Backblaze (BLZE) 8 Nov 232023 Q3 Earnings call transcript

Good day, and welcome to the Backblaze Third Quarter 2023 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Mimi Kong, Director of Investor Relations. Please go ahead.

Thank you. Good afternoon, and welcome to Backblaze's Third Quarter Fiscal Year 2023 Earnings Call.

financial me the Gleb Chief Board; Backblaze discuss with and Co-Founder, Financial call distributed will of were Chairperson and the the today afternoon. Budman, are CEO Officer.Today, earlier On this that results Frank Patchel, and include results and to Statements proceeds, price our acquire future our new changes, our impact marketing of features ability and manage partnerships statements financial on business forward-looking effectively retain our about sales use with initiatives, and results, our strategy compete customers this customers. new of the and and call from our IPO growth expand offerings existing and to and factors to differ in our that These subject risks statements XX-K to uncertainties Annual Report actual materially, on that are our described could filings. Form other those financial results risk are cause including and included and our in

the statements -- and on All on measures considered this by not assumptions addition rely substitute as forward-looking You obligation measures. found our also X-K undertake in required should can find of that Please release also and be will non-GAAP which to update rate.Before that furnished the will I in mention law.Our the comments Gleb. non-GAAP call Relations also our no see non-GAAP were retention to financial call release, in for I'd addressing to was GAAP now webcast, NRR the a customer our these questions filed call posted results. that page with SEC.You of also or our we for gross statements Form not results for events. them, platform.Thank to include the should investors metrics definitions be like as presentation we will to predictions you Reconciliation us. calls, over in GAAP may the would Investor press be on from related additional be such and These as except turn Say which to beliefs presentation our joining in today of Technologies slide I turn a and today, latter make our to forward-looking financials Gleb, today our prior of non-GAAP financial to to call. as gathered Gleb? of after we portion our with like discussion future the And call, based over as are as through earnings

Thank QX. the everyone, a and you, delivered We to call. welcome, Mimi, strong

higher growth First, and we believe with revenue that QX expected XXXX. point in we're inflection at an

continuing at to with showcased platform data services more model, Tech training on cloud. constraints the cloud other our cloud, to customers CoreWeave, large-scale providers.For how Amazon with data paring Third demonstrated moving faster the ideal be towards data session storage I'd event on Fastly, decision-makers a AI Snowflake. a we presented Tech to power further the Day in BX and storage are AI and and free XX% to have generate growth observations of GPU-accelerated Annual BX power stored and developers cloud administrators, which just Cloud secure Web the grow efficiently toward exponential particularly cost-effective to Second, including to on This great Storage how an costs Day, ago, cases, storage presentation ecosystem IT within weeks Cloud the co-presented technical and providers and edge how making consume cash, The partners And CoreWeave, on financial platforms we've more workflows, Frank our other to delivering architects Tech and focus data.With at best cloud, gives Cloud workflows put specialized cloud our Snowflake, for in Storage. is works few how how use and industry-leading Snowflake build Fastly strategy up processes, customers with the solution BX successful of on progress participating traditional show break AI easier rate. from that our freedom within fraction our resellers. needs cloud than works to the with thousands of cloud. our we attended interoperability share analytics the workloads Day shift of open a a to supports inference performance provider they on Storage upload high strategy. offering, a from of a specialized detail dramatic the open Cloud Storage The an for strategy. expand the BX financials, solutions it Frank and hosted AI the increase performance, where innovate like Cloud X/X storage their price.Before and to making We users shared made we to on like team third, serve their And and continues while as our workflows data of adjusted will Backblaze's our EBITDA up BX, industry's BX later. Storage thousands We interested demonstrating Services continuing cost.Turning adopt customers to continued and the allows talks confirms open to for the some about which to work in while

As application and these. highlights of we've strategy touch discussed before, some each with cases.I'll partnership includes on efforts storage focusing use for cultivating this on sales-assisted along self-serve,

completed customers. our and infrastructure in For website self-serve, we seen increased encouraging with have have new results growth overhauling year-over-year

and add Our sales-assisted motion customers. to grow larger continues

adds has one Qencode. trend to to leaned expanded for is of data our Xx, by data in initiatives. Qencode to move partnership The within small the earlier partnership an once announced reach with example, as market stored use.Moving more and Storage's partnership data new terabytes dollar since they over multi-billion realize customers. such which the where HYCU full in service a year Cloud BX customers our and additional and the of fully helps extend and For on ARR. BX distribution with in BX often translates their media Storage point Cloud we cost XXX This increasing ease see data start and customer $XXX,XXX production extent protection started large of HYCU savings We and the partnerships a

