Q1 2023 Backblaze Inc Earnings Call

May 9, 2023

[music].

Good day and welcome to the back. Please first quarter 2023 earnings conference call. All participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your touch.

John phone and Swift to all your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. James Kisner. Please go ahead Sir.

Thank you good afternoon, and welcome to backwards as first quarter fiscal year 2023 earnings call.

On the call with me today are glib Butman co founder CEO and chair person of the board and Frank Patchell Chief Financial Officer.

Today back ways 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 offerings and partnerships and sales and marketing initiatives our ability to compete effectively.

And 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 actual results to differ materially.

Putting those described in our risk factors that are included in our annual report on Form 10-K, 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.

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 a 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 NR or or gross customer retention.

Before I turn the call over to cool lab I'd also like to mention that in the latter portion of our call as in prior calls.

We will be addressing questions from investors that we gathered through the sei technologies platform.

I would now like to turn the call over to Glenn.

Webb.

Thank you James and thanks to all of you for joining US we continued to execute on our growth strategy this quarter.

Total company revenue grew 20% year on year with strong 42% year on year growth of Btu cloud storage and solid 8% growth for computer backup.

<unk> growth rate was more than two five times that of Amazon AWS, which grew only 16% in the same period.

Not only did we showed strong growth, but it's Frank will discuss in a moment with our results and our expectation for continued EBITDA margin improvement in Q2, we remain committed to our goal to approach adjusted EBITDA breakeven in Q4.

We believe businesses and developers are increasingly recognizing the benefits, including significant cost savings.

Abandoning or minimizing the use of the traditional cloud providers. These.

These providers into trap customers into an expensive walled garden, and then charged them, except the fees to retrieve and use their data at the leading specialized storage cloud not only do we provide customers tremendous savings by charging approximately one fifth the price of these traditional cloud providers.

We also enable customers to build the best cloud stack for their business, we do that by providing customers the ability to store their data with back please and connected easily and often for free to other best of breed cloud providers.

While the economic environment continues to face headwinds. We're pleased that we can help our customers save money by switching from other expensive storage options.

It's also a very exciting time to run a business that benefits from data growth when applications like those based on general AI are growing explosively.

Im excited to profile another one of our AI focused <unk> customers later in this call.

Our growth strategy to capitalize on our market opportunity includes the following key elements number one.

Optimizing our self serve go to market motion.

Two expanding our sales assisted go to market efforts.

Leveraging partnerships.

And for cultivating application storage use cases.

Briefly touch on the progress we are making on these elements of our strategy.

Let's start with del sur.

Recall from most of our company's history, we've acquired customers primarily through our self serve motion in which we attracted new customers to our website with engaging content on our blog <unk>.

Additional material on our website and publicity driven you get coverage.

The self serve customers can quickly and easily sign up for our service with just an E mail and credit card, which is a highly efficient means to acquire customers.

We have recently increased our focus on improving conversion of visitors to our website into paying customers. For example, we launched in App messaging capabilities at the beginning of January to support guided self serve.

To date, we've seen in over 10% increase in user conversion from free to paid as a result.

We have a roadmap of opportunities to improve the customer experience, which can increase both the number of customers signing up and their usage of our offerings.

Next our sales assisted go to Mark.

Efforts.

To augment our self serve marketing effort over time, we've also built up a sales team dedicated to serving larger potential customers and we've been investing in building out an outbound sales motion.

Early last year, we projected that it would take roughly a year before we begin to see results from our investments in outbound. We're pleased to report that in Q1, our outbound team generated more pipeline in total and per salesperson than in any other quarter as we've honed our approach.

Recall, we also mentioned last quarter that unlike many other firms we were seeing shortened sales cycles and improving close rates.

A quarter later as we look at the larger deals upon which our sales team was focused sales cycles shortened again and win rates or within a few percentage points of Q4s high rate.

We believe this is yet another proof point that we are well suited for an environment where businesses are tightening their belts.

Now, let's talk about partnerships for.

For <unk>, we know that at least one third and likely significantly more of the data stored in vitro comes to us as a result of partnerships. We have two types of partners channel partners and technology partners.

We launched our channel partner program last year, and it's a strategic focus this year.

As we mentioned previously our beat your reserve.

Prepaid storage offering is well suited for the channel.

