Q4 2022 Backblaze Inc Earnings Call
Good day and welcome to the back plane fourth quarter 2022 earnings Conference call all participants will be in listen only mode.
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I would now like to turn the conference over to James Kisner, Vice President of Investor Relations. Please go ahead.
Thank you good afternoon, and welcome to <unk> fourth quarter and fiscal year 2022 earnings call.
On the call with me today are Glenn Butman, co founder CEO and chair person of the board and shrink Patchell Chief Financial Officer.
The back we used to discuss the financial results that were distributed earlier this afternoon.
Statements on this call forward looking statements about our future financial results use of or IPO proceeds.
For new offerings.
Partnerships and sales and marketing initiatives.
Our ability to compete effectively acquire new customers and retain and expand our business with existing customers hiring.
Higher and retain key personnel and effectively manage our growth.
These statements are subject to risks and uncertainties that could cause actual results to differ materially including those described in our Respecters that are included in our quarterly report on Form 10-Q, and our other financial filings.
You should not rely on our forward looking statements as predictions of future events.
All forward looking statements that we make on this call are based on assumptions and beliefs as of today and we undertake no obligation to update them, except as required by law.
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.
A reconciliation of GAAP to non-GAAP results may be found in our earnings release, which was furnished with our form 8-K filed today with the SEC.
You can also find the slide presentation related to our comments in the webcast, which will also be posted to our investor relations page after the call.
Please also see our press release or presentation for definitions of additional metrics such as N or are a number of customers.
Before I turn the call over to Glen I'd also like to mention that in the latter portion of our call as in prior calls.
We will be addressing questions for investors that we get into the state technologies platform.
I would now like to turn the call over to Glenn.
Go ahead.
Thank you Jamie and thanks to all of you for joining us.
At Barclays. We're incredibly passionate about our mission to make an astonishingly easy to store protect and use data.
Given the ever growing importance of data businesses and consumers alike, and high cost and complexity of traditional cloud providers. We are seeking to aggressively scale. Our beach you called starts.
To provide an easier more cost effective solution at a time when it is needed most.
Businesses are feeling the pain runaway cloud infrastructure costs.
To date, we have over 500000 customers and have two cloud service offerings that operate on our storage cloud platform first.
First our Btu called storage service right developers I T personnel and others pop sports that is dramatically easier to use and it's one fifth the price or the Amazon S three and others.
Second our computer back from source provides unlimited calls backup for laptops and desktops.
Companies and individuals.
While our computer backup business remains the larger of our two call it sort of a thought for a moment.
Our strategy and increasing investments centered around capitalizing on the approximately 100 billion total 2025 market opportunity be to.
<unk> called starch based on projections from ITC and a company analysis.
Only 22 was a pivotal year for us with our first complete year as a publicly traded company and we're proud of what we've accomplished we launched new products New go to market motions established key partnerships and set up additional key functions to operate as a well run public company.
The products, we launched our B two reserve.
Carnival Qishan, a new East Coast data Center region and more.
Well go to market motions, not only did we scale our efficient self serve motions developer evangelism and partnership efforts, but we also created a new channel partner program.
New national resource and distributors and landed the biggest customer order in our history and our strategically important application storage category.
And despite inflation recession fears and more we grew total revenue or 25% year on year, it could be two or 45% and beach you now makes up 41% of total revenue.
Looking to the future I'm, especially excited about our role and position specialized cloud and supporting where the cloud is headed let me explain why.
We believe the cloud has gone to three key phases.
When we founded back planes in 2007, the cloud was in its infancy.
This was phase one most people weren't clear what cloud computing wise right. Even if it was going to take route. The question for most businesses was what is the cloud.
Question defined the first phase.
Cloud services.
Fast forward to 2016, almost 10 years later and Amazon have nearly 50% market share of public cloud services more than Microsoft Google and IBM combined.
On AWS generated over 12 billion in revenue that year. This was a phase two.
The public cloud.
Cordless undeniably a thing and businesses saw the value of it whereby cloud most people thought of Amazon AWS.
This brings us to stay in the future phase three.
Phase three is defined by the open multi cloud internet.
Consulting firm Deloitte recently published their U S future of Cloud Survey report and it clearly supports the notion of multi cloud is now the norm of the 500 senior called decision maker survey, 79% said they work with more than one cloud provider.
Why.
Businesses have internalized several key lessons about the clock first the traditional cloud vendors are very expensive and attempt to lock customers in with egregious fees to retrieve their own data and use it.
Second, especially wide cloud providers like backwards offer best of breed services that are differentiated and valuable in our case with dramatically lower cost better ease of use and free or low cost data transfer.