We we to which with AI QX, to to finally, also within developer make initiative. continue like BX million our to serve make commitment.And deal our upfront progress our with innovators our headway signed partner largest Reserve in $X a I'd continue illustrates how space storage ability we share story, highlights application program. and channel the In multiyear an

also developer improvements sensors, Stash, how XD customers joint led volumes to and share data it cases a CoreWeave With they to into a ambitious movement great offering, reinvent can capture that require for usable in capture best migrate human this special providers, that run BX works. considering we translates need an SaaS while Small is call growth with megabyte, define application to which plans performance large XD using animation, results. of One those scale of object no their AI we Cloud well innovation Shard environments, is their but which serve smaller file and with provider BX. of storage use could activity our a important archive storage.Next, AI for up the significant free as than for needs. as recent cloud a affordable, simply or for creators This processing they other there's AI our into easily them that as majority storage example both how AI could excited to egress clothing traditional powerful for platform, workloads After to providing needed motion upload of X accessible CoreWeave customer's Storage. data servers uploads, their make Backblaze found I'm upload their

cloud breakthrough helps up which For SX. increases a faster upload, usability X/X computer now we is for our and providers as performance as more Storage requested this the BX value platform.Additionally, improvements to Amazon tests. type resources of Version while to Cloud and up than across of customers restore to XX% delivering highly efficiency experience. local the X.X, other be free well for customers features to for cost new backup, launched traditional continues Backblaze This

which continued October. IT from forward As delivers endpoint became the with we backup solutions.Now, workstation features we're I'd from enterprise in of looking announced share changes and upgrades the announced administration, our managers in which to and group's to free we like improvements advanced effective to received some in August, burden feedback expensive product August, we of complex the price

While it our was line churn with is still expectations. generally in early,

BX Cloud will investments make computer we helps and version our best, and Our we the and such believe shared history service that have continued as upgrades in customers our open to our features cloud customers egress improvements a recent Xx serve free egress for our free valued and an backup platform complementary extended X-year popular for reality. previously, Storage.As appreciate

Following cared we are new through cut really solutions I'm the before to and I edge all use to impact data.And I'd how Frank. call leader global with Senior have performance best-of-breed our computing, fees years because deployment turn noise the point other cloud spoke about Chris's Having we're oversees us of want major hand of saw center over strategy engage to Vice management to over our of their storage already enablement new customers Chris him what directly the the providers companies earlier, for President operations and free and experience Backblaze. platform. of high to excited a customer-centric egress Operations excited freedom the at data over Opat, with by welcome them. call and to Frank, charged on customers the for the like to very egress industry seen Chris aboard.Now, in Offering is to multi-cloud choose announcement, Frank? Cloud they improvements XX mentioned Cloudreach. like paint and I store Chris accelerating StackPath a our to

highlighted and Gleb, surpassing ARR by joining for milestone. was $XXX thanks, QX us in the million you, everyone, Thank today.

important it As also inflection Gleb an for company. believe point the mentioned, we is

Storage down Backup Cloud Storage with growth, is guidance on cash revenue our provide BX revenue year-on-year adjusted Backup revenue.Turning backup.Working XXX% the NRR, XX% EBITDA, to Storage will call in was XXX%, rates gross defined EBITDA, revenue earnings centers. growth and half with quarter Unless financial growth. non-GAAP the we represented reflecting on and year. million, initial in prior Computer are NRR later increase in and growth. we XX% XX% will totaled QX, and BX track Storage and was all the reach I XX% results. discuss of data focused to key with reflecting noted, Total $XX.X quarter, of company X of full overall for at which costs I million, at metrics year retention, accelerate earnings our revenue metrics, down expect and BX retention. $XX.X XXXX decrease Cloud call computer customer to some XX% XX% and Computer BX I the P&L, margin year-on-year. release. thoughts for in net growth from retention Gross and Cloud driver of X% retention third XXX%. this customer million, our was last revenue referring by XX%. totaled February.Our or adjusted detail.Turning adjusted with mentioned total In was to new primary Next gross quarter remain $XX.X about further on QX to expanded an reduce usage to revenue consistent the gross Similar metrics: X prior associated is XXXX Cloud due year positive We quarters, the which be will our XX%, in sequentially margin otherwise

