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What changed in Backblaze, Inc.'s 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Backblaze, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+509 added−451 removedSource: 10-K (2026-03-10) vs 10-K (2025-03-11)

Top changes in Backblaze, Inc.'s 2025 10-K

509 paragraphs added · 451 removed · 291 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThe ability to manage an ever-larger amount of data across ever-larger hard drives while maintaining data availability and durability continues to be highly complex. This web-scale software layer receives, stores, and delivers data for customers across the globe. Our code achieves this for billions of files under management by intelligently allocating storage locations in line with capacity and demand.
Biggest changeThe web-scale software layer receives, stores, and delivers data for customers across the globe, intelligently allocating storage based on capacity and demand to maintain availability and durability at scale. Managing ever-growing volumes of data across increasingly large hard drives while maintaining durability, availability, and throughput is highly complex.
Intellectual Property Our success depends in part on our ability to obtain and maintain intellectual property protection for our technology platform and cloud services, defend and enforce our intellectual property rights, preserve the confidentiality of our trade secrets, and operate without infringing, misappropriating, or otherwise violating the intellectual property rights of others.
Intellectual Property Our success depends in part on our ability to obtain and maintain intellectual property protection for our technology platform and cloud services, to defend and enforce our intellectual property rights, to preserve the confidentiality of our trade secrets, and to operate without infringing, misappropriating, or otherwise violating the intellectual property rights of others.
Customers leverage B2 Cloud Storage for a wide range of other use cases as well, including public, hybrid and multi-cloud data storage; application development and DevOps; content delivery and edge computing; security and ransomware protection; media management; backup, archive and tape replacement; and Internet of Things (e.g., storing data for surveillance systems, autonomous vehicles, and smart devices) .
Customers leverage B2 Cloud Storage for a wide range of other use cases, including public, hybrid and multi-cloud data storage; application development and DevOps; content delivery and edge computing; security and ransomware protection; media management; backup, archive and tape replacement; and Internet of Things (e.g., storing data for surveillance systems, autonomous vehicles, and smart devices).
We own the following registered trademarks: “Backblaze,” “B2,” “Break Free,” “Blaze Forward” and the Backblaze logo. We also have pending trademark applications. Policing unauthorized use of our technology and intellectual property rights is difficult.
We own the following registered trademarks: “Backblaze,” “B2,” “Break Free,” “Blaze Forward” and the Backblaze logo. We also have pending trademark applications. Policing unauthorized use of our technology and intellectual property rights is challenging.
This cloud service includes a lightweight agent that runs locally on each end user’s computer, continuously searching for new and changed files in a manner unobtrusive to the user. When a new or changed file is detected, the altered data is backed up and sent to the Backblaze Storage Cloud.
Computer Backup includes a lightweight agent that runs locally on each end user’s computer, continuously searching for new and changed files in a manner unobtrusive to the user. When a new or changed file is detected, the altered data is backed up and sent to the Backblaze Storage Cloud.
Customers use us to support their AI workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and IT needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates.
Customers use us to support their AI workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and information technology (“IT”) needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates.
As we seek to move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of these customers. Our customers use our Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 4 billion gigabytes of data storage under management.
As we move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of customers like these. Our customers use our Backblaze Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 5 billion gigabytes of data storage under management.
A significant amount of our employees are either software engineers that develop and improve the software that runs our Storage Cloud or Cloud Operations employees that specialize in network operations, site reliability engineering, technical operations, and supply chain, which operate our software and systems to deliver our infrastructure as a service and our cloud services.
A significant number of our employees are either software engineers that develop and 6 Table of Contents improve the software that runs our Backblaze Storage Cloud or operations employees that specialize in network operations, site reliability engineering, technical operations, and supply chain, which operate our software and systems to deliver our infrastructure as a service and our cloud services.
Resellers then market and sell B2 Cloud Storage individually or as part of broader solutions to businesses and organizations. The channel provides greater access to markets with specialty needs in the purchasing process, like state and local governments and educational institutions. • Managed Service Providers (MSP).
Resellers then market and sell B2 Cloud Storage individually or as part of broader solutions to businesses and organizations. This channel provides greater access to markets with specialty needs in the purchasing process, like state and local governments and educational institutions. • MSPs.
The wide range of options for accessing B2 Cloud Storage allows anyone to use it, including developers and partners who can integrate storage capabilities into their technology stack or build their own solutions on top of our platform.
The wide range of options for accessing B2 Cloud Storage allow for broad use, including developers and partners who can integrate storage capabilities into their technology stack or build their own solutions on top of our platform.
Our website address is www.backblaze.com. 6 Table of Contents Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are filed with the Securities and Exchange Commission, or the SEC.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to reports filed pursuant to Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, are filed with the Securities and Exchange Commission, or the SEC.
Partners providing software, hardware, and SaaS services to perform backups, synchronize data, manage media, and address other use cases either select our Storage Cloud for the underlying data storage, or offer it as a choice to their customers. • Channel Partners. We sell B2 Cloud Storage to resellers at a discounted rate.
Partners offering software, hardware, or SaaS solutions to perform backups, synchronize data, manage media, and address other use cases either integrate our Backblaze Storage Cloud as their underlying data storage, or offer it as an optional storage choice to their customers. • Channel Partners . We sell B2 Cloud Storage to resellers at a discounted rate.
As of December 31, 2024, we had over 500,000 cust omers in over 175 countries, including approximately 400,000 customers using our Computer Backup cloud services solution and approximately 100,000 customers using our B2 Cloud Storage solution (approximately 18,000 custom ers use both our B2 Cloud Storage and Computer Backup solutions).
As of December 31, 2025, we had over 500,000 customers in over 175 countries, including approximately 400,000 customers using our Computer Backup cloud services solution and approximately 120,000 customers using our B2 Cloud Storage solution (approximately 20,000 customers use both our B2 Cloud Storage and Computer Backup solutions).
Our Cloud Service Offerings Backblaze B2 Cloud Storage. B2 Cloud Storage provides customers direct access to our Storage Cloud to store, use and protect data. Users can access the platform through industry standard and native application programming interfaces (APIs), software development kits (SDKs), our web interface, or hundreds of third-party integrations.
B2 Cloud Storage B2 Cloud Storage provides customers with direct access to the Backblaze Storage Cloud platform, enabling them to store, use and protect data for a broad range of use cases. Users can access this platform through industry standard and native application programming interfaces, software development kits, our web interface, or hundreds of third-party integrations.
Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, com bined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers as of December 31, 2024, and our direct sales activities have historically supported us in acquiring larger customers.
Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, combined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers as of December 31, 2025, and our direct sales activities have historically supported us in acquiring larger customers, including leading neocloud platforms via our Powered by Backblaze program.
From raw data collection and processing, to model training and inference, B2 Cloud Storage provides a reliable foundation for managing vast datasets, enables seamless data transfer to GPU clusters, optimizes storage for AI-generated outputs, and provides cost-effective, scalable storage for monitoring and logs.
From raw data collection and processing, to model training and inference, B2 Cloud Storage is designed to provide a reliable foundation for managing vast datasets, enable seamless data transfer to graphics processing unit (“GPU”) clusters, optimize storage for AI-generated outputs, and provide cost-effective, scalable storage for monitoring and logs.
Customers also strategically tier backups of their core data systems to our cloud, including on-premises and virtual machine servers and other high-capacity storage devices. More recently, businesses are incorporating B2 Cloud Storage into artificial intelligence (AI) and machine learning (ML) workflow, ensuring data accessibility, scalability, and efficient network performance.
Customers also strategically tier backups of their core data systems to the Backblaze Storage Cloud platform, including on-premises and virtual machine servers and other high-capacity storage devices. Businesses are increasingly incorporating B2 Cloud Storage, including our premium high-throughput offering, B2 Overdrive, into AI and machine learning (“ML”) workflows, ensuring data accessibility, scalability, and efficient network performance.
While we do not own any patents to date, we have two pending patent applications. In addition, we protect our intellectual 5 Table of Contents property through a combination of trade secrets, copyrights, trademarks, service marks, and domain names where appropriate.
While we do not currently own any patents, we have three pending patent applications. We protect our intellectual property through a combination of trade secrets, copyrights, trademarks, service marks, and domain names.
Our platform, alongside the platforms of our technology partners, enables software developers to efficiently build their applications and provides a cloud storage destination for partners whose products require storage to serve their customers.
Our platform, together with those of our technology partners, enables software developers to efficiently build applications and provides a cloud storage foundation for partners whose products require reliable, scalable data storage to serve their customers.
As a result, even if a few of the parts are entirely lost or offline, we are able to reconstruct the customer data from the remaining parts for durability and availability. Multiple vaults are grouped together to form one cluster, and one or more clusters are organized into a region.
As a result, even if a few of the parts are entirely lost or offline, we are able to reconstruct the customer data from the remaining parts for durability and availability.
Our platform enables MSP partners to store data for backups, archives, hybrid cloud setups, ransomware protection, and otherwise manage their clients’ data. MSPs provide critical IT solutions for mid-market organizations who often lack the resources to do so themselves.
Our platform enables MSP partners to store data for backups, archives, hybrid cloud setups, ransomware protection, and other data management use cases. MSPs deliver critical IT solutions for mid-market organizations who often lack the resources to manage these workloads internally.
Corporate Information We were incorporated in Delaware in 2007 under the name Backblaze, Inc. We completed our initial public offering in November 2021 and our common stock is listed on The Nasdaq Global Market under the symbol “BLZE.” Our principal executive offices are located at 201 Baldwin Ave., San Mateo, CA 94401 and our telephone number is (650) 352-3738.
We completed our initial public offering in November 2021 and our Class A common stock is listed on The Nasdaq Global Market under the symbol “BLZE.” Our principal executive offices are located at 2261 Market Street STE 81006, San Francisco, CA 94114 and our telephone number is (650) 352-3738. Our website address is www.backblaze.com.
We believe that by offering an easy to use, cost-effective, performant cloud storage solution, and thereby substantially reducing the cost, complexity and frustration of storing, using, and protecting data, we can empower customers to focus on their core business operations.
We believe that by offering a cloud storage solution optimized for price-to-performance at scale, engineered for efficiency, and priced predictably, we substantially reduce the cost, complexity and frustration of storing, using, and protecting data, and we empower customers to focus on their core business operations.
B2's open platform and free egress (up to 3x) drive cost-efficient multi-cloud architectures, enabling seamless data orchestration across diverse cloud environments. This flexibility allows customers to leverage best-of-breed GPU services without vendor lock-in, and significantly reduces data transfer costs, maximizing resource utilization and minimizing overall expenses.
This flexibility allows customers to leverage best-of-breed compute GPU services without vendor lock-in, and significantly reduces data transfer costs, maximizing resource utilization and minimizing overall expenses.
Continued investment in developing data compaction, compression, performance optimization, and other software innovation further improves our ability to efficiently leverage hardware. Alongside these core processes, our software layer also manages load balancing, caching, deletion, billing, as well as numerous other essential functions for hundreds of thousands of customers.
We believe that continued investment in developing performance optimization, efficiency improvements, operational support, and other software innovation enhances our ability to efficiently leverage hardware and scale cost-effectively. Alongside these core processes, this software architecture manages load balancing, caching, deletion, billing, and other essential 2 Table of Contents functions for hundreds of thousands of customers.
As our customers’ data grows, and our total revenue with it, we seek to continuously and smoothly deploy additional infrastructure and utilize finance leases to match the capital outlays with additional incoming revenue.
As our customers’ data needs grow, we seek to continuously and smoothly deploy additional infrastructure and utilize finance leases to align capital deployment with platform scaling requirements.
Generally weekly code updates regularly enhance these functions. 3 Table of Contents Our vault architecture creates redundancy for the storage of customer data using proprietary and other algorithms. Our software splits each uploaded customer file into several data parts, adds multiple redundant parts, and stores these parts across discrete hard drives in different servers in a data center.
Our software splits each uploaded customer file into several data parts, adds multiple redundant parts, and stores these parts across discrete hard drives in different servers in a data center.
Despite our efforts to protect our proprietary technology and our intellectual property rights, unauthorized parties may attempt to copy or obtain and use our technology to develop applications with the same functionality as our offerings.
Despite our efforts, unauthorized parties may attempt to copy or otherwise use our technology to develop applications with the same functionality as our offerings, and the measures we take to protect and preserve our trade secrets may be inadequate, and we may not have adequate remedies for violations of such measures.
Customers leverage Computer Backup for many different use cases, including Mac and PC backup; ransomware protection; theft and loss recovery; data archiving; organization and MSP-level management; and remote access. Customers Our customers consist of a wide range of consumers, organizations and businesses, from SMB to enterprise.
Customers leverage Computer Backup for many different use cases, including Mac and PC backup; ransomware protection; theft and loss recovery; data archiving; organization- and managed service provider (“MSP”)-level management; and remote access. Revenue Substantially all of our revenue is recurring in nature. We employ a land-and-expand model that drives additional revenue from existing customers.
Backblaze Computer Backup. Our Computer Backup cloud service backs up laptops, desktops, and external hard drives in a continuous and automated fashion. Whether for home computers or a business’ full fleet of machines, customers can back up a virtually unlimited number of files without size or speed constraints.
Whether for home computers or a business’ full fleet of machines, customers can back up a virtually unlimited number of files without size or speed constraints. Computer Backup offers transparent, flat-rate pricing to allow customers to continuously back up data and is delivered as a subscription-based Software-as-a-Service (“SaaS”) model.
Today, we believe that our solutions are differentiated by their ease of use and affordability while also delivering reliability and performance. We believe that focusing on storage use cases and promoting an open cloud ecosystem helps position us to integrate well with a broad range of partners.
Today, we believe that our solutions are differentiated by their performance and cost efficiency while also delivering reliability and ease of use.
No employees are represented by a labor union with respect to his or her employment by us. We have not experienced any work stoppages, and we consider our relations with our employees to be positive. Facilities Our principal executive offices are located in San Mateo, California.
No employees are represented by a labor union with respect to his or her employment by us.
Our customers span a range of industries, including a broad range of businesses, MSPs, developers, media teams, AI innovators, creative 4 Table of Contents agencies, academic institutions, government agencies, research institutes, gaming companies, and individuals. Our customer base is highly diversified, with no single customer accounting for more than 10% of our total revenue in 2024 or 2023.
Customers Our customer base includes individuals, developers, MSPs, small and medium-sized businesses and large enterprises across industries including media, AI innovators, creative agencies, academic institutions, government agencies, research institutes, and gaming companies.
We believe these providers are drawn to our solutions due to our support of the breadth of their offerings, competitive pricing which helps MSPs with their own margin profile, and ease of use.
We believe these providers choose Backblaze for the breadth of our platform support, competitive pricing that strengthens their own margin profiles, and ease of use that simplifies service delivery across diverse client environments.
The amount of data stored in this cloud service can scale up and down as needed on a pay-as-you-go basis, or can be paid for on a capacity basis or committed contract for greater predictability.
B2 Cloud Storage operates as an IaaS model, enabling customers to scale up and down as needed on a pay-as-you-go basis or to purchase capacity or committed contracts for greater predictability. 3 Table of Contents Computer Backup Our Computer Backup cloud service solution backs up laptops, desktops, and external hard drives in a continuous and automated fashion.
We have programs to support these partners, and our white-label Powered By Backblaze program supports Technology Partners, MSPs, and others by enabling them to more easily integrate our cloud storage and offer it directly to their customers under their own brand. This expands both their opportunity and ours. The markets addressed by our platform include Public Cloud Infrastructure-as-a-Service (IaaS) storage.
Our white-label Powered By Backblaze program enables third-party organizations to integrate our cloud storage into their products and offer it directly to their customers under their own brand while owning the customer relationship. This program expands our reach into new customer segments and markets and creates shared growth opportunities with our partners.
According to IDC forecasts, the worldwide market for Public Cloud IaaS Storage is expected to grow to $118 billion by 2028. Backblaze Storage Cloud The Backblaze Storage Cloud provides the core platform for our cloud services and is designed to be durable, available, scalable, secure, performant and predictive.
Our Platform and Cloud Services Backblaze Storage Cloud The Backblaze Storage Cloud provides the core platform for our cloud services and is designed to deliver high-performance, secure, reliable object storage at exabyte scale.