Finally, there was a benefit from a resiliency standpoint, having one's data, helping more than one cloud.
So in this third phase what we're seeing is businesses clamouring for an open internet where customers are free to choose best of breed specialized cloud services, whether it's our partners Fastly and digital ocean for networking and compute.
When Leo for messaging and communications stripe or billing or back place for storage, we believe starch and a critical component of the tech stack and in fact I would argue data storage is probably the most critical because none of these other things would exist. If you don't have data.
This is evident in many trends the most recent being the explosion of generative AI.
It requires data storage for models and create data at scale.
The importance of data continues to increase every day and for AI, having scalable cost efficient data storage is an important enabler.
This new phase of the pod makes us very excited for our future and we see a runway of growth for many years to come.
Focusing on 2023 businesses are feeling the pain of inflation and the choppy economic environment and are looking to reduce costs, while maintaining the quality of the services.
We believe that we are strongly positioned protection environment as we can help businesses dramatically lower the cost of their infrastructure.
With cloud storage that is one fifth the price of the traditional car providers.
As evidence of our strong position.
<unk> grew 44% year on year in Q4 more than twice the growth rate of 20% for Amazon AWS.
I'll now focus on our priorities and the recent developments that demonstrate our progress on these strategic imperatives.
First partnerships.
As we've noted in the past partnerships are key part of our growth strategy for me too we know that at least one third unlikely significantly more of the data stored in Beecher is coming to us as a result of partnerships.
In 2023, we're investing to cultivate this important growth driver we.
We have two types of partners technology partners and channel partners.
Technology partners include what we previously called developer and Alliance partners.
This quarter I'd like to highlight two technology partners Commvault and tell a stream.
Humboldt if they want on backup and data services player and our customers can use be too at the cloud destination for their backups.
Hello stream provides a solution for organizations to handle media management and their customers include 96% the top U S broadcast station groups and 82% of Fortune 100 companies.
Those customers can now use be too.
I'll destination for all of that content.
Turning to channel partnerships, we continue to scale this effort as well.
As mentioned previously our beat to reserve prepaid storage offering is well suited for the channel.
While still a new offering for us.
The two reserve revenue nearly tripled quarter on quarter in Q4, and we continue to be excited by and focusing investments on the combination of channel and.
Tourism.
Second.
We are continuing to cultivate our relationships with developers for application storage use cases, which we define as customers that use be two quad barge as the storage infrastructure for their fast e-commerce or other business.
We continue to make progress on this front and I'll share. Another recent customer example in a minute.
In Q4, we also held our annual technology day, thousands of retrofits and over 60% growth in attendance over the prior year.
Finally, I want to talk about our self serve go to market motion.
As many of you know self serve.
Primary means of acquiring a customer for many years and drive significant efficiencies and our customer acquisition approach.
Scaled the team focused on improving our self serve funnel and in January we had the best month of self serve our calculations in a year.
While we have been historically successful in driving self serve customers. We believe there is still significantly more opportunity to continue our success here and drive greater efficiency in our customer acquisition.
Now I'd like to share two new customers that highlight how btu has helped drive their success.
Let's start with an application barge customer called monument.
Monument wanted to build an offering similar to Google photos, but with a focus on privacy.
They develop monument crowd, which uses advanced AI to build a cloud based photo service built around their philosophy of privacy.
Monument considered AWS.
But realize that ultimately lose money if they built the infrastructure for monument cloud on AWS.
While they started using initially free credits from AWS to develop their AI model. They ultimately chose to build their quality infrastructure using three specialized cloud providers.
One for compute one for for the thumbnails and back plates for their overall storage cloud.
Having done that monument cloud has quickly become the companys flagship offering drawing 25000 active users.
Second customer I'd like to highlight is another example of how a multi cloud solution can save businesses money.
<unk> is a pioneer in providing retail data with customers such as Unilever.
With an infrastructure built almost entirely around AWS Baltics began to have concerns about the cost of using S. III.
<unk> settled on using Amazon asleep for short term surge in living long term storage into Barclays, which would reduce costs, while keeping data accessible.
Dolphins believes that in 2023.
Have saved approximately 75 to $100000 on their storage spend thanks to leveraging back with me too and we'll continue to statements in the future.
Before I turn the call over to Frank a final topic. We started the company 16 years ago, and it's now been over a year since the company went public.
For the past few years, we've built out a great executive team.
Recently as one might naturally expect some of the founders and early employs a backwards it'd be kind of a smooth transition out of the company.
Each of them it remains a part of the backwards family.
