Q3 2022 Backblaze Inc Earnings Call
[music].
Good afternoon, and welcome to the back place third quarter 2022 earnings call.
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Please note that this event is being recorded today.
I would now like to turn the conference over to James Kisner. Please go ahead Sir.
Thank you.
Good afternoon, and welcome to <unk> third quarter of fiscal year 2022 earnings call.
On the call with me today are glib Butman co founder CEO and chair person of the board.
Frank petrol.
<unk> financial officer.
They back please will discuss the financial results that were distributed earlier this afternoon.
Statements on this call include forward looking statements about our future financial results.
Use of our IPO proceeds.
Results from our new products.
<unk> announcements in sales and marketing initiatives.
Our ability to compete effectively acquire new customers and retain and expand our business with existing customers.
Hire and retain key personnel.
And effectively manage our growth.
These statements are subject to risks and uncertainties that could cause our actual results to differ materially.
Including those described in our risk factors that are included in our Form 10-Q for the quarter ended September 32022, and our other financial filings.
You should not rely on our forward looking statements as predictions of future events.
Okay.
All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we.
We undertake no obligation to update them, except as required by law.
Yeah.
Our discussion today will include non-GAAP financial measures. These non-GAAP measures should be considered in addition to and not as a substitute for our GAAP results.
Reconciliation of GAAP to non-GAAP results can be found in our earnings release, which was furnished with our form 8-K filed today with the SEC.
You can also find a slide presentation related to our comments in the webcast, which will also be posted to our investor relations page after the call.
Before I turn the call over to Glenn I would like to mention that in the latter portion of our call is in prior calls we will be addressing questions from investors that we gathered to the sei technologies platform.
I would now like to turn the call over to Glib glib.
Thank you James and thanks to all of you for joining US we delivered a strong third quarter with 27% year on year revenue growth.
<unk> cloud storage business grew 48%.
The rate of the broader cloud infrastructure market. According to synergy research.
And B to cloud storage now makes up 40% of total revenue.
Our computer backup business grew a healthy 17%.
As a reminder for those on the call it may be newer to the story.
<unk>, the leading independent cloud for data storage and our mission is to make it astonishingly easy to store protect and use data.
We had two cloud service offerings that operate on our storage cloud platform.
First our beat to cloud storage service provides developers.
Personnel and others cloud storage that is dramatically easier to use and has won the price of Amazon Web services and.
And others.
And second our computer backup service provides unlimited cloud backup for laptops and desktops for companies and individuals.
While the computer backup business from maybe the larger of our two cloud service offerings at the moment, our strategy and increasing investments center around capitalizing on the approximately 100 billion total 2025 market opportunity for <unk> cloud storage.
Based on projections from IDC and company analysis.
I want to highlight three items on this call.
First our strategy of investing behind our <unk> cloud storage offering as demonstrated with <unk> now representing 40% of total revenue.
Second.
Our strategy of targeting developers as a key market is working with nine of our top 20 accounts now being developers and the data stored by developers with its growing by 80% over the course of the prior year.
Third our partnership strategy has been important and we are now also scaling a channel partnership approach with major national retailers.
As we stated during our IPO roadshow, both of our cloud services are an important aspect of backwards.
However, our investment thesis behind scaling be too cheap.
Pursue the large storage cloud market.
<unk> continues to become an ever larger part of our overall business, reaching 40% of overall revenue today.
Since <unk> has a higher growth rate in our computer backup business and b to become the majority of the business. It drives the growth rate of the whole company.
A brief update on the developers we are continuing to cultivate our relationships with developers, which we define as customers that are using <unk> cloud storage as the storage backend for their SaaS e-commerce or other business.
We saw strong growth on Btu with developers with paid data storage up over 80% year on year in Q3.
Our developer evangelism team has been busy the last few months attending and presenting at a number of conferences, including coupon and San Francisco Spice World in Austin Infotech live in Las Vegas, and the storage developer conference in three months.
