Q4 2024 Backblaze Inc Earnings Call

Question. During this time simply press star followed by the number one on your telephone keypad once again star one and if you'd like to withdraw your question simply press Star one again.

Speaker Change: I would now like to turn the call over to Mimi Kong head of Investor Relations. Maybe please go ahead.

Speaker Change: Thank you good afternoon, and welcome to back late in the fourth quarter and full year 2024 earnings call.

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Glenn: On the call with me today are Glenn <unk> co founder CEO and chair person of the board and Mark <unk> Chief Financial Officer.

Thank you for standing by. And at this time, I would like to welcome everyone to today's Backblaze fourth quarter and full year 2024 earnings call. All lines have been placed on mute to prevent any background noise.

Glenn: Today Barclays will discuss the financial results that were distributed earlier. This afternoon statements. On this call include forward looking statements about our future financial results the impact of our go to market transformation sales and marketing initiatives cost saving initiatives results from new features the impact of <unk>.

After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star followed by the number one on your telephone keypad. Once again, star one. And if you'd like to withdraw your question, simply press star one again. Thank you.

Speaker Change: I would now like to turn the call over to Mimi Kong, Head of Investor Relations. Mimi, please go ahead.

Glenn: This changes our ability to compete effectively and manage our growth and our strategy to acquire new customers and retain and expand our business with existing customers.

Mimi Kong: Thank you. Good afternoon, and welcome to Backblaze's fourth quarter and full year 2024 earnings call.

Glenn: These statements are subject to risks and uncertainties that could cause actual results to differ materially including those described in our risk factors are included in our annual report on Form 10-K, and our other financial filings.

Speaker Change: On the call with me today are Gleb Budman, co-founder, CEO, and chairperson of the board, and Marc Suidan, chief financial officer.

Speaker Change: Today, BACLays will discuss the financial results that were distributed earlier this afternoon. Statements on this call include forward-looking statements about our future financial results

Glenn: 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.

The impact of our go-to-market transformation

Speaker Change: Sales and Marketing Initiatives, Cost Saving Initiatives, Results from New Features, the Impact of Price Changes, our Ability to Compete Effectively and Manage our Growth, and our Strategy to Acquire New Customers and Retain and Expand our Business with Existing Customers.

Glenn: 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.

Glenn: 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.

Speaker Change: These statements are subject to risks and uncertainties that could cause actual results to differ materially, including those described in our risk factors that are included in our annual report on Form 10-K and our other financial filings.

Glenn: 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 gross customer retention rate or <unk> and adjusted free cash flow.

Speaker Change: 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.

We'd also like to inform you that we will be participating in the Oppenheimer emerging growth Conference Tomorrow on February 26, and the citizens JMP Tech conference on March 3rd and fourth we hope to see you there.

Speaker Change: 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.

Glenn: Thank you for joining us and wed now like to turn the call over to Glenn.

Speaker Change: Reconciliation of GAAP to non-GAAP results may be found in our earnings release which was furnished with our Form 8K file today with SEC.

Thank you Amy and welcome everyone to the call.

Glenn: Revenue grew 18% over the same period last year and be true cloud storage grew 22%.

Speaker Change: 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.

Glenn: <unk> card storage, our fastest growing solution is now over 50% of the business in Q4.

Speaker Change: Please also see our press release or presentation for definitions of additional metrics such as NRR, gross customer retention rate, ARPU, and adjusted free cash flows.

Glenn: And adjusted EBITDA margin came in at 14% doubling over the same period last year.

Glenn: I'll talk more about the quarter in a moment, but first I wanted to take stock of where we've been and where we're going.

Speaker Change: We'd also like to inform you that we will be participating in the Oppenheimer Emerging Growth Conference tomorrow on February 26th and the Citizens J&P Tech Conference on March 3rd and 4th. We hope to see you there.

Glenn: And the last four years, we have more than doubled both the revenue and adjusted EBITDA margin, which transitioned from a company selling primarily SMB customers to a self serve model to one that also supports enterprises with a direct sales and partnership model.

