Backblaze’s cloud storage business continued to expand in the third quarter of 2026, while revenue from its computer backup product declined slightly. The company reported total revenue of $46.7 million for the quarter ended September 30, up 26 percent year over year. Cloud storage accounted for $30.5 million, or about 65 percent of revenue, and grew 47 percent. Backup storage revenue was $16.2 million, down 2 percent.
The results underscore a shift in Backblaze’s business toward providing storage capacity for artificial intelligence infrastructure companies and AI builders. The company’s cloud storage offering is increasingly used to hold data for customers’ workloads, while its established computer backup business is growing more slowly.
Storage demand and customer growth
Backblaze co-founder and CEO Gleb Budman said the company added a record number of net new self-service customers for its B2 cloud storage product in the quarter, four times the number added in the same period a year earlier. The number of customers generating more than $50,000 in annual recurring revenue rose 57 percent year over year to 254.
Backblaze also signed four large agreements spanning AI and core workloads. Budman said three were expansions by existing AI builders, while one was a new agreement for a core workload. Each of the three expanding customers more than doubled its original commitment within a year, he said. The company also closed four agreements worth more than $500,000 in annual recurring revenue.
Backblaze reported a net revenue retention rate of 115 percent for cloud storage, indicating that revenue from the existing customer base increased as customers expanded their spending. The corresponding rate for computer backup was 94 percent, reflecting lower revenue from that customer group. Budman said AI customers’ storage requirements were exceeding even their own high expectations.
The company serves AI infrastructure providers that offer Backblaze storage capacity to their customers, as well as AI builders using storage directly. Backblaze operates its cloud storage on premises for neocloud AI infrastructure companies, a model that requires it to acquire and deploy storage hardware. Budman said hardware allocations were secured and shipments were ahead of schedule. Development for a large neocloud customer announced earlier in the year was completed ahead of plan, and the customer began loading data several months before Backblaze’s early-2027 expectation.
Budman also said CoreWeave had begun ramping its use of the Backblaze platform. Backblaze expects CoreWeave to contribute more revenue in the fourth quarter and through 2027, with the ramp continuing until the middle of next year. The company described the arrangement as a committed contract with minimum ramps and said it saw no signs of risk or concern.
Profitability, investment and outlook
Backblaze recorded a GAAP net loss of $2.4 million in the third quarter, compared with a $3.8 million loss in the same period last year. For the nine months ended September 30, cash flow from operations was $22.8 million, up from $14.2 million a year earlier. Adjusted free cash flow was $1.9 million, compared with negative $9.5 million in the prior-year period. Cash, cash equivalents and marketable securities totaled $230.2 million at quarter-end.
Expanding capacity will require substantially more capital spending. Budman said Backblaze expected capital expenditure to increase by roughly a factor of 10 over the course of the next year or so. The company did not provide a specific spending total in the reported comments.
For the fourth quarter, Backblaze forecast revenue of $50 million, plus or minus $200,000, representing 32.3 percent year-over-year growth at the midpoint. It expects B2 revenue growth to accelerate to approximately 60 percent in the quarter and has an outlook for growth above 40 percent for B2 in 2027.
Backblaze raised its 2026 revenue outlook by $5 million to $178 million, plus or minus $200,000. At the midpoint, that would be 22.1 percent above 2025 revenue. CFO Marc Suidan said the neocloud capacity storage market is expected to reach $14 billion by 2031. That projection points to the opportunity Backblaze sees in the market, but the company’s near-term results will depend in part on delivering the capacity and customer ramps behind its new agreements.