one-time the XXXX.Now of gains at efficiencies negative operating at The EBITDA loss like or QX of loss due quarter, outlook and sheet. a [Technical Cash I'd to million for $XX gains.Turning was $XXX,XXX investments, totaled versus some X% million of negative revenue our in X to $X.X beat restricted extent, the of and lesser the to XXXX adjusted This provide QX. or compared quarter Difficulty] a X% of XXXX. in to including to end million $XX balance end cash, short-term QX of

as our in still usage. with line gross our change Regarding for while cash net recent price margin generally increase, early, churn positive expectations, revenue, price and adjusted has and we been the a see EBITDA,

due to This the fourth wider quarter, to million. $XX.X we for expect range guidance $XX.X be and that rolling For revenue started million range of price in typical is increase to is just than our a the through X. quarter the quarter fourth

as as revenue to of our QX expect half to sequentially public be a quarter further first between cash adjusted to the also to growth highlight, a the adjusted margin we a X% by as We and decrease price QX of positive EBITDA positive and EBITDA positive due gross increase expect trend and up additional margin company.As is efficiencies. expected impact X%. usage operational well an

full million to raising end bottom are the we full $XXX.X $XXX million XXXX, of year For to guidance by revenue the year our $X.X million.

full-year process budget, will are X%.We EBITDA XXXX XXXX of We range X% to the to our adjusted February. of also full we improving a negative in in guidance and provide are still our negative our finalizing guidance

we expect up be QX XXXX XXXX. the in However, revenue in with trending QX point to and inflection growth

anticipate bottom call growth.I positive next for the to drive top Gleb? continue be now to year the back as we adjusted pass and EBITDA year Additionally, will Gleb. we full line will

and in on higher lower I want be huge both positive in performance these thank to are be ready AWS. track questions revenue to a are our you to upload Thanks, of.Operator, X strong our financial proud storage extend with usage. call. faster and Frank. the speeds XX% and for We had These that now developing to delivering enabling accomplishments offer on see expect to EBITDA XXXX growth now than quarter adjusted we're take to to to dramatically team, innovation is cash QX results for a major up QX, us

from first Our question Simon comes with Instructions] Raymond James. [Operator Leopold

guide when the is think And to XXXX. be could out I price the helpful you ready impact time in walk maybe and wanted play if the might done line could increases if increases about see what appreciate But you've XXXX. help could through you're you not us to how I in us past? price to

the those contracts. the on the X-year Backup, and increase Sure. in that X And are price We had increases of past customers through XX% business. Computer in way price Computer is our rolls Backup X- that

Cloud increase. time be Backup. in. and the So across this in as in of they phases the it be the is pay-as-you-go Computer the increase that we'll we're on all customers the BX period.On of the Storage will price And that side, It's and will price price price for renew had Backup a phase phase increase increase. having started our that Computer customers, October year, their those this on become immediately -- continued There October. first and time same a this It effective

phase already Computer it the the out. that's BX -- will in. so how that's So go and really is engaged Backup will

a is Great. egress, would other better I I'm to understand thing your be if attractive cost you're then you? some the us the to on handle get And providing trying is customers, way to and free there help that understand why the to

said, committed then. have BX the seen contracts, and price that using they effect effect. have We increase have not the and do price aren't they Reserve increase are Frank As do customers customers that take

Great. And then a quick just as follow-up.

the costs. to magnitude free of to cost absorbing Just of trying the us those allowing egress, you're you that understand to how if give sense some means you're estimate assume Can I you?

had far for egress our egress all remember they already. as partner Well, accounts, free of yes, as

egress for their a of immaterial. But customers think we going So business. certainly cost amount not the it's business We going in -- now the boost is storage free important get overall to to open forward, very that this It's that is the really reason. the and concept, think cloud Xx egress. and

in downside the upsides any are cost. than much more limited So the positive

very So but not if immaterial, they're Thank not it's much. absorbable. -- you very it's

question next with Our Oppenheimer. comes Kidron Ittai from

Nice results.