Gleb Budman: Thank you for joining us and would now like to turn the call over to Gleb.

Gleb Budman: Thank You Mimi and welcome everyone to the call. Revenue grew 18% over the same period last year and B2 cloud storage grew 22%.

Glenn: We also doubled our number of data regions and launched a host of innovations to provide customers and partners with more value.

Gleb Budman: B2 Cloud Storage, our fastest-growing solution, is now over 50% of the business in Q4. An adjusted EBITDA margin came in at 14%, doubling over the same period last year.

Glenn: As we look to the next few years, we are focused on becoming a rule of 40 company deliver.

Glenn: Delivering both growth and profitability.

Glenn: Continuing to build the leading storage cloud for the cloud to pointed out era.

Gleb Budman: I'll talk more about the quarter in a moment, but first I wanted to take stock of where we've been and where we're going.

Glenn: Now, let's talk about our recent results.

Gleb Budman: In the last four years, we have more than doubled both the revenue and adjusted a bit of margins.

Glenn: During our last earnings call, we shared two key initiatives.

Gleb Budman: We transitioned from a company selling primarily to SMB customers to a self-serve model to one that also supports enterprises with a direct sales and partnership model.

Glenn: Go to market transformation.

Glenn: Focus on driving <unk> growth.

Glenn: And our plan to be adjusted free cash flow positive by Q4.

Glenn: First I'll share details about our go to market transformation and then Mark will provide an update on our path to becoming adjusted free cash flow positive.

Gleb Budman: We also doubled our number of data regions and launched a host of innovations to provide customers and partners with more value.

Glenn: I am pleased with the impressive progress our team has made on our go to market transformation as we are already seeing strong early signs.

Gleb Budman: As we look to the next few years, we are focused on becoming a Role of Forty company.

Gleb Budman: delivering both growth and profitability and continuing to build the leading storage cloud for the cloud 2.0 era.

Mark: Our win rates were up significantly and sales productivity in Q4 doubled year over year, leading the team to meaningfully beat quota for the quarter and the full year.

Now let's talk about our recent results.

During our last earnings call, we shared two key initiatives.

Mark: Despite being behind quota when Jason our new Chief revenue Officer arrived in July.

A Go-To-Market Transformation

Focus on driving B2 growth.

Gleb Budman: and our plan to be adjusted free cash flow positives by Q4.

Mark: Not only did we increase sales productivity across the sales team.

Gleb Budman: First, I'll share details about our go-to-market transformation, and then Marc will provide an update on our path to becoming a just and free cash flow positive.

Mark: But we also signed a significant expansion for an existing customer for over $1 million based on annual contract value.

Mark: We had a record sales booking quarter, which was greater than the prior three quarters come behind.

Gleb Budman: I am pleased with the impressive progress our team has made on our go-to-market transformation, as we are already seeing strong early signs.

Mark: <unk> cloud storage had net new <unk> sequential growth $5 million.

Speaker Change: ARR win rates were up significantly and sales productivity in Q4 doubled year over year.

Mark: A record outside of that driven by the price increase.

Mark: These are excellent early signs that the go to market transformation is working.

Gleb Budman: leading the team to meaningfully beat quota for the quarter and the full year despite being behind quota when Jason, our new chief revenue officer, arrived in July.

Mark: As a reminder, due to the nature of us being in as a service business. There is generally a lag before these leading indicators translate into revenue.

Gleb Budman: Not only did we increase sales productivity across the sales team,

Mark: However, we do believe that the low point in organic growth was behind us in Q3.

Gleb Budman: But we also signed a significant expansion for an existing customer for over $1 million based on annual contract value.

Mark: We are already seeing an acceleration in <unk> growth.

Gleb Budman: We had a record sales booking quarter, which was greater than the prior three quarters combined.

Mark: We will go into more details later on in the call.

Mark: Now.

Mark: How have we achieved these results and acceleration to date we've.

Gleb Budman: B2 cloud storage had net new AR sequential growth of $5 million, a record outside of that driven by the price increase.

