Backblaze Inc. saw its shares surge on Tuesday, climbing $2.96 to $7.60, following the company's upward revision of its 2026 revenue and adjusted EBITDA margin forecasts. The cloud-storage provider reported first-quarter revenue of $38.7 million, a 12% increase year-over-year, with its B2 Cloud Storage segment posting a robust 24% gain to $22.4 million.
AI Demand Drives Growth
The company attributed the strong performance to surging demand from artificial intelligence customers, who now represent a growing portion of its business. Backblaze's AI customer base expanded 76% year-over-year, and the number of clients generating over $50,000 in annual recurring revenue climbed 51%. Annual recurring revenue reached $158.2 million, reflecting solid income from established contracts.
Outlook Raised
Backblaze now expects 2026 revenue in the range of $161.5 million to $163.5 million, up from its prior guidance of $156.5 million to $158.5 million. The company also raised its adjusted EBITDA margin forecast to 23% to 25%, compared with the previous range of 19% to 21%. Adjusted EBITDA excludes interest, taxes, depreciation, and amortization, and is a non-GAAP measure.
CEO Gleb Budman highlighted the strong performance, noting that "B2 growing 24% year over year." He cited two recent AI customer deals: one with an AI training-data firm and another with a generative video player, which together contributed approximately $1.5 million in annual contract value.
Competitive Landscape
While Backblaze's B2 Cloud Storage segment is gaining momentum, its core Computer Backup business remains under pressure. Revenue from Computer Backup slipped 2% to $16.2 million, and net revenue retention for that segment fell to 95% from 103% a year ago. The company faces stiff competition from cloud giants such as Amazon Web Services, Google Cloud Platform, and Microsoft Azure, which boast larger budgets, broader product portfolios, and extensive sales channels.
Financial Performance
Backblaze reported a GAAP net loss of $6.1 million for the quarter, an improvement from the $9.3 million loss in the same period last year. The company noted that quarterly performance remains unpredictable, with factors such as customer churn, data usage, equipment purchases, and capacity planning all influencing results. Margins could be impacted if capacity is overbuilt, while underbuilding might affect service quality or revenue.
CFO Marc Suidan explained that the $5 million increase in the full-year revenue forecast was roughly split between pricing and packaging adjustments and core business momentum. Effective May 1, Backblaze raised pay-as-you-go storage rates and eliminated API transaction fees, with the revenue impact depending on customer usage patterns.
Despite the competitive challenges, Backblaze's latest quarter presents a clearer growth narrative centered on AI storage demand. The company's B2 segment is accelerating, guidance is improving, and operating leverage is helping to narrow losses even as spending increases to meet higher demand.
