Backblaze’s GTM Progress and Revenue Growth Claims Clash in 2026 Earnings Calls

Date of Call: Aug 3, 2026

Financials Results

• Revenue: $42.7 million, up 18% YOY
• Gross Margin: 63%, benefiting from B2 price increase and operating efficiency, partially offset by higher hardware costs

Guidance:

• Q3 revenue expected in range of $44.4M to $44.8M.
• Q3 adjusted EBITDA margin expected in range of 27% to 29%.
• Full-year 2026 revenue guidance raised to $172M to $174M (approx. 19% YOY growth at midpoint).
• Full-year 2026 adjusted EBITDA margin outlook raised to 27% to 29%.
• 2027 B2 revenue expected to grow over 40% YOY (early directional commentary).

Business Commentary:

Revenue Growth and AI Strategy:

• Backblaze reported revenue of $42.7 million for Q2 2026, up 18% year-over-year.
• The growth was driven by the company's strategic focus on AI, particularly with the signing of a $335 million multi-year agreement with CoreWeave, and B2 growth accelerating to 34% year-over-year.

Increased ARR and Customer Growth:

• Backblaze's B2 annual recurring revenue (ARR) reached $113 million, an increase of 39% year-over-year.
• The company ended the quarter with 235 customers contributing more than $50,000 each in ARR, up 57% year-over-year, indicating strong customer acquisition and expansion.

Operating Efficiency and Margin Improvement:

• The company reported an adjusted EBITDA margin of 30%, 700 basis points above the high end of their guidance range.
• This improvement was attributed to operating efficiency, a price increase implemented on May 1st, and targeted investments in cost savings initiatives.

Strategic AI Infrastructure Partnerships:

• Backblaze signed significant deals with AI-native companies, including a leading frontier model developer, expanding their AI startup outreach, and introducing agentic developer tooling.
• These partnerships were driven by the increasing demand for scalable and affordable storage solutions to support AI workloads.

Capital Investments and Financial Outlook:

• Backblaze plans to accelerate capital expenditures (CapEx) in the second half of 2026 and into 2027 to support signed customer commitments.
• The company expects to maintain adjusted free cash flow neutrality for the full year despite increased CapEx, supported by available capital lease lines.

Sentiment Analysis:

Overall Tone: Positive

• CEO stated 'We had a fantastic second quarter' with revenue above guidance and adjusted EBITDA margin significantly exceeding expectations. Management noted 'strongest growth in six quarters' and 'strongest growth rate in seven quarters' for B2. The quarter 'demonstrates the benefits of our strategy' and they are 'raising full-year guidance again'.

Q&A:

• Question from Mike Sikos (NeedHEM): Can you help us think about to what degree the improved 2026 outlook is tied to the ramp for the minimum commitments from the CoreWeave contract or anything on the 2027 to support that 40%+ outlook?
  Response: The raised outlook benefits from a broad base including business outperformance, the Q2 revenue beat, the B2 price increase, and CoreWeave ramp, with no single factor dominant. CoreWeave minimums are ramped over the coming year, hitting minimum around mid-2027.

• Question from Mike Sikos (NeedHEM): Can you give us a status update on the go-to-market transformation?
  Response: GTM transformation is underway with new leadership and systems; evidenced by strong B2 growth, new large customers, and increased upmarket movement with customers contributing >$50k ARR growing 57% YOY.

• Question from Itai Kedron (Oppenheimer & Co.): Does the CoreWeave deal generate more interest from customers or less? Could it tie you too closely to CoreWeave?
  Response: The CoreWeave deal elevates Backblaze as a key player in AI infrastructure, acts as validation, and has spurred conversations with other AI infrastructure companies and AI-native startups, with no concern about being seen as too tied to CoreWeave.

• Question from Itai Kedron (Oppenheimer & Co.): On the managed storage topic, is this common in the pipeline? Can you see expansion opportunity within large wins like the frontier model developer?
  Response: Managed storage is a newer offering with limited pipeline currently; it's not the norm but represents larger opportunities for select customers. Visibility into customer needs and future data appetite is better due to sales-led engagement and commitments.

• Question from Jason Adder (William Blair): Could you give a sense of what the gross margins are going to look like for the CoreWeave deal relative to traditional B2 business?
  Response: Gross margins for CoreWeave are priced to be in line with current 63% level. The managed storage offering for CoreWeave (on customer hardware) has potential for higher margins long-term due to lower depreciation.

• Question from Jason Adder (William Blair): Given the CapEx needs, do you have enough capital today or will you need to raise more?
  Response: The company is well-set with cash, available capital lease lines (>150M), and healthy operating cash flow to proceed with planned capital leases, without need for additional capital raising at this time.

• Question from Jeff Van Rey (Craig-Hallam Capital Group): Can you provide more color on the frontier model win, including deal duration and size?
  Response: The deal was a large, multi-year commitment with a seven-figure ARR (using B2 Overdrive pricing). It addressed the customer's need for scalable storage and high throughput performance, with expectations for significant future expansion.

• Question from Jeff Van Rey (Craig-Hallam Capital Group): When selling to neoclouds, what is the delta value between traditional B2 and the managed storage offering?
  Response: Traditional B2 is fully managed by Backblaze, offering convenience. Managed storage is chosen when customers want data in their own data centers for sovereignty reasons or to own assets on their balance sheet.

• Question from Eric Seppala (B. Reilly Securities): Have you hired most of the executives across the go-to-market team that you need?
  Response: Key GTM leadership is in place, including CRO, head of field development, RevOps, and customer success, enabling the company to execute on larger deals and move upmarket effectively.