We were pleased to see Beecher reserve recently crossed $1 million and our after roughly just one year in the marketplace.

Partnerships are also key to enabling the open internet we advocated for.

A good example of this was our April announcement of an expanded partnership and co marketing program with compete specialist Vulture one of our technology partners.

This partnership enables more application storage customers to replace traditional cloud providers with our two best of breed platforms, gaining benefits ranging from lower costs to data read from lock in.

I will now profile one of our customers benefiting from this technology aligns an AI company developing technology to analyze massive amounts of survey wants video to make it easily searchable for end users.

This company originally developed their application on Microsoft's Azure platform.

But felt locked in by the walled garden approach to third party tools and Azure is painfully high pricing.

By migrating to be to cloud storage the gain the flexibility to build their tech stack with the tools that work best for them.

Volker for compute.

And reduce their spend without having to sacrifice performance.

This is a great example of an application storage customer using backfill btu and a data intensive AI application.

This example, along with the next to illustrate how we win customers from each of the traditional cloud providers by helping customers solve their problems and reduce their spend.

The first is an E sports solutions company that works with top tier video game brands like Fortnite Halo and call of duty to provide a range of event services, including production Broadcasting tournament and program design.

Their high volume production generates massive amounts of data that needs to be processed shared and stored on behalf of their customers with.

With Google Cloud platform costs, we're cutting into their margin and they were experiencing failures during big events.

By migrating to back fleets, they were able to not just reduce costs and increase reliability, but also significantly increase the productivity of the distributed workforce.

Their data is where they need it when they need it and at a dramatically reduced storage costs compared to Google.

Our last example is the school and one of the fastest growing K 12 public school districts in Washington State that was paying exorbitant amounts to archived data and Amazon S. III.

Considered amazon's cold storage solution Glacier.

But uncertainty around retrieval fees and delays give them pause.

They went with Btu.

75%.

They are delighted by the predictability of their bill.

Three customer wins.

One from each of the traditional cloud providers.

These examples demonstrate the breadth of customers and applications that can benefit from <unk> and the strength of our product on ease of use affordability performance and reliability.

I'll now turn the call over to Frank <unk>, who can review the financial results of the quarter in more detail.

Frank.

Thank you Glenn and thanks, everyone for joining us today.

Turning to our Q1 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, which is defined in our earnings release.

Q1 revenue totaled $23 4 million an increase of 20%.

B two contributed sales of $10 million, reflecting 42% growth computer backup revenue totaled $13 4 million, reflecting 8% growth.

These segment figures now include $2 million of revenue from physical media that was previously disclosed separately and is now allocated to the business line with which it is associated.

Physical media is associated with restoration in data capture and is easily allocate to each service.

In Q1, <unk> cloud storage represented 43% of total revenue continuing its upward trend.

We're pleased to be able to deliver continued strong growth in a challenging economic environment.

This highlights the resiliency and predictability of our business model as well as the appeal of our cost effective solutions for customers.

Turning to retention metrics, we track net revenue retention or NR and gross customer retention.

Total company <unk> was 111% with <unk> cloud storage at 120% and computer back up at 106% gross customer retention was 91% overall consistent with the prior year with 90% for both <unk> cloud storage and computer backup.

Working down the P&L adjusted gross margin was 72% down from 76% year on year.

In quarter, one we had increased data center costs due in part to data center expansion, our planned migration between data centers at a higher than anticipated increase in power costs.

While we do not guide gross margin explicitly we expect Q1 gross margin to be the low point for the year and for it to trend back into the mid <unk> for the balance of the year.

Adjusted EBITDA was a loss of $2 9 million or negative 12% of revenue compared to a loss of $3 million or minus 15% in Q1 of 2021.

Year over year, the better adjusted EBITDA margin reflects the slight leverage on sales and marketing and R&D as our revenue growth outpaces our expense growth.

On a GAAP basis. We also had one time charges of $2 5 million for workforce reduction and related severance charges.

Turning to the balance sheet cash and short term investments, including restricted cash totaled $57 million as of March 31, 2023 versus $70 million.

As of the end of Q4 2022.

In addition to the $2 $5 million of workforce reduction costs mentioned, a moment ago cash usage also included $1 5 billion for an unrelated legal settlement.

