Backblaze's AI Bet Pays Off, Fueling Profit and Beating Forecasts

SAN FRANCISCO, CA – May 04, 2026 – Backblaze, Inc. (Nasdaq: BLZE) today announced first-quarter financial results that surpassed expectations, signaling that its strategic focus on the artificial intelligence market is yielding significant returns. The independent cloud storage provider reported strong revenue growth, a substantial improvement in profitability, and raised its financial outlook for the full year, driven by accelerating adoption of its B2 Cloud Storage platform by AI companies.

The company posted total revenue of $38.7 million for the quarter ending March 31, 2026, a 12% increase year-over-year. The standout performer was its B2 Cloud Storage segment, which saw revenue climb 24% to $22.4 million, while its traditional Computer Backup business remained flat. More notably, the company achieved a non-GAAP net income of $2.7 million, a stark reversal from a non-GAAP net loss of $1.8 million in the same quarter last year.

"We are seeing growing traction with AI customers," said Gleb Budman, co-founder and CEO of Backblaze, in the company's press release. "As AI models shift from text to multimodal, the volume of data required to train and operate them grows exponentially, and the need for storage that is performant, open, and cost-efficient at scale has never been greater. Backblaze is emerging as a compelling storage platform of choice for the AI economy."

The AI Growth Engine

Backblaze's quarterly success story is intrinsically linked to the explosive data demands of the artificial intelligence sector. The company reported a remarkable 76% year-over-year increase in its AI customer count. This growth is not just in numbers but in value; two new AI clients, one specializing in training data and another in generative video creation, jointly represent approximately $1.5 million in new annual contract value.

Industry experts note that AI workloads, particularly in areas like generative video and multimodal model training, require storing and rapidly accessing petabytes of data. This creates a significant challenge for developers who must balance performance with cost. Backblaze appears to be carving out a crucial niche by addressing this pain point directly. Its platform is proving attractive to AI firms that find the complex pricing tiers and high data egress fees of larger cloud providers, or hyperscalers, to be prohibitive.

For these customers, the appeal lies in a combination of high-throughput performance and predictable, low-cost pricing. Backblaze's architecture is designed to efficiently handle the massive datasets needed to feed power-hungry GPU clusters for AI training, preventing costly bottlenecks. This focus on performance per dollar, coupled with an open platform that avoids vendor lock-in, allows AI startups and enterprises to build more flexible and cost-effective infrastructure.

An Independent Cloud Thriving Against Giants

In a market dominated by Amazon Web Services, Microsoft Azure, and Google Cloud, Backblaze's results demonstrate the viability of independent, specialized cloud providers. The company has positioned itself as a compelling alternative by focusing on a core competency—cloud object storage—and competing aggressively on price and simplicity.

Its B2 Cloud Storage is often cited as being significantly more affordable than comparable services from hyperscalers, with storage costs that can be up to five times lower. A key differentiator is the company's approach to data transfer fees. While major providers are known for charging substantial "egress fees" for moving data out of their cloud, Backblaze offers a generous free egress allowance, a policy that resonates strongly with companies that need to move data frequently between services, a common practice in AI development.

This strategy is underpinned by a commitment to an "open cloud" ecosystem. With its S3-compatible API, Backblaze ensures seamless integration with a wide array of popular AI tools and platforms, including Hugging Face and MLflow. This allows customers to easily pair its storage with best-in-class compute providers like Vultr or CoreWeave, creating a custom-built infrastructure stack without being locked into a single vendor's ecosystem.

A Sharpened Go-to-Market Strategy

Backblaze's growing success with larger clients suggests a maturing go-to-market strategy. The company reported that annual recurring revenue (ARR) from customers spending over $50,000 annually grew 72% year-over-year, with the number of such customers increasing by 51%. This upmarket momentum is a key part of its plan to scale revenue.

Bolstering this effort is the recent appointment of Anuj Kumar as Chief Revenue Officer. Kumar brings a wealth of experience from senior leadership roles at enterprise technology giants like Rackspace, VMware, Red Hat, and NetApp. His hiring signals a clear intent to deepen the company's penetration into the enterprise sector and further capitalize on the AI opportunity by building a more robust and sophisticated sales operation.

Coinciding with this strategic push, Backblaze recently adjusted its pricing model. Effective May 1, the company increased its pay-as-you-go storage rates but eliminated API transaction fees. This move appears designed to simplify billing and offer greater cost predictability for customers with high-access workloads, such as AI and media applications, while funding continued investment in platform performance and features.

Charting a Path to Profitability

Beyond the top-line growth, the quarter's most significant financial story is the marked improvement in profitability. The company's net loss narrowed to $6.1 million from $9.3 million a year ago. However, investors are paying close attention to the non-GAAP figures, which exclude non-cash expenses like stock-based compensation and provide a clearer view of underlying operational performance.

The swing to a non-GAAP net income of $2.7 million is a milestone that demonstrates growing operational leverage. This was accompanied by a substantial increase in Adjusted EBITDA, which reached $10.1 million, representing a 26% margin, up from 18% in the prior-year quarter. This progress highlights effective cost management alongside strong revenue growth in its high-margin B2 business.

Reflecting confidence in this sustained momentum, Backblaze raised its full-year 2026 guidance. The company now expects revenue to be between $161.5 million and $163.5 million, up from its previous forecast. It also raised its expected Adjusted EBITDA margin to a range of 23% to 25%, reinforcing the narrative that its strategic focus on the AI data storage market is building a foundation for sustainable, profitable growth.