And on behalf of all the employees back ways I want to say a big thank you to each of them for their contributions and we all wish them well in their future endeavors.
I'll now turn the call over to Frank actual who can review the financial results of the quarter in more detail.
Frank.
Thank you Glenn and thanks, everyone for joining us today before turning to Q4 I will comment on our 2022 achievements.
Our first year after our IPO, we continue to build out the systems people and processes to run a successful public company, we've executed well, despite a turbulent financial market and record inflation risks of recession, and a tight labor market.
Well focusing on the approximately 100 billion market opportunity and successfully growing b to over 40% roughly twice the rate of the broader public cloud market. We are actively managing expenses and intend to be approaching adjusted EBITDA breakeven in Q4 of 2023.
Turning to our Q4 financial results unless otherwise noted I will be referring to non-GAAP metrics and the growth rates mentioned are year on year.
We remain focused on two key metrics revenue growth and adjusted EBITDA, which is defined in our earnings release.
Our Q4 revenue totaled $22 9 million an increase of 23%.
Back place B, two contributed sales of $9 5 million, reflecting 44% growth computer backup revenue totaled $13 3 million, reflecting 11% growth.
In quarter four B two cloud storage represented 41% of total revenue continuing its upward trend.
Peter back up continued to benefit from the price increase we implemented in quarter three 2021.
Recall the amount of growth on the computer backup business driven by pricing has been diminishing since we are past the one year anniversary of the increase and we see little benefit in 'twenty to 'twenty three.
Turning to retention metrics, we track net revenue retention or at all our and gross customer retention.
Total company at our our was 113% an increase of two points year over year with be two cloud storage at 122% and computer back up at 108%.
Gross customer retention was 91% overall consistent with the prior year with 90% for both be to cloud storage and computer backups.
As part of our year end numbers, we've also disclosed customer count and annual average revenue per customer as of December 31, 2022, we share these metrics once per year.
Our paid customers increased to 506000 from 493000 in quarter for 2021.
The number of customers.
Or b to grew to 87000 from 74001 year ago. The number of customers for computer backup totaled 436000 up from 433000 in Q4 2021.
Now turning to the annual average revenue per customer or our <unk> for the entire company it increased to $181 versus 153 and quarter four 2021.
B to cloud storage ARPA grew to $437 versus 361 year ago.
And computer backup ARPA was $124 up from 113, one year ago.
We shared the number of customers this year, but because this metric does not fully reflect how we bill for services is becoming less meaningful as an indicator of our business in the future.
Working down the P&L adjusted gross margin was 75% consistent year on year, we do not guide gross margin explicitly but we continued to see adjusted gross margin in the mid seventy's in the near term.
<unk> EBITDA was a loss of $2 $5 billion or minus 11% of revenue compared to a loss of $1 3 million or minus 7% in Q4 of 2021 year over year, though our adjusted EBITDA margin reflects planned expenses from higher investments primarily in sales and market.
And R&D as we continue to pursue the large market potential for be two cloud storage on a GAAP basis. We also had a one time $1 $5 million settlement payment to resolve a dispute in connection with the holders of the 2021 safe investment.
Turning to the balance sheet.
Cash and short term investments, including restricted cash totaled $70 million as of December 31, 2022 versus $80 million as of the end of Q3, 'twenty 'twenty to Q.
Q4 cash usage included approximately $1 million of nonrecurring indirect tax payments.
Now I'd like to provide our outlook for Q1 for the first quarter, we expect revenue to be in the range of $23.1 million to $23.5 million. We expect Q1, adjusted EBITDA margin of minus 15% to minus 11%.
Note, our EBITDA fluctuates on a quarterly basis as expenses are typically seasonally high in quarter one.
We expect our quarter one 'twenty two 'twenty three basic share count of approximately $33 five to $35 5 million.
Also for Q1 and Q2 GAAP results, we anticipate one time costs due to reductions in force other terminations and restructuring expenses.
From a cash standpoint, these costs will approximate $4 million with the majority likely occurring in quarter one.
Turning to our full year 2023 we expect revenue of $98 million to $102 million and an adjusted EBITA margin of minus 10 to minus 6%.
We are targeting to approach adjusted EBITDA breakeven in quarter four of this year.
I'll now pass the call back to glad.
Thank you Frank operator, we're now ready to take questions from analysts.
Thank you we will now begin the question and answer session.
To ask a question you May press Star then one on your Touchtone phone if youre using a speakerphone. Please pick up your handset before pressing the keys to.
To withdraw your question. Please press Star then two at this time, we will pause momentarily to assemble our roster.
Our first question comes from E Tai kitchen with Oppenheimer and company. Please go ahead.