We expect further one time employee separation cash cost of approximately $1 million in quarter two.

Investors should also note that our primary banking relationship is with city National Bank, a subsidiary of Royal Bank of Canada, one of the largest and well capitalized banks in the world and we have no known exposure to any of the banks that have faltered recently.

Now I'd like to provide our outlook for quarter two.

The second quarter, we expect revenue to be in the range of 24, 1% to $24 5 million.

We expect quarter, two adjusted EBITDA margin of minus 11% to minus 7%.

At the midpoint. This is an over three percentage point improvement quarter on quarter.

Flexing our commitment to approach EBITDA breakeven by Q4.

We expect Q2 2023 basic share count of approximately 34, 5% to $36 5 million.

Turning to the full year 2023, we are reaffirming our prior outlook for revenue.

$98 million to $102 million and an adjusted EBITDA margin of minus 10 to minus 6%.

I will now pass the call back to Glenn.

Thanks, Frank and thank you to the entire <unk> team for executing so well in an environment that has proven challenging for many of our competitors and peers.

You just heard from Frank we are focused on continued growth and returning to adjusted EBITDA profitability.

Operator, we're now ready to take questions from the sell side analysts on a call.

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 withdraw your question. Please press Star then two and at this time, we'll pause momentarily to assemble our roster.

The first question will come from Simon Leopold with Raymond James. Please go ahead.

Great. Thanks for taking the question.

I just wanted to see if you could maybe <unk>.

Reflect on how the macro environment might be affecting.

Your business and really sort of the root of this question is this idea that you.

You might be seeing some tailwind.

Some buyers some customers are dropping down from from the Hyperscale high expense in there.

That would benefit you, whereas on the other side, maybe there are customers that are pressured and just not to not to store their data in the cloud and avoid the subscription how are you thinking about those kind of net results.

Okay.

Thanks for the question, maybe I'll start and if anything maybe Frank can jump in as well.

I think it's similar to what you just described which is.

Like I talked about on the call.

Those were three examples where we are.

Customers away from each of the other traditional cloud providers part of the reason we each of them switched was.

Optimize their spend so those were net benefits to us because we were able to help those customers and we see a lot of that happening. So that's certainly a tailwind of sorts.

Overall in the market.

Hi.

Certainly customers just across the range are looking at where they can save save costs and where they can.

Not invest in future activities for the moment.

For the most part I think we're seeing that as a as a benefit.

But we also saw some reduction in <unk>, which is likely a little bit of that as well.

The one thing I'll say is kind of on the macro overall for us.

We're reiterating our guidance for 2023, and so I think that speaks to the where that where we believe that that lands on balance.

And that's sort of the root of my question is it sort of seems like the pros and cons cancel each other out to enable the reiterated guidance, which I think in the current environment is good news, but that seems to me that the net of it isn't it.

Yes.

Hi, Simon its Frank Yes, we agree with that conclusion, where we're seeing that our strong business model and the fact that our market is so large and in fact that was such a good value.

Is really important to the prospects.

And Dave mentioned, it more often and Glenn mentioned, how are how large our pipelines are right now and we think thats in part to not just good sales execution, but the need for companies to really look at these expenses and decrease them.

So we see that and then.

I think it's really very positive that we can reiterate guidance in this environment.

Great and then when we think about the full year outlook.

It does appear that that the <unk> business.

Maintains a growth rate over 40%, but I just wanted to check in how are you thinking about the individual segment growth rates.

That's right, we think of the individual segment growth rates to be <unk>, particularly to be strong and we think that 40% is a good.

Approximation for quarter two.

Thank you for taking the questions.

The next question will come from Chad Bennett with Craig Hallum Capital. Please go ahead.

Great. Thanks for taking my question nice job on the quarter.

And it's good to see the reiteration on the guide.

So I guess just maybe following up on on the guidance question from before.

I look at your <unk> your <unk> actually accelerated year over year I think it was 47% this quarter year over year up from 44 last quarter.

Which you just not seeing in this in this software cloud environment all of the eye.

I don't have to tell you, but all of the Hyperscale are sort of decelerating massively.

And it seems like <unk>.

Sales cycles like you said are accelerating are hanging in there for sure pipeline is.

Celebrating.

I guess from an IRR standpoint.