I deliver incur egress follow cover in the advantage quickly transferring needed Why do -- given a by relative you Simon's up customer cost that egress significant on cost that over? you to an call me free is would feel very Let already itself, on question, AWS, guess. even

Gleb. for the Thank question. is you This

of a easy-to-use is price that platform. the to platform very the we provide, And customer for storage because provide simply amount we So believe obviously, tremendous we X/X value of AWS point a storage storage. the that

certainly to value the that's So strong customer. material

to predict. customers with they bit what cost providers, is times are cloud for them can is don't it's egress to have on One they've they the of we they that for by traditional going egress been fees And worry. found burned little that confused -- at them know the sometimes just necessarily be because hard egress because a things because the about

for So friction point mental it's of them. a

with egress easy like open we our certainly free companies of make the and to so they and wanted -- driving really that to works the Cloudflare we egress one, partners, their And making customers easy.Well, for we're it, offered [ Vultr not like our the it's cloud and any keep because, of egress ] on goal we want very where said, And use others. revenue significant immaterial, goal that today. it want and completely up get customers they where Xx to Frank through to how our was movement was but not collected already choose Fastly to data, not providing

it's financial about how us, customers So cloud. huge huge for but kind open not it in is, we think a to the benefit they a of believe, impact

you [Technical be Will or that the multiyear you month-to-month and one make Difficulty] [ available obligations ] have you egress? them contractual pay to can require sign for

So can us still for customers. time. period what the pay-as-you-go. BX we for customers can -- They for still still work they a requirement with still -- for sign sign sign can of the up Reserve committed doesn't up this can The a longer and for they contract how purchase change with

egress free with that. doesn't the change So

egress and get get from the then universal ask cloud us. from to X-year Now out cost no there's data contract is cover requirement Amazon in Azure providing what to migration, egress traditional commitment data where their of -- to But free Xx, for is Cloud. or providers customer do them we or the Backblaze do up to data sign a out to we the for that, a And terms a the to of the on the that. do which from we're we offer we Google if to ability data

Okay. what versus for percent And ahead your regarding the BX, of time? is BX pay-as-you-go contracted so pricing, of revenue

majority about It's currently.

Majority.

talk you when [ X/X cost than becoming And AWS price you're AWS, is price Okay. after of the I Am assuming increase? of ] the price rather X/X before this after? being fixed, a the about that the or the increase

well, and So transaction we added today. price point different believe costs has complexity. else and everything we're as X/X approximately costs a fees variety of the that added of which still AWS with are all

that still X/X price the believe we of approximately we're So point.

And one big like and standpoint, macro average rates. last closing also I then from execution a Help Difficulty] looking is about wise, me deal looking just standpoint, size Gleb, Okay. understand stand [Technical it. appreciate how where that front? for me, backlog you from like, you picture the can looking line talk on like, an

absolutely. Sure,

that prior talked how we weren't those we prior the whereas good, quarters longer So quarters. lines good, our were were others had seen seeing the pipelines the in seeing now with close the line about in rates What is that. or worse, get time -- we're

think quite I strong. we've is pipeline the ever had itself company. largest at that the And So pipeline the

about good for things where pretty stand feeling So from a macro us.

from, biggest number But it of And the for you grows talk is backlog, just growth quarter-to-quarter, from two, one. quantify have that mature back. you? the Can maybe you the to going how the naturally can as quality, grow number company the it's you're about

Yes.

is that? that pipeline company. the the had biggest say is -- accelerated pipeline the and company think the than that bigger I of about the the from we've growth -- it has So more can what I at

just the we've dollars. with So company, the relative sales conversations not it they feel to deals in grown from marked that stages. the terms team, just share they they the And there. good has like the -- actually think the on Obviously, stages I -- relative that still in grown that the pipeline of about deals, had have at, call the the in different not for of through. every based the stages quality But are they're has each

with from Bennett comes next Craig-Hallum. The Chad question

you're the Obviously, price at and just immediate BX pay-as-you-go. looking So BX between impact, kind here increase in more quarter increase Backup? you least the side on see the side Computer fourth of how price mix of on impact the at with

way revenue the So expect quarter? think Is should we to about mix increase of it? that a -- the BX mix in to fair fourth

fine. a right? for we're the price it BX looking necessarily, Not never at overall date, increase, still we've had So X because to although churn, month, looks

increase second price that and -- So Backup higher price the than thing increase. is Computer the BX the is

we're looking BX at it, rates rate now So growth we're when same. Backup was at the Computer with growth using from it is that X%. was XX% about and But quarter, the this the -- growing we're right what at remember growing seeing overall,

So -- total the BX and is XX% already of business.

as So the quickly. overtaking long-term is dominant BX product

ask. to maybe guess, I

low increase So the I talked this in a about? the think the in Is ARR is quarter. but to still XX% we accelerate about think would you quarter, December pre-price kind XXs way up growth that should of last BX quarter the ballpark be

Yes. XX% as we say.