Mark: We've done that through the three main focus areas, we talked about last quarter.

Mark: Fueling partnerships and sales plays.

Gleb Budman: These are excellent early signs that the go-to-market transformation is working.

Mark: Okay.

Mark: On upscaling the sales team Jason.

Gleb Budman: As a reminder, due to the nature of us being an as-a-service business, there is generally a lag before these leading indicators translate into revenue.

Mark: Jason is moving at Lightning speed. It has an outsized impact in a short period of time.

He has implemented robust training and a more rigorous and repeatable process to help ensure that the team is set up well to continue to move upmarket.

Gleb Budman: However, we do believe that the low point in organic growth was behind us in Q3, and we are already seeing an acceleration in B2 growth.

Mark: In the last few months, we also hired field sales leadership and additional experienced quota carrying reps to increase sales capacity along with a VP of demand generation to help fill the pipeline.

Gleb Budman: Marc will go into more details later on in the call.

Speaker Change: Now, how have we achieved these results and acceleration to date?

Mark: Second on the Partnership's front, we are making significant headway last quarter I spoke about the changes we've made with our channel program I'm happy to share that the average deal size of the leads coming in from the channel in Q4, as we nearly doubled year over year.

Speaker Change: We've done that through the three main focus areas we talked about last quarter. Upskilling, partnerships, and sales plays.

First, on upscaling the sales team.

Speaker Change: Jason is moving at lightning speed and has an outsized impact in a short period of time.

Mark: Next I'd like to talk about how we are meaningfully up loving our alliance strategy.

Speaker Change: He has implemented robust training and a more rigorous and repeatable process to help ensure that the team is set up well to continue to move up market.

Mark: This program is now structured along a co build co market and co sell strategy.

Co build we are currently working on joint solutions with key technology partners.

Speaker Change: In the last few months, we also hired field sales leadership and additional experienced quota-carrying reps to increase sales capacity, along with a VP of demand generation to help fill the pipeline.

Mark: As examples we are working with two partners to create a joint solution for AI powered media workflows and with another partner to create a joint solution to support compute and storage needs around large AI datasets.

Speaker Change: Second, on the partnerships front, we are making significant headway. Last quarter, I spoke about the changes we made with our channel program. I'm happy to share that the average deal sizes of the leads coming in from the channel in Q4 has nearly doubled year-over-year.

Mark: Third the sales plays.

Mark: We are focusing on four key plays to drive repeatability and efficiency. These are applications storage.

Mark: Backup media and entertainment and powered by Barclays, which is our white label offerings.

Speaker Change: Next, I'd like to talk about how we are meaningfully uploading our Alliance Strategy. This program is now structured along a Co-Build, Co-Market, and Co-Sell strategy.

Mark: Our marketing efforts are becoming more tightly aligned with these sales plays to ensure we have the right positioning collateral programs and more to drive greater sales efficiency and market awareness.

Speaker Change: To co-build, we are currently working on joint solutions with key technology partners.

Mark: On market awareness I will note that we were recently recognized by actually to a popular software review site as the best object storage solution for faster implementation ease of use and high performance.

Speaker Change: As examples, we're working with two partners to create a joint solution for AI-powered media workflows, and with another partner to create a joint solution to support compute and storage needs around large AI datasets.

Mark: Turning to our business highlights for the quarter.

Third, for sales plays.

Mark: We continued to add a number of larger customers in a diverse range of industries.

Speaker Change: We are focusing on four key plays to drive repeatability and efficiency. These are Application Storage, IT Backup, Media and Entertainment, and Powered by Backplays, which is our white label offering.

Mark: Just a quick sampling we signed a company that provides an application developer platform for over $100000 in Ah discussed.

Mark: This customer chose <unk> because they were looking for a cost effective solution to archived data from their data warehouse.

Speaker Change: Our marketing efforts are becoming more tightly aligned with these sales plays to ensure we have the right positioning, collateral, programs, and more to drive greater sales efficiency and market awareness.

Mark: A large Japanese social media company committed to back plates for over 50000 in <unk>.