Hey, guys. This is herschel I'm pretty tight can you hear me.
Yes, we can hear you yes.
Great.
Congrats on a nice quarter.
Wanted to just talk ask about the macro environment are you seeing any kind of changes in terms of like the deal cycles or anything that's kind of you know.
Sticking out maybe from a geo perspective, theres any color you can give on that.
Yeah. Thank you Jack for the question.
Good to hear from you.
Obviously, we're watching the macro environment being what it is.
Having said that I think.
We get a lot of customers who are self serve motion.
The sales assistant side.
When we've looked at the data both on close rates and our deal.
<unk>.
We've actually seen slight improvement on those fronts I know that a number of companies have talked about sales elongation in close rates getting worse, we've actually seen some slight improvements on those which we believe is partially because customers are looking at how.
Did they optimize their cloud infrastructure and that that is becoming an urgent need for many of them and so they're looking at ways to do that.
Since we're at one fifth the price point of the traditional cloud vendors and they get to save a lot of.
Efficiency and time to the ease of use.
It's making some of those have been more.
Effectively and more efficiently.
Plus I think we are just becoming.
To get better at our execution on that front.
Got it that's helpful. And then have you guys made any changes to your hiring plan for the year.
If you remember that in.
2022 you know we had gone public in late late 2021, so in 2022, where you're standing up whole functional area. So we had a lot of hiring in 2022, we did slow it slightly in three and four quarters three and four because we are conscious of the macro economic environment.
Turns about it.
In 2023, we are it's a much more moderated head count plan, because we're filling in.
There's always areas that we need, but we're not standing up whole groups.
Got it that's helpful. Thank you.
You bet.
Okay.
Our next question comes from Simon Leopold with Raymond James. Please go ahead.
Hi, guys. This is Victor Chu in for Simon Leopold.
Can you help provide some color around your visibility into the dynamics of your customers switching.
To be too specifically do you have metrics.
The percentage that come from AWS versus an internal solution versus some other cloud provider.
Yes, it's a good question, we don't have specific data on that in part because so many of our customers do show up as a self serve so we don't have.
Data on what they had before we just see that they come in they try it they like the service they sign up they put a credit card that Mako.
We do see customers coming from both so we see customers that are switching from traditional cloud providers, because what is the price point much easier to use and a better fit for them and we also see customers, saying I don't want to deal with on premise infrastructure anymore and.
So where I want to move to overcrowded many of them for many of them. We are their first public cloud the b.
We've seen public cloud they know that the benefits of it but they have not.
The leap or oftentimes because they've seen the complexity and the cost of the traditional vendors and when are they playing back ways. They say Wow, that's really easy it really affordable I can do that and they and they end up leaving their on premise infrastructure to move to that plays with the public cloud, but we don't have a concrete break down between those two on the frequency.
Okay, and just to follow up on the previous question you noted that the sales cycles.
Elongation of some.
Deal closures.
Aren't impacting you guys.
Go to the same degree are there specific trends or.
He says that you're absorbing that gives you.
Yeah.
You can see that they couldn't help.
Explain why you're feeling better than some of your peers in that regard.
Yeah, I think actually just to clarify it's not just that we're not seeing as much of a negative in fact, we've actually seen some benefit.
Over the time period.
Right right.
And I think that.
We look at that is likely the result of two <unk>.
Two things.
One is that the customers are trying to optimize their cloud infrastructure spend.
And a great way to do that is to switch from.
Traditional providers.
Or.
Or on premise infrastructure and the other is because as an organization I think we're continuing to become more effective and efficient.
Okay.
Got it that's helpful. Thank you.
Our next question comes from Eric Martin Newsy with Lake Street Capital markets. Please go ahead.
Yeah, given the outlook for 2023 I was just curious if you could comment on the growth rates for the two different parts of the business I know in 2022 we had a 46% growth from B to.
Because the price increase in the 17% growth from.
Computer backup business, just you know for.
For those of US modeling at home I'm thinking that the B two is probably still in that 40% range, but it could be in low single digits for.
Computer backup.
Hi, Eric.
We don't guide the product specifically, but when you use the guidance.
Guidance that we've provided and you kind of.
Work with your model you're going to get.
B two in that low forty's with the difference coming into computer back up in the low single digits.
Hello to mid single digits.
Okay.
And then B given.
Given the price differential that you guys have and the fact that you didn't see any of the.
Deal elongation that a lot of other people saw in Q4.
Have you seen an increase in interest from large prospects. So I wouldn't expect large prospects to have kind of pulled the trigger on back. Please.
Really fast, but just kind of a pipeline.
Of larger transactions.