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Item 1. Business Overview We are a leading specialized storage cloud platform, providing businesses and consumers cloud services to store, use, and protect their data in an easy and affordable manner. We provide these cloud services through a purpose-built, web-scale software infrastructure built on commodity hardware.
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Item 1. Business Overview We are a high-performance cloud storage platform for data-intensive use cases in the artificial intelligence (“AI”) era and across a broad range of modern cloud workloads, designed to help customers address complex storage needs by reducing the barriers of lock-in, complexity, and cost.
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From our straightforward pricing model, to our transparent communication with customers, to the popular and insightful content on our blog—we believe we have established ourselves as an open and trusted provider and partner.
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Our mission is to make customers succeed by solving their toughest data storage challenges. We aim to achieve this mission through our purpose-built, web-scale software infrastructure, which is essential to the global data center and compute infrastructure buildout. We provide cloud services through a purpose-built, web-scale software infrastructure built on commodity hardware.
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Our Platform and Cloud Services The Backblaze Storage Cloud organizes, safeguards, and keeps ov er 850 billion files available on demand and is designed to handle many more in the future. Through our purpose-built software that manages our global physical infrastructure, we provide a platform that we believe is durable, scalable, performant, and secure.
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Our strategy centers on a focused set of storage use cases and participation in an open cloud ecosystem, which we believe positions us to prioritize opportunities with emerging data-heavy workloads like those with AI model builders and neocloud platforms utilizing our Powered by Backblaze program.
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Our two cloud services that we offer on our Storage Cloud are: • Backblaze B2 Cloud Storage: Enables customers to store data, developers to build applications, and partners to expand their use cases.
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Alongside these emerging opportunities, we continue to grow our business and opportunities among the developers of application storage solutions while also continuing to service our foundational use cases including media and entertainment and cyber resilience. Finally, we continue to invest in our self-serve user base, where developers who are experimenting with AI can experiment and grow within our storage platform.
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This Infrastructure-as-a-Service (IaaS) enables use cases including backups, multi-cloud, application storage, ransomware protection, and storage for AI/ML workflows. • Backblaze Computer Backup: Automatically backs up data from laptops and desktops for businesses and individuals. This cloud backup service offers easily understood flat-rate pricing to continuously back up a virtually unlimited amount of data.
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It currently manages ov er 1 trillion files which are available on demand and is designed to scale efficiently to meet growing enterprise workloads and AI-driven data demands.
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This service is offered as a subscription-based Software-as-a-Service (SaaS) and serves use cases including computer backup, ransomware protection, theft and loss protection, and remote access. Our solutions are designed for individuals and businesses of all sizes, from large-scale businesses (enterprise) to small and medium-sized businesses (SMB) and across all industries.
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The key enabler of the Backblaze Storage Cloud is its proprietary global-scale system and software architecture, which manages our global physical infrastructure, including hundreds of thousands of hard drives across multiple data centers.
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Our solutions appeal to customers with a desire for easy-to-use and cost-effective solutions. Our go-to-market model is a layered approach that includes our self-service motion and our sales driven motion that focuses on larger customers.
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Regular updates to our codebase further strengthen these capabilities and improve the overall performance of our Infrastructure-as-a-Service platform (“IaaS”). Our vault architecture creates redundancy for the storage of customer data using proprietary and other algorithms.
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The sales driven motion includes our direct sales team that contracts directly with customers, with our channel sales team that contracts sales through our channel partners, and our Powered By Backblaze program that enables third parties to integrate Backblaze and thus offer white-label cloud storage as part of their product offering and under their own branding. 2 Table of Contents Prospective customers find us through a variety of channels including our website, partners, and brand advocates.
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These ongoing investments are designed to support high sustained throughput relative to price, while performing at levels that we believe are at or above competitors’ performance across a range of metrics, including upload and download throughput for multiple file sizes and concurrency profiles.
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We have fostered community engagement with content we share on our blog through which millions of readers consumed content that we share there. Our free trial and self-serve sign-up processes help convert our blog readers and referrals from our brand advocates into customers, with approximately 73% o f our total revenue in 2024 coming from self-serve customers.
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We periodically publish performance testing results and our performance testing methodologies to enhance transparency and enable benchmarking against other cloud storage providers. Cloud Service Offerings Through our Backblaze Storage Cloud platform, we deliver two primary services, B2 Cloud Storage and Computer Backup, which are designed to enable customers to store, use, and protect their data in flexible and cost-effective ways.
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Our technology, channel and managed service provider (MSP) partners help expand use cases and sales channels and attract customers, thereby increasing usage of our Storage Cloud. Our sales driven selling motion focuses on selling our cloud services to larger customers and opportunities to increase revenue with existing customers.
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These services leverage the same core software architecture, allowing us to serve a broad spectrum of customers, from individual users to large enterprises, with consistent performance, security, and reliability.
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Customers acquired by our sales motion frequently have a significantly larger average revenue per customer than our self-serve customers. Substantially all of our revenue is recurring in nature. We employ a land-and-expand model that drives additional revenue from existing customers.
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B2 Overdrive is built on the foundation of B2 Cloud Storage, and includes throughput up to 1Tbps, unlimited free egress, and private networking support, designed to give customers the ability to run data-intensive workloads without compromising on performance to keep costs manageable.
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Our B2 Cloud Storage re venue grew by 36% during the year ended December 31, 2024 and our Computer Backup cloud service revenue grew by 16% during the year ended December 31, 2024. Our ecosystem of partners—including tech nology partners, channel partners, and MSPs—helps us expand our platform in existing and new markets. • Technology Partners.
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In multi-cloud environments typical of AI and data-intensive workloads, customers frequently move large volumes of data across cloud providers, which can create operational complexity and result in significant data egress fees.
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This storage cloud organizes, safeguards, and keeps ov er 850 billion files available on demand and is designed to handle many more in the future. The key enabler of the Backblaze Storage Cloud is the software that runs it, which contains millions of lines of code that our software engineering team has written and continually improved since our Company’s founding.
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B2 Cloud Storage's open platform and standard free egress (up to 3x of data stored) are designed to enable cost-efficient multi-cloud architectures and seamless data orchestration across diverse cloud environments.
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Our software manages our global physical infrastructure of over 300,000 hard drives and one terabit per second (one million megabits per second) of network capacity across multiple data centers. Our systems also manage the automation, monitoring, and security of this infrastructure.
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For the year ended December 31, 2025, c ompared to the year ended December 31, 2024, o ur B2 Cloud Storage re venue grew by 26% and our Computer Backup cloud service revenue grew by 3%. Go-to-Market and Partnerships We continue to evolve our go-to-market strategy to focus on high-value customers with enterprise-scale workloads.
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Sales and Marketing We have a layered go-to-market model that includes our self-service motion and our sales driven motion that focuses on larger customers.
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Our marketing and demand generation teams have reoriented toward account-based marketing, targeted digital campaigns, and industry-specific content. In parallel, we have expanded our direct and channel sales capabilities to support complex procurement cycles and larger multi-year engagements. Our go-to-market model includes both a sales-assisted motion and a self-service motion.
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The sales driven motion includes our direct sales team that contracts directly with customers and emphasizes the acquisition of larger customers, our channel sales team that contracts sales through our channel partners, and our alliances team that works with other technology partners to sell B2 Cloud Storage, including through our Powered By Backblaze program that enables third party platform providers to purchase Backblaze to then sell it to their customers as a part of their product offering.
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The sales-assisted motion is executed by our internal sales organization, while the self-service motion enables customers to begin using our services quickly through our website and onboarding tools. Together, these motions are designed to allow us to efficiently reach a broad range of customer types and buying preferences.
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Prospective customers find us through a number of sources including our website, partners, and brand advocates. We regularly optimize our website to improve the user experience and increase traffic through search engine optimization to accelerate lead generation. We have fostered community engagement through the content shared on our blog, which is read by millions of people.
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Sales-Assisted Motion The sales-assisted motion is supported by the following teams within our sales organization: • Direct Sales , which focuses on acquiring and expanding relationships with larger customers and strategic accounts, including leading neocloud and AI customers. • Channel Sales , which manages relationships with resellers and distribution partners who sell our solutions to their customers. • Alliances , which collaborates with technology partners whose solutions integrate with or complement our platform, enhancing the value we deliver to joint customers.
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In addition to generating customers, our content generation efforts have contributed to building a community of thousands of partners. Our technology, channel, and MSP partners expand use cases and attract customers, thereby increasing the usage of our platform. Our marketing efforts focus on establishing our brand, generating awareness, creating leads, and cultivating the Backblaze community.
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While our Direct Sales team focuses on acquiring and expanding relationships with larger customers, our Channel Sales and Alliances teams extend our reach by working with our broader partner ecosystem.
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The marketing team consists primarily of demand generation, product marketing, corporate communications and publishing, social media, and lifecycle marketing teams. We leverage both online and offline marketing channels such as blogs, events and trade shows, seminars and webinars, whitepapers, case studies, search engines, advertising and email marketing. Research and Development We invest substantial resources in research and development.
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This ecosystem, including technology partners, channel partners, and MSPs, broadens our distribution network, enhances product integration opportunities, and is designed to drive incremental adoption of our Backblaze Storage Cloud solutions. 4 Table of Contents Partner Ecosystem • Technology Partners.
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We have an internal technology roadmap to introduce new features and functionality to our platform.
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Our customer base is highly diversified, with no single customer accounting for more than 10% of our total revenue in 2025 or 2024. The markets addressed by our platform include Public Cloud IaaS storage. According to International Data Corporation forecasts, the worldwide market for Public Cloud IaaS Storage is expected to grow to $118 billion by 2028.
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Those investments have continued to result in innovations to the platform such as shard stash which improves small file uploads up to 30% faster than competitors and product enhancements such as our white-label solution called Powered By Backblaze which enables customers to sell B2 Cloud Storage on their platform and under their own brand.
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Sales and Marketing Our sales and marketing strategy is designed to drive awareness, adoption, and expansion across both self-serve and direct sales motions by aligning our go-to-market efforts with how developers and businesses increasingly discover and adopt cloud infrastructure.
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Development of software based solutions such as Computer Backup Enterprise Control provides up-selling opportunities that help customers while improving our gross margin profile. Substantially all of our engineering organization is focused on software development. We generally have a continuous product release cycle and we typically release updates on a weekly basis.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeGrowth in our international operations will subject us to new risks and may increase risks that we currently face, including risks associated with: 15 Table of Contents • higher costs of doing business internationally, including increased energy, infrastructure, accounting, travel, and legal compliance costs; • providing our platform, building out the necessary infrastructure and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, data sovereignty, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance, and additional laws and regulations in the United States that are applicable to international operations; • compliance with immigration laws, both in the United States and the applicable foreign country, which laws and practices are subject to changes and delays; • recruiting and retaining talented and capable employees outside the United States, and maintaining our company culture across all of our offices; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; • compliance by us and our business partners with anti-corruption laws, anti-bribery, anti-money laundering, and similar laws; import and export control laws; tariffs and trade barriers; economic sanctions; and other regulatory limitations on our ability to provide our cloud services in international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories; • restrictions that might prevent us from repatriating cash earned outside the United States; • increased tax complexity, including being subject to regular review and audit by both United States federal and state and foreign tax authorities; • taxing authorities of the United States or foreign jurisdictions in which we operate may challenge our methodologies for valuing intercompany arrangements; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • political and economic instability in various jurisdictions.
Biggest changeGrowth in our international operations will subject us to new risks and may increase risks that we currently face, including risks associated with: • higher costs of doing business internationally, including increased energy, infrastructure, accounting, travel, and legal compliance costs; • providing our platform, building out the necessary infrastructure and operating our business across a significant distance, in different languages and among different cultures, including the potential need to modify our platform and features to ensure that they are culturally appropriate and relevant in different countries; • recouping any upfront investments for new or expanded operations and locations and achieving a reasonable return on a timely basis with respect to any such investments; • compliance with applicable international laws and regulations, including laws and regulations with respect to privacy, data protection, consumer protection, data sovereignty, and unsolicited email, and the risk of penalties to our users and individual members of management or employees if our practices are deemed to be out of compliance, and additional laws and regulations in the United States that are applicable to international operations; • compliance with immigration laws, both in the United States and the applicable foreign country, which laws and practices are subject to changes and delays; • recruiting and retaining talented and capable employees outside the United States, and maintaining our company culture across all of our offices; • management of an employee base in jurisdictions that may not give us the same employment and retention flexibility as does the United States; • operating in jurisdictions that do not protect intellectual property rights to the same extent as does the United States; • compliance by us and our business partners with anti-corruption laws, anti-bribery, anti-money laundering, and similar laws; import and export control laws; tariffs and trade barriers; economic sanctions; and other regulatory limitations on our ability to provide our cloud services in international markets; • foreign exchange controls that might require significant lead time in setting up operations in certain geographic territories; • restrictions that might prevent us from repatriating cash earned outside the United States; • increased tax complexity, including being subject to regular review and audit by both United States federal and state and foreign tax authorities; • taxing authorities of the United States or foreign jurisdictions in which we operate may challenge our methodologies for valuing intercompany arrangements; • double taxation of our international earnings and potentially adverse tax consequences due to changes in the income and other tax laws of the United States or the international jurisdictions in which we operate; and • political and economic instability in various jurisdictions. 17 Table of Contents Expanding our international operations and complying with applicable laws and regulations may substantially increase our cost of doing business in international jurisdictions.
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; 28 Table of Contents • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • outbreaks of war or other hostilities; • any significant change in our management; • a return of pandemic conditions; and • general economic conditions and slow or negative growth of our markets.
Factors that could cause fluctuations in the market price of our common stock include the following: • price and volume fluctuations in the overall stock market from time to time; 30 Table of Contents • volatility in the market prices and trading volumes of technology stocks; • changes in operating performance and stock market valuations of other technology companies generally or those in our industry in particular; • sales of shares of our common stock by us or our stockholders; • failure of securities analysts to maintain coverage of us, changes in financial estimates by securities analysts who follow us, or our failure to meet these estimates or the expectations of investors; • the financial projections we may provide to the public, any changes in those projections or our failure to meet those projections; • announcements by us or our competitors of new products or services; • the public’s reaction to our press releases, other public announcements, and filings with the SEC; • rumors and market speculation involving us or other companies in our industry; • actual or anticipated changes in our operating results or fluctuations in our operating results; • actual or anticipated developments in our business, our competitors’ businesses, or the competitive landscape generally; • litigation involving us, our industry, or both, or investigations by regulators into our operations or those of our competitors; • developments or disputes concerning our intellectual property or other proprietary rights; • announced or completed acquisitions of businesses or technologies by us or our competitors; • new laws or regulations or new interpretations of existing laws or regulations applicable to our business; • changes in accounting standards, policies, guidelines, interpretations, or principles; • outbreaks of war or other hostilities; • any significant change in our management; • a return of pandemic conditions; and • general economic conditions and slow or negative growth of our markets.
These risks include, among others: • We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future. • The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results would be harmed. • Any significant disruption in our service or loss, or delay in availability, of our customers’ data, could damage our reputation and harm our business and operating results. • If we are unable to maintain our brand and reputation, our business, results of operations, and financial condition may be adversely affected. • If our information technology systems, including the data of our customers stored in our systems, are breached or subject to cybersecurity attacks, our reputation and business may be harmed. • If we are unable to attract and retain customers on a cost-effective basis, our revenue and operating results would be adversely affected. • If we are unable to provide successful enhancements, new features, and modifications to our cloud services, our business could be adversely affected. • Material defects or errors in our software could negatively impact our business, harm our reputation, result in significant costs to us, and negatively impact our ability to sell our cloud services. • We rely on third-party vendors and suppliers, including data center and hard drive providers, which may have limited sources of supply, and this reliance exposes us to potential supply and service disruptions that could harm our business. • Our business depends, in part, on the success of our strategic relationships with third parties. • Although we have previously identified and remediated material weaknesses in our internal controls over financial reporting, we could experience material weaknesses in the future and the failure to achieve and maintain effective internal controls over financial reporting could harm our business and negatively impact the value of our common stock. 7 Table of Contents Risks Related to Our Business and Our Industry We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future.