Okay. XXs.

this the how it? that Okay. I you then call it, I just think in about in accelerating your want on we're XX% maybe rate? year-over-year sure kind from fourth think year assume to growth as track of I think next quarter fourth terms guidance quarter here. that. about you at revenue When of with fourth of still And that much about Is quarter reaccelerate XX%, the next talking quarter beyond year, XX% we range, you're about make directionally can midpoint to as

the the -- about you're So midpoint. right

growth X. that rates at XXXX. we going see similar midpoint around rate as we growth to our we seeing So forward in And are quarter that XX% enter

Okay.

seen assumptions it on of doesn't is because increase in But know in set part XX%, data what BX, on that price terms thinking line. changes, in not. you of increase if of you're you XX% time Is anything it churn. like sound of about small growth So of business? price data XX% increase growth your the usage or increase But anything terms ex a conceptually I'm it's seeing changing and whether understand if could sound just If data again, I just And you've grow the asking? terms increased like, BX, that believe doesn't effectively -- there of next don't of the non-price a price kind or I'm increase. business price year.

I in so. amplification, price our from current And new customers new is we look customers. in so increase. -- always which then think have The growth revenue at coming growth we

are in factors, and pushes the this So a there. churn X those

And our far so as or areas assumption, because churn so churn fine, are expected. growth of appears other the

So or any logo saying? aren't is what growth, data growth new seeing you deceleration you're

Correct.

Okay. I one And could. then for me, if last

be to sequential the Is I this you talked $X deferred million on multiyear I related top that? the So deal? on almost deals, of think increase? might related sequentially. BX deals of was there very revs, to large Or BX about effectively Reserve were your kind about Reserve doubled but that a think, long-term almost deal call, more It that

-- the the increase It's and for are deal reason is -- single there that then largest the the other...

What you was that? Hello? hear Did me?

Yes.

I You said, you Frank? there were at deals, cut other the other out assume --

largest. the was That Yes. Yes. Yes.

Okay. That's to hear. great

quarter, guys. job the again Nice on Okay.

Our next from JMP Erik comes question Suppinger with Securities.

quarter. good Congrats a on

you're that now one, SX to going your So a at you're was relative change? to performance the Were improve your you enhancement? then performance continue you so faster? far? and us you about what relative to how said give does before where churn is you Can performance? was -- what to the from think much expecting think what parity us were that had you XX% two, sense whether the change? any you've you relative Or And Or do AWS you expected. seen the made change can you And for it what remind you

So Erik, this is Gleb.

it, we put we Stash place. on the our really focused side On had performance Shard performance Amazon of once in measuring versus

before, little quite bit terms faster to can yes. and point.In side? were we this probably the think of at performance they a innovate answer further bit on we the down we're than are we The is slower So now side a continue --

on have We that we road that. those But more us of to what We'll you for had, have increase? items -- the whether -- question improvements. our in of those to -- map of how further I was expectations what make we out but you continue were see price the a see the drive it for components churn the believe to continue as believe performance improvements.And that then extent question second, around other a do faded -- was were from do I scale to possibilities to what

Yes, that's correct.

had we this were history the being increase, Yes. the history And on product. we Backup had bundled Computer one extended although our price -- version into