How does that compare to say six months or a year ago.
Okay, I think we're always talking to companies of all sizes.
I don't think we have anything specific to say on the different different sizes of organizations within the pipeline.
Much of our business comes from the the kind of the core of the mid market.
For us we.
Do you know what.
We are always in conversations with customers have different different sizes. So I don't think I have anything really concrete to say on this shift between the different parts of the pipeline.
Okay and then last question for me on the B two congratulations on the self serve success.
To see kind of a <unk>.
New high here in January of 2023 on the.
Uh huh.
Self serve sign ups, what do you attribute that to is that the result of maybe an increased focus on sales.
On channel development on enhanced.
Enhancements at the with the economy, what what's the big driver there.
Yes, So I think you remember we talked about how we have we have this efficient self serve motion that includes generating good content and then bringing people to the website and then converting them through the website experience and we've actually worked on both of those.
Areas, both in terms of generating good content things like our drives that's where we published statistics around the hard drive reliability that's been thriving.
We've had higher numbers on both.
Total total traffic on the drive starts in recent drive traffic on the drive side. So it's driving interest from that front and then also on the conversion side of it we did invest last year in.
Additional resources for the team, whose focus is on optimizing the website flow for customers, making it even easier and so.
That then translates into additional people coming through the funnel once their once it comes to the web site.
And this is this is an area to focus on this year.
Continued it it's not a one and done its a continued focus that we'll be doing throughout the year. It talked about Great example, we've talked about how we we monitor great moderate and measure our different investment and that investment is is one that we actually increased.
Increased during the year, because we were seeing good preliminary results. So I'm really pleased that that investment is coming to fruition.
Got it thanks.
Yeah.
Our next question comes from Zach Cummins with B Riley Securities. Please go ahead.
Yeah, Hi, good afternoon, Glab and Frank Congrats again on the solid results and thanks for taking my questions.
Glen could you go a little bit deeper into the traction you've seen so far with with channel partners and your B to reserve product seems to be some pretty encouraging early progress in just curious how youre thinking about the potential.
Growth from that channel in 2023.
Sure. It is something that we're excited about.
The combination of each reserve and channel is a great mix.
And we've seen that because it's.
It's all of the needs that the customers have so.
Typically I E buyers solving backup archiving ransomware type use cases.
And it's.
So it makes it easier for them to purchase because it's a prepaid fixed price amount.
Predictable, it's easier for them to go to their finance department their CFO and say this is what it's going to cost me, which is especially this year is something that theyre.
More focused on getting.
Clear answers to it is something where the channel is accustomed to selling the SKU.
It's a good it's a good way for the channels to sell.
And so it's a good fit.
Product market fit on that front.
B to reserve.
As they noted it's grown very rapidly over the last.
A couple of quarters.
We signed several national retailers and distributors.
And let me say that another distributor just this quarter and.
And basically what we're doing is.
We've hired up additional people into the partnership team to go and pursue various strategies on primarily.
Getting more traction with these large national resellers.
Not so much a strategy you get lots and lots and lots of them.
We thought wasn't distributors. It is the strategy of getting more traction and increasingly with the ones that I'm, saying, because they're major significant ones and so that's basically how we're looking at it we're putting people.
At it we're putting programs added and we're aligning around.
Core handful strategies.
In their place.
Understood. That's helpful and final question for me is any sort of update you can give on the cloud replication product or any sort of feedback from early adopters.
Do you think.
I guess I'm standing up here your east coast data centers is going to help drive further adoption of that product here in 2023.
Yes.
For everybody.
Just for my clarification is the functionality, where a customer can keep their data in one region inside of <unk> and then choose to keep it in another region instead of back would it be too. So we launched that in the middle of 2022.
Alright.
Soft launch because of the choices that the customers had word should keep the data in the U S West Coast region and in Europe , and those are the those are the two choices.
In at the end of this past year, we launched East Coast data Center, which now gives people the choice of keeping the data on the west and East coast of the U S or are you also on the web.
In Europe or eastern Europe , we.
We do expect that that is a benefit to customers and we certainly heard from customers, who have said hey, do you want to replicate that they want to keep the data inside of the U S. So they want to replicate it inside of the U S and that gives them the ability to do that we have.
We've also actually started standing up additional programs for our marketing cloud application.
Including functionality inside of the product itself that helps explain how to set it up for our customers as well as targeted outreach to customers that we have.
To educate them on the ability for them to do so.
Like I said before we don't expect cloud application to be a hockey stick type type of approach, it's something that we see the value for customers. It gives them the opportunity to keep data.