On October 31, we held our technology day with thousands of registrants and multiple interactive sessions aimed at helping developers easily and affordably succeed in the cloud.
As another proof point of our progress we were very pleased that just last week <unk> was named to Inc. Business media for the inaugural power partner list, which honors beta be organizations across the globe that have proven track records supporting entrepreneurs and helping startups grow.
There were a number of exciting developments for Btu cloud storage since we reported Q2.
In addition to the modest Reacceleration in growth we experience, we continued to make significant progress in expanding our partner program.
Partnerships are very important to us and as we discussed on our last call a significant amount of btu revenue well more than one third has come through our partners.
Given their increasing strategic importance to <unk> I'd like to take a moment to highlight the different types of partnerships back ways of building.
We talked before about how we work with our technology partners.
Now we have started a major push to succeed with channel partners, which are resellers and distributors that sell products to end customers.
Each new channel partner can be a sales force multiplier, increasing the number of salespeople promoting our cloud services to customers.
A key development was the launch of our online partner portal, a dedicated place for partners to accident Youll registration discounts support and self service promotional resources.
Several new national retailers and distributors have recently begun to sell B to reserve.
And we have also continued to expand our partner team.
Channel partners have shown enthusiasm for our new platform offering <unk> reserve, which is our predictable capacity based pricing program for Btu.
Victor Reserve also includes premium support.
And use of our recently launched Universal data migration program, which makes it easy and free for eligible customers to move data from a wide variety of sources.
While only in its first full quarter of availability and still relatively small we are pleased to see <unk> reserve show a nice initial ramp in demand with revenue increasing each month of Q3.
In other partner news, we announced MSP 360 customers can now protect their backup data with backwards.
Object block this delivers a new level of ransomware protection for one of our oldest and most significant alliance partners MSP 216.
Not familiar ransomware refers to when hackers take control of individual our business data and demand a ramp them to release the data.
Object lock ensures data cannot be diluted over a specified period of time by bad actors.
More importantly by staff.
Pending this functionality enables MSP $3 60 to help solve a major need for customers.
Resulting in more data protected with be too.
Additionally, we integrated <unk> with elements.
Cloud based media asset management provider.
Media and entertainment remains a vertical that we focus on given their high level of data storage needs.
Also recently attended <unk> in New York in October and we're pleased to see continued growth in mind share and interest from companies in this industry.
We believe continued success with media and entertainment customers will help drive future <unk> growth.
I'd like to short couple of new customers that highlight how <unk> has helped customers succeed.
First a developer customer in the information security space.
Everyday web threat analysis service Urls scan that Io run.
700000, plus website scans seeking out malicious content, capturing over three and a half million files, an artifact in the process.
With the commitment to <unk>.
The results of website scans in perpetuity.
Company needed capacity and performance that would scale with growth.
Unfortunately, they are original solution couldnt keep up.
When it came time to upgrade the euro scan dot Io team evaluated a fusion solutions, including <unk> and AWS.
Storage pricing was not an immediate concern.
But it was the unknown transfer costs and other hidden fees with AWS that were of concern for the business.
Euro scan brio chose <unk> cloud storage for speed and consistent response times.
Ease of integration feel deal.
The backwards compatible API made integrating their workflow with backwards b, two incredibly simple, enabling tens of thousands of daily users.
Simultaneously access files without needing a CDN.
Now you're asking about I O easily managers retrieving and permanently storing billions of files on a lean stacked that scales effortlessly with their daily data growth.
Budgeting is simple and performance is right, where you're all skin got IL whatsapp with customers reporting a great user experience.
<unk> gives the team absolute peace of mind.
Freedom to focus on their mission protecting businesses and individuals from malicious websites.
Now I'd like to highlight a btu reserve customer.
Digital fitness companies pitcher had an ambitious production schedule in huge quantities of raw footage coming and constantly.