So getting of then on to increase you're top actually a product that. innovation associated and

we we modeled more we So churn -- a the and are just BX -- -- And our were modest was modeling rate. a there. -- modest in in

so than churn that's And more better didn't yet. far, it we say we want and are it's very why that early, model rate. about But to

of performance Or that that performance the is a stagnant Okay. is performance fairly metric back to And time? over of then SX -- you the kind coming this question, type side? thing on SX's where improving the it is steadily

would We we So, our stable. I -- very that during it testing, data have not was sure I'm that. good say on

sure during terms year not this thing that that how that are of the period. doing versions, to did front think where which compared are but been not of available fairly that kind was wildly it's year to not their X So during performance period years short performance of in we any see our around it on testing things ago, nor necessarily improvements But public default I data. last things there SX I'm has SX what had like they've and is in they've Glacier, we that. But faster. is information some Maybe the slower, have been slower offering, that then general, on kind moved

top service. tier of than currently faster is So this their

Our Eric Markets. comes Capital next Lake Street question from with Martinuzzi

about with of talked renewals, evidence you're data the been on we've then that of at there. the that got any macro X line there hasn't And perspective, based seeing And expectations. you churn in customer, month the with Yes. deceleration least -- the growth kind

upfront Backup know payment. the a X-year, at on asking side, On X- pushback the X X-year Computer least X- terms seen Any observation, for their you on it's for have or any month or people I there? pushback of

customers as lock to funny year seen point to in from X the some ahead switch some we've monthly to results, and the X pricing... price actually It's wanting of

Yes.

Okay.

is So amount the an people. dollar issue not for

Okay. we've I on for the should going one to data some XXXX, know to a as shifting February. How over be center full things investments. you're then XXXX in seen gross margin the thinking in the side is And about year But that give that outlook XXXX? we us here of

XX% as Yes. gross be always of we have think mid to that said going in Gross it was the the on range. -- upper XX% we in the margin And now non-GAAP.

question Our Riley comes from Zach with B. next Cummins Securities.

Great.

cash starting a off, bit half supposed I can fall about more QX. you the know like by to it's about Frank, it sounds usage? talk little Just in

you think of cash August Are end usage? least at still year. about about you good I a should Or $XX exiting feeling next pretty near we target the that million target? how of think gave

we provided half we be would last that. the of we feel very that and in $XX would time was that XXXX. first breakeven with cash million, still exit about That the XXXX good And

same. the that So remains

for Got it. question And Helpful. Gleb. one

any train the models. Can partnership you with around just for could opportunity Interesting see more kind look potential see with potential you training seeing Just to the talk of CoreWeave. about models? as to the there? opportunity And ways you're AI people closer tailwind AI your

and growing in and exponentially. and absolutely. seen being evaluation are are [Technical that call others I shared data data all large at Difficulty] we've this think using use used. customers our our Yes, scale to is and where mean, and that call uses We've cases data needs storage data and that's data usage, AI the keeping the prior data customers their I how growth that on

customer, play in parts to a the customer of looking data CoreWeave they my we were that a how also that that So AI. think has started the Cloud to accessible I a but it's of brought workflow keep where place And different somewhere do keep I it the BX to shared interesting for was CoreWeave. easily we it, example Storage find that in affordable -- for Backblaze

it, and the for to compute analysis accessible areas the and where providers data want the first part result places your run ecosystem, open it cloud of side you growth the increasing had that different to that, think be do fact cases, usage and models of cloud us that CoreWeave And to you that it.So lots want to have of so the as us them other is be the them needs data this to the providers accessible CoreWeave is to of the like and that others you of looked of of we've locked to We've AWS, use introduced to data different it AI used us. opportunity storage if then to in a CoreWeave I for expensive come traditional some data it them. of overall data your actually then off the like customers with inside a and therefore, be for traditional want to where and introduced becomes leverage cloud

model to believe providers. I So storage for cloud an open customers data place their be all different that, is good increasingly position these that provider accessible want to when as an

Blair. next Our Jason comes with question William from Ader

few a for Just ones me.

just BX? of could both and increases remind on for the details off, specific the First Computer you price Backup us

only customers. on details were BX The pay-as-you-go for Yes.

are product, no Computer per $X that was then really it customers what -- month, And contracts our our on locked which taking bundling was in. doing were extended we our side, our on history Backup and in BX our EVH, were we had and version is other XX%. that committed So electronic or reserve impact,

popular adding very product it. already. for So we're per all that didn't It $X those accounts to a month have the was

here who was regular didn't price. for make we X discounts to have just discounts. discount only our those we market-friendly of So have there a for -- we a regular rounding then and X And then year And years. did have it our bit it and little it.

have percentage What EVH? customers didn't of

which So shared was it, definitely we've never we the it. half option significantly I'll was but it. it but was why that of customers EVH the felt like adoption getting continuing, a had And base to customer specifics percentage customers than is material because in it the what there, had already of mean, that it it it adoption. liked had I less include was adopted good a good taken good say was

the... for when it's signs product. completely in somebody just now this baked So up It's

Exactly. Yes.