These risks include, among others: • We have a history of cumulative losses, and we do not expect to be profitable for the foreseeable future. • The markets in which we participate are intensely competitive, and if we do not compete effectively, our operating results would be harmed. • Any significant disruption in our service or loss, or delay in availability, of our customers’ data, could damage our reputation and harm our business and operating results. 7 Table of Contents • If we are unable to maintain our brand and reputation, our business, results of operations, and financial condition may be adversely affected. • If our information technology systems, including the data of our customers stored in our systems, are breached or subject to cybersecurity attacks, our reputation and business may be harmed. • If we are unable to attract and retain customers on a cost-effective basis, our revenue and operating results would be adversely affected. • If we are unable to provide successful enhancements, new features, and modifications to our cloud services, our business could be adversely affected. • Material defects or errors in our software could negatively impact our business, harm our reputation, result in significant costs to us, and negatively impact our ability to sell our cloud services. • We rely on third-party vendors and suppliers, including data center and hard drive providers, which may have limited sources of supply, and this reliance exposes us to potential supply and service disruptions that could harm our business. • Our business depends, in part, on the success of our strategic relationships with third parties. • Although we have previously identified and remediated material weaknesses in our internal controls over financial reporting, we could experience material weaknesses in the future and the failure to achieve and maintain effective internal controls over financial reporting could harm our business and negatively impact the value of our Class A common stock.
We may face increased competition from some of our competitors that typically target larger businesses and organizations and that may have pre-existing relationships or purchase commitments, that may have more experienced sales personnel or greater budgetary resources available to target larger customers, or that may be able to bundle other services with an offering that is competitive with ours.
We may also face increased competition from some of our competitors that typically target larger businesses and organizations and that may have pre-existing relationships or purchase commitments, that may have more experienced sales personnel or greater budgetary resources available to target larger customers, or that may be able to bundle other services with an offering that is competitive with ours.
If our capacity needs are reduced, or if we decide to close a data center, we may nonetheless be committed to perform our obligations under the applicable leases including, among other things, paying the base rent for the balance of the lease term and continuing to pay for any servers or other equipment.
If our capacity needs are reduced, or if we decide to close a data center space, we may nonetheless be committed to perform our obligations under the applicable leases including, among other things, paying the base rent for the balance of the lease term and continuing to pay for any servers or other equipment.
While we currently have some patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications, the patent protection may not be obtained quickly enough to meet our business needs, any patents issued in the future may not provide us with competitive advantages or they may be successfully challenged by third parties.
While we currently have patent applications pending, we may be unable to obtain patent protection for the technology covered in our patent applications, the patent protection may not be obtained quickly enough to meet our business needs, any patents issued in the future may not provide us with competitive advantages or they may be successfully challenged by third parties.
Although we take measures to protect our systems and sensitive information from unauthorized access or disclosure, third parties may be able to circumvent our security by deploying viruses, worms, and other malicious software programs that are designed to attack or attempt to infiltrate our systems and networks, including distributed denial of service (DDoS) or phishing attacks, that can undermine the availability and performance of our systems and cloud services, lead to the blocking of our services by ISPs or governments, fraudulently steal data, or otherwise cause damage to our reputation and negatively impact us and our customers.
Although we take measures to protect our systems and sensitive information from unauthorized access or disclosure, third parties may be able to circumvent our security by deploying viruses, worms, and other malicious software programs that are designed to attack or attempt to infiltrate our systems and networks, including distributed denial of service (“DDoS”) or phishing attacks, that can undermine the availability and performance of our systems and cloud services, lead to the blocking of our services by ISPs or governments, fraudulently steal data, or otherwise cause damage to our reputation and negatively impact us and our customers.
Our quarterly results of operations may fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result may not fully reflect the underlying performance of our business. Fluctuation in quarterly results may negatively impact the trading price of our common stock.
Our quarterly results of operations fluctuate as a result of a variety of factors, many of which are outside of our control, and as a result may not fully reflect the underlying performance of our business. Fluctuation in quarterly results may negatively impact the trading price of our Class A common stock.
However, a strengthening of the U.S. dollar could increase the real cost of our cloud services to our customers outside of the United States, which could reduce demand for our cloud services and adversely affect our financial condition and results of operations.
A strengthening of the U.S. dollar could increase the real cost of our cloud services to our customers outside of the United States, which could reduce demand for our cloud services and adversely affect our financial condition and results of operations.
In addition, we regularly encounter attempts to create false or undesirable user accounts and various types of DDoS attacks, which can disrupt our systems, impair system performance and impact analytics.
In addition, we regularly encounter attempts to create false or undesirable user accounts, phishing attacks and various types of DDoS attacks, which can disrupt our systems, impair system performance and impact analytics.
While we maintain incident response plans that include defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations, and such plans are tested and evaluated on a regular basis, o ur disaster recovery planning cannot account for all eventualities and even if we anticipate an incident, our disaster recovery plans may not be sufficient to timely and effectively address the issue.
While we maintain incident response plans that include defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations, and such plans are tested and evaluated on a regular basis, our disaster recovery planning cannot account for all eventualities and even if we anticipate an incident, our disaster recovery plans may not be sufficient to timely and effectively address the issue.
To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payment processing, loss of payment partners, and/or disruptions or failures in our payment processing systems or payment products, including products we use to update payment information, our revenue, operating expenses, and results of operation could be adversely impacted.
To the extent there are increases in payment processing fees, material changes in the payment ecosystem, such as large re-issuances of payment cards, delays in receiving payments from payment processors, changes to rules or regulations concerning payment processing, loss of payment partners, and/or disruptions or failures in our payment processing systems or payment products, including products we use to update payment information, our revenue, operating expenses, and results of operations could be adversely impacted.
Among other things, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include provisions: • creating a classified Board of Directors whose members serve staggered three-year terms; • authorizing “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors; and 27 Table of Contents • controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings.
Among other things, our Amended and Restated Certificate of Incorporation and Amended and Restated Bylaws include provisions: • creating a classified Board of Directors whose members serve staggered three-year terms; • authorizing “blank check” preferred stock, which could be issued by our Board of Directors without stockholder approval and may contain voting, liquidation, dividend, and other rights superior to our common stock; • limiting the liability of, and providing indemnification to, our directors and officers; • limiting the ability of our stockholders to call and bring business before special meetings; • requiring advance notice of stockholder proposals for business to be conducted at meetings of our stockholders and for nominations of candidates for election to our Board of Directors; and • controlling the procedures for the conduct and scheduling of Board of Directors and stockholder meetings.
Specifically, our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum provision for: (i) any derivative action or proceeding brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty; (iii) any action arising pursuant to any provision of the DGCL, our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws (as either may be amended from time to time); (iv) any action to interpret, apply, enforce, or determine the validity of our Amended and Restated Certificate of Incorporation or our Amended and Restated Bylaws; (v) any action asserting a claim against us that is governed by the internal affairs doctrine; or (vi) any action asserting an “internal corporate claim” as defined in the DGCL.
Specifically, our Amended and Restated Certificate of Incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum provision for: (i) any derivative action or proceeding 32 Table of Contents brought on behalf of us; (ii) any action asserting a claim of breach of a fiduciary duty; (iii) any action arising pursuant to any provision of the DGCL, our Amended and Restated Certificate of Incorporation or Amended and Restated Bylaws (as either may be amended from time to time); (iv) any action to interpret, apply, enforce, or determine the validity of our Amended and Restated Certificate of Incorporation or our Amended and Restated Bylaws; (v) any action asserting a claim against us that is governed by the internal affairs doctrine; or (vi) any action asserting an “internal corporate claim” as defined in the DGCL.
For example, we are and may be subject to claims brought by customers, vendors or other third parties in connection with various types of disputes, including relating to commercial or contract matters, violation of securities laws, intellectual property laws or other laws, or privacy or other data breaches, or employment claims made by our current or former employees.
For example, we may be subject to claims brought by customers, vendors or other third parties in connection with various types of disputes, including relating to commercial or contract matters, violation of securities laws, intellectual property laws or other laws, or privacy or other data breaches, or employment claims made by our current or former employees.
We cannot ensure that we will be able to retain the services of any member of our senior management or other key employees, 14 Table of Contents particularly given that some of these employees may hold equity of the Company that is largely vested, or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
We 15 Table of Contents cannot ensure that we will be able to retain the services of any member of our senior management or other key employees, particularly given that some of these employees may hold equity of the Company that is largely vested, or that we would be able to timely replace members of our senior management or other key employees should any of them depart.
As of June 30, 2024, we continued to qualify as an “emerging growth company,” as defined in the securities law. For as long as we continue to be an emerging growth company, we have taken, and may continue to take, advantage of exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.
As of June 30, 2025, we continued to qualify as an “emerging growth company,” as defined in the securities law. For as long as we continue to be an emerging growth company, we have taken, and may continue to take, advantage of exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies.
While we believe that these price increases resulted in increased revenue without a material negative impact on our business, any future price increases by us, or reductions in prices by our competitors, could have a material adverse effect on our business, including potential loss of customers who do not wish to renew their subscriptions at the higher prices, reduction in the number of new customers, or a decrease in the amount of data that existing (or new) customers store with us or subscriptions they purchase from us.
While we believe that these price increases resulted in increased revenue without a material negative impact on our business, any future price increases by us, or reductions in prices by our competitors, could 8 Table of Contents have a material adverse effect on our business, including potential loss of customers who do not wish to renew their subscriptions at the higher prices, reduction in the number of new customers, or a decrease in the amount of data that existing (or new) customers store with us or subscriptions they purchase from us.
If we are unable to attract and retain customers on a cost-effective basis, our revenue and operating results would be adversely affected. We generate substantially all of our revenue from the sale of our cloud services either on a consumption or subscription model. To grow, we must continue to attract a large number of customers on a cost-effective basis.
If we are unable to attract and retain customers on a cost-effective basis, our revenue and operating results would be adversely affected. We generate substantially all of our revenue from the sale of our cloud services either on a consumption or subscription model. To grow, we must continue to attract customers on a cost-effective basis.
If search engine companies modify their search algorithms in a manner that reduces the prominence of our listing, or if our competitors’ search engine optimization efforts are more successful than ours, or if AI results replace traffic from search engines, fewer potential customers may click through to our website.
If search engine companies modify their search algorithms in a manner that reduces the prominence of our listing, or if our competitors’ search engine optimization efforts are more successful than ours, or if AI technologies replace traffic from search engines, fewer potential customers may click through to our website.
In such a scenario, we may also be required to enter into leases or other agreements for data centers, servers and other equipment that are more expensive than they otherwise would be as a result of the increased demand and competition in the market for data center capacity.
In such a scenario, we may also be required to enter into leases or other agreements for data center spaces, servers and other equipment that are more expensive than they otherwise would be as a result of the increased demand and competition in the market for data center capacity.
We expect it will be more difficult and expensive to attract and 17 Table of Contents retain mid-market organization customers than other customers because mid-market organizations are more frequently forced to curtail or cease operations due to the sale or failure of their business; can be more difficult to identify and may require more expensive, targeted sales campaigns; and generally have lesser amounts of data to store than larger organizations, thus requiring us to successfully sell to and support more mid-market organizations for meaningful revenue impact.
We expect it will be more difficult and expensive to attract and retain mid-market organization customers than other customers because mid-market organizations are more frequently forced to curtail or cease operations due to the sale or failure of their business; can be more difficult to identify and may require more expensive, targeted sales campaigns; and generally have lesser amounts of data to store than larger organizations, thus requiring us to successfully sell to and support more mid-market organizations for meaningful revenue impact.
As our business grows and becomes more complex, it may become more difficult to maintain culture aligned across the Company. Any failure to preserve our culture could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our strategies.
As our business grows and becomes more complex, it may become more difficult to maintain culture aligned across the company. Any failure to preserve our culture and core values could negatively affect our ability to retain and recruit personnel, which is critical to our growth, and to effectively focus on and pursue our strategies.
Although we take steps to secure customer information that is provided to or accessible by our partners and vendors, such measures may not always be effective and w e may have limited or no control over how cybersecurity attacks on our partners or vendors are addressed.
Although we take steps to secure customer information that is provided to or accessible by our partners and vendors, such measures may not always be effective, and we may have limited or no control over how cybersecurity attacks on our partners or vendors are addressed.
In addition, because we offer our Computer Backup cloud service at a fixed price, the amount of data our customers back up affects our costs and gross margins. Subject to certain limitations, we also offer up to three times free egress for our B2 Cloud Storage customers.
In addition, because we offer our Computer Backup cloud service at a fixed price, the amount of data our customers back up affects our costs and gross margins. Subject to certain limitations, we also offer free egress for our B2 Cloud Storage customers.
We are and may become subject to legal proceedings, investigations, and claims that arise in the ordinary course of business.
We may become subject to legal proceedings, investigations, and claims that arise in the ordinary course of business.
As a result of our current or future use of open-source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
As a result of our current or future use of open-source software, we may face claims or litigation, be required to release our proprietary source code, pay damages for breach of contract, re-engineer our solutions, discontinue making 29 Table of Contents our solutions available in the event re-engineering cannot be accomplished on a timely basis or take other remedial action.
For example, under the GDPR we may be subject to fines of up to €20 million or up to 4% of the total worldwide annual group turnover of the preceding financial year, as well as potentially face claims from individuals.
For example, under the GDPR we may be subject to fines of up to €20 million or up to 4% of the total worldwide annual group turnover of the preceding financial year, as well as potentially facing claims from individuals.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions. 25 Table of Contents Risks Related to Intellectual Property Assertions by a third party that our cloud services infringe, misappropriate, or otherwise violate their intellectual property could subject us to costly and time-consuming litigation and adversely impact our business.
Our results of operations may be adversely affected if our assumptions change or if actual circumstances differ from those in our assumptions. Risks Related to Intellectual Property Assertions by a third-party that our cloud services infringe, misappropriate, or otherwise violate their intellectual property could subject us to costly and time-consuming litigation and adversely impact our business.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
It cannot be predicted whether, when, in what form or with what effective dates tax laws, regulations and rulings may be enacted, promulgated or issued, which could result in an increase in 27 Table of Contents our or our stockholders’ tax liability or require changes in the manner in which we operate in order to minimize or mitigate any adverse effects of changes in tax law.
The requirements of being a public company, particularly after we are no longer an “emerging growth company”, may strain our resources, require us to incur substantial costs and will require substantial management attention.
The requirements of being a public company, particularly after we are no longer an “emerging growth company,” may strain our resources, require us to incur substantial costs and will require substantial management attention.
In addition, our ability to manage our business and conduct our operations internationally requires considerable management attention and resources and is subject to the particular challenges and complexities of deploying infrastructure internationally and supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
In addition, our ability to manage our business and conduct our operations internationally 16 Table of Contents requires considerable management attention and resources and is subject to the particular challenges and complexities of deploying infrastructure internationally and supporting a rapidly growing business in an environment of multiple languages, cultures, customs, legal and regulatory systems, alternative dispute systems, and commercial markets.
Our efforts to comply with the complex matrix of data privacy laws around the world subjects us to increasing costs to review and comply with such laws, including updating our policies, procedures, and business practices to address such evolving privacy laws.
Our efforts to comply with the complex matrix of data privacy laws around the world subject us to increasing costs to review and comply with such laws, including updating our policies, procedures, and business practices to address such evolving privacy laws.
In addition, our business could be harmed in the event of any industry consolidations, acquisitions, other restructuring events or bankruptcies. For example, in September 2023, Toshiba Corp., one of our hard drive suppliers, announced the completion of a buy-out by various private equity firms and others.
In addition, our business could be harmed in the event of any industry consolidations, acquisitions, other restructuring events or bankruptcies. For example, in September 2023, Toshiba Corp., one of our hard drive suppliers, announced the completion of a buy-out by various private equity 23 Table of Contents firms and others.
The risks we face in connection with the opening and expansion of data centers include: • we may not be able to find suitable third-party data center locations with sufficient power, or bandwidth, or such data center locations may not be available on commercially reasonable terms; • we will be required to commit substantial operational and financial resources to open new data centers, and we may not have sufficient customer demand in those markets to support the new data centers; • unanticipated delays in the completion of such projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of quality of our service; • issues that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully utilize the underlying equipment, could disrupt the delivery of our cloud services to customers or increase our costs; and • unanticipated technological changes could affect customer requirements for data centers, and we may not have built such requirements into our new data centers.