Do you have.

More conviction that <unk> growth relative to revenue.

Is maybe better than expected or it could be better than expected because also I think your even your backup business I think performed.

Better than maybe I thought from a year over year growth standpoint, just any commentary there would be helpful. Thanks.

I'll start first of all thank you for initiating coverage, we do appreciate that.

Our growth rate is slightly higher by just one point that in our revenue and then they trail to get there and is there upside opportunity there sure.

But right now we're thinking that they're going to be really aligned together.

Okay.

Just.

Do you.

Heavier.

I mean, it seems like the backup business is hanging in there and the gross churn is hanging in there and I don't know if it's better than worse than maybe what you thought but have your expectations on the backup business changed at all for this year.

No not really be our emphasis on all of our investments are not all of them, but the vast majority of our investments are aimed at <unk>. So that hasnt changed. However that is we love our computer backup business. It does continue to grow.

We're very pleased with that but that single digit range of growth is what we had expected.

Got it.

Okay, and then maybe maybe last one if I could just could you could you give me a sense of.

After Q1 here you had some some capex investments.

Investments in Q1, just kind of how that looks like or how that looks for the rest of the year and any any other kind of cash related investment items. We should be aware of then I'll hop off thank you.

Yes, our capex in the first quarter as a percentage of revenue is lower.

Remember that we get advantages from our platform.

Investment so our software engineers are making our platform ever more efficient and that does help us and not having to incur as high capital expenses going forward. So we do see that savings and we do think that savings will continue so our trend line is a decline in.

Capex as a percentage of revenue.

Got it thanks, so much nice job.

The next question will come from Erik <unk> with JMP Securities. Please go ahead.

Yes, Thanks for taking my question and good quarter.

First off did you say that the reserve.

The reserve service generated $1 million or have passed the $1 billion Mark in which cases at about 10% of the <unk> business overall.

The IRR on the.

On the revenue is $1 million not the actual revenue we received in quarter, one and quarter one.

Okay.

What kind of penetration.

Go ahead.

I'd just add its not not yet.

As large as that.

No revenue or you just get generating from our customer the orders the reserve at this point.

Yeah, they're they're pretty similar so the the detail reserve offering comes with some additional services, including the Universal data migration, some additional support functionality and.

Some included <unk>.

Availability, but they're pretty similar offerings at a pretty similar price luck uhm. It's just that the the main thing that we see with me to reserve. The main reason customers choose that in the main reason the channel <unk> is that it's a prepaid offering and so for for those that want to have full predict.

The ability in terms of what they're gonna spend they can use beach reserve as a way to buy a certain amount of capacity no that that's how much they paid for it and not have consumption charges month to month.

And also the advantage for us they vanished for US of course is that it's installed usually as an annual so as soon as the invoice is sent to our reseller. We can recognize the 12th of the revenue.

Right away and so unlike the B two regular account there on consumption based pricing, we usually have to wait for them to upload their data before we had a meaningful invoice. So that's a nice advantage as well you know 12 months of cash collected and then recognition of it ever Avenue.

Okay and then the other question you said that the.

The.

The conversion rate for yourself service service improved I think by 10% can you tell us what the conversion rate is for self serve customers.

Going from free to paid.

Yeah, but I'm I'm afraid, we aren't sharing that number.

But what what I'll say is that we've always been quite efficient with our conversion rates I think customers like the experience of showing up to the web site, creating an account with just an email address and password Frank trying to free service, which gives them 10 gigabytes of data and then when they cross.

US over that 10 gigabytes Uhm, then we start charging them for the storage amount. The one of the things that we've learned is that uhm, some customers sharp and they get into that at.

That would be created that account, but they don't necessarily know what they do next and so the guide itself serve helps them with specific use cases that they may want to solve and helps navigate them through that so it's a it's an opportunity for us to make it even easier than it has been and and as you know most of our business has.

<unk> was built on the self serve motion. So it was something that we were good at but this is this is another step up from that.

Very good thank you.

Thanks, Sir.

The next question will come from Zack Cummings with be Riley Securities. Please go ahead.

Yeah, Hi, good afternoon, thanks for taking my questions Uhm glue.

Glad I mean, it's nice to hear that your business is holding up well in the current environment, especially but I mean, obviously I've heard some feedback from some major technology distributors.