Speaker Change: On market awareness, I'll note that we were recently recognized by G2, a popular software review site, as the best object storage solution for fast implementation, ease of use, and high performance.

Mark: Recognizing that we were an affordable and archive solution for their content.

Mark: And a digital music media company signed a deal for about $50000 in and.

And is using <unk> as their origin store for their streaming content.

Turning to our business highlights for the quarter.

Speaker Change: We continued to add a number of larger customers in a diverse range of industries.

Mark: In addition to signing a number of larger customers or customers also continued to expand with us as.

Speaker Change: Just a quick sampling, we signed a company that provides an application developer platform for over $100,000 in AR. This customer chose Backblaze because they were looking for a cost-effective solution to archive data from their data warehouse.

Mark: As an example in Q4 three existing customers in the surveillance gaming and AI industries, each expanded their usage to an additional $100000 in a run rate.

Mark: It's a pattern, we have seen where customers often start small and lean in as they see the significant value our platform provides that scale.

Speaker Change: A large Japanese social media company committed to Backblaze for over $50,000 in ARR, recognizing that we were an affordable and hot archive solution for their content.

Mark: And I'll highlight a customer who signed a significant expansion in Q4 for over $1 billion in annual contract value.

Speaker Change: and a digital music media company signed a deal for about $50,000 in AR and is using Backways as their origin store for their streaming content.

Mark: They chose our powered by <unk> offering, thus, enabling them to offer cloud storage to their customers.

Mark: Three things to note.

Speaker Change: In addition to signing a number of larger customers, our customers also continue to expand with us. As an example, in Q4, three existing customers in the surveillance, gaming, and AI industries each expanded their usage to an additional $100,000 in AR run rate.

Mark: First.

Mark: Our white label powered by <unk> solution launched in Q1 of last year.

Mark: We've already signed a number of channel and technology partners to offer this innovative capability, including this latest $1 million plus ACD deal.

Speaker Change: It's a pattern we've seen where customers often start small and lean in as they see the significant value our platform provides at scale.

Mark: This speaks to our ability to innovate.

Mark: And drive growth from our R&D investments.

Mark: Second this customer chose <unk> in part because of our platform's ability to deliver high performance and affordability a rare combination.

Speaker Change: And I'll highlight a customer who signed a significant expansion in Q4 for over $1 million in annual contract value.

Speaker Change: They chose our Powered by Backblaze offering, thus enabling them to offer cloud storage to their customers.

Mark: And for our free egress, which was key to their business.

Mark: And third this demonstrates our continued progress in being able to move up market.

Three things to note.

First.

Speaker Change: Our white label powered by a backlight solution launched in Q1 of last year.

Mark: Next I'd like to address the seismic shifts taking place in the AI industry.

Speaker Change: We've already signed a number of channel and technology partners to offer this innovative capability, including this latest $1 million plus ACV deal.

Mark: A few weeks ago, the major announcement of deep seek illustrated that AI innovation is happening rapidly and everywhere.

Speaker Change: This speaks to our ability to innovate and drive growth from our R&D investments.

Mark: Thus it is increasingly clear that companies need flexible AI tech sector that can adapt to this dynamic environment and leverage data effectively.

Speaker Change: Second, this customer chose Backblaze in part because our platform's ability to deliver high performance and affordability, a rare combination, and for our free egress, which was key to their business.

Mark: We believe that those who can freely flow their data to where innovation is happening as they can with Doc blades.

Mark: We'll be the best positioned to win in this evolving landscape.

Speaker Change: And third, this demonstrates our continued progress in being able to move up market.

Mark: And those who are constrained by the walled gardens of the traditional cloud providers may struggle to keep pace.

Speaker Change: Next, I'd like to address the seismic shifts taking place in the AI industry.

Mark: We believe this need for flexibility and data mobility is a big factor in why we're seeing such strong momentum in our AI customer segment.

Mark: We now serve hundreds of AI customers.

Speaker Change: Thus, it is increasingly clear that companies need flexible AI tech stacks that can adapt to this dynamic environment and leverage data effectively.