The risks we face in connection with the establishment and expansion of data center spaces include: • we may not be able to expand or find new suitable third-party data center locations with sufficient power, or bandwidth, or such expansion options or new data center locations may not be available on commercially reasonable terms; • we will be required to commit substantial operational and financial resources to establish new data center spaces, and we may not have sufficient customer demand in those markets to support the new data center spaces; • unanticipated delays in the completion of such projects or availability of components may lead to increased project costs, operational inefficiencies, or interruptions in the delivery or degradation of quality of our service; • issues that are not identified during the testing phases of design and implementation, which may only become evident after we have started to fully utilize the underlying equipment, could disrupt the delivery of our cloud services to customers or increase our costs; and • unanticipated technological changes could affect customer requirements for data center spaces, and we may not have built such requirements into our new data center spaces.
In some circumstances, we may choose to do so through the acquisition of 18 Table of Contents complementary businesses and technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may be unable to successfully complete proposed acquisitions.
In some circumstances, we may choose to do so through the acquisition of complementary businesses and technologies rather than through internal development. The identification of suitable acquisition candidates can be difficult, time-consuming, and costly, and we may be unable to successfully complete proposed acquisitions.
Also, the use of generative artificial intelligence, or other societal or political developments resulting in periods of increased political tensions and military conflicts, could result in a greater likelihood of cybersecurity incidents that could either directly or indirectly impact our operations.
Also, the use of generative AI, or other societal or political developments resulting in periods of increased political tensions and military conflicts, could result in a greater likelihood of cybersecurity incidents that could either directly or indirectly impact our operations.
We may continue to expand our international operations, which may include the establishment of foreign subsidiaries, the opening and expansion of data centers, hiring employees, building out technical infrastructure, and opening offices in foreign jurisdictions. Any new markets or countries into which we attempt to market and sell our cloud services may not be receptive.
We expect to continue to expand our international operations, which may include the establishment of foreign subsidiaries, the opening and expansion of data center spaces, hiring employees, building out technical infrastructure, and opening offices in foreign jurisdictions. Any new markets or countries into which we attempt to market and sell our cloud services may not be receptive.
In the event of a shortage, supply interruption, material pricing change or other significant events involving 21 Table of Contents one of our suppliers, we may be unable to develop alternate sources in a timely manner or at all.
In the event of a shortage, supply interruption, material pricing change or other significant events involving one of our suppliers, we may be unable to develop alternate sources in a timely manner or at all.
Even if the markets in which we compete meet the size estimates and growth forecasted in this Annual Report on Form 10-K, our business could fail to grow at similar rates, if at all. Any future litigation against us could be costly and time-consuming to defend.
Even if the markets in which we compete meet the size estimates and growth forecasted in this Annual Report on Form 10-K, our business could fail to grow at similar rates, if at all. 22 Table of Contents Any future litigation against us could be costly and time-consuming to defend.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. Our quarterly results of operations may vary significantly in the future. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance.
Our quarterly results may fluctuate significantly and may not fully reflect the underlying performance of our business. Our quarterly results of operations have fluctuated in the past and may vary significantly in the future. Accordingly, the results of any one quarter should not be relied upon as an indication of future performance.
Although we have taken, and continue to take, various actions to prevent and mitigate potential cybersecurity attacks, it is very difficult to successfully identify, stop, or resolve such attacks, or implement adequate preventative measures and we will 9 Table of Contents continue to incur costs in our efforts to protect against and respond to cyber-attacks and potential cyber-attacks.
Although we have taken, and continue to take, various actions to prevent and mitigate potential cybersecurity attacks, it is very difficult to successfully identify, stop, or resolve such attacks, or implement adequate preventative measures and we will continue to incur costs in our efforts to protect against and respond to cyber-attacks and potential cyber-attacks.
As a result of disclosure 30 Table of Contents of information in filings required of a public company, our business and financial condition has become more visible, which may result in threatened or actual litigation, including by competitors.
As a result of disclosure of information in filings required of a public company, our business and financial condition has become more visible, which may result in threatened or actual litigation, including by competitors.
We also have limited internal resources and thus need to selectively prioritize features and other development and infrastructure projects, and de-prioritize other such projects.
We also have limited internal resources and thus need to selectively prioritize features and other development and infrastructure projects, and de-prioritize certain other projects.
In addition, our customers sometimes depend on our technical support services to resolve issues relating to our platform. If we do not succeed in helping our customers quickly resolve issues or provide effective ongoing education related to our platform, our reputation and business may be harmed.
In addition, our customers sometimes 20 Table of Contents depend on our technical support services to resolve issues relating to our platform. If we do not succeed in helping our customers quickly resolve issues or provide effective ongoing education related to our platform, our reputation and business may be harmed.
The use of generative artificial intelligence tools could also expose us to inadvertently disclosing trade secrets or other confidential information or inadvertently cause us to violate third party intellectual property rights.
The use of generative AI tools could also expose us to inadvertently disclosing trade secrets or other confidential information or inadvertently cause us to violate third party intellectual property rights.
Since our IPO, the stock price of our common stock has experienced very high volatility and the market prices of securities of other newly public companies have historically been highly volatile.
Since our initial public offering, the stock price of our common stock has experienced very high volatility and the market prices of securities of other newly public companies have historically been highly volatile.
In addition, mid-market organizations frequently have limited budgets and are more likely to be significantly affected by economic downturns than larger, more established companies. For example, recent high inflation and recession concerns in the United States could have a greater adverse impact on mid-market organizations.
In addition, mid-market organizations frequently have limited budgets and are more likely to be significantly affected by economic downturns than larger, more established companies. For example, high inflation and recession 19 Table of Contents concerns in the United States could have a greater adverse impact on mid-market organizations.
We rely on third-party software for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively. We rely on third-party software to provide many essential financial and operational services to support our business, including HubSpot, NetSuite, FireHydrant, and Zendesk.
We rely on third-party systems for certain essential financial and operational services, and a failure or disruption in these services could materially and adversely affect our ability to manage our business effectively. We rely on third-party software to provide many essential financial, enterprise risk planning and operational services to support our business, including Stripe, HubSpot, NetSuite, FireHydrant, and Zendesk.
The costs associated with leasing and maintaining our custom-built infrastructure in co-location facilities and third-party data centers already constitute a significant portion of our capital and operating expenses. We continuously evaluate our short and long-term infrastructure capacity requirements and seek to ensure adequate capacity for new and existing users while minimizing unnecessary excess capacity costs.
The costs associated with leasing and maintaining our custom-built infrastructure in data center spaces and third-party data center spaces already constitute a significant portion of our capital and operating expenses. We continuously evaluate our short and long-term infrastructure capacity requirements and seek to ensure adequate capacity for new and existing users while minimizing unnecessary excess capacity costs.
However, because our customer retention and the amount of data that they store with us may increase, decline or fluctuate as a result of a number of factors, it is difficult to accurately predict our capacity needs over time.
However, because our customer retention and the amount of data that they store with us may increase, decline or fluctuate as a result of a number of factors, potentially with little or no advance notice, it is difficult to accurately predict our capacity needs over time.
Our future financial performance also depends in part on our ability to continue to increase revenue from our customers through new features and additional paid products, such as Event Notifications, Live Read, Enterprise Control and multi-region selection. Our customers’ decision whether to opt for additional paid products is driven by a number of factors.
Our future financial performance also depends in part on our ability to continue to increase revenue from our customers through new features and additional paid products, such as B2 Overdrive, Enterprise Control and multi-region selection. Our customers’ decision whether to opt for additional paid products is driven by a number of factors.
Consequently, a decline in new or renewed subscriptions in any one quarter may only be partially reflected in our revenue results for that quarter. However, any such decline will negatively affect our revenue in future quarters.
Consequently, a decline in new or renewed subscriptions in any one quarter may only be 26 Table of Contents partially reflected in our revenue results for that quarter. However, any such decline will negatively affect our revenue in future quarters.
The immigration process can be subject to frequent changes and limitations, and we may experience difficulty in obtaining visas permitting entry for some of our employees that are foreign nationals into the United States, and delays in obtaining visas permitting entry into other key countries, which could negatively impact our ability to strategically locate our personnel.
In particular, the immigration process can be subject to frequent changes and limitations, and we may experience difficulty in obtaining visas permitting entry for some of our employees that are foreign nationals into the United States, and delays in obtaining visas permitting entry into other countries, which could negatively impact our ability to fully leverage our personnel.
We cannot guarantee that we have entered into such agreements with each 26 Table of Contents party that may have or has had access to our trade secrets or proprietary information, including our technology and processes.
We cannot guarantee that we have entered into such agreements with each party that may have or has had access to our trade secrets or proprietary information, including our technology and processes.
International tax laws also undergo frequent change. Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made, and changes are likely to continue to occur in the future.
Changes to tax laws (which changes may have retroactive application) could adversely affect us or holders of our common stock. In recent years, many such changes have been made, and changes are likely to continue to occur in the future.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2024, we had net operating loss carryforwards for U.S. federal income tax purposes of $123.3 million available to offset future U.S. federal taxable income.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited. As of December 31, 2025, we had net operating loss carryforwards for U.S. federal income tax purposes of $172.5 million available to offset future U.S. federal taxable income.
In addition, we are also and may also be subject to subpoena requests from third parties as well as governmental agencies 20 Table of Contents from time to time that require us to provide certain information relating to matters targeted against other third parties, which can be time consuming.
In addition, we may also be subject to subpoena requests from third parties as well as governmental agencies from time to time that require us to provide certain information relating to matters targeted against other third parties, which can be time consuming.
Royalty or licensing agreements may be unavailable on terms acceptable to us, or at all. If we cannot develop or license technology for any allegedly infringing aspect of our business, we could be forced to limit our cloud services and may be unable to compete effectively. Any of these events could have a material adverse effect on our business.
Royalty or licensing agreements may be unavailable on terms acceptable to us, or at all. If we cannot develop or license technology for any allegedly infringing aspect of our business, we could be forced to limit our cloud services and may be unable to compete effectively.
However, changes to global trade dynamics, including the imposition of tariffs, trade restrictions or retaliatory actions, could have a material adverse impact on our business and results of operations.
In addition, political uncertainty and changes to global trade dynamics, including the imposition of tariffs, trade restrictions or retaliatory actions, could have a material adverse impact on our business and results of operations.
Our brand promotion activities may not be successful or yield increased revenue. The promotion of our brand may require us to make substantial expenditures, particularly as our markets become more competitive and we expand into new markets or offer new products or services, or additional features.
Our promotional activities may not be successful or yield increased revenue. The promotion of our brand has in the past, and may in the future cause us to make substantial expenditures, particularly as our markets become more competitive and we expand into new markets or offer new products or services, or additional features.
As a result, our revenue could be reduced as a result of any general or industry decline in demand for cloud-based storage solutions, particularly given that we would not have meaningful revenue from other market sectors to offset any temporary or longer-term downturn in demand for cloud-based storage solutions. Adverse economic conditions may adversely impact our revenue and profitability.
As a result, our revenue could be reduced as a result of any general or industry decline in demand for cloud-based storage solutions, particularly given that we would not have meaningful revenue from other market sectors to offset any temporary or longer-term downturn in demand for cloud-based storage solutions.
To support our anticipated growth and as we develop and implement new product features we may require more computing infrastructure, which may include the opening and expansion of data centers.
To support our anticipated growth and as we develop and implement new product features we may require more computing infrastructure, which may include the establishment and expansion of data center spaces.
Current or future supply chain interruptions could be triggered or exacerbated by global political tensions, such as the imposition, or threat of potential imposition, of tariffs or other trade restrictions, hostilities or tensions such as the Russia-Ukraine, Israel-Hamas and China-Taiwan conflicts, particularly if those tensions escalate into an armed conflict or directly or indirectly involve other countries, which may include the implementation of trade barriers, including boycotts or the use of economic sanctions and export control restrictions, any of which could negatively impact our ability to acquire hard drives and semiconductors.
Current or future supply chain interruptions could be triggered or exacerbated by global political tensions, such as the imposition, or threat of potential imposition, of tariffs or other trade restrictions, hostilities or tensions such as the joint United States-Israeli strikes on Iran in February 2026 along with other conflicts in the Middle East, and conflicts between Russia-Ukraine, Israel-Hamas, and China-Taiwan, particularly if those tensions escalate into an armed conflict or directly or indirectly involve other countries, which may include the implementation of trade barriers, including boycotts or the use of economic sanctions and export control restrictions, any of which could negatively impact our ability to acquire hard drives and semiconductors.
Factors that may cause fluctuations in our quarterly results of operations include, without limitation: • our ability to attract new customers; • the amount of customer churn; • fluctuations in the amount of data customers store with us; • the amount and timing of operating expenses and equipment purchases related to the maintenance and expansion of our business; 13 Table of Contents • interruptions or loss of service of our offerings; • the timing and success of new product feature and service introductions by us or our competitors; • our ability to retain and increase revenue from customers; • changes in deferred revenue balances; • changes in or timing of cash flows; • changes in the competitive dynamics of our industry, including consolidation among competitors; • security breaches of our systems; • our involvement in litigation, or the threat thereof; • the length of the sales cycle; • the amount and timing of sales commissions, particularly with respect to pipeline, that may precede or exceed the actual corresponding revenue we receive; • outbreaks of war or other hostilities, such as the Russia-Ukraine and Israel-Hamas hostilities; • inflation in the United States, which has recently hit a four decade high, and other regions; • the impact of pandemics on our business or that of our customers and partners; • the timing of expenses and receipt of perceived benefits related to any acquisitions; • changes in laws and regulations that impact our business; and • general economic and market conditions.
Factors that may cause fluctuations in our quarterly results of operations include, without limitation: • our ability to attract new customers; 14 Table of Contents • the amount of customer churn; • fluctuations in the amount of data customers store with us; • the amount and timing of operating expenses and equipment purchases related to the maintenance and expansion of our business; • interruptions or loss of service of our offerings; • the timing and success of new product features and service introductions by us or our competitors; • our ability to retain and increase revenue from customers; • changes in deferred revenue balances; • changes in or timing of cash flows; • changes in the competitive dynamics of our industry, including consolidation among competitors; • security breaches of our systems; • our involvement in litigation, or the threat thereof; • the length of the sales cycle; • the amount and timing of sales commissions, particularly with respect to pipeline, that may precede or exceed the actual corresponding revenue we receive; • outbreaks of war or other hostilities, such as the Russia-Ukraine, the joint U.S-Israeli strikes on Iran in February 2026 and other conflicts in the Middle East; • inflation in the United States and other regions; • the impact of pandemics on our business or that of our customers and partners; • the timing of expenses and receipt of perceived benefits related to any acquisitions; • changes in laws and regulations that impact our business; and • general economic and market conditions.
Our recent price increase for Computer Backup and B2 Cloud Storage could make it more difficult to attract new customers and retain existing customers, or cause existing customers to reduce the amount of data that they store with us or 12 Table of Contents subscriptions they purchase from us.
Future price increases for Computer Backup and B2 Cloud Storage could make it more difficult to attract new customers and retain existing customers or cause existing customers to reduce the amount of data that they store with us or subscriptions they purchase from us.
For example, we are subject to the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA) and the California Privacy Rights Act of 2020 (CPRA), among other laws and regulations around the world.
For example, we are subject to the General Data Protection Regulation (“GDPR”), the California Consumer Privacy Act (“CCPA”) and the California Privacy Rights Act of 2020 (“CPRA”), among other laws and regulations around the world.
Weak economic conditions, whether due to the banking and financial crises, a return of pandemic conditions, inflation, uncertainty relating to the hostilities with Russia-Ukraine and Israel-Hamas, and the potential escalation of geopolitical tensions that could also directly or indirectly involve other countries, including the United States, could cause a reduction in spending on products and solutions storage.
Weak economic conditions, whether due to the banking and financial crises, a return of pandemic conditions, inflation, uncertainty relating to the hostilities with Russia-Ukraine, the joint United States-Israeli strikes on Iran in February 2026 along with other conflicts in the Middle East, and the potential escalation of geopolitical tensions that could also directly or indirectly involve other countries, including the United States, could cause a reduction in spending on products and solutions storage.