Yes.

good Just increase this know look you Computer you're and -- be a outlook I but think through help XXXX. moderate just year the takes do be is of do the guess, could you think in should XXXX? won't price the right. year, for the a All Backup guidance, Okay. going Computer increase. somewhat of the broadly some because in impact to we forward, as year. then more growth You're think about that due And give as material How we us the puts Backup to specific must what of speaking, of the having business? think next the just I Good. price on rate lot

puts the to as that you single the digits for going said a rate Computer have upper described we're at it, Backup. looked and in we as growth Well, we've takes

include price So in increase new that subscriptions would accounts, for and QX. the additional

was got you. thinking... next year, for QX, For I But Yes.

Yes.

course going said, increase for like for next the things the is over is year, be think one of to Computer that out I X still Frank Backup, of price the years. rolling

all So it next X-year over will the monthly will increase be customers price but X-year now, have the the continue and already the seeing of period. X-year customers the on customers to

Okay.

I all think growth single-digit well. this year, you next you for for about the talked So it about as talked that year and

So holds, -- still that at still that's point, it sounds like. this

growth time give kind we'll in frame. Well, the that of February outlook

Okay.

of this and that is growth is about QX inflection just creating Can the the sort then business point? you moving Okay. Good. question point in order year. next inflection last me the drivers in then the you talked in for there of sort just rank And into

the amplification Sure. existing are Computer logos then growth call the we itself, business on, increase. which added in BX that new coming and the it's Backup price It's business, subscriptions and always and always

Good. Okay.

BX Reserve, is Okay. of And the that? and -- the thing? that that of just it Is part type

it's be and portion to larger larger a of our because continuing yes, growth. Yes,

piece. amplification the That's

customers storage, and our for selling, when a it's you different they're stated a amount year No. BXB has contract products sold resellers, it of with is taking the usually to are recognition, Reserve -- when resellers, it's recall. revenue other the if and a that's that in bundled

back questions further over for There call to are pass questions. now Mimi no online. further the I'll

to call. today's to all Thanks analysts the joining

question Say been or to we're first received understand going I space, our has Technologies on small to POs retail I move some trend great we toward the mentioned, platform. is mid-market customers? push investors larger a there that And from Gleb, in or questions our As Gleb. Backblaze for on the that but plays mostly

focused on we're and on up mid-market in We focused mid-market. talked Yes, about moving the the that that absolutely. increasingly we're

to -- last about customers we And ARR. the so signed compared we multiyear Difficulty] quarter, with we that talked to [Technical And $XX,XXX add quarter, having this XX number commit continue -- of our average to over this quarter. that

up to our continuing So we and on are move services. focus with market

next you, your not when Gleb. it attract any question The marketing company and for is also customers to new This fairly very Are product? companies and strong seems up comes game to to the plans there quiet marketing. to

and scaled storage-focused So getting our and We've trade also we market. blog. X our good success people events actually presence believe million within our shows. our at target awareness outcomes About read annually we're

building planning XXXX, we just our we've pipeline is I that, ramp are up do effort laying And ever. groundwork the to As highest earlier, on recently in brand been mentioned the top to and our that. of

aligning how AI and strategy financial Now, to you results? do your see

the call. And little for AI opportunity us bit talked we about a the earlier in

workflows. a customers certainly help storage, And significant specialized that use BX opportunity CoreWeave space. it's for help continue their use for customers that cases. second, wish to an platform for ideal supports obviously case with various to which So a just for that who we places massive is at in those We CoreWeave partnership use we GPUs. believe have And in our is on to for data. touching Backblaze storage Backblaze a

anticipate And what hardest will do anticipated? the should the are coming years? be in that hurdles you challenges What the be

scale So as culture and continue our ensuring attention lot I'm become continue paying a we larger maintain much to great we that of we business, something to. a is to certainly

our make that And larger about mission. and our deeply other, company. care as people I lose larger we don't that Our sure a we customers, want become each to

the what and in cash question we expand is could In are healthy this a growth? planning many Frank, price bring ways for so to you. company, other see you share

we million plans, overall cash. to of that are raise But and because, growth current the to front increase phase that the to continue our don't company market because us. the in expect operating that's for actively remember, we investing growth, efficiencies we price $XXX in. of Now growing huge our need of have And in

companies Gleb, Microsoft, and plan cloud as with Alphabet? the how massive do you such to compete Amazon