And the U S slowing spending environment. So I'm just curious of feed.

Feedback you received from some of your reseller partners or even major distributor partners and we're really your expectations for that channel in the coming year.

Yeah, I I think that you know a little bit to the conversation about it I T spend over all may be slowing because customers are looking for ways to spend less but for storage and data.

<unk> unless they're going to stop their businesses many of them have to continue having a place to both stored and then use it.

And so if the choices are am I going to buy an additional set of servers am I going to.

Spend money on additional traditional cloud vendors at at five times, our price point or am I going to expand on back wiser switch tabak ways. I think we am many customers are choosing to switch tabak. Please instead of buying more servers are buying more traditional crowd, so and I I think <unk>.

From from the channel side of it. It's it's an area that we're excited about as you know the the B two reserve is a channel friendly offering. It's it's primarily something that we offer through the channel and so the the rate of growth on that offering speaks to some of what we're seeing with the channel and why work.

Cited about the combination of each reserved with the channel motion.

So we have you know.

The the the.

The guidance does baked and our expectations around the growth of the channel, but it the channel is definitely something that we're excited about independent initiative that we're investing behind.

Understood and and just one question.

More geared toward Frank, but just says you're still targeting approaching breakeven adjusted EBITDA by the end of the year, how how should we think about the progression of cash burn as we continue throughout 2023.

But we don't project cash as you know, but as you were going through the quarters, you should expect to see lower and lower cashed usage.

Understood well, thanks for taking my questions and best of luck with the rest of the corner.

The next question will come from Jason Adder with William Blair. Please go ahead.

Yeah. Thanks.

Maybe just on the macro front any color commentary on specific vertical or geography's any anecdotes from from.

From folks out their customers just on.

I'm kind of a trend line in this in particular, you're seeing any improvement from January February March to April .

We're in early May now so you have another month of data to just kind of curious as to what you're saying.

So our businesses you know it was very distributed with over half a million customers in over 175 countries in basically every vertical out there. So I I would say that where I I don't think I've seen very concrete.

Trend lines that segment by vertical to say this vertical as is.

Doing better in the macro are doing worse in the macro.

They're certainly vertical is that are more inclined to be good customer segments for us we've talked about media as one of those examples part of the reason that media is is is a good vertical for us is because the customer is there have a lot of video footage a lot of photos.

It was a lot of audio and all that takes up a lot of data space and so they are more attuned to making decisions about where and how do they store their data. So we see certain vehicles that are more tuned to caring about.

Data and what the implications of of where they choose disorder.

But I wouldn't say I have much in the way of specific changes macro.

Macro specific by vertical.

I don't know if <unk>. If you have anything else you wanted to add to that.

Okay Fair enough I guess not Frank [laughter].

Can you hear me didn't have more to add sorry, Oh can you give me just one they've got one flanked there for a second.

Alright, I guess next question.

For your club is.

When you're talking to customers what are the most requested features are services that you currently don't have.

Customers are coming to you and thank God, we wish you had this.

So I think I'm going to be a little care pharmacy, because for competitive reasons. They don't Wanna it'd be sharing our future roadmap, but what I will say is that one of the things that we had heard.

A fair bit from customers in the past was hey, I I I Love Your service and the only thing about it is that every time I have to.

Go to our finance.

<unk> and talk to them about how much it's going to cost it's not that they have any issue with the amount. It's gonna cost. It's just that I have to explain every month what is what it is and what why the bill varied and how much it's going to be next month and I can't answer that question. So with that feedback from customers. We built B two reserve.

And there are some.

There is some features on the on the sides of of those Beach reserve that.

That we hear requested that we're working on to make it even easier for customers to adopt Beach reserve.

They're not major but there are things that just you know we we shipped our first version of Beach Reserve and we have functionality that's coming for for the second version of it one of the things that we heard what customers wanting to be able to store their data in the east coast of the U S. Some.

That was just to have it in the east coast and some of that was in order to replicate data.

Into two regions, but keep it inside of the U S. So that was something that we launched.

Thank you for it to support that Uhm. So we continue focusing on enabling customers to not only store their data, but also to protect and to use their data and so we have items on our roadmap that are in support of some of those other <unk>.

Parts of our mission.