If any of the analysts who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price of our common stock or trading volume to decline. 29 Table of Contents We do not expect to declare any dividends in the foreseeable future.
If any of the analysts who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price of our common stock or trading volume to decline.
As a result, we depend upon these vendors to provide us with services that are always available and are free of errors or defects that could cause disruptions in our business processes.
We depend upon such third party vendors to provide us with services that are always available and are free of errors or defects that could cause disruptions in our business processes.
Also, in October 2023, Western Digital, another one of our hard drive suppliers, announced that it would spin-out its hard drive and other selected businesses into a separate company.
Also, in October 2023, Western Digital, another one of our hard drive suppliers, announced that it would spin-out its hard drive and other selected businesses into a separate company. One of our data center vendors also went through bankruptcy proceedings in 2022.
For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the rules and regulations of the SEC, and the listing standards of the Nasdaq Global Market.
For example, we are subject to the reporting requirements of the Exchange Act, the applicable requirements of the Sarbanes-Oxley Act, the Dodd-Frank Act, the rules and regulations of the SEC, and the listing standards of Nasdaq.
Ineffective disclosure controls and procedures and internal controls over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.
Ineffective internal controls could also cause investors to lose confidence in our reported financial information, which could have a negative effect on the trading price of our common stock.
These new obligations and constituents will require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations. Item 1B. Unresolved Staff Comments None.
These obligations and constituents require significant attention from our senior management and could divert their attention away from the day-to-day management of our business, which could adversely affect our business, financial condition, and results of operations.
Moreover, our platform and technical infrastructure may not be adequately designed with sufficient reliability and redundancy to avoid delays or outages or other issues that could be harmful to our business.
Moreover, our platform and technical infrastructure as well as the infrastructure of our data center partners may not be adequately designed or operate with sufficient reliability and redundancy to avoid delays or outages or other issues that could be harmful to our business.
Our success will depend in part on our ability to manage this growth effectively, which will require that we, among other things, continue to improve our administrative, operational, financial, and management systems and controls.
Our success will depend in part on our ability to manage these workforce dynamics effectively, which will require that we continue to improve our administrative, operational, financial, and management systems and controls.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses, or the write-off of goodwill, any of which could harm our financial condition or operating results.
Future acquisitions could also result in dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities, amortization expenses, incremental operating expenses, or the write-off of goodwill, any of which could harm our financial condition or operating results. Restrictive covenants under our credit facility may constrain our strategic and operational flexibility.
We do not anticipate declaring any cash dividends to holders of our common stock in the foreseeable future. Consequently, investors may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment.
Consequently, investors may need to rely on sales of our common stock after price appreciation, which may never occur, as the only way to realize any future gains on their investment. Investors seeking cash dividends should not purchase shares of our common stock.
International expansion has required, and will continue to require, investment of significant funds and other resources.
International expansion has required, and will continue to require, investment of significant upfront and on-going investments and other resources.
If not utilized, the federal and state tax credit carryforwards will begin to expire in 2027. 24 Table of Contents Utilization of our net operating loss carryforwards and other tax attributes, such as research and development tax credits, may be subject to annual limitations, or could be subject to other limitations on utilization or benefit due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the Code), and other similar provisions.
Utilization of our net operating loss carryforwards and other tax attributes, such as research and development tax credits, may be subject to annual limitations, or could be subject to other limitations on utilization or benefit due to the ownership change limitations provided by Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Code”), and other similar provisions.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeBackblaze has implemented an extensive set of policies, procedures, systems and tools designed to help safeguard our systems and data, including firewalls, endpoint protection, detection and response solutions, intrusion detection systems, access controls including multi-factor authentication, vulnerability scanning, software static analysis, dynamic analysis and software composition analysis tools, third party independent penetration testing, independent third-party control audits, a public bug bounty program, and other systems and processes. • Incident Response Planning: We maintain an incident response plan that includes defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations.
Biggest changeOur cybersecurity program includes the selection, implementation, testing, and monitoring of a layered set of administrative (including policies and procedures), technical, and physical controls, including access controls, endpoint protection, vulnerability management, independent testing, and monitoring capabilities, designed to reduce the likelihood and impact of cybersecurity threats. • Incident Response Planning: We maintain an incident response plan that includes defined processes, roles, communications, responsibilities and procedures for responding to cybersecurity incidents and other events that impact our operations.
We regularly review and update our policies, procedures, processes and practices to address changes in the threat landscape and as a result of lessons learned from suspected, actual or simulated incidents. We also conduct tabletop exercises, and engage third party services to conduct evaluations of our security controls through penetration testing and independent audits.
We regularly review and update our policies, procedures, processes and practices to address changes in the threat landscape and as a result of lessons learned from suspected, actual or simulated incidents. We conduct tabletop exercises, and engage third-party services to conduct evaluations of our security controls through penetration testing and independent audits.
Our Audit Committee is responsible for overseeing our cybersecurity, which represents an important component of the company’s enterprise risk management (“ERM”). We seek to reduce cybersecurity risks through a variety of cybersecurity risk management activities that are designed to identify, assess, manage and mitigate cybersecurity threats.
Our Audit Committee is responsible for overseeing our cybersecurity, which represents an important component of the company’s enterprise risk management (“ERM”). We seek to reduce cybersecurity risks through a variety of control activities that are designed to identify, assess, manage and mitigate these risks.
We generally 31 Table of Contents conduct a security risk assessment based on the potential for harm prior to onboarding of any such new services and include security and privacy addenda to our contracts where applicable. • Education and Awareness: We have established a security and privacy awareness program that runs throughout the year and includes training for all company personnel to enhance employee awareness of how to detect and respond to cybersecurity threats as well as more targeted training for company personnel that have increased responsibility for mitigating certain potential cybersecurity risks.
We generally conduct a security risk assessment based on the potential risk to the company and its customers prior to onboarding of any such new services and include security and privacy addenda to our contracts where applicable. • Education and Awareness: We have established a security and privacy awareness program that runs throughout the year and includes training for all company personnel to enhance employee awareness of how to detect and respond to cybersecurity threats as well as more targeted training for company personnel that have increased responsibility for mitigating certain potential cybersecurity risks.
For more information relating to cybersecurity risks and uncertainties, please see the risk factor entitled “If our information technology systems, including the data of our customers stored in our systems, are breached or subject 32 Table of Contents to cybersecurity attached, our reputation and business may be harmed” in Part I, Item 1A, and other risk factors in this 10-K.
For more information relating to cybersecurity risks and uncertainties, please see the risk factor entitled “If our information technology systems, including the data of our customers stored in our systems, are breached or subject to cybersecurity attacks, our reputation and business may be harmed” in Part I, Item 1A, and other risk factors in this Annual Report on Form 10-K.
Our CISO also regularly provides updates to the Audit Committee on our cybersecurity program, including recent developments, key initiatives to strengthen our systems, applicable industry standards, vulnerability assessments, third-party and independent reviews, and other information security considerations.
Our CISO also provides updates to the Audit Committee on our cybersecurity program, including recent developments, key initiatives to strengthen our systems, applicable industry standards, vulnerability assessments, third-party vendor risk, and independent security framework alignment and compliance maturity, AI, and other information security considerations.
We also review industry best practices to assist in evaluating responses to new challenges and risks. These evaluations include testing both the design and operational effectiveness of security controls. The state of the cybersecurity program is also reported by the CISO to the Audit Committee.
We also review industry best practices to assist in evaluating responses to new challenges and risks. These evaluations include testing the design and operational effectiveness of security controls.
Our Risk Management Committee consists of our Chief Executive Officer, Chief Financial Officer, General Counsel and Chief Compliance Officer, CISO, other members of management, and other employees from selected key functions of the company. • Approach : We use a cross-functional approach to identifying, preventing, assessing, and mitigating cybersecurity threats and incidents, while also implementing controls and procedures that are designed to provide for the prompt escalation of cybersecurity incidents and support appropriate public disclosure and reporting of incidents as required in a timely manner.
Our Risk Management Advisory Committee is a cross-functional committee comprised of our executives and other leaders of various departments that consists of our Chief Executive Officer, Chief Financial Officer, Head of Legal and Compliance, CISO, other members of management, and other employees from selected key functions of the company. • Approach : We use a cross-functional approach to identify, assess, treat, and monitor cybersecurity risks, while also implementing controls and procedures that are designed to provide for the prompt escalation of cybersecurity incidents and support appropriate public disclosure and reporting of incidents as required in a timely manner.
As is common in the industry, we also experience periodic phishing and distributed denial-of-service (DDoS) attacks.
As is common in industry, we experience periodic phishing and DDoS attacks.
Cybersecurity Risks While we dedicate significant efforts and resources to our cybersecurity program, we may be unable to successfully identify threats, prevent attacks, satisfactorily resolve cybersecurity incidents, or implement adequate mitigating controls.
He is an IAPP Fellow of Information Privacy and holds recognized security, privacy, audit, and risk management certifications relevant to data protection and regulatory compliance. Cybersecurity Risks While we dedicate significant efforts and resources to our cybersecurity program, we may be unable to successfully identify threats, prevent attacks, satisfactorily resolve cybersecurity incidents, or implement adequate mitigating controls.
The Audit Committee also receives information regarding cybersecurity incidents, including prompt updates for any cybersecurity incidents that may be deemed material events impacting us and which might require public disclosure. Our CISO and other key personnel also frequently engage with key vendors, industry groups, and law enforcement communities as part of our continuing efforts to improve our cybersecurity program.
The Audit Committee also receives information regarding cybersecurity incidents, including prompt updates for any cybersecurity incidents that may be deemed material and which might require public disclosure. Management is responsible for the day-to-day operation of the cybersecurity program, while the Audit Committee provides oversight.
Governance Our Board of Directors, in coordination with its committees, with input from the Risk Management Committee, a cross-functional committee comprised of our executives and other leaders of various departments, oversees our enterprise risk management process, including the risks arising from cybersecurity threats.
The state of the cybersecurity program is reported by the CISO to the Audit Committee. 34 Table of Contents Governance Our Board of Directors, with input from the Risk Management Committee, oversees our enterprise risk management process, including the risks associated with AI and cybersecurity threats.
Our incident response policies and procedures provide for prompt notice to key members of our management team and other company personnel of any incidents that could negatively impact the company’s systems or data. Our cybersecurity risk management program is managed by our CISO, whose security team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, architecture, and processes.
Our cybersecurity risk management program is managed by our CISO, whose security team is responsible for leading enterprise-wide cybersecurity strategy, policy, standards, controls, and processes. Cybersecurity risks are evaluated alongside other enterprise risks and inform prioritization of mitigation activities and resource allocation.
Experience Our CISO has 30 years of experience working in cybersecurity, IT, governance, risk management, regulatory compliance, and data protection and privacy program design and implementation. He previously served as the Chief Information Security Officer at multiple federal healthcare contractor organizations, and also served as the Director of IT Security at a publicly traded international satellite radio company.
He has served in CISO roles for over 15 years, including leadership positions at a publicly traded cloud services company and organizations supporting highly regulated federal healthcare programs, and previously served as Director of IT Security at a publicly traded international satellite radio company.
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Our cybersecurity efforts include the use of risk-based administrative, technical, and physical controls.
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Our CISO and other key personnel also frequently engage with key vendors, industry groups, and law enforcement communities as part of our continuing efforts to improve our cybersecurity program. Experience Our CISO has more than 30 years of experience in cybersecurity, IT, governance, risk management, regulatory compliance, and data protection and privacy program design and implementation.
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He is an IAPP Fellow of Information Privacy, holds a GIAC Law of Data Security and Investigations certification, and also holds approximately 40 security, privacy, and risk management certifications.
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For example, as we previously disclosed, in December 2021, an industry-wide zero-day vulnerability was discovered in the Apache Log4j logging library commonly used by many companies throughout the world that could enable attackers to take control of vulnerable servers.
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Although we did not identify any unauthorized access to our systems due to the Log4j vulnerability, out of an abundance of caution and because Log4j was leveraged widely in our environment, we decided it was in our customers’ best interest to take our systems offline for a short period of time until we could apply the security updates.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties Our corporate headquarters is located in San Mateo, California and consists of approximately 24,000 square feet of space, including approximately 12,000 square feet of space subject to a potential sublease to a third party, under a lease agreemen t which expires in 2029.
Biggest changeItem 2. Properties We lease approximately 24,000 square feet of office space in San Mateo, California under a lease agreement that expires in 2029, of which approximately 12,000 square feet is subleased to a third party and approximately 12,000 square feet is available for sublease.
We also lease space in multiple data centers located domestically in California, Arizona and Virginia, and data centers located internationally in Amsterdam, the Netherlands and Toronto, Canada. We lease all of our facilities and do not own any real property.
We also lease space in multiple data centers located in California, Arizona and Virginia, as well as in Amsterdam, the Netherlands and Toronto, Canada. We lease all of our facilities and do not own any real property. We may add or consolidate facilities from time to time as we grow our business and expand our Backblaze Storage Cloud platform.
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We may add facilities as we grow our employee base, expand our Backblaze Storage Cloud platform, and may also elect to consolidate the locations of the data centers we use as well as other operation centers from time to time to address our needs and strategy.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. Item 4. Mine Safety Disclosures Not applicable. 33 Table of Contents Part II
Biggest changeRegardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources, and other factors. 35 Table of Contents Item 4. Mine Safety Disclosures Not applicable. 36 Table of Contents Part II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures 33 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 34 Item 6. Reserved 34 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 35 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 51 Item 8.
Biggest changeItem 4. Mine Safety Disclosures 36 Part II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 37 Item 6. Reserved 37 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 58 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of February 28, 2025 , there were 12 sto ckholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these record holders.
Biggest changeHolders of Record As of March 3, 2026 , there were 10 sto ckholders of record of our common stock. Because many of our shares of common stock are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of beneficial owners of our common stock represented by these record holders.
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Recent Sales of Unregistered Securities Not applicable. Issuer Repurchases of Securities None. Use of Proceeds On November 20, 2024, we issued and sold an aggregate of 6,250,000 shares (the “Shares”) of our Class A common stock, par value $0.0001 per share (the “common stock”) at a public offering price of $5.60 per share (the “Follow-On Offering”).
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Recent Sales of Unregistered Securities None. Issuer Repurchases of Securities In August 2025, the Company’s Board of Directors approved a share repurchase program authorizing us to repurchase up to $10.0 million of our common stock through August 1, 2026. The program is intended to offset dilution resulting from stock-based compensation.
Removed
We also granted the underwriters an option to purchase up to an additional 937,500 shares of common stock at the same per-share price of $5.60 per share, which the underwriters exercised. We received net proceeds of $37.4 million from the offering, after deducting the underwriting discounts and commissions and other offering expenses.
Added
Repurchases are to be funded from the proceeds of employee stock option exercises and from employee contributions under the 2021 Employee Stock Purchase Plan.
Removed
All of the shares issued and sold in our Follow-On Offering were registered under the Securities Act pursuant to a registration statement on Form S-3 (File No. 333-279033), which was filed with the SEC on May 10, 2024 and declared effective by the SEC on May 13, 2024, and Prospectus Supplement filed with the SEC on November 21, 2024 pursuant to Rule 424(b)(5).
Added
The following is a summary of the repurchases of our common stock, by month, during the quarter ended December 31, 2025 (in thousands, except for share and per share information): Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs October 2025 47,405 $ 9.82 47,405 $ 8,350 November 2025 12,971 $ 5.72 12,971 $ 8,276 December 2025 54,104 $ 4.77 54,104 $ 8,017 Total 114,480 $ 6.97 114,480
Removed
There has been no material change in the planned use of proceeds from the offering from those disclosed in the Prospectus Supplement dated as of November 21, 2024 and filed with the SEC on November 21, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

94 edited+83 added−69 removed32 unchanged
Biggest changeWe maintain a full valuation allowance against our U.S. deferred tax assets because we have concluded that it is more likely than not that our deferred tax assets will not be realized. 42 Table of Contents Results of Operations The following table sets forth our consolidated statements of operations and comprehensive loss data for the periods indicated: For the Years Ended December 31, 2024 2023 (in thousands) Revenue $ 127,628 $ 102,019 Cost of revenue (1) 58,285 52,162 Gross profit 69,343 49,857 Operating expenses: Research and development (1) 42,098 39,527 Sales and marketing (1) 44,440 41,270 General and administrative (1) 29,094 26,965 Total operating expenses 115,632 107,762 Loss from operations (46,289) (57,905) Investment income 1,422 1,984 Interest expense, net (3,658) (3,792) Loss before provision for income taxes (48,525) (59,713) Income tax provision 6 — Net loss and comprehensive loss $ (48,531) $ (59,713) __________________ (1) Includes stock-based compensation expense as follows: For the Years Ended December 31, 2024 2023 (in thousands) Cost of revenue $ 1,907 $ 1,986 Research and development 11,277 9,218 Sales and marketing 9,505 8,801 General and administrative 5,939 5,172 Total stock-based compensation expense $ 28,628 $ 25,177 (1) Stock-based compensation expense includes restructuring charges of $2.5 million and $0.1 million , incurred during the years ended December 31, 2024 and 2023.