And was rapidly running out of room on their Synology network attached storage device.
To free up space locally and streamline production workflows, they set out to find a solution.
Insurance system integrator recommended a single solution <unk> reserve.
Our capacity based cloud storage solution, which includes pre transaction calls no delete penalties and three data migration.
In addition to being cost effective <unk> reserve offered predictable billing and freed picture from worrying about future storage growth.
Pictures adoption of <unk> has already paid off.
Now their archiving, new furniture directly to back with Btu, freeing up local storage space and keeping costs low.
They fit your team can access all of the files in BT cloud storage from anywhere and with the peace of mind that their content is safely stored in the cloud.
Before I turn the call over to Frank I'd like to welcome Robert fit to <unk> as our first chief Human Resources Officer.
Robert has over 20 years of experience in human resources.
Backwards has received numerous awards for the strength of its culture diversity and leadership.
We believe this strength is a source of competitive advantage that allows us to hire develop and retain the best talent in the world.
Excited to have Robert on board to help us maintain and evolve that culture as we continue to scale the business.
I would also like to congratulate Brian Beach on being promoted to Chief Technical Officer CTO.
Placing Brian Wilson, who will be continuing with <unk> in a senior engineering role in advisory capacity to the CTO.
Dr Beach has over 40 years of engineering experience.
<unk> playing a key part in the development of the DVR at Eagle and holding senior engineering goals and Silicon graphics and Hewlett Packard.
And he has played a key role in the <unk> technology platform for nearly a decade.
I'll now turn the call over to Frank petrol, who can review the financial results of the quarter in more detail.
Thanks.
Thank you Glenn and thanks, everyone for joining us today.
Turning to our Q3 financial results unless otherwise noted I will be referring to non-GAAP metrics and growth rates mentioned are year on year.
We remain focused on two key metrics revenue growth and adjusted EBITDA. Adjusted EBITDA is defined as earnings before interest taxes, depreciation amortization stock based compensation expense and other expenses or benefits that are noncash or that we deem nonrecurring.
Our Q3 revenue totaled $22 1 million, an increase of 27% year on year.
<unk> contributed sales of $8 8 million, reflecting 48% growth year on year.
Peter backup revenue totaled $13 1 million, reflecting 17% growth year on year in Q3, the two cloud storage represented 40% of total revenue continuing its upward trend.
Computer backup continue to benefit from the price increase we implemented in Q3 2021.
Recall since most backup customers are on an annual or two year subscriptions. This increase which was from roughly $6 per month to $7 per month, we will continue to phase in as they renew across the next two years at the higher price, but at this point the vast majority of that can Peter backups.
Descriptions have transitioned to the new pricing.
The amount of growth on the computer backup business driven by pricing began to wane in quarter three since we are past the one year anniversary of the increase by.
By yearend, we expect approximately 10% of currently active computer backup subscriptions to be on pre increased pricing.
Turning to retention metrics, we call we track two key metrics net revenue retention or NR and gross customer retention.
These metrics are defined in more detail in our earnings release and filings, but basically and our or is the growth of the recurring revenue for initial set of customers.
Gross customer retention measures retention of customers.
With metrics, our trailing four quarter averages.
Total company NR was 114% an increase of four points year over year.
With <unk> cloud storage at 123% and computer back up at 108%.
Gross customer retention was 91% overall consistent with the prior year with 90% for <unk> cloud storage and 90% for computer backup.
Working down the P&L adjusted gross margin, which excludes noncash expenses of depreciation amortization and stock based compensation was 76%.
Versus 74% in Q3 2021 cheaper.
Chiefly due to lower credit card fees, but also leverage on data center at fixed cost.
We do not guide gross margin explicitly but we continued to see gross margin in the mid seventies and the near term.
Adjusted EBITDA was a loss of $1 9 million or a negative 8% of revenue down from a positive 800000 or 5% in quarter three of 2021.