Gotcha, Okay, and then the last one for me.

The requisite generous.

Generous today I question, that's on every earnings call.

In particular for you guys I was wondering.

Does it make sense at some point for you guys to compute to your platform, especially with.

You know how computer intelligent things like Gen AI or I mean, I know their storage intensive as well but.

Are you at risk of losing some workloads because if.

You don't have compute and customers go to another platform that has both computing Serge.

So I think that we.

We believe in the open Internet and we believe that customers want and walk increasingly want to <unk>. The best parts of their text back with special I'd cloud that are really good at that and so today, we focus on the storage aspect of it and we work with partners for other.

Pieces of the Tech stack.

One of the partnerships that we talked about this this quarter was bolter, which is a compute uhm focused company and we can cross connect with them and make it free and easy to move the data back and forth between us and them. So if a customer wants to store large datasets and then they want to run a computer on those large datasets and then they want.

To keep the outputs of those large datasets. They can do all that with us and them. So they can keep all the data with backwards to they can run the compute inside of ultra they can put the data back on back with me too at all can work seamlessly and we think that that works really well for customers. So you know I gave you. The example of the.

The general AI customer on this call and give the example, they generate a customer on the last one is call we have others that do it as well I think that we're we're showing that customers with general <unk> AI in particular, but in general can be successful in this open internet approach.

Thanks, very much good luck.

Thank you.

The next question will come from Maxwell Michaels with Lake Street Capital markets. Please go ahead.

Hey, guys. Good afternoon, and congrats on the <unk> I was wondering if you could touch on gross margin you answer my second half of my question on the outlook throughout the year, but I was just wondering if you can go into a little more detail on Q1 in the step down from Q4.

Sure. So first of all Q1 gross margin to 72% is the low point of gross margin for the year and we do expect the gross margin will return into the mid 70% range in the second quarter and for the full year.

But for the specific reasons why it was the lower in this quarter is this is the quarter, where we had.

Full quarter of expenses for our new data center is in our expanded data centers and that included the setup the staffing the space and utility charges.

<unk> those new centers and then we also had some duplicate expenses in moving from one data center to another that will dissipate in quarter too and I think like everyone. We also experienced higher energy costs as well. So we did have some.

We had announced these additions to our data center footprint, and we will grow into and leverage those as we go forward.

Okay.

Okay. Thanks, guys and then my next one a good color on the Bolter partnership I was wondering if you could share any other potential partnership do you happen to work you're thinking about announcing this year.

Yeah. So <unk> you know, we we don't pre announced partnerships, but but you can look at it and see what we've previously announced partnerships with other independent health provider, including Cloudflare Fastly.

Hashi core.

In other so the we continue to add partners as it makes sense and as our customers show that it's something that's valuable for them. We also partner with companies on the technology of Lions side of things. So we partnered with the email quanta him and <unk> and others to support typically.

I T Tech use cases, and one of the big areas that we're focusing on now is the channel.

Type of partnerships.

Which.

Doing with national distributors that we've signed and are now selling primarily beach reserved.

With them.

Alright, thanks, guys.

Mmm. Thank you.

Alright, thanks to all our covering animals for this insightful questions.

That is our customers and we're going to take your questions that'll be gathered from the retail investors I'm Gonna say, it and now I'm just about to ask.

<unk>.

So the the <unk>, it's actually a combination of a couple of questions around the same topic. What's your plan you get the stock back on track what are your plans to increase shareholder value.

Sure what value in the stock. So unfortunately, we're not alone.

Sauce or a cloud company in terms of the stock performance Mmm Mmm <unk>.

Many of our peers have seen similar stock price declines since November 21, which is when we went public.

Probably with many other public companies deals, we don't believe that the stock price that we see today is reflective of the longterm value of our business northern consistent with the growth we've delivered since we've gone public.

And so while we can't control the market conditions, what we do believe is that executing on our growth plan is the best thing we can do to enhance shareholder value. We remain committed to that and so we're <unk>, we're taking some strong actions to deliver that shareholder value.

Part of that is driving growth and we've talked to quite a bit about some of our growth initiatives <unk>.

Part of that is aiming to achieve profitability again, so that's we've talked about achieving adjusted EBITDA breakeven by a by end of the year, we're doing that through both the revenue growth and the careful cost management for our business. So those are the <unk>.