• Question from Eric Seppala (B. Reilly Securities): Does the CoreWeave minimum commitment level imply a ~65M run rate by mid-2027?
  Response: The CoreWeave deal is roughly 70/30 split between traditional platform and managed service; the 70% component (net of $22M warrants) ramps over the first 12 months and reaches minimum around mid-2027.

• Question from Eric Martinuzzi (Lake Street Capital Markets): Is the business outperformance primarily from the four >$500k ARR transactions?
  Response: Outperformance is broad-based, including self-serve growth, no churn from the price increase, higher ARPU, and increased RPO from new commitments, not just the large deals.

• Question from Eric Martinuzzi (Lake Street Capital Markets): Any change to the expectation for computer backup revenue decline for the year?
  Response: Computer backup revenue is still expected to decline in the low single digits YOY, though it performed better than expected this quarter due to churn mitigation efforts.

• Question from Rustem Kanga (Citizens): Is the CoreWeave win accelerating discussions with other neocloud providers? Are best conversations with those who have already experienced costly flash storage challenges?
  Response: Discussions are accelerated, and the best conversations are with neoclouds that already have storage and are feeling the pain of flash-based solutions, as they are looking for a cost-effective capacity tier.

• Question from Rustem Kanga (Citizens): Is the 55-65% CapEx/revenue ratio applicable to 2027 as well?
  Response: The 55-65% CapEx/revenue ratio is specific to 2026; it is too early to provide a 2027 figure due to hardware price volatility and accelerating growth outlook.

Contradiction Point 1

GTM Transformation Progress and Status

The description of the go-to-market transformation shifts from an ongoing process requiring key hires to being declared on track and completed. This signals a change in the company's strategic narrative regarding its sales and market approach.

Mike Sikos (NeedHEM) - Mike Sikos (NeedHEM)

2026Q2: The GTM transformation is on track. Key hires include a new CRO, sales development leader, and RevOps head. - [Gleb Budman](CEO)

Status of last year's go-to-market transformation? - Ittai Kidron (Oppenheimer & Co. Inc.)

2026Q1: The GTM transformation has made good progress. Remaining priorities include: 1) Hiring Anuj Kumar as Chief Revenue Officer... 3) Scaling awareness programs... - [Gleb Budman](CEO)

Contradiction Point 2

Customer Growth Trends and Deal Impact

The primary driver for the raised revenue outlook shifts from a specific pricing change (half of the raise) to broad-based performance (all factors). This alters the perceived strength and predictability of the company's growth engine.

Does Eric Martinuzzi of Lake Street Capital Markets have a question? - Eric Martinuzzi (Lake Street Capital Markets)

2026Q2: The outperformance is broad-based, including the four large deals, self-serve momentum, and strong RPO growth... - [Mark Sweetan](CFO)

Is the 2026 guidance increase primarily driven by the four >$500k ARR deals? - Ittai Kidron (Oppenheimer & Co. Inc.)

2026Q1: The $5M raise in full-year revenue guidance is split evenly: half from the pricing/packaging change... and half from strong Q1 business momentum. - [Marc Suidan](CFO)

Contradiction Point 3

Timing of Revenue Recognition for Large/Neocloud Deals

Contradiction on the revenue recognition timeline for major deals, impacting 2026 and 2027 growth forecasts. It raises questions about the company's ability to deliver on commitments and the economic model of new offerings.

Mike Sikos (NeedHEM) - Mike Sikos (NeedHEM)

2026Q2: The CoreWeave commitment ramps over the coming year, reaching its minimum spend around mid-2027, and is factored into the 2027 growth forecast. - [Mark Sweetan](CFO)

To what extent is the 2026 outlook improvement linked to the CoreWeave contract's minimum commitments ramp-up and 2027 demand driving the >40% B2 growth outlook? - Ittai Kidron (Oppenheimer)

20260224-2025 Q4: The large deal’s revenue will start in 2027 due to required development and integration work... This work benefits other Neoclouds but is not needed for most. - [Gleb Budman](CEO)

Contradiction Point 4

CapEx-to-Revenue Ratio Outlook for 2027

Contradiction on providing a forward-looking capital expenditure metric, shifting from a specific 2026 target to stating it is too early for a 2027 figure. This creates uncertainty about the company's financial planning and investment strategy.

Rustem Kanga (Citizens) - Rustem Kanga (Citizens)

2026Q2: The 55-65% CapEx ratio is specific to 2026 only. It is too early to provide a 2027 figure... - [Mark Sweetan](CFO)

Will the 55-65% CapEx-to-revenue ratio apply in 2027? - Rustam Kanga (Citizens)

20260224-2025 Q4: CapEx will be higher in 2026, with PP&E ending the year at high 20s% of revenue. - [Marc Suidan](CFO)

Contradiction Point 5

Gross Margin Impact of New Offerings

Contradiction on the gross margin profile for the new managed storage offering, shifting from a lower margin but capital-light model to a potential higher-margin service. This affects the economic attractiveness of the new product line.

Jason Adder (William Blair) - Jason Adder (William Blair)

2026Q2: The managed storage offering, which uses customer-owned hardware, has the potential to be a higher-margin service over the long term due to its capital-light nature. - [Mark Sweetan](CFO)

What are the gross margins of the CoreWeave deal compared to traditional B2 business? - Michael Cikos (Needham)

20260224-2025 Q4: For white-label deals like B2 Neo, gross margin is lower but OpEx is also lower, netting to a similar economic model. - [Marc Suidan](CFO)