Closer to wherever they want it to be let them fulfill insurance requirement that allow opt in for data to be geographically distributed it allows them to add additional resiliency.
And it's something that we continue to see growth in but we expect that to be considered a gradual growth in the in the offering.
Great well, thanks for taking my questions and best of luck with the rest of Q1.
Got you.
Alright. Thank you for all those great questions from the sell side analyst community I would now to like to re question that could come from investors that were submitted and the C technologies platform.
I want to thank those investors that submitted questions.
We've kind of address some of them.
We're gonna try to just some of the more pocketed ones right now the first one is for Frank Frank really it's actually we had a couple of different forms of this question.
When can we expect to get paid dividends shrank.
So we are a growth company.
And beyond that a growing technology company and we have so many growth opportunities in front of us remember that our core market is over 100 billion. So the best use of our cash right now is two <unk>.
Invest in opportunities that get us parts of that market and that's what we're doing so we don't have any plan to pay dividends. Consequently, because these other opportunities can be so lucrative for us.
Alright, Thank you Frank.
This is actually the combination of really think about five of the questions on the platform.
Some of them are in other folks are asking what are the main goals of the company. Both in the next 12 months.
And beyond that what are we focusing on as a company.
Our goals and objectives have reset.
For the long haul.
Flip that question.
James.
So for the long haul we've talked about there are three phases of the cloud we're entering the third phase, which is a focus on specialty clouds in the open cloud internet where customers get to choose.
How they want to work with the cloud what services, they want and get the best of breed services and we certainly intend to continue to lean into that opportunity and help customers with their data storage needs and really helping them to store and protect and as well as use their actual data.
In the short term.
Some of the things that we've talked about are we want to focus on growing <unk>. We see this 100 billion dollar opportunity ahead of us we want to grow be too and pursue that opportunity.
Three core areas in which we're focusing that our channel.
Partnerships.
Focusing on the application storage use cases, helping developers build on our platform along with our other technology partners.
And optimizing the self service experience continuing to make it increasingly easy for customers to adopt back ways for their for their needs and the other thing that we talked about is more of a.
Financial company goal for the year, which is in Q4, we want to approach adjusted EBITDA breakeven so continuing to focus on growth.
But also.
Being cognizant of both.
The macro environment and in general our goal continuing to build a strong and sustainable company.
Bye.
Moderating.
Growth in our expenses.
I had a couple of questions really around the outlook for glib I think what is the outlook for 2023.
Do you expect any growth for this year.
So we certainly expect growth for this year.
This outlook can be a pretty broadly interpreted term, but in general we're excited by that $100 billion opportunity in 2025 that we see so we continue to capitalize on that.
In 2023, we're excited about the opportunity to help customers reduce their cloud infrastructure spend by switching to be too.
That's certainly a core focus for us and it's something that we think we're fairly uniquely situated to help customers with this year.
From a financial outlook perspective.
Frank gave the guidance for the year.
The mid point, we intend to do 100 million in revenue at the midpoint.
We have we're intending to have negative 8% adjusted EBITDA for the year.
Alright, the next one for Frank.
What point does the company expect to pivot to profitability.
Yeah, I'll have to comment a little bit on to that if you remember that.
Back lays in its first 15 years had very little outside investment So the company had.
The cash and good performance just survive since it wasn't depending on outside investors to sustain it so even in a year that we went public in 2021, we had 5% positive.
Adjusted EBITDA.
The reason we have negative EBITDA today is that we've been investing and there's been that big hundred billion dollar market, principally in sales and marketing and in R&D expenses and then also the things that are needed to be a public company.
So the.
As we look forward I think the key thing is that we see 2023, adjusted EBITDA approaching breakeven by quarter, four and that's an indicator of where we're headed overall.
Thank you Frank Mexicans.
Mexican strict web or are there any plans to leverage partnerships with other companies in the same service industry like Salesforce, Microsoft or AWS.
So partnerships are a strong source of business for us we have over 100 technology partnerships and <unk>.
Mentioned that.
They're responsible for helping us generate over one third of all the revenue in that would be true.
We partner with companies like Fastly in cloud and digital Ocean, Commvault and beam and many others. We are always looking to consider a wide variety of partnerships to drive sales and to enhance shareholder value.
Happy to consider other ideas if you have any specific ideas.
Certainly feel free to email us.
Partner contact at <unk> Dot com.
Always happy to hear additional ideas.
Another one for Glen another couple of questions for Glenn along the same kind of topic.
Is your team developing any artificial intelligence features or products to integrate in your cloud services.
With AI, becoming a focal point of the industry you know what is the plan to leverage this in your offerings.
Good customers.