Biggest changeResults of Operations The following table sets forth our consolidated statements of operations and comprehensive loss data for the periods indicated: For the Years Ended December 31, 2025 2024 2023 (in thousands) Revenue $ 145,835 $ 127,628 $ 102,019 Cost of revenue 57,042 58,285 52,162 Gross profit 88,793 69,343 49,857 Operating expenses: Research and development 46,109 42,098 39,527 Sales and marketing 37,397 44,440 41,270 General and administrative 28,910 29,094 26,965 Total operating expenses 112,416 115,632 107,762 Loss from operations (23,623) (46,289) (57,905) Investment income 1,961 1,422 1,984 Interest expense (3,866) (3,658) (3,792) Loss before provision for income taxes (25,528) (48,525) (59,713) Income tax provision 84 6 — Net loss and comprehensive loss $ (25,612) $ (48,531) $ (59,713) The following table sets forth our consolidated statements of operations and comprehensive loss data expressed as a percentage of revenue for the periods indicated: (1) For the Years Ended December 31, 2025 2024 2023 Revenue 100 % 100 % 100 % Cost of revenue 39 46 51 Gross profit 61 54 49 Operating expenses: Research and development 32 33 39 Sales and marketing 26 35 40 General and administrative 20 23 26 Total operating expenses 77 91 106 Loss from operations (16) (36) (57) Investment income 1 1 2 Interest expense (3) (3) (4) Loss before provision for income taxes (18) (38) (59) Income tax provision — — — Net loss (18) % (38) % (59) % ________________ (1) Totals may not sum due to rounding. 46 Table of Contents The following table includes stock-based compensation, depreciation and amortization, and restructuring charges as they are included in the results of operations: For the Years Ended December 31, 2025 2024 2023 (in thousands) Stock-based compensation (1) Cost of revenue $ 1,557 $ 1,616 $ 1,986 Research and development 12,094 10,392 9,218 Sales and marketing 6,119 8,280 8,721 General and administrative 6,655 5,816 5,127 Total stock-based compensation $ 26,425 $ 26,104 $ 25,052 Depreciation and amortization (2) Cost of revenue $ 25,136 $ 27,761 $ 24,331 Research and development 170 262 261 Sales and marketing 117 190 189 General and administrative 70 115 131 Total depreciation and amortization $ 25,493 $ 28,328 $ 24,912 Restructuring charges Cost of revenue $ 115 $ 460 $ — Research and development 285 1,278 2,311 Sales and marketing 687 1,867 1,025 General and administrative 1,385 1,256 280 Total restructuring charges $ 2,472 $ 4,861 $ 3,616 ________________ (1) $2.5 million of stock-based compensation incurred during the year ended December 31, 2024 is classified as restructuring charges in the table above, including $0.3 million related to cost of revenue , $0.9 million related to research and development costs, $1.2 million related to sales and marketing costs, and $0.1 million related to general and administrative costs. $0.1 million of stock-based compensation incurred during the year ended December 31, 2023, which were related to sales and marketing and general and administrative costs, is classified as restructuring charges in the table above.
We define adjusted gross margin as gross profit, excluding stock-based compensation expense, depreciation and amortization and restructuring charges within cost of revenue, as a percentage of adjusted gross profit to revenue. We exclude stock-based compensation, which is a non-cash item, and restructuring charges because we do not consider it indicative of our core operating performance.
We define adjusted gross profit as gross profit, excluding stock-based compensation expense, depreciation and amortization and restructuring charges within cost of revenue. We define adjusted gross margin as a percentage of adjusted gross profit to revenue. We exclude stock-based compensation, which is a non-cash item, and restructuring charges because we do not consider it indicative of our core operating performance.
See Notes 2 and 3 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for more information on revenue from B2 Cloud Storage and Computer Backup arrangements. ARR does not have a standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies.
See Notes 2 and 3 to our consolidated financial statements included in this Annual Report on Form 10-K for more information on revenue from B2 Cloud Storage and Computer Backup arrangements. ARR does not have a standardized meaning and is therefore unlikely to be comparable to similarly titled measures presented by other companies.
Customers may purchase our B2 Cloud Storage on a capacity or committed contract basis for greater predictability. For prospective customers interested in Computer Backup, we offer a free 15-day trial and automatically start to back up all their files securely to our Backblaze Storage Cloud. Prospective customers can then choose to sign up on a per computer basis.
Customers may purchase our B2 Cloud Storage on a capacity or committed contract basis for greater predictability. For prospective customers interested in Computer Backup, we offer a free 14 -day trial and automatically start to back up all their files securely to our Backblaze Storage Cloud. Prospective customers can then choose to sign up on a per computer basis.
Our future capital requirements will depend on many factors, including our total revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the potential expansion of our data centers, the price at which we are able to purchase or lease infrastructure equipment, the impact of inflation on interest rates, the introduction of platform enhancements, and the continuing market adoption of our platform.
Our future capital requirements will depend on many factors, including our total revenue growth rate, the timing and the amount of cash received from customers, the expansion of sales and marketing activities, the timing and extent of spending to support development efforts, the potential expansion of our data center spaces, the price at which we are able to purchase or lease infrastructure equipment, the impact of inflation on interest rates, the introduction of platform enhancements, and the continuing market adoption of our platform.
We have not experienced a material impact on customer retention as a result of this price increase through December 31, 2024. Cost of Revenue and Gross Margin Cost of revenue consists of our expenses in providing our platform and cloud services to our customers.
We have not experienced a material impact on customer retention as a result of this price increase through December 31, 2025. Cost of Revenue and Gross Margin Cost of revenue consists of our expenses in providing our platform and cloud services to our customers.
We believe that adjusted EBITDA and Adjusted EBITDA Margin, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance by excluding certain items that may not be indicative of our business, results of operations, or outlook.
We believe that Adjusted EBITDA and Adjusted EBITDA Margin, when taken together with our GAAP financial results, provide meaningful supplemental information regarding our operating performance by excluding certain items that may not be indicative of our business, results of operations, or outlook.
Although B2 Cloud Storage is generally paid for by customers in arrears, we recognize revenue in the month these storage services are delivered, and consider this revenue recurring as customers are charged as long as their data is stored with us.
Although B2 Cloud Storage is generally consumption-based and paid for by customers in arrears, we recognize revenue in the month these storage services are delivered, and consider this revenue recurring as customers are charged as long as their data is stored with us.
International Expansion Whil e our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more th an 175 countries, with 26% of our total revenue originating outside of the United States for the year ended December 31, 2024. We believe international expansion may represent a meaningful opportunity.
International Expansion Whil e our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more th an 175 countries, with 28% of our total revenue originating outside of the United States for the year ended December 31, 2025. We believe international expansion may represent a meaningful opportunity.
Customers use us to support their AI workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and IT needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates.
Customers use us to support their AI workflows, help ensure the cyber-resilience of their organizations, streamline their media workflows, and enable a variety of other data-focused application and information technology (“IT”) needs. Through our blog and culture of transparency, we have built a community of millions of readers and brand advocates.
Our annual average revenue per user for B2 Cloud Storage and Computer Backup is calculated in the same manner based on the revenue and number of customers from our B2 Cloud Storage and Computer Backup solutions, respectively.
Our ARR per user for B2 Cloud Storage and Computer Backup is calculated in the same manner based on the revenue and number of customers from our B2 Cloud Storage and Computer Backup solutions, respectively.
As we seek to move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of these customers. Our customers use our Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 4 billion gigabytes of data storage under management.
As we move up-market, we expect our direct sales activities to increasingly contribute to the acquisition of customers like these. Our customers use our Backblaze Storage Cloud platform across more than 175 countries to store and protect their data with an aggregate of approximately 5 billion gigabytes of data storage under management.
The following table shows a summary of our cash flows for the periods presente d: For the Years Ended December 31, 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ 12,505 $ (7,350) Net cash (used in) provided by investing activities $ (6,131) $ 21,657 Net cash provided by (used in) financing activities $ 22,772 $ (8,842) Operating Activities Our largest source of operating cash is payments received from our customers.
Cash Flows The following table shows a summary of our cash flows for the periods presente d: For the Years Ended December 31, 2025 2024 2023 (in thousands) Net cash provided by (used in) operating activities $ 23,544 $ 12,505 $ (7,350) Net cash (used in) provided by investing activities $ (25,340) $ (6,131) $ 21,657 Net cash (used in) provided by financing activities $ (14,798) $ 22,772 $ (8,842) Operating Activities Our largest source of operating cash is payments received from our customers.
These expenses include operating in colocation facilities, network and bandwidth costs, and depreciation of our equipment and finance leased equipment in colocation facilities. Personnel-related costs associated with customer support and maintaining service availability, including salaries, benefits, bonuses, and stock-based compensation are also included.
These expenses include operating our data center spaces, network and bandwidth costs, and depreciation of our equipment and finance leased equipment in data center spaces. Personnel-related costs associated with customer support and maintaining service availability, including salaries, benefits, bonuses, and stock-based compensation are also included.
Key Components of Results of Operations Revenue We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to our customers primarily through either a consumption or committed contract basis or a subscription-based arrangement through B2 Cloud Storage and Computer Backup, respectively.
Key Components of Results of Operations Revenue We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to customers primarily through two pricing models: a consumption- or committed-contract basis for B2 Cloud Storage, and a subscription-based arrangement for Computer Backup.
As a result, our consolidated financial statements may not be comparable to companies that comply with new or revised accounting pronouncements as of public company effective dates.
Accordingly, our consolidated financial statements may not be comparable to those of public companies that comply with new or revised accounting pronouncements as of the public company effective dates.
Our Annual ARPU increased for B2 Cloud Storage and Computer Backup by 12% and 14%, respectively, for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to increased storage and our focus on adding larger customers.
Our Annual ARPU increased for B2 Cloud Storage and Computer Backup by 16% and 3% , respectively, for the year ended December 31, 2025 compared to the year ended December 31, 2024, primarily due to increased storage and our focus on adding larger customers.
We calculate our gross customer retention rate for a quarter by dividing (i) the number of accounts that generated revenue in the last month of the current quarter that also generated recurring revenue during the last month of the corresponding quarter in the prior year, by (ii) the number of accounts that generated recurring revenue during the last month of the corresponding quarter in the prior year.
We calculate the quarterly gross customer retention rates by dividing (i) the number of accounts that generated revenue in the last month of the current quarter that also generated recurring revenue during the last month of the corresponding quarter in the prior year, by (ii) the number of accounts that generated recurring revenue during the last month of the corresponding quarter in the prior year.
Our annual recurring revenue for B2 Cloud Storage and Computer Backup is calculated in the same manner as our overall annual recurring revenue based on the revenue from our Computer Backup and B2 Cloud Storage solutions, respectively.
Our ARR for each of B2 Cloud Storage and Computer Backup is calculated in the same manner as our overall ARR based on the revenue from our B2 Cloud Storage and Computer Backup solutions, respectively.
Interest Expense, net Interest expense, net consists primarily of interest related to our finance lease agreements and interest on the previously outstanding balance of our debt facility. Incom e Tax Provision Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business.
Interest Expense Interest expense consists primarily of interest related to our finance lease agreements, interest on the outstanding balance of our debt facility, and the amortization of debt issuance costs. 45 Table of Contents Incom e Tax Provision Provision for income taxes consists primarily of income taxes in certain foreign and state jurisdictions in which we conduct business.
December 31, 2024 2023 B2 Cloud Storage Net revenue retention rate (NRR) 123 % 122 % Gross customer retention rate 89 % 90 % Annual recurring revenue (in millions) $ 70.2 $ 57.6 Number of customers 107,616 97,842 Annual average revenue per user $ 645 $ 577 Computer Backup Net revenue retention rate (NRR) 109 % 100 % Gross customer retention rate 90 % 91 % Annual recurring revenue (in millions) $ 66.5 $ 60.0 Number of customers 417,845 431,745 Annual average revenue per user $ 159 $ 140 Total Company Net revenue retention rate (NRR) 116 % 109 % Gross customer retention rate 90 % 91 % Annual recurring revenue (in millions) $ 136.7 $ 117.6 Number of customers (1) 507,647 511,942 Annual average revenue per user $ 268 $ 228 (1) The number of customers for each of B2 Cloud Storage and Computer Backup solutions include customers that use both our B2 Cloud Storage and Computer Backup solutions.
December 31, 2025 2024 2023 B2 Cloud Storage Net revenue retention rate 111 % 123 % 122 % Gross customer retention rate 89 % 89 % 90 % Annual recurring revenue (in millions) $ 88.9 $ 70.2 $ 57.6 Number of customers 119,154 107,616 97,842 Annual average revenue per user $ 750 $ 645 $ 577 Computer Backup Net revenue retention rate 98 % 109 % 100 % Gross customer retention rate 91 % 90 % 91 % Annual recurring revenue (in millions) $ 65.5 $ 66.5 $ 60.0 Number of customers 402,589 417,845 431,745 Annual average revenue per user $ 163 $ 159 $ 140 Total Company Net revenue retention rate 105 % 116 % 109 % Gross customer retention rate 91 % 90 % 91 % Annual recurring revenue (in millions) $ 154.4 $ 136.7 $ 117.6 Number of customers (1) 503,866 507,647 511,942 Annual average revenue per user $ 307 $ 268 $ 228 ________________ (1) The number of customers for each of B2 Cloud Storage and Computer Backup solutions include customers that use both our B2 Cloud Storage and Computer Backup solutions.
One such example would be a business using B2 Cloud Storage for media asset management storage, which decides to also use the service as an origin store for content distribution; another would be a business that adopts B2 Cloud Storage for backup and archive purposes, which decides to also enable Object Lock for ransomware protection.
For example, a media company using B2 Cloud Storage for asset storage may later use it as an origin store for content distribution. Another example would be a business that adopts B2 Cloud Storage for backup and archive purposes, which decides to also enable Object Lock for ransomware protection.
We believe our high gross customer retention rates demonstrate that we provide a vital service to our customers, as the vast majority of our customers tend to continue to use our platform from one period to the next.
We believe our high gross customer retention rates demonstrate that we provide a vital service to our customers, as the vast majority of our customers tend to continue to use our platform from one period to the next. To calculate our gross customer retention rate, we take the trailing four-quarter average of our quarterly gross customer retention rates.
Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States, or GAAP, we provide investors with non-GAAP financial measures including adjusted gross margin, adjusted EBITDA, and adjusted EBITDA margin, each as defined below.
Non-GAAP Financial Measures To supplement our consolidated financial statements, which are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”), we provide investors with non-GAAP financial measures including adjusted gross profit (and margin), adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”), adjusted EBITDA margin, each as defined below.
Our Backblaze Storage Cloud provides a platform that is the foundation for our B2 Cloud Storage Infrastructure-as-a-Service (IaaS) offering and our Backblaze Computer Backup Software-as-a-Service (SaaS) offering. B2 Cloud Storage enables customers to store data, developers to build applications, and partners to expand their use cases.
Our Backblaze Storage Cloud provides a platform that is the foundation for our B2 Cloud Storage Infrastructure-as-a-Service (“IaaS”) offering, our B2 Overdrive high-performance IaaS offering, our Powered by Backblaze white label IaaS offering, and our Computer Backup Software-as-a-Service (“SaaS”) offering. B2 Cloud Storage enables customers to store data, developers to build applications, and partners to expand their use cases.
