Backblaze Q3 2026: B2 Cloud Storage Revenue Jumps 47%

Backblaze (Nasdaq: BLZE) reported third-quarter 2026 revenue of $46.7 million on 2 November 2026, up 26% year over year, as B2 Cloud Storage revenue climbed 47% to $30.5 million. Adjusted EBITDA reached $15.2 million, or 33% of revenue, against $8.4 million and 23% a year earlier, and the company raised full-year 2026 revenue guidance to between $177.8 million and $178.2 million.

Context — why Backblaze's Q3 2026 results matter now

The quarter shows a company rotating away from its legacy backup business toward AI capacity storage. Computer Backup revenue fell 2% to $16.2 million, and Computer Backup ARR slipped 2% to $63.9 million. B2 Cloud Storage ARR rose 53% to $126.8 million, so the growth engine and the declining line now point in opposite directions.

Management framed the shift around AI workloads. Chief executive Gleb Budman said B2 revenue growth accelerated to 47% from 28% a year earlier, which he attributed to broad-based momentum across the customer base.

The company also signed four large agreements in the period. Three covered AI workloads and one covered a core workload, and one was a $4 million expansion with an AI builder. Backblaze did not disclose the counterparties or contract terms for the other three.

Cash generation changed alongside the mix. Operating cash flow for the nine months ended 30 September 2026 was $22.8 million, against $14.2 million a year earlier. Adjusted free cash flow swung to $1.9 million from negative $9.5 million.

Backblaze closed the quarter with $230.2 million in cash, cash equivalents and marketable securities, after a $201 million convertible notes offering. The notes carry a 0% coupon due 2031, and the company entered capped call transactions alongside them. Management said proceeds will fund capital expenditure tied to contracted growth and general corporate purposes.

Data — what the numbers show

The income statement improved on both the top and bottom lines. Gross profit was $29.8 million, or 64% of revenue, against $23.1 million and 62% a year earlier. Net loss narrowed to $2.4 million from $3.8 million, and net loss per share fell to $0.04 from $0.07.

Non-GAAP net income was $6.7 million, compared with $1.9 million in the third quarter of 2025. Total ARR reached $190.7 million, up 29% year over year.

Metric	Q3 2026	Q3 2025
Revenue	$46.7M	~$37.1M
B2 revenue	$30.5M	~$20.7M
Computer Backup revenue	$16.2M	~$16.5M
Adjusted EBITDA margin	33%	23%
Net loss per share	$0.04	$0.07

Retention told a mixed story. Net revenue retention was 105%, down from 107%, with B2 NRR at 115% versus 116% and Computer Backup NRR at 94% versus 96%. Gross customer retention was 91% in both periods.

Customer counts moved sharply. Net new B2 self-serve additions hit a record, four times the prior-year level, and customers contributing more than $50,000 in ARR grew 57% to 254. The report did not give absolute self-serve customer totals.

The AI storage peer set includes pure-play infrastructure names, but the report names no competitor figures, so no direct margin or growth comparison can be drawn from it.

Analysis — what it means for markets and sectors

The mix shift matters because B2 carries the growth and the AI narrative while Computer Backup funds the base. A 47% B2 growth rate against a 2% decline in backup means total company growth depends increasingly on AI-linked consumption, which is more cyclical than subscription backup seats.

The $201 million convertible at a 0% coupon is the balance-sheet story. It adds cash for capital expenditure against contracted growth without near-term interest cost, and the capped calls limit dilution above a ceiling the company did not disclose.

The counter-argument is retention. Total NRR fell two points to 105%, and Computer Backup NRR at 94% means existing backup customers are spending less over time. Growth is coming from new logos and large AI contracts rather than expansion inside the installed base.

Positioning follows the guidance raise. Management lifted full-year revenue guidance from a $172.0 million to $174.0 million range to $177.8 million to $178.2 million, and adjusted EBITDA margin guidance from 27% to 29% up to 30% to 31%. That combination, higher revenue and higher margin, is what long holders are underwriting.

Exposure runs to AI infrastructure and data-center capacity names, since Backblaze positions itself as the capacity tier for AI builders. Storage hardware and networking suppliers tied to that buildout are the read-through, though the report names none.

Outlook — what to watch next

For the fourth quarter of 2026, Backblaze guided revenue to between $49.8 million and $50.2 million, adjusted EBITDA margin to 32% to 34%, and basic weighted average shares outstanding to 63.6 million to 63.8 million. Those are the company's expectations, not reported results.

The next catalyst is the fourth-quarter report, which the company did not date. The conference call for this quarter took place on 2 November 2026, and an archive is posted on the investor relations site.

Investors will watch whether B2 growth holds near 47% and whether Computer Backup stops declining. A second trigger is deployment of the convertible proceeds into capital expenditure for contracted growth, which would show up in adjusted free cash flow, positive at $1.9 million for the nine months to date.

The WEKA collaboration and the B2 MCP Server are the two product bets to track. Both target AI storage integration, and neither carried disclosed revenue contribution in the quarter.

Frequently Asked Questions

What does Backblaze's Q3 2026 earnings report mean for retail investors?

It shows a faster-growing, more profitable business than a year ago, with revenue up 26%, adjusted EBITDA margin at 33% and a narrowed net loss. The caveat is concentration: B2 Cloud Storage now drives the growth while Computer Backup declines, so results depend on AI-related storage demand continuing. The report is informational and contains no recommendation.

Why did Backblaze's net revenue retention fall to 105%?

The company reported NRR of 105% for Q3 2026, down from 107% a year earlier, with B2 at 115% versus 116% and Computer Backup at 94% versus 96%. Computer Backup below 100% means existing customers spent less than the prior year. Backblaze changed its NRR methodology in the first quarter of 2026 to a single-quarter calculation and recast prior periods.

What happens next for Backblaze after the $201 million convertible notes offering?

Backblaze issued 0% convertible senior notes due 2031 with related capped call transactions, and said proceeds will fund capital expenditure supporting contracted growth plus general corporate purposes. The company did not disclose the conversion price or cap level. Deployment into infrastructure would appear in capital spending and adjusted free cash flow, which was $1.9 million for the nine months ended 30 September 2026.

Bottom Line

Backblaze's AI storage bet is working: B2 grew 47% while margins expanded, though a shrinking backup base now carries more of the risk.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. CFD trading carries high risk of capital loss.