Backblaze's Q1 2025: Key Contradictions in AI Growth, Cloud Storage Expectations, and Profitability Strategies

AI customer base and data growth, B2 cloud storage growth expectations, pricing strategy and AI customer growth, zero-based budgeting and profitability timeline, AI customer base growth are the key contradictions discussed in Backblaze's latest 2025Q1 earnings call.



Strong Revenue Growth and Adjusted EBITDA Margin Improvement:
- Backblaze's revenue grew 15% over the same period last year, with B2 Cloud Storage achieving 23% organic growth for the second consecutive quarter.
- The company's adjusted EBITDA margin tripled over the same period last year to 18%.
- The growth was driven by strong performance in B2 Cloud Storage and effective cost-saving initiatives.

Improvement in Adjusted Free Cash Flow:
- Backblaze improved its adjusted free cash flow from negative 13% in Q4 to negative 6% in the first quarter.
- This improvement was due to the company's focus on revenue growth and effective cost management.

AI Customer Base and Data Growth:
- Backblaze's AI customer base grew by 66%, with their data with the company growing by 25x.
- AI use cases represented the fastest-growing piece of the business in the first quarter.
- The growth in AI is attributed to the company's high-performance, low-cost storage platform and its open cloud strategy.

Addressing Market Manipulation Schemes:
- Backblaze confronted a misleading report based on false claims by disgruntled former employees, alleging untrustworthy financials.
- Independent reviews by a law firm and a forensic accounting firm confirmed no wrongdoing or issues with the financials.
- The company is committed to providing accurate information to protect retail investors and other stakeholders.