Year over year. This reflects planned expenses from higher investments in both sales and marketing and R&D as we continue to increase investment to pursue the large market potential for <unk> cloud storage as well as increased G&A expenses chiefly related to public company costs.
As for the favorability versus our guidance. This primarily reflects higher revenue in Q3, and moderately lower sales and marketing investments than planned.
Turning to the balance sheet cash short term investments, including restricted cash totaled $80 million as of September 32022.
There's $88 million as of the end of Q2, reflecting a slower rate of cash usage than the June quarter.
Now I'd like to provide our outlook for quarter four.
For the fourth quarter, we expect revenue to be in the range of $22 five to $22 $9 million.
We expect Q4 adjusted EBITDA margin.
Minus 14% to minus 10%.
We expect a Q4 2022 basic share count of approximately $32 five to $34 5 million.
This implies full year 2022 revenue guidance of $84 seven $2 $85 1 million and an adjusted EBITDA margin of minus 12% minus 11%.
Our prior guidance call for 2022 revenue of $83 million to $86 million and an adjusted EBITDA margin of minus 17% to minus 13%.
While we're still early in the planning process for 2023, and we won't be providing guidance for next year until we report Q4 'twenty two resolved in February 2023, we'd like to provide some color about what we're seeing.
As yuval undoubtedly heard from other companies who've reported there are some challenges in the macro environment and we're not completely immune to those.
Now our results year to date have been strong or not for example, seeing as much benefit to date as we expected from our growth initiatives.
Additionally, as I mentioned, a moment ago, we're also seeing a decreasing benefit from our price increase and computer backup from earlier this year.
When considering these factors we believe the top line revenue forecast of approximately $100 million for 2023 is appropriate.
We also currently expect to adjust operating expense growth to reflect our anticipated revenue growth and the impact of the macroeconomic environment.
I will now pass the call back to go out for closing comments.
Thank you Frank.
To add to Frank's comments, while we are mindful that the post pandemic inflation, we're experiencing is unprecedented and our clients' budgets are fluid. The good news is that data grows every day.
And our low cost solutions can thrive in every economic cycle.
I'll close our prepared remarks by just reminding everyone that <unk> been in business for 15 years, and we've grown through multiple economic cycles.
As we've already seen in Q4, there are great opportunities to grow to optimize and to invest in the future success of the business and we're still early in our life as a public company with funds to pursue our $100 billion market opportunity.
To our stakeholders.
Employees suppliers partners customers and investors. Thank you for your continued trust.
Operator, we're now ready to take questions from analysts.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question here will come from <unk> Kidron with Oppenheimer. Please go ahead.
Thanks, Hey, guys nice quarter.
I guess, it's good to see the growth.
Customer retention, especially considering the macro environment.
But perhaps Frank can talk about the.
Net dollar retention rate and how do we think about that going forward on a blended basis, it's been growing golf, but that's more a reflection of.
The higher mix of <unk> from quarter to quarter.
Visually the net dollar retention into beta has been declining for the last three quarters. So how do we think about the blended <unk> going forward.
For the company.
Thank you each time, but I would take first.
Our NRI number for <unk> for example is still very strong and we're pleased that the overall MLR for the company has been increasing it's up four points from the prior year and it is by the price increase but some other items as well.
We don't forecast going forward, but our MLR is going to be.
We did talk earlier in the year about some of the headwind problems.
So our data growth and Thats reflected in the MLR and remember that our the way it's calculated truck how hard from a year ago compared to now so all of the new programs that have added new customers and revenue isn't really in this number at this time.
Okay. So how do I think about the contribution of our cloud replication and data migration program all of those.
<unk> you for your topline next year, how do you think about the impact there.
They will impact us that will impact us positively, it's adding to the net revenue retention and so we're.
And that's definitely coming.
Okay, and then from a strategic standpoint glib, maybe this one is for you.
<unk> hundred million dollars framework to try and provide us for 'twenty threes, a bit short relative to where expectations are now.