Mark: This is translated into nearly a 10 fold increase of data stored by these companies with three out of our top 10 customers.

Speaker Change: We believe that those who can freely flow their data to where innovation is happening, as they can with BackBlaze,

Mark: As of December 2024, now being AI companies.

Mark: Because we focus on the storage layer, we are not burdened by the massive capex investments being made in Gpus, but we still benefit from AI tailwind.

Speaker Change: will be the best positioned to win in this evolving AI landscape.

Speaker Change: and those who are constrained by the walled gardens of the traditional cloud providers may struggle to keep pace.

Mark: Recently, another AI customer gave us a glowing endorsement and I quote.

Speaker Change: We believe this need for flexibility and data mobility is a big factor in why we're seeing such strong momentum in our AI customer segment.

Mark: We looked at all of the cloud provider as you would expect.

Mark: <unk> delivered the right combination of price and usability and we didn't have to change anything on our site to make it work.

We now serve hundreds of AI customers.

Mark: Our opportunity back ways to power. The AI Revolution is exciting and I expect AI will be a major growth driver for many years to come.

Speaker Change: This has translated into nearly a ten-fold increase of data stored by these companies with three out of our top ten customers

Mark: Finally <unk>.

As of December 2024, now being AI companies.

Mark: <unk> 25 is a pivotal year for <unk> as we expect to accelerate <unk> revenue growth.

Speaker Change: Because we focus on the storage layer, we are not burdened by the massive CapEx investments being made in GPUs, but we still benefit from AI tailwinds.

Mark: Being adjusted free cash flow positive in Q4.

Move towards being a rule of 40 company and continue to build the ideal cloud storage platform for the open cloud.

Speaker Change: Recently, another AI customer gave us a glowing endorsement and I quote

Speaker Change: We looked at all of the cloud providers you would expect.

Mark: Now I will turn it over to Mark.

Mark: Art.

Mark: Thank you Glenn and good afternoon, everybody. It's been a very busy six months since I joined the company, where we've deployed numerous changes to position ourselves for higher growth and free cash flow profitability.

Speaker Change: Backblaze delivered the right combination of price and usability and we didn't have to change anything on our site to make it work.

Speaker Change: Our opportunity at BackWaves to power the AI revolution is exciting, and I expect AI will be a major growth driver for many years to come.

We are executing on an aggressive agenda to drive change quickly we launched our go to market transformation in a cost restructuring initiatives, which are both showing good early results.

Speaker Change: Finally, 2025 is a pivotal year for Backblaze as we expect to accelerate B2 revenue growth.

Mark: We also successfully completed an oversubscribed secondary offering for $37 million in net proceeds in November of 2024.

Speaker Change: target being adjusted free cash flow positive in Q4, move toward being a Role 40 company, and continue to build the ideal cloud storage platform for the open cloud.

Mark: I want to note that while the company did not need additional capital to turn free cash flow positive. We felt it was prudent to executed a secondary offering to reinforce our liquidity and generally strengthened our balance sheet.

Now, I will turn it over to Marc.

Now, let me share our results for the quarter.

Marc Suidan: Thank you Gleb and good afternoon everybody. It's been a very busy six months since I joined the company where we've deployed numerous changes to position ourselves for higher growth and free cash flow profitability.

Mark: Q4 revenue was $33 $8 million.

Mark: Representing 18% year over year growth and slightly ahead of the midpoint of our guidance computer backup revenue was $16 7 million, representing 13% year over year growth, primarily driven by price increase implemented in Q4 of 2023.

Marc Suidan: We are executing on an aggressive agenda to drive change quickly. We launched a go-to-market transformation and a cost restructuring initiative which are both showing good early results.

Mark: B to cloud storage revenue was $17 1 million, representing 22% year over year growth, primarily driven by existing customer data expansion and new customer acquisition.

Marc Suidan: We also successfully completed an oversubscribed secondary offering for 37 million dollars in net proceeds in November of 2024.