It would affect the growth of the business going forward.
So it.
Obviously, the big conversation right now and we certainly help many of our customers today that that is that leverage AI for their products and platforms for their customers.
As used by a number of our partners.
For things like text to speech transcription language translation object recognition celebrity recognition. Many other use cases, we have partners, who do these things and leverage.
For the storage cloud components. So all of these things on which you do AI or our data.
And.
Data storage provider.
Sure.
Ah well situated to benefit from the explosion in AI in general.
AI.
Wires a lot of data to get trained.
I also creates a lot of data.
And back ways.
To benefit from both of those trends.
I'll say that we.
We also.
True product functionality perspective.
We highlighted on our blog not too long ago, one of our team members.
Showed how to actually build in AI training model.
Using AI tools that are out there and using back with you.
Storage cloud for all of the data sets for the trading model.
And it's all outlined on our block that you can.
You can try that for yourself, if you want to.
Stable diffusion and Barclays create a masterpiece.
From a bucket of your own images, so give that a shot if youre interested in experimenting with how you could use exactly the barcode fluids quite along with all the AI tools as far as our own plans for building out functionality.
We are certainly intrigued by the opportunities and look at some of the some of the <unk>.
As soon as possible.
To what extent is back was used as a data data lake a central place for organizations.
<unk> data to be filtered into the places like Snowflake again this one's for web two <unk>.
Yes, we have many customers who use us as a data lake.
Yeah, I mean, even <unk>, which is the customer example that I gave earlier in this call.
Alex actually has a data lake of Bill.
Oems of files that they did they use in the mine and analyze them and that they're leveraging.
<unk> for that data Lake.
But they are called back what is an ideal solution.
For them for that purpose. So it's certainly something that we all customers with two day and it's certainly something that we see as a growth opportunity in the future.
And so when they went shopping for desk top hard drives to shift to back weight during the shortage.
We have plans to switch from components from the U S is overseas market conditions.
Availability fluctuate.
So first of all thank you for being one of the people who helped US do that back in I believe that was <unk> 11. So thank you for being helping us back that and being with us for over 10 years.
We source from all three of the global manufacturers of hard drives from.
To ensure that we have a diverse supply chain.
We worked hard to keep good relationships with all of them buy from.
Wherever they are.
They sell them through.
We are constantly ensuring that we work towards having a strong supply chain and it is strong I would say that our supply chain is in very good shape. We're sourcing from everyone. We get great cooperation and we are not seeing the shortages or the elongated lead times that we saw during the.
Beginning of the pandemic.
It's actually you can actually compete for either one of you I suppose what are your career plans when you eventually replace from leadership.
So frankly, I haven't given too much thought to a courier after back laser outside it back with them since they don't have any plans to leave anytime soon.
Soon mostly I'm excited about the opportunity we have ahead of us.
This is a really interesting time in <unk> history.
The combination of this very large market.
Fairly unique product market fit that we have with <unk> to help customers, especially as they look to optimize their cloud infrastructure and.
The opportunity we have to really help customers use data in addition to store and protecting it. So I'm just thinking about all of that opportunity going forward.
I would just add back places a very exciting business theres a lot going on in it and that's my focus is to try to keep up with all of that.
Alright, no claims through tighter private island at this point.
Glib, how can we better advertise the company to consumers that I think they're talking about how they themselves can.
So it sounds like a shareholder customer and someone is interested.
Interested in helping us acquire I love every part of that.
So we encourage you to refer your friends, including US are for a friend program. If you go to <unk> Dot com slash refer Don HTML.
Can learn about the refer a friend program.
You do that you have heard someone to the service they get amongst three you get a month free so.
Benefit for both.
And your unique referral code is actually listed inside of your accounts. So if you just sign into your back book the count in left now.
You can get your any code and we would love for you to do that or in any other way.
That you want to refer.
Alright. So next question is really about backup.
From the moment you arrive at a bit back wages website, its btu business options and support it feels like personal backup is falling to the wayside cutback Lacey personal data storage is a profitable space.
Will there be any future efforts to enhance our advertisers.
So so.
So computer back what was our original business, we started that back in 2007 Btu called storage.
The newer business line that we introduced.
Back in 2017.
And we.
We are increasingly focused on vastly be too.
In large part because we can help so many more customers with so many more different use cases.
Really provide them.
Platform for all kinds of different storage needs it.
It helps them in the right way, having said that we continue to love our computer backup servicing the customers that use it and we still continue to invest in that service.
Just this year, we launched a new version of that person he got five.
Mac and Windows applications, we launched a new mobile application on both iOS and Android versions of.