You seem to be delivering.
While either are not delivering so.
Help me understand your underlying assumptions there and.
And with that as your target or preliminary target.
How do I think about your investment in Opex.
<unk>.
Are you right now rather have one point of margin over one point of growth or what is your preference here right now.
Yeah.
Yes, it's a good question.
So I'll say a couple of things I mean.
Still strength that we're still early in the 2023 planning process right. So so I want to be a little careful about getting too far ahead of our skus. So we wanted to provide some sense of where.
What we were seeing and what we were.
What we were seeing for 2023, but our plan for the year is not done.
In terms of the investments we are actively going through a process that.
Is evaluating what investments do we want to accelerate what investments do we want to decelerate. So that we are actively going through that process in terms of the strategic approach between up a point of growth and a point of margin I would say that we're still viewing ourselves as a growth company pursuing this $100 billion opportunity. So if if a.
Or was it pure 100% one for one trade I would take the point of growth versus the point of margin.
Obviously in businesses.
Quite that that.
Linear to each other but.
We're still focusing on growth.
Having said that we're cognizant of the macro environment we're in.
As we said from the very beginning when we were going.
The IPO path.
We still want to be a growth at a reasonable price.
Model overall, so we're not trying to turn the whole company upside down.
We continue to focus on EBITDA as an important metric.
Taking growth over it but as the choice.
Okay.
I agree with that Glenn and <unk>. The only thing I would say is that we look at all of our investments individually and we have accelerated some of those investments and we've moderated others. Because we are looking at what is that return overall and even in those that we've moderated we're still evaluating and we might.
Continue to accelerate that later, so remember at that point in January when we started to invest from our IPO proceeds we stood up a lot of programs simultaneously and so we're kind of monitoring them on some of them were very pleased with and some of them we need to give it more time or.
We think of them.
Alright, good luck guys. Thanks.
Thank you Peter.
Our next question will come from Erik <unk> with JMP Securities. Please go ahead.
Yes, thanks for taking the question.
First off.
Can you give us a sense of the hiring plan. So how are they.
The beginning of the year I think youre looking to add 180, you dialed. It back some can you give us any sense of where you would expect head count to come out as we exit the year.
Yes.
This was asked in the prior quarter also and it Hasnt changed our hiring plans right now are between 70 and 80% of our original hiring.
Hiring plans to partially due to two things one is on the calibration of some of our investments.
We decided that hey, we should see that they have a better return than we than just adding at this point seminars due to difficulties in the market are finding the best people. So thats always calibrate that a little bit and some of that is from efficiencies that we've garnered where we didn't need as many people ask me you originally thought.
Execute some programs.
Okay and then.
Can you discuss.
Channel partners that you're working with maybe.
How many partners, you're working with now or how many youre.
Planning to have partnerships with by the end of the year.
Yes, Thanks, Eric.
So okay.
As you know we have a number of different types of partners, we have technology partners and within the technology partners that we have alliance partners and developer partners. We also have a mezz piece and that's really what we're really standing up now and kind of announcing as the channel partner side of that the core focus has recently been on.
Getting these large national retailers and distributors stood up.
And several of them are now set up and selling back please be to reserve, which we're very excited about.
There.
A follow on program to get more of the smaller channel partners and those obviously, we would need more of but the first step for US was getting getting these major national ones set up so we're excited by that because each.
Each one of those have obviously many salespeople.
The force multiplier for our sales team as they go out and talk to all of their customers.
Very good thank you.
Okay.
Our next question will come from Bruce Goldfarb with Lake Street Capital markets. Please go ahead.
Hey, Glenn Frank Congratulations on Great results and thanks for taking my call.
Thanks for taking my questions.
Any.
Change or any timeline.
Goal for reaching adjusted EBITDA breakeven is that changed or is it.
Yeah.
We haven't set a specific goal for that.