Cloud and customers Storage competed away we've win years since with launched we day them. BX ago continuously So them the from we X

saved also expensive. is easier that found We to their time XX% opposite now egress, There in. to use. we are now than less us. of. by customers And the do We analysis using are that faster have that are We're trying our Amazon. They're was an they which customers trying something of dramatically to free lock

very about we feel ability to compete good our successfully. So

see the the do company Now, involved conflicts economically you long-term? otherwise the current how short and in, considering is being U.S. or affected term both

XXX the in think million directly particular don't about I have don't areas, customers affected. X.X have any we concentration is conflict company countries. across spread So We so

many pressures. rates positioned et do in their we're on which that to inflation, value Looking to some experiencing obviously challenge they're cetera, a them ways at as opportunity believe as us is specifically, optimize help for economic we're Since that for we're great such the an we customers their U.S. and economy customers when good interest and those that. pressure well workflows, affected costs to by look way a is

alternative interested Gleb, said, for for on-site server to terabyte-sized in also data. its being With node clients? storage nowadays, storage we have or Is that our remote micro-memory options cards. we progressed on rely Backblaze more

We needs. customer always listen to

most to And from listening it if on in always traditional interest we'll do. our of look redeploying see cloud lot paying to shifts the that part, clients, certainly see don't to always we a to trying something attention providers We and they're roadmap. consider to but equipment, shifting for Backblaze. For customers on-premises front, on-premises what from

Are change there to or pricing? any model tiered pricing plans

increase No successfully about just that rolled the on talked We current plans. this we've out call. price

us. like complicated our Amazon We pricing customers. customers of That's running structure reasons one can very a have from have has, the don't in that that pricing expenses model. which simple result same away We

plans to no that. So change

you. Now growth Frank, is for company? What one the is the this of

flagship XX% grew our reported, product have Well, as we growth, we XX%. BX but overall

made point. a an at our inflection we also really substantial and discussed guidance in we We increase for are QX, that

continued that due in we're see new price that carrying So we logos increase, the XXXX. and to getting growth growth and continuing into that

hang-ups the biggest Backblaze then Gleb, Now, do see as your conversion you to are prices and if services? competitive, adoption what

but the about taking a awareness, our haven't I think as we a efforts. Historically, high things of in I we success. And customers toward that and rate see steps Backblaze, brand important evaluate we're the When building one is starting have on do earlier branding of direction, cloud. we're lot mentioned spent open that to the shift

the significant. shifting years become shifts take customers see buying there but do, For to get from time, and clouds. time, a customer one got sometimes that when these back and of technologies you we free IBM. traditional to and years they Then the ago, change, lock-in was they break pendulum adage no And wanting it over became, did for buying time, fired because, the needs long change fired of IBM, for

a that's so seeing see in. a I that think lot of and opportunity trend we're And

And this question. our to time. last close getting We're is

sits Frank, to is cost Now, better being what ratio negatives? it as in to done limit of operations the P/E the

the all, Well, driving But focused enormous opportunity revenue. Remember, out are of too. are we operational efficiencies, have we we there. growing on first

OpEx, You is it costs, our quarter-on-quarter. in our can see operating which fairly flat

of data was is comparison. going centers, to to growth that. really And been positive by headcount leverage we expanded previous. mid-XXXX a grow this quarter, part be them. it year year remember growth growth This our slowing. in We're company, actually able and we're that flow into last footprint we with fairly expect of expanded in flat below to reach to with can also really drive And investments. the overall, we're we which during now our them that and that our cash continue all do But still we has And

Gleb, understand issues there hand some call I I to today. before the audio Now, back were

questions hand Gleb. reach definitely call next will it there look feel that over to our on, free me you Gleb? into any if are back the at please out to call, I'll for need to ir@backblaze.com.Now, We but any clarity

in Mimi. And one on for Thanks, you may look Operator, earnings you, everybody, [Technical right. Difficulty] joining we'll our All you on to forward February. our next with call. today us Thank chatting

is presentation. conference Thank now The concluded. for today's attending you

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