Things that I think about in terms of both executing on the company side and delivering shareholder value the other pizza.

<unk> your home value is we need to make sure that we get the story out to investors.

And so we've been doing a reasonable amount of increasing awareness of our story through conferences meetings at the stocks and storage video blog and and other other investor relations activities. So between executing on the company and getting her a story out that's what we're focused on in terms of delivering shortly.

Right.

Alright, Thanks <unk>. Another one for you. So this is really going to be the account issue I think about.

Questions I'm Gonna most of your center around just generating awareness in reaching a new <unk>, new financial customers with their value prop uhm driving growth.

And just sort of general marketing plans.

General marketing <unk>, certainly makes sense that there'll be a lot of questions about awareness in our growth strategy makes sense since.

The market, we're pursuing at the 50 billion dollar market and we have a tremendous opportunity to pursue it.

We raise the IPO proceeds specifically with the goal of going after that opportunity now a lot of that was around both building awareness and investigate the go to market activities behind them.

So we hired chief marketing officer in the Middle of last year. So I'm excited about that addition to the team and and and helping us build that awareness and scaled the code.

Market efforts.

On the awareness side of things some of what we have been scaling or the programs around content. So we've talked about our blog and how the blog.

Courtney part of getting awareness out there. We're we're scaling programs around that both in terms of generating additional content improving the the way that that content is prevent presented getting the additional publicity search engine optimization and some of the community. We're gonna surrounded and we've also.

Behind both live and virtual events. So those are some of the things that we're doing to scale awareness.

And then I'll go to market side, we've talked I think a fair bit now about self serve optimization sales motion the challenge technology partnerships and focusing on those applications are juice cases and so.

<unk>, we're excited about all the various steps for taking and some of the results that we're seeing from it.

Whenever you're Frank can you just talk about insider selling February it looked like it was higher than than in prior quarters.

Yeah, there's not none of large <unk> and the selling month to month, but in February in particular that is the month, where our bonuses, which are paid in restricted stock units are issues are destined to our employees and then we have an obligation to sell on their behalf.

To cover the federal and state income tax associated with it. So there was selling to do that and then of course those proceeds are immediately we admitted to the government.

<unk> <unk>, we had a couple of questions to surround lay offs like what's best for taking to guard against I'm, having to do lay offs, what what's the chasing profitability.

So we've talked about aiming to be adjusted EBITDA breakeven by end of the year and there's really two fundamental ways that we're doing that one is growing revenue and the other is keeping a lid on expenses across the board.

<unk> quite a bit about how we're aiming to grow revenue on the <unk> side, we're looking at optimizing a variety of things, including our facilities and usage first various programs and other opportunities to save so uhm growing revenue optimize expenses.

And the ultimate expenses that are not just not just people.

Frank do we have a forecast for next year and onwards.

Well, what we do is we do create a budget for every year. So we have that and then we do create rolling forecasts and what we mean by that is that we take current revenue and expenses and we start rolling that and seeing what the trends are there and then we use all of that to build a multi year.

<unk> outlook for for all seniors going forward. So yes, we do and we do use it you can tell that we have because we keep providing more and more guidance on the different quarters are reiterating guidance not case this all year.

Mmm Thanks Frank.

Glenn what are your plans in the next year it'd be more competitive with a larger cloud services. Besides just the lower subscription fee or their new products or features that are coming to differentiate from the competition.

Certainly the the lower price point is obviously, a very compelling and we continue to invest in the platform to drive.

<unk> in the actual storage called platform and that's it takes a lot of technology to do that obviously was we spent a lot of time money and effort over the.

The last 15 years to make sure that our storage platform is really robot and very cost efficient. So we continue to invest in that we don't <unk> features but we do continue explore what we can do to deliver more value to customers.

I think we're already very competitive we can we can see that is why we're seeing growth that is more than two and a half times.

Or a larger competitors. It's also <unk> show customers, leaving those companies and switching to back please.

Wow <unk>.

Not gonna Preannounced features of a point to some of the things that we've done in the recent past right. So from a roadmap perspective, we added the east Coast region, we added <unk> object block, which enabled customers to help them protect themselves from rent somewhere we had a beat you reserve, which as we mentioned just recently crossed the.

