of engineering required to build a storage backend from scratch. On the demand side, the growth in AI developers is exponential. GitHub disclosed they were adding on average a new developer every second. Hundreds of AI companies countless individual AI developers already use B2. For example, one of our customers uses AI to generate audio. They just launched a year ago and already have multiple petabytes with us signing a six-figure annual deal with us. As they add new users and those users generate more audio, that data grows exponentially. Our self-serve platform where we added 12,000 customers this year alone is a great enabler for this class of AI developers who just want to get going. We launched our startup program called Flamethrower and a developer relations initiative to ensure developers are building with Backblaze. To drive our roadmap forward for the AI opportunity ahead, we strengthened our product and engineering leadership. Dan Spragans joined as SVP of engineering and Rhett Dillingham as SVP of product, bringing deep experience in AI and high-performance cloud infrastructure. We also added Russ Arts, co-founder and former head of R&D at Computer Associates as an advisor. Together, this team strengthens our ability to scale the platform for larger, more complex AI-driven deployments. We enter 2026, with a strong and growing business, a rapidly improving go-to-market motion, and a tremendous AI opportunity with a targeted B2 Neo offering and a strong product team. AI is reshaping how data is created and scaled, and storage sits at the center of that transformation. Across Neo Cloud platforms and AI native developers, we are building the foundation for the next generation of data infrastructure. Durable growth and massive AI potential are the hallmarks of our opportunity. With that, I'll turn the call over to Mark. Mark?