Of that as well as a number of other enhancement and optimization. So we absolutely continue to love that service and wanted to continue to support our customers on that.
Any plans of expanding the company to the East coast.
Uh huh.
Sorry.
Question on <unk>.
Maybe you've got submitted just shortly before the announcement so we as we announced a little bit earlier, we are at the end of last year, We launched our East Coast data Center region, It's live and available so.
Customers can sign up directly and use that and you can also use this product. If you can keep your data and in both west and east or Eastern Europe as you wish.
What measures are being taken to circumvent cyber security concerns.
Mr noted the last past and capital one data breaches.
So security is always top of mind that we're constantly working to ensure customer data secure we have a really experienced chief information security officer Who's part of our executive team, we have a security department that works for him we employ.
E. A measures we encrypt data it doesn't seem to keep physical security access controls we have network security, we do continuous monitoring to protect customer data. We also use third party services to attempt to.
Breaches, we also.
Third party.
Bug bounty program. So we're constantly working to ensure the safety of customer data.
When can we expect the company's stock to be back to its IPO level.
Sure.
I wish I could predict the stock market as much as anybody else, obviously stock investing is uncertain and depends on market conditions or our performance of the company the sector of the industry performance how investors deal.
Not not not adventure not a guess I can joint venture.
Where do you see as the main selling points in competing with major cloud providers, such as AWS, Microsoft and Google.
So Nathan.
Back would be Q1.
The price point of those traditional cloud providers, that's always a great value for customers, but especially in the current macro environment, where customers are looking to say how can I reduce the costs of running my business or running my application, while continuing to do the things they need to do.
That makes it even more valuable and we're also dramatically easier to use.
Farrington market report that found that.
Customers save over 90% of their time by using back ways, and so, especially as everyone feels increasingly busy.
Saving all that time for them is critical and then.
We also are part of the open Internet, we are a specialized cloud provider that enables customers to use the data the way they want it where they want it they want that we don't try to lock you in to boldly using our services as the traditional operators do.
By charging egregious egos fees. So those are some of the key ways in which we believe we provide a lot of value versus the traditional operators.
Get them back, but it is extremely competitive pricing for cloud storage, what's stopping large cloud customers from moving to be too.
It's a good question.
Fundamentally we believe that the primary thing stopping larger customers moving to be too is just aware.
We need more of them to look at it and say.
I know back with me too exists.
Understand that it is compatible with that three I understand that it's not hard for me to switch and I understand.
I understand that I will say.
Four kids that might fail on storage.
Radically dramatically potentially on egress Steve.
And.
Getting awareness of that so we think customers of all sizes, including the roughly $1 billion contract we announced in Q2.
With over 2000 Petabytes.
Data under management, we can support basically any size customer. So we think it's largely an awareness issue and we're working to working on that with the additional go to market effort that we've talked about.
Alright, and just the last couple of Oregon, squeezing I think any plans to implement a Quaker style store adoption.
So backward deteriorate is customers that is roughly the same price of the glacier, but without all of the cost penalties and all the complexity of that offering. So we can't be too is a really attractive option for all of the various storage use cases.
Losing for the subset that is just archival data.
Something like <unk> could be used for.
We offer.
Really low cost while preserving the ability for the data to always be accessible and available, which we think is key since so much of the data.
A longtime customers thinking I'm, just gonna archivist, they don't need it and then later find out that they actually didn't hit we've had many customers who switched over to backwards because of the of drilling the frustration of getting stuck inside of glacier when when they actually turned out that they needed access to their data. So we believe we provide.
The benefits.
Yeah.
S III at roughly the cost inflation.
Maybe one more time here when do you expect back where it should be the leading cloud storage. When you look backwards to lead the cloud storage industry.
So while we do not have the revenue scale of the traditional cloud providers. We believe we are the leading specialized car for data storage today with one of the largest storage clouds out there.
And we grew about twice the rate of AWS this past quarter and considering the cloud market is entering the third phase with customers wanting these open cloud solutions wanting the best free services, we believe we're well positioned to continue down this path.
Alright, Thanks Cliff answers, so before I pass it back to Brad to close the call.
I, just Wanna comment, though that we're gonna be a couple of institutional investor events. This quarter first being at the JMP Securities Technology Conference in San Francisco on March 7th and the second is a virtual conference with William Blair. The Tech innovation leaders conference. So we hope to see some institutional.
Investors, there and with that I'll hand back to web to just close up the call briefly.
Thanks, Jamie.
To all of you for your interest and for listening into our updates we look forward to talking with you again in February .
Actually I was next in memory.
Oh in May.
Operator, we're now ready to end the call. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.