You took note of the fact that our adjusted EBITDA has improved greatly.
Our minus two 8% in this quarter was the best that we've had.
The early days of going public.
We're on a good trend for that and we are calibrating our.
Spend in our Opex and so on.
And looking at the different investments so that we don't it collapses get ahead of our skis and our investment. So we are still doing that I think we've been good stewards of that you've seen us go from a minus 15% this year in quarter, one to a minus <unk> eight so I think we've been making good progress there.
Okay, and then it sounds like Youre temporary in some of your.
Spend just because are you are you actually seeing the weakness in either.
The install base and either for small and midsized companies or are you just kind of anticipating.
Lower demand.
So just to comment a little bit the data ground in or be too.
Customers have been good.
It is not due to something like that what we're saying is that in some of our investment they have in China as well as we had hoped so that has calibrated to spend less in those programs. We are spending more and other program just not one for one on the dollars because those other programs are doing.
Well, so that's really what we're trying to say and overall, causing an expense.
<unk> expense.
Expense growth is moderating.
And Bruce I. Appreciate the question, maybe just add one one tiny bit of color to is that.
Some of what you've heard us talk about in terms of Beecher reserve in the partner program and in our investments and accelerating some of those efforts are because we're excited about those opportunities and seeing those same with the developer.
So.
Like Frank said some of the programs are performing.
Well some of them, we need more time or we need to optimize them better.
There is some trade off there, but we are we are some of the reason we highlight b to reserve in the partner program and develop reference are because we're we're excited about those.
Great. Thank you that's all my questions and congratulations on the great results.
Thank you. Thank you.
Our next question will come from Zach Cummins with B Riley Securities. Please go ahead.
Yes, hi, good afternoon, thanks for taking my questions and congrats on the solid results.
I guess just building upon some of your initiatives that have had success there and can you talk about the ways that you can try to further accelerate some of the momentum that you've seen with your development customer base.
Sure. Thanks, Thanks for that.
So.
Last quarter, we talked about big Cartel as an example customer case study.
Where they started off on Amazon than they added.
<unk> they kept Amazon as a backup but they made us the primary in that enabled them to double their durability and availability and then decrease their bill by half.
In a market where customers are increasingly being concerned about the macroeconomic environment.
There are more companies looking for ways to continue to maintain high quality of their offerings, while reducing costs. So we believe that that is an opportunity for us.
We've stood up a developer evangelism team and that team has been very active.
As we mentioned a little bit in the script, but.
They've also been publishing block goes there are many interesting ways in which developers can leverage back please be too that they're that they're highlighting and demonstrating on our board and so they are there.
From a ground up perspective, there they're building up the awareness based amongst developers.
The offering and giving them additional tools to enable them to use back we'd be too we've also.
Just stood up a technical documentation teams, making the API documents for developers.
Yes, more robust and then and that's on the on the kind of the bottoms upside wood from developers and then there is a top down side of it.
Reaching out to the CEO .
The vps.
<unk>, who.
So often bring in backwards b two based on the affordability.
The impact for those companies and so we have programs that the sales team and the marketing teams are working on those as well.
Okay.
Understood. That's helpful. And then just one final question for me.
With the current environment in many of these companies are looking for ways to extract savings.
Have you seen any pickup in inbound interest for companies that are looking for lower cost data storage I'm just curious if any of those dynamics have changed.
Yes, I mean, we continue to see that as a as an important consideration.
Both in terms of the low cost and also the predictability of those those costs.
The two examples that I highlighted for customers.
In the prepared remarks.
Chose backwards b to for a number of reasons.
Including performance and compatibility with their offerings and the ability to access it from our cloud as opposed to having beyond parameters cetera, but certainly affordability play.
Played into those those conversations and those perspectives and the predictability of the pricing also did as well.
Got it well thanks for taking my questions and best of luck with the rest of the year.
Thank you.
Okay.
Yes.
Alright.