Contractual Obligations and Commitments Our commitments are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts. Operating lease commitments relate primarily to our rental of office space and co-location facilities.
Contractual Obligations and Commitments Our commitments are associated with contracts that are enforceable and legally binding and that specify all significant terms, including fixed or minimum services to be used, fixed, minimum or variable price provisions, and the approximate timing of the actions under the contracts.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition.
If we are unable to raise additional capital or generate cash flows necessary to expand our operations and invest in continued innovation, we may not be able to compete successfully, which would harm our business, results of operations, and financial condition. We maintain cash deposits in the United States, in Federal Deposit Insurance Corporation insured banks.
Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, com bined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers as of December 31, 2024, and our direct sales activities have historically supported us in acquiring larger customers.
Our direct sales activities, channel and technology partners, and referrals from our community of brand advocates, combined with our highly efficient and self-serve customer acquisition model have allowed us to attract over 500,000 customers as of December 31, 2025, and our direct sales activities have historically supported us in acquiring larger customers, including leading neocloud platforms via our Powered by Backblaze program.
Our subscription arrangements generally range in duration from one month to three years, for which we bill our customers up front for the entire period. Consumption-based revenue is variable and is related to fees charged for our customers’ use of our platform and is recognized as revenue in the period in which the consumption occurs.
Our subscription arrangements generally range in duration from one month to five years, for which we bill our customers up front for the entire period. Consumption-based arrangements are generally recognized based on fees charged for customer usage of our platform, with fees recorded as revenue in the period in which the consumption occurs.
General and administrative expenses also include costs related to legal and other professional services fees, sales and other taxes; depreciation and amortization; and an allocation of our general overhead expenses.
General and Administrative General and administrative expenses consist primarily of personnel costs for our accounting, finance, legal, security, human resources, and administrative support personnel and executives. General and administrative expenses also include costs related to legal and other professional services fees, sales and other taxes; depreciation and amortization; and an allocation of our general overhead expenses.
The amount of data stored in this cloud service can scale up and down as needed primarily on a pay-as-you-go basis or can be paid for on a capacity or committed contract basis for greater predictability. Backblaze Computer Backup automatically backs up data from laptops and desktops for businesses and individuals.
The amount of data stored in this cloud service can scale up and down as needed primarily on a pay-as-you-go basis or can be paid for on a capacity or committed contract basis for greater predictability. B2 Overdrive is built on the foundation of B2 Cloud Storage.
Our research and development expenses may fluctuate as a percentage of total revenue from period to period due to the timing and extent of these expenses. Sales and Marketing Sales and marketing expenses consist primarily of our investment in personnel costs.
Our research and development expenses may fluctuate as a percentage of total revenue from period to period due to the timing and extent of these expenses. Sales and Marketing Sales and marketing expenses include the cost of personnel focused on developing and executing selling and marketing activities.
Sales and marketing expenses also include investments related to advertising, marketing, our brand awareness activities, commissions paid to marketing partners, sales commissions paid to our employees that are recognized as expenses over the period of benefit, and an allocation of our general overhead expenses.
Sales and marketing expenses also include program investments related to advertising, demand generation, brand awareness activities, sales commissions paid to our employees, and an allocation of our general overhead expenses.
Our gross customer retention rate reflects only customer losses and does not reflect the expansion or contraction of revenue we earn from our existing customers.
Our gross customer retention rate reflects only customer losses and does not reflect the expansion or contraction of revenue we earn from our existing customers. We have maintained gross customer retention rates of approximately 90% across our revenue products as of both December 31, 2025 and December 31, 2024.
Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage net revenue retention r ate of 123% as of December 31, 2024. Fees from B2 Cloud Storage (consumption-based arrangements) are recognized as services are delivered.
Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage NRR r ate of 111% as of December 31, 2025.
We exclude depreciation expense of our property and equipment and amortization expense of capitalized internal-use software because these may not reflect current or future cash spending levels to support our business.
We exclude depreciation expense of our property and equipment and amortization expense of capitalized internal-use software because these may not reflect current or future cash spending levels to support our business. We believe adjusted gross profit (and margin) provides consistency and comparability with our past financial performance and facilitates period-to-period comparisons of operations.
Given the renewable nature of our business, we view ARR as an important indicator of our financial performance and operating results, and we believe it is a useful metric for internal planning and analysis.
Given the renewable nature of our business, we view ARR as an important indicator of our financial performance and operating results, and we believe it is a useful metric for internal planning and analysis. ARR is calculated by multiplying the monthly revenue from all B2 Cloud Storage and Computer Backup arrangements for the last month of a period by 12.
Financing Activities Cash provided by financing activities was primarily due to $37.4 million of proceeds from the Follow-On Offering. Cash provided of $7.5 million and $2.8 million were related to proceeds from the exercise of employee stock options and proceeds from our ESPP, respectively. Proceeds of $0.6 million related to the credit facility prior to its termination.
Cash provided by financing activities for the year ended December 30, 2024 was $22.8 million, resulting primarily from the following activity: • $37.4 million of net proceeds from the Follow-On Offering; • $7.5 million in proceeds from the exercise of employee stock options; • $2.8 million in proceeds from our ESPP; • $0.6 million in proceeds from our RCA debt facility prior to its termination.
We expect our investment in research and development to increase in absolute dollars for the foreseeable future as we continue to focus our research and development investments on adding new features to our platform, improving our cloud service offerings, and increasing the functionality of our existing features.
We expect our investments in research and development to increase in absolute dollars for the foreseeable future as we continue to add new features to our platform, integrate advanced technologies such as AI into our development lifecycle, further enhancing our cloud service offerings, and increase the functionality of our existing features.
Adjusted Gross Margin We believe adjusted gross margin, when taken together with our GAAP financial results, provides a meaningful assessment of our performance, and is useful to us for evaluating our ongoing operations and for internal planning and forecasting purposes.
A reconciliation of each of our non-GAAP financial measures to the most directly comparable financial measure calculated in accordance with GAAP is set forth below. 50 Table of Contents Adjusted Gross Profit and Adjusted Gross Margin We believe adjusted gross profit (and margin), when taken together with our GAAP financial results, provides a meaningful assessment of our performance, and is useful to us for evaluating our ongoing operations and for internal planning and forecasting purposes.
Cost of revenue also includes credit card processing fees, amortization of capitalized internal-use software development costs, and allocated overhead costs. We intend to continue to invest additional resources in our infrastructure to support the growth of our business.
Cost of revenue also includes credit card processing fees, amortization of capitalized internal-use software development costs, and allocated overhead costs. We plan to continue investing in our infrastructure to support the growth of our business. These investments include the purchase and expansion of infrastructure equipment (and related depreciation) as well as software development activities and associated amortization.
We plan to continue investing in sales initiatives, supplementing our self-serve model with a direct sales approach, expanding our partner ecosystem, driving our go-to-market strategies, building our lead generation and brand awareness, and sponsoring marketing events.
Sales and marketing expenses also reflect ongoing investments in sales initiatives, including supplementing our self-serve model with a direct sales approach, expanding our partner ecosystem, building our lead generation and brand awareness, and sponsoring marketing events.
As of December 31, 2024 and 2023 , our principal sources of liquidity were cash, restricted cash, and short-term investments of $54.9 million and $33.4 million, respectively.
As of December 31, 2025 and 2024 , our principal sources of liquidity were cash, cash equivalents, and marketable securities of $51.4 million and $54.9 million, respectively.
For example, in January 2025 we opened a data center region in Toronto, Canada and partnered with a leader in hybrid cloud solutions in Canada, to extend our market reach in Canada, as noted above. 38 Table of Contents Key Business Metrics We monitor the key business metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing investments, and assess operational efficiencies.
This agreement resulted in the launch of a new data center region in Canada in January 2025. Key Business Metrics We monitor the key business metrics set forth below to help us evaluate our business and growth trends, establish budgets, measure the effectiveness of our sales and marketing investments, and assess operational efficiencies.
Cash provided by operations increased during the year ended December 31, 2024, as compared to the same period in 2023 primarily due to our growing customer base, increased storage from new and existing customers and the price increase that began to take effect in October 2023, partially offset by increased expenditures related to managing and operating our co-location facilities, and increased spending in support of our expanded research and development and sales and marketing spending to support business growth.
Cash provided by operations increased during the year ended December 31, 2024, as compared to the same period in 2023 primarily due to our growing customer base, increased storage from new and existing customers and the price increase that began to take effect in October 2023, partially offset by increased expenditures related to managing and operating our co-location facilities, and increased spending in support of our expanded research and development and sales and marketing spending to support business growth. 55 Table of Contents Investing Activities Cash used in investing activities during the year ended December 31, 2025 was $25.3 million, resulting primarily from the following activity: • Purchases of marketable securities of $39.5 million; • Cash payments of $7.6 million related to the development of internal-use software for adding new features and enhanced functionality to our platform; • Cash payments of $4.7 million related to capital expenditures in support of infrastructure deployments to support our growing business; and • Proceeds of $26.3 million from the maturity of our marketable securities.
For the year ended December 31, 2023, cash used in operating activities was $7.4 million, which resulted from a net loss of $59.7 million, adjusted for non-cash charges of $52.8 million and a net cash outflow of $0.4 million from changes in operating assets and liabilities.
For the year ended December 31, 2025, cash provided by operating activities was $23.5 million, which resulted from a net loss of $25.6 million, adjusted for non-cash charges of $58.5 million and net cash outflow of $9.3 million from changes in operating assets and liabilities.
The calculation of the key metrics discussed below may differ from other similarly titled metrics used by other companies, securities analysts, or investors.
The calculation of the key metrics discussed are calculated under the same method for B2 Cloud Storage, Computer Backup, and total Company. The below metrics may differ from other similarly titled metrics used by other companies, securities analysts or investors.
Additionally, customers receive email and chat support for free, but can also opt for enhanced support tiers for an additional cost, which provide dedicated customer support contacts and 24/7 response. • Use Case Expansion: B2 Cloud Storage customers may adopt the service for one business need, but can expand their use cases as their business evolves.
Additionally, customers receive email and chat support for free, but can also opt for enhanced support tiers for an additional cost, which provide dedicated customer support contacts and 24/7 response. • Use Case Expansion: Customers often begin using our products for a single need and expand over time.
We believe that by offering an easy to use, cost-effective, performant cloud storage solution, and thereby substantially reducing the cost, complexity and frustration of storing, using, and protecting data, we can empower customers to focus on their core business operations.
We believe that by offering a cloud storage solution optimized for price-to-performance at scale, engineered for efficiency, and priced predictably, we substantially reduce the cost, complexity and frustration of storing, using, and protecting data, and we empower customers to focus on their core business operations.
This cloud backup service offers easily understood primarily flat-rate pricing to continuously back up a virtually unlimited amount of data. We believe that focusing on storage use cases and promoting an open cloud ecosystem allows us to integrate well with a broad range of partners.
Computer Backup automatically backs up data from laptops and desktops for businesses and individuals. This cloud backup service offers easily understood primarily flat-rate pricing to continuously back up a virtually unlimited amount of data. 38 Table of Contents We focus on specialized storage and an open cloud ecosystem that integrates with a broad range of partners.
See Note 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding restructuring charges . (2) As of December 31, 2024, we included foreign exchange loss in the reconciliation of net loss to Adjusted EBITDA.
See Note 16 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for additional information regarding our restructuring plans and associated charges.
The following table presents a reconciliation of gross margin, the most directly comparable financial measure stated in accordance with GAAP, to adjusted gross margin, for each of the periods presented: For the Years Ended December 31, 2024 2023 (in thousands, except percentages) Gross profit $ 69,343 $ 49,857 Adjustments: Stock-based compensation 1,616 1,986 Depreciation and amortization 27,761 24,330 Restructuring charges 460 — Adjusted gross profit $ 99,180 $ 76,173 Gross margin 54 % 49 % Adjusted gross margin 78 % 75 % Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA as net loss adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, net, investment income, income tax provision, realized and unrealized gains and losses on foreign currency transactions, impairment of long-lived assets, restructuring charges, legal settlement costs, and other non-recurring charges.
The following table presents a reconciliation of gross profit, the most directly comparable financial measure stated in accordance with GAAP, to adjusted gross profit (and margin), for each of the periods presented: For the Years Ended December 31, 2025 2024 2023 (in thousands, except percentages) Gross profit $ 88,793 $ 69,343 $ 49,857 Adjustments: Stock-based compensation (1) 1,557 1,616 1,986 Depreciation and amortization (2) 25,136 27,761 24,330 Restructuring charges 115 460 — Adjusted gross profit $ 115,601 $ 99,180 $ 76,173 Gross margin 61 % 54 % 49 % Adjusted gross margin 79 % 78 % 75 % ________________ (1) $0.3 million of stock-based compensation expense for the year ended December 31, 2024 is classified as restructuring charges in the table above, as these charges were incurred as part of our 2024 Restructuring Plan.
Our Gross Customer Retention Rate decreased by 1% for both B2 Cloud Storage and Computer Backup for the year ended December 31, 2024 compared to the year ended December 31, 2023. Annual Recurring Revenue We define annual recurring revenue (“ARR”) as the annualized value of all B2 Cloud Storage and Computer Backup arrangements as of the end of a period.
Annual Recurring Revenue We define annual recurring revenue (“ARR”) as the annualized value of all B2 Cloud Storage and Computer Backup arrangements as of the end of a period.
Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results.
Because of these limitations, when evaluating our performance, you should consider Adjusted EBITDA alongside other financial performance measures, including our net loss and other GAAP results. The following table presents a reconciliation of net loss, the most directly comparable financial measure stated in accordance with GAAP, to Adjusted EBITDA for each of the periods presented.
As a result, we expect our general and administrative costs to increase over time, as our business continues to grow. Investment Income Investment income consists primarily of interest earned on our cash balances and investments.
While we expect general and administrative expenses to increase in absolute dollars as our business scales, we anticipate that these costs will decline as a percentage of revenue over time. Investment Income Investment income consists primarily of interest earned on our cash, cash equivalents and investments in marketable securities.
The following table presents a reconciliation of net loss, the most directly comparable financial measure stated in accordance with GAAP, to Adjusted EBITDA for each of the periods presented: For the Years Ended December 31, 2024 2023 (in thousands, except percentages) Net loss $ (48,531) $ (59,713) Adjustments: Depreciation and amortization 28,328 24,912 Stock-based compensation (1) 26,104 25,052 Interest expense and investment income 2,236 1,808 Income tax provision 6 — Foreign exchange loss (2) 32 123 Non-recurring professional services — 411 Restructuring charges (3) 4,861 3,616 Adjusted EBITDA $ 13,036 $ (3,791) Adjusted EBITDA Margin 10 % (4) % 47 Table of Contents (1) During the three months ended December 31, 2024 , $2.5 million of stock-based compensation expense is classified as restructuring charges in the table above, as it was incurred as part of our restructuring program.
For the Years Ended December 31, 2025 2024 2023 (in thousands, except percentages) Net loss and comprehensive loss $ (25,612) $ (48,531) $ (59,713) Adjustments: Depreciation and amortization (1) 25,493 28,328 24,912 Stock-based compensation (2) 26,425 26,104 25,052 Interest expense and investment income, net 1,905 2,236 1,808 Income tax provision 84 6 — Foreign exchange loss 451 32 123 Litigation settlement costs 288 — 411 Impairment loss on long-lived assets (3) 258 — 232 Restructuring charges 2,472 4,861 3,616 Adjusted EBITDA $ 31,764 $ 13,036 $ (3,559) Net loss and comprehensive loss margin (18) % (38) % (59) % Adjusted EBITDA Margin 22 % 10 % (3) % ________________ (1) $0.1 million of depreciation and amortization expense for the year ended December 31, 2025 is classified as restructuring charges in the table above, as these charges were incurred as part of our 2025 Restructuring and Transformation Plan.
Additionally, cash used of $12.5 million was related to the development of internal-use software for adding new features and enhanced functionality to our platform, and $1.7 million was used on capital expenditures in support of infrastructure deployments to support our growing business.