A million dollars of a R. R M.

<unk> and other features and functions that we've launched and announced over the last year to tears. So we're not gonna preannounced, but we are excited about a roadmap and how we can serve our customers ever better.

Alright, Thanks, Frank when do you expect her needs to stop falling.

Oh earnings that we use is the best measure for earnings adjusted EBITDA and that's really how we.

Report or physical improvements and as you just heard we data improve in our adjusted EBITDA. This quarter is modest 12 and in our next quarter at the midpoint, it's minus nine and for the full year. That's that's at the mid point and at the full.

<unk>, we're still approaching the editor breakeven. So I think we're on our way we've been getting some initial good results are on our way to that debit breakeven.

Alright, <unk>, how do you plan to I'm going to summarize descriptions longer than this new natural platform, but basically how do you plan to educate investors and the.

Not a tendency savvy, an internet have folks get too freaked out by your temper deletions in the business.

So we have great investors, which I I appreciate it and I love.

We also have a broad investor relations program and it aims to keep our investors informed.

About the business and where we're headed.

It also is focused on introducing or sorry to new investors. We we do aim to meet and educate investors where they are so for institutional investors we work with our.

Covering analysts we attend conferences and do not deal Roadshows for our retail investors. We publish are stocks and storage video blog. We also have our stock perks program and so we we we aim to have a robust program to both egg.

<unk> and also introduce investors into into the store.

Mmm, Frank what are your branch increase your Green energy.

Energy sources.

The best way for us to be greener Israeli in the selection of our data center vendors, because we use so much energy.

And for an example of that is one of our data centers has innovation and cooling technologies to save on energy. So would continue as we expand in our data centers to look for these kinds of innovation.

And for Frank E <unk>.

No we have no plans to do reverse ducks, but.

Uhm.

I'm, probably more for glad to hear what are the company's plans to breathe and effective management team that experienced or any of the little company with a focus on increasing shareholder value.

So.

We've had a team.

With whom we went public that included a number of people with strong public company management expertise.

Over the last 12 months we've.

Added a few more people to the team that have strong public company expertise.

So I think we have a strong executive team.

That do have a a company expertise to do that I'd also say that the at the company I think I'm proud of what we have achieved we've executed on our growth plans. We've met all of our guidance for all the.

Course, since we've been public.

And I want to also recommended that I think we have a lot that we still want to do and we've talked about some of the initiatives around the growth opportunities in the roadmap that we have so I think.

We have a we have a good team.

Added people to make it an even stronger team we've done a lot of good things and we have a lot of work still to be done.

Alright last week for you <unk> when do you believe that backpack weight is going to be the number one cloud company.

I love that so I would say.

We are the leading specialized storage cloud today, we certainly believe we can be a much larger company given the size of the market is over $50 billion and we have a very compelling value proposition.

And I'd say considering that that would be two grew 42% this quarter, which is more than two and a half times that of Amazon AWS I think we're well on our way.

Alright, Thanks, Glenn and frankly, this thoughtful answers, we're getting off to glad for closing comments I'd like to mention a few investor events. We've got plan for you too.

They include first the Oppenheimer virtual emerging <unk> conference on May 11th later this week <unk> in London in June 12th returning the Cantor Fitzgerald, San Fran Security infrastructure Software Conference in New York City on June 14th Uhm and then we also have the rest of your meetings hosted by Craig Hallum.

New York City on June 15th Alright, Thank you <unk>.

Well, thank you James and thanks for everybody for joining US today, we look forward to talking again, and just a few short months.

Operator, you May know Anna Nicole.

The confidence has now concluded. Thank you for attending today's presentation you may now disconnect.

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Why don't you touched on phone and Swift your all your question. Please press Star then two please note. This event is being recorded I would now like to turn the conference over to Mr. James Kisner. Please go ahead Sir.

Thank you good afternoon, and welcome to <unk> first quarter fiscal year 2023 earnings call.

On the call with me today are glib Butman co founder CEO and chair person of the board and Frank <unk> Chief Financial Officer.

Good day back lease 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.

From our new offerings.

Partnerships and sales and marketing initiatives, our ability to compete effectively.

Acquiring 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 actual results to differ materially.

Those described in our risk factors that are included in our annual report on Form 10-K, and our other financial filings.