Thanks for all those great questions from the sell side analyst community I would now like to re question is that coming from investors.
There were submitted on the same platform.
I think it was invested submitted questions and will haney, who looks like they have already been answered.
To address some of the more popular ones right now.
The first one is for glib.
Are there any current large contracts in the works, we're expecting future customers that would be a boost to long term profitability.
Yeah.
Thanks, Jim and perfect I wanted to say, thank you to the investors many of whom are our customers and so many of the questions I imagine as in the past have been for people who are very familiar with the content, we published on our blog or the products that we offer and.
So thank you for staying actively engaged with us and for asking good questions and looking forward to talking through those.
So as far as current large contract.
So we typically don't comment on specific customers or pipeline.
Because we are focused on the broad base of mid market customers.
As we highlighted during the IPO, we have been investing in scaling up our sales efforts in part that's to support our strategy of pursuing those larger sized companies in the mid market a statistic that we mentioned previously is that our sales assisted deals have historically been 20 times larger than our self serve one.
With that we are actively pursuing larger contract and moving up within the mid market and we are increasingly looking to sign longer term agreements with larger purchase orders.
B to reserve certain.
Certainly highlighted a few times is an example of one way that we're doing that as well.
I'll be to reserve contracts are effectively committed contracts.
Okay.
The other ones glib.
What is the short term two to three year plan and long term reported eight year plan to increase revenue.
Okay.
Our short and long term plan with similar in our company and revenue continues to grow nicely. So our plan is to continue to execute.
The path, we set out during our IPO, which is to pursue our mission of making it astonishingly easy.
For customers to store protect and use data and.
And we believe that we can become a much larger company by addressing the very large $100 billion storage as a service market, while focusing on middle market companies.
That easier more affordable solution from trusted requires.
The next one is for Frank.
When are you going to start paying dividends.
Thank you James.
Given our significant growth opportunities in our core market. We believe the best use of our cash is to invest in background. So therefore, we have no near term intention of paying dividend.
Nick Thanks for the web.
Where's the company headed.
Okay.
Thanks for the question and I guess, it's a little bit more to the question just above about two to three years and four to eight year plan, but I will say that we continue to be focused on that mid market and as it's clear from the growth of the company over time, we continue to serve those customers well, we intend to continue adding new mid market customers, we intend to <unk>.
Expanding our storage platform in the cloud services for those customers and we continue to focus on.
Pursuing that $100 billion storage as a service market.
Moving to Glenn what percentage of new <unk> customers are switching from other service providers like AWS instead of adopting backup for the first time, you expect that percentage to change drastically in the next two years.
It's an interesting question.
We don't have a statistics that I can share with you today will ponder, whether there's a way to share that in the future.
What I will say is that if you. If you look at the two example customers that I mentioned in our prepared remarks earlier in the call.
One of those.
You're asking about I O was an existing <unk>.
<unk>.
George.
Sir.
And the other picture was an existing on premise.
Company.
The.
In both cases, they considered all options and one switched from another competing cloud storage vendor to backwards B two and the other one added backwards b to their on premise to provide a cloud.
Our cloud storage offering.
We don't have a reason to say that we expect a drastic change in the percentage split.
What we do know is that both have been and continue to be a large opportunity for us.
So much of the world data is still on premises.
And so many of the customers that are inside of AWS and others are also realizing that the expense the complexity and the lock and from being able to use their data outside of those providers is limiting their businesses. So we see both movement from on premise to cloud and movement.
Other cloud providers as good opportunities for us.
Okay.
What influencers are you working with over the next year.
Service.
So as far as Influencers, we havent evangelism team.
Dedicated to promoting our services amongst developers.
We're also aggressively pursuing the channel partner program opportunities that I mentioned, which is a form of Influencer press to increase the reach of our Salesforce.
<unk>.
Other big path for Influencers that we view is our overall customer base and our blog reader community.
