Backblaze 2025 Q1 Earnings Narrowed Losses with 37% EPS Improvement

Backblaze(BLZE) reported its fiscal 2025 Q1 earnings on May 07th, 2025. Backblaze's Q1 2025 earnings beat expectations with a notable narrowing of losses. The company reported a 15.5% increase in total revenue, surpassing analysts' estimates, and adjusted its guidance upwards, projecting a positive outlook for the remainder of the year. The company anticipates continued growth, particularly in its B2 Cloud Storage segment, which is expected to accelerate further. Backblaze's financial results highlight strong operational performance as they continue to focus on strategic growth initiatives.

Revenue
Backblaze reported a total revenue increase of 15.5% in the first quarter of fiscal year 2025, amounting to $34.61 million, compared to $29.97 million in the same quarter of 2024. The B2 Cloud Storage segment contributed $18.05 million, reflecting the company's focus on cloud storage solutions. Meanwhile, the Computer Backup segment generated $16.57 million, underscoring Backblaze's commitment to providing comprehensive backup services.

Earnings/Net Income
Backblaze narrowed its losses significantly, reporting a loss of $0.17 per share in 2025 Q1, compared to a loss of $0.27 per share in 2024 Q1, marking a 37% improvement. This reduction reflects Backblaze's ongoing efforts to manage financial challenges effectively.

Post-Earnings Price Action Review
Backblaze has shown consistent revenue growth, with a 15% year-over-year increase in Q1 2025. The B2 segment, as a key growth driver, achieved a 23% revenue acceleration. A strategy of buying Backblaze shares after quarterly revenue increases and holding for 30 days has historically yielded robust returns. In the short term, holding shares after earnings releases has led to positive outcomes, evidenced by an 8.41% increase in aftermarket trading following the Q1 2025 earnings announcement. Over the past five years, this strategy has consistently generated substantial returns, with notable stock surges post-earnings beats. Backblaze's improved financial metrics, such as adjusted EBITDA margin and gross profit margin, further support this strategy. Analysts have revised earnings estimates upward, enhancing market confidence. The company's stock holds a 'Buy' rating with a high price target, suggesting continued potential for price appreciation. Overall, Backblaze's consistent revenue growth, improving metrics, and positive sentiment bolster this strategic approach.

CEO Commentary
“Backblaze continued its upward trajectory, and I am proud to report that in Q1, we grew 15% year over year. We signed our largest contractual commitment consisting of a multi-million dollar contract over a multi-year period. We delivered increased B2 revenue growth of 23%, powerful proof for how effective our GTM strategy has been,” said Gleb Budman, CEO of Backblaze. He highlighted the launch of B2 Cloud Storage Overdrive, optimized for AI customer demands, and emphasized the company’s commitment to the AI space as a key driver for future growth, projecting a compelling outlook for the remainder of 2025.

Guidance
For the second quarter of 2025, Backblaze expects revenue between $35.2 million and $35.6 million and an adjusted EBITDA margin between 14% and 16%. For the full year 2025, the company anticipates revenue between $144.0 million and $146.0 million, with an adjusted EBITDA margin now projected to be between 17% and 19%. Additionally, annual growth in the B2 segment is expected to range from 21% to 23% in Q1 2025, increasing to 30% or more by Q4 2025.

Additional News
Backblaze has been the focus of a securities class action investigation led by the Rosen Law Firm, following allegations of misleading business information. The investigation stems from a report by Morpheus Research criticizing Backblaze for alleged financial missteps and questionable practices since its IPO. These claims have raised concerns among investors, leading to a stock price drop of 2.1% on April 24, 2025. Despite these challenges, Backblaze remains committed to maintaining transparency and addressing investor concerns effectively. The company continues to focus on strategic initiatives to drive growth and enhance shareholder value.