Cash used in investing activities during the year ended December 31, 2024 was $6.1 million, resulting primarily from the following activity: • Purchases of marketable securities of $38.1 million; • Cash payments of $12.5 million related to the development of internal-use software for adding new features and enhanced functionality to our platform; • Cash payments of $1.7 million related to capital expenditures in support of infrastructure deployments to support our growing business; • Proceeds of $45.7 million from the maturity of our marketable securities; and • Proceeds of $0.5 million from the disposition of certain hard drives.
We may invest in our operations internationally to reach new customers by expanding in targeted key geographies where we believe there are opportunities for significant return on investment.
We may invest in our operations 41 Table of Contents internationally to reach new customers by expanding into targeted key geographies where we believe there are opportunities for significant return on investment. In January 2025, for example, we entered into an agreement with a leading hybrid cloud solutions provider in Canada to extend our market reach in this region.
B2 Cloud Storage offers Snapshots that allow customers to create moment-in-time versions of their data, and we also allow customers to keep their data in multiple geographic regions, both of which provide more customer value.
For example, our Computer Backup cloud service offers Enterprise Control, which provides larger customers with greater administrative management for an additional cost. B2 Cloud Storage offers Snapshots that allow customers to create moment-in-time versions of their data, and also allows customers to retain data in multiple geographic regions, both of which provide additional flexibility and value.
We believe that our existing cash, cash equivalents, and short-term investments, together with cash provide d by operations, will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months. Our material cash requirements include contractual and other obligations under our finance and operating lease agreements, and purchase commitments as discussed below.
We believe that our existing cash, cash equivalents, and marketable securities, together with cash provided by operations and our revolving credit facility, will be sufficient to support our working capital and capital expenditure requirements for at least the next 12 months.
No stock-based compensation related to restructuring charges was recognized during the three months ended December 31, 2023. During the years ended December 31, 2024 and 2023, $2.5 million and $0.1 million, respectively, of stock-based compensation is classified as restructuring charges in the table above.
(2) A nominal amount, $2.5 million, and $0.1 million, of stock-based compensation expense for the years ended December 31, 2025 , 2024 and 2023, are classified as restructuring charges in the table above, as these charges were incurred under our restructuring plans.
The net cash outflow from changes in operating assets and liabilities was primarily the result of a $2.5 million decrease in operating lease liabilities, a $1.4 million decrease in 49 Table of Contents accrued expenses and other current liabilities, which decreased primarily due to our accrued compensation and due to timing of payment of our expenses, a $0.4 million increase in other assets, a $0.4 million increase in prepaid and other current assets and a $0.3 million decrease in accounts payable, offset in part by a $4.5 million increase of deferred revenue, which increased due to our growing customer base and upfront collections from our customers.
The net cash outflow from changes in operating assets and liabilities was primarily due to a $4.5 million decrease in operating lease liabilities reflecting the timing of lease payments, a $2.7 million increase in other assets primarily related to employee sales commissions, a $1.7 million increase in accounts receivable driven by higher revenue from enterprise customers and the timing of billings and related collections, and a $1.5 million increase in prepaid expenses and other current assets primarily due to higher unbilled revenue.
Critical Accounting Estimates Our consolidated financial statements and the related notes thereto included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP. The preparation of consolidated financial statements also requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, costs and expenses, and related disclosures.
For more information, see Note 10 and Note 11 to our consolidated financial statements located elsewhere in this Annual Report on Form 10-K. Critical Accounting Estimates Our consolidated financial statements and related notes included elsewhere in this Annual Report on Form 10-K are prepared in accordance with GAAP.
The weighted average discount rate for finance leases was 11.9% as of December 31, 2024. For further information on our future minimum commitments on our operating leases, s ee “Item 8. Financial Statement and Supplementary Data — Note 11. Commitments and Contingencies” to our consolidated financial statements.
S ee Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for our future minimum commitments related to our finance leases. The weighted average discount rate for finance leases was 12.6% as of December 31, 2025.
Research and Development Research and development expenses consist primarily of our investment in personnel costs, costs related to technical operations, and an allocation of our general overhead expenses. We capitalize the portion of our software development costs that meets the criteria for capitalization.
We capitalize the portion of our software development costs that meets the criteria for capitalization.
Some of these investments, including costs of infrastructure equipment (including related depreciation) and expansion, and software development costs and related amortization are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period.
Because these costs are often incurred ahead of revenue generation, delays in realizing anticipated revenue or fluctuations in the timing of revenue could adversely affect our gross margin from period to period.
Cash provided was partially offset by cash used of $19.5 million for principal payments on our finance lease agreements and lease financing obligations related to hard drives and other infrastructure equipment used in our co-location facilities, and $0.9 million related to repayment of principal on financed insurance premiums. We used $4.7 million to repay, in full, our line of credit.
See Note 12 to our consolidated financial statements located elsewhere in this Annual Report on Form 10-K for additional information ; • Principal payments on our finance lease agreements and lease financing obligations of $19.5 million related to hard drives and other infrastructure equipment used in our data center spaces; • $4.7 million related to the repayment, in full, of the RCA debt facility; • $0.9 million related to repayment of principal on financed insurance premiums; and • $0.4 million related to payments of offering costs in connection with our Follow-On Offering.
Cash used in financing activities was primarily due to principal payments on our finance lease agreements and lease financing obligations of $19.5 million related to hard drives and other infrastructure equipment used in our co-location facilities, $4.5 million repayment of principal on our line of credit, $1.5 million related to repayment of principal on financed insurance premiums, offset in part by $4.7 million in proceeds from the exercise of employee stock options, $4.5 million from our lease financing transactions, $4.3 million in proceeds from our credit facility, $2.3 million in proceeds from our ESPP, and $0.9 million of proceeds from insurance premium financing.
Financing Activities Cash used in financing activities for the year ended December 31, 2025 was $14.8 million, resulting primarily from the following activity: • Principal payments on our finance lease agreements and lease financing obligations of $18.2 million related to hard drives and other infrastructure equipment used in our data center spaces; • $2.0 million related to repurchases of our Class A common stock; • $1.9 million related to payments on taxes for net share settlements of vested equity awards, resulting in a retirement of related equity awards; • $0.6 million related to payments of debt issuance costs; • $5.3 million in proceeds from the exercise of employee stock options; and • $2.6 million in proceeds from our ESPP.
In the fourth quarter of 2023, we refined our customer definition to include end-user customers that purchase through a reseller. Annual Average Revenue Per User We define annual average revenue per user (“Annual ARPU”) as the annualized value for the average revenue per customer.
This population makes up substantially all of our user base. Annual Average Revenue Per User We define annual average revenue per user (“Annual ARPU”) as the annualized value for the average revenue per customer.
Income Tax Provision For the Years Ended December 31, 2024 2023 Change % Change (in thousands, except percentages) Income tax provision $ 6 $ — $ 6 — % Our provision for income taxes was relatively flat for the year ended December 31, 2024, compared to the same period in 2023.
Income Tax Provision Our provision for income taxes was immaterial for the years ended December 31, 2025 and 2024.
We also generally enter into leases for our facilities for data centers and office space under non-cancelable operating leases w ith various expiration dates. See “Item 8. Financial Statement and Supplementary Data — Note 10. Finance Leases and Lease Financing Obligations” for our future minimum commitments related to our finance leases.
Operating Leases We lease data center spaces and office space under non-cancelable operating leases with various expiration dates. See Note 10 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further information on our future minimum commitments on our operating leases.
In the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. We plan to continue to enter into finance lease agreements for purchase of infrastructure equipment and may also be required or choose to seek additional equity or debt financing.
In the future, we may enter into arrangements to acquire or invest in complementary businesses, products, and technologies. To support our up-market transformation, we expect to increase our capital expenditures, continue leveraging finance lease agreements for infrastructure investments and, when strategic opportunities arise, we may supplement our revolving credit facility with additional equity or debt funding to accelerate enterprise-focused growth.
Non-cash charges primarily consisted of $24.9 million for depreciation and amortization expense and $25.2 million for stock-based compensation expense.
Non-cash charges primarily consisted of $26.4 million for stock-based compensation expense, $25.6 million for depreciation and amortization expense, noncash lease expense on operating leases of $4.9 million, and a $1.0 million impairment loss on right-of-use assets primarily related to our restructuring activities.
By adding more partners and deepening our relationships with them, we expand our use cases and drive new customer acquisition. Expansion Within Existing Customers Our future success will depend in part on our ability to increase usage and adoption of our solutions with existing customers.
This disciplined approach is designed not only to acquire new customers efficiently but also to cultivate long-term relationships that turn customers into brand advocates, partners, and sources of referrals. Expansion Within Existing Customers Our future success will depend in part on our ability to increase usage and adoption of our solutions with existing customers.
Operating Expenses The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation.
This update resulted in a reduction in depreciation expense of approximately $5.2 million for the year ended December 31, 2025 and is anticipated to result in further reduction of approximately $2.8 million for the year ending December 31, 2026. 44 Table of Contents Operating Expenses The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation.
Costs incurred during the year ended December 31, 2023 relate to severance and benefits for the employees impacted by the restructuring plan initiated in 2023. Liquidity and Capital Resources Since inception, we have financed operations primarily through payments received from our customers and, in later periods from the net proceeds from our initial public offering.
(3) $1.0 million and $0.9 million of impairment loss on right-of-use assets for the years ended December 31, 2025 and 2024, respectively, are classified as restructuring charges in the table above, as these charges were incurred as part of our restructuring plans. 52 Table of Contents Liquidity and Capital Resources General Since inception, we have financed operations primarily through payments received from our customers and, in later periods from the net proceeds from our public offerings.
Our ARR incre ased by $6.5 million, or 11%, for Comp uter Backup for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the price increase. 40 Table of Contents Number of Customers We define a customer at the end of any period as a distinct account, as identified by a unique account identifier, that has paid for our cloud services, which makes up substantially all of our user base.
ARR for Computer Backup experienced a slight decline of $1.0 million compared to the prior year, but continues to serve as a stable source of recurring revenue, supported by multi-year subscription commitments and increased demand from business environments. 43 Table of Contents Number of Customers We define a customer at the end of any period as a distinct account, as identified by a unique account identifier, that has paid for our cloud services, including end-user customers that purchase through a reseller.
We generate revenue primarily from our two cloud services: • Backblaze B2 Cloud Storage, which enables customers to store data for a wide range of use cases, and for developers to embed our platform into their applications.
Our two primary cloud services are B2 Cloud Storage and Computer Backup, which together enable customers to store, use, and protect their data across a broad variety of use cases. • B2 Cloud Storage enables customers to store and manage data for use cases ranging from backup and archive to application storage, ransomware protection, and AI/ML workloads.
Our ARR increased by $12.6 million, or 22% for B2 Cloud Storage for the year ended December 31, 2024 compared to the year ended December 31, 2023, primarily due to the price increase and increased storage from new and existing customers.
Changes to recurring revenue may result from the expansion of our offerings to our existing customers, as well as new customer acquisition and the timing of customer renewals. Our ARR increased by $18.7 million for B2 Cloud Storage as of December 31, 2025 compared to December 31, 2024, representing 27% growth.
Under the RCA, as amended in December 2023, the maximum borrowing available was reduced from $30 million to $20 million and advances on the line of credit will bear monthly interest at a variable rate equal to, at our discretion, (a) the average SOFR plus 2.75%, or (b) the base rate.
Borrowings under the facility bear interest at a variable rate, at our discretion, equal to either (a) the average Secured Overnight Financing Rate (“SOFR”) plus 3.25% or (b) a base rate, as defined in the Credit Agreement, plus 2.25%.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+4 added−3 removed2 unchanged
Biggest changeFurther, prior to its termination, our credit facility with City National Bank, was at a variable interest rate tied, at our discretion, to SOFR or to the prime rate most recently announced by City National Bank, assuming such rate is greater than 3.0%. 51 Table of Contents Inflation Risk The inflation rate has recently been falling by some measures after reaching a nearly three decade high in 2022, but interest rates remain high and may continue to increase our operating costs and our interest expense.
Biggest changeNo borrowings were outstanding under the Revolving Credit Facility as of December 31, 2025. Inflation Risk The inflation rate has recently been falling by some measures after reaching a nearly three decade high in 2022, but interest rates remain high and may continue to increase our operating costs and our interest expense.
We continue to monitor the impact of inflation in order to minimize its effects through focusing on upmarket revenue growth, productivity improvements, and cost reductions. However, we may not be able to sufficiently offset our increases costs through these measures, for competitive reasons or because of other factors influencing our operations.
We continue to monitor the impact of inflation in order to minimize its effects through focusing on upmarket revenue growth, productivity improvements, and cost reductions. However, we may not be able to sufficiently offset our increased costs through these measures, for competitive reasons or because of other factors influencing our operations.
Due to the short-term nature of these investments and as all investments are generally intended to be held-to-maturity, we do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial condition.
Due to the short-term nature of these investments and as all investments are generally intended to be held-to-maturity, we do not believe that an increase or decrease in interest rates of 100 basis points would have a material effect on our operating results or financial position.
There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition. Foreign Currency Exchange Rate Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiary is the U.S. dollar.
There can be no assurance that future inflation will not have an adverse impact on our operating results and financial condition. Foreign Currency Exchange Rate Risk Our reporting currency and the functional currency of our wholly owned foreign subsidiaries is the U.S. dollar.
Interest Rate Risk Our exposure to interest rate risk primarily relates to our finance lease arrangements and lease financing obligations for obtaining hard drives and related equipment for our data center operations, which may be impacted by interest rate changes for any future agreements we enter in to.
Interest Rate Risk Our exposure to interest rate risk primarily relates to our finance lease arrangements and lease financing obligations for obtaining hard drives and related equipment for our data center operations, which may be impacted by interest rate changes for any future agreements we enter into. We also earn interest income generated by cash, cash equivalents and marketable securities.
The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk. As such, we gen erally do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure, and intend to hold all investments to their respective maturities.
As such, we gen erally do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. We intend to hold all investments to their respective maturities.
We also earn interest income generated by cash, cash equivalents and short-term investments held at City National Bank. As of December 31, 2024, we had cash and cash equivalents and short-term investments balances of $45.8 million and $9.1 million, respectively. Interest-earning instruments carry a degree of interest rate risk.
As of December 31, 2025, we had cash and cash equivalents and short-term investments balances of $29.2 million and $22.2 million, respectively. Interest-earning instruments carry a degree of interest rate risk. The primary objective of our investment activities is to preserve principal while maximizing income without significantly increasing risk.
Removed
Our sales are currently denominated in the U.S. dollar and we have minimal foreign currency risk related to our revenue. I n addition, most of our operating expenses are denominated in the U.S. dollar, resulting in minimal foreign currency risks. The volatility of exchange rates depends on many factors that we cannot accurately forecast.
Added
In addition, borrowings under our Revolving Credit Facility bear interest at variable rates, at our discretion, equal to either (a) the average SOFR plus 3.25% or (b) a base rate, as defined in the credit agreement, plus 2.25%. Accordingly, our future interest expense will fluctuate with changes in market interest rates.
Removed
In the future, if our international sales increase or more of our expenses are denominated in currencies other than the U.S. dollar, our operating results may be adversely affected by fluctuations in the exchange rates of the currencies in which we do business.
Added
It is uncertain how inflation and interest rates will be impacted in 2026 by the imposition of tariffs and other trade-related actions or inactions. World 58 Table of Contents events, such as the Russia-Ukraine War, the joint United States-Israeli strikes on Iran in February 2026 and other conflicts in the Middle East, continue to negatively affect the global economy.
Removed
At this time we do not, but we may in the future, enter into derivatives or other financial instruments in an attempt to hedge our foreign currency exchange risk. It is difficult to predict the impact hedging activities could have on our results of operations. 52 Table of Contents
Added
Our revenue and operating expenses are denominated in U.S. dollars and are not subject to foreign currency exchange rate risk. Our exposure to foreign currency exchange rate risk relates to certain finance lease purchase option obligations that are denominated in foreign currencies, including the British pound, Canadian dollar, and Euro.
Added
Fluctuations in exchange rates result in remeasurement gains or losses and affect the U.S. dollar value of these lease liabilities. As the we expand our international operations and enter into additional foreign currency-denominated lease arrangements, our exposure to exchange rate fluctuations may increase. We do not currently use derivative instruments to hedge foreign currency risk. 59 Table of Contents

Other BLZE 10-K year-over-year comparisons