With over half a million customers and over 3 million blog readers. They in many ways are the key influencers that help spread the message of how Barclays can provide other customers with value and help them succeed.
And so we continue to aim to provide them a great experience so that they continue to share that message.
Yeah.
We use a few more here and they can crank.
How was backwards preparing for these next fed rate hikes rate fed rate hikes.
What we do is we create negotiate our leases and line of credit term for our equipment financing.
And then on our investment side, we keep our debt and short term.
We can take advantage of higher yields.
Okay.
Sure.
Glib do you plan on this on establishing another data center location in the Midwest central or Eastern U S.
Okay.
So we're not going to pre announce new locations, but certainly data center footprint expansion that is something we continue evaluate and one thing I will say is that you should stay tuned Corey pretty near term announcements in this space.
Just a couple more Greg how are you handling the current business environment and are you, making adjustments we're staying the course.
Yeah, we've talked about this a little bit but the overall message here is we still see.
The opportunity in front of us as being enormous and we also remain in excellent value for many many companies to reduce their spend and storage and we are a trusted service provider. So they can.
Rely on us.
And then the other one that we've talked about a little bit is we are metering those investments based on the returns that we expect Matt.
Matching to the anticipated revenue growth and looking at that overall economic environment.
Okay. One more are there any plans to bring back the back wage that fleet storage pod breakdown slash builds in the early days boost seem to attract attention from a Dev ops engineers could ultimately market back in their enterprises.
Yes.
So this is definitely from someone who has been a long time, our readers of our blog and I. Appreciate the question so for those not quite as more of our our blog.
How is about $3 million of years and it's something that is an important part of building community and building awareness for backwards and one of the ways that we have done that and the reason we have such a.
His strong leadership as we've published a lot of interesting valuable technical content in the storage space. One of the first things that we did on that blog almost 15 years ago would be published.
How we designed and built our own storage server called the <unk> storage pod and we shared the intricate details behind the breakdown of that that server design and we continue to periodically update on our blog information about that.
Yep.
That specific one.
Multiple times different versions of it different breakdown piece et cetera, and we recently published.
A detailed.
Announcement about our strategy.
Moving away from that core storage server to a new storage platform using third party components.
Third party servers and that strategy is actually something that we had outlined years and years ago. When we originally open source, our first storage pod, hoping that as the open sourcing the storage acquired would enable the industry to provide hardware that was it.
To use an inexpensive for software companies like us to leverage and that has materialized and we've been able to take advantage of that in our go forward.
Hardware.
So we don't have new storage pod breakdowns to share on the blog so much beyond that because.
We don't design and build those anymore, but we do continue to invest in and share a lot of interesting content on our blog, including hard drive reliability statistics and many other.
Detailed components so.
We certainly continue to invest in that we certainly will continue to share a lot of using content and we've had.
Significant growth in some of the leadership of some of those more recent blockbuster.
Do you read the blogs these stay tuned theres more interesting content theyre coming soon.
Thanks Glib.
And I think both you for those answers were hitting back to glib.
<unk> that we will be attending Investor Summit conference virtually in America.
And we will also be attending the Raymond James Conference, New York City on December 7th.
I'd like to also mentioned a couple of developments on the Investor Relations front.
Ms. Deborah relaunched the stock purchase program to reward our shareholders with branded products and discounts.
Pleased to see that we had a strong first patient the program hundreds of shareholder Redeeming awards.
Last week, we also launched our video blog called stocks and Stuart to provide an educational resource retail investors and financial technology topics.
Each video is just a few minutes describing light hearted and we're looking forward to all of your feedback and Chondrichthian content recommendations.
You can find our first episode on the Youtube channel.
I'll now turn the call back to Glenn for closing comment.
Thanks, Tim and thank you all for your interest and for listening in to our update we look forward to talking with you again in February .
Later, we are now ready to end the call.
The conference has now concluded. Thank you very much for attending today's presentation. You may now disconnect your lines.
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