Marc Suidan: I want to note that while the company did not need additional capital to turn free cash flow positive, we felt it was prudent to execute a secondary offering to reinforce our liquidity and generally strengthen our balance sheet.

Mark: I'd like to point out that in Q4, we fully lap the btu price increase the.

Mark: The strength of our <unk> growth in Q4 is easier to see if we exclude the impact of the price increase from the prior period.

Now let me share our results for the quarter.

Mark: Excluding the benefit of the price increase third quarter organic <unk> growth would have been approximately 19%, which we view as our low point of growth.

Marc Suidan: Q4 revenue was $33.8 million, representing 18% year-over-year growth and slightly ahead of the midpoint of our guidance. Computer backup revenue was $16.7 million, representing 13% year-over-year growth, primarily driven by price increase implemented in Q4 of 2023.

Mark: Compared to our fourth quarter growth was 22%, representing a 300 basis points sequential improvement.

As Glenn noted, we expect that our go to market transformation should continue to accelerate <unk> revenue growth throughout 2025, which I will comment on further in the guidance section.

Marc Suidan: B2Cloud storage revenue was 17.1 million dollars representing 22% year-over-year growth primarily driven by existing customer data expansion and new customer acquisition.

Mark: RB two <unk> for Q4 is $70 million, representing a $5 million increase from Q3 and as I mentioned. This is the largest organic sequential dollar increase for <unk> since our IPO in 2021.

Marc Suidan: I'd like to point out that in Q4, we fully lapped the B2 price increase.

Marc Suidan: The strength of our V2 growth in Q4 is easier to see if we exclude the impact of the price increase from the prior period.

Mark: This gives us further confidence in the early success of our go to market transformation given that <unk> is a leading indicator of revenue.

Marc Suidan: excluding the benefit of the price increase, third quarter organic B2 growth would have been approximately 19% which we view as our low point of growth.

Mark: Net revenue retention or NR for the total company was 116% compared to 109% last year.

Marc Suidan: Compared to our fourth quarter, growth was 22%, representing a 300 basis points sequential improvement.

Mark: The year over year improvement, mainly benefited from the price increase that we put in place in Q4 2023.

Speaker Change: As Gleb noted, we expect that our go-to-market transformation should continue to accelerate B2 revenue growth throughout 2025, which I will comment on further in the guidance section.

Mark: The total customer retention was 90% in the quarter compared to 91% in the prior year.

Mark: Our customer retention has remained consistent since going public in 2021.

Speaker Change: Our B2 ARR for Q4 is $70 million, representing a $5 million increase from Q3. And as Gleb mentioned, this is the largest organic sequential dollar increase for B2 since our IPO in 2021.

Mark: Overall company <unk> is $268 up 18% year over year.

Our <unk> business continues to show strength with our pool climbing to $645, a 12% improvement over last year.

Speaker Change: This gives us further confidence in the early success of our go-to-market transformation, given that ARR is a leading indicator of revenue.

Mark: Moving down to the income statement adjusted gross margin was 78% for the quarter showing continued strength with the all time highs seen in Q3 of 2024.

Speaker Change: Net Revenue Retention or NRR for the total company was 116% compared to 109% last year.

Mark: Adjusted EBITDA continues to improve at $4 6 million or 14% of revenue for the quarter driven by revenue growth and strong cost management the.

Speaker Change: The year-over-year improvement mainly benefited from the price increase that we put in place in Q4 2023.

Speaker Change: The total customer retention was 90% in the quarter compared to 91% in the prior year.

Mark: Q4, adjusted EBITDA margin more than doubled from the prior year and represents an 800 basis points improvement.

Speaker Change: Our customer retention has remained consistent since going public in 2021.

Mark: Q4, only partially benefited from the restructuring because the quarter included about half of the benefit on a run rate basis.

Overall company ARPU is $268, up 18% year-over-year.

This further demonstrates that the operating leverage as efficiently working which is roughly 75% of our incremental revenue flowing through the bottom line.

Speaker Change: Our B2 business continues to show strength, with our pool climbing to $645, a 12% improvement over last year.

Mark: Turning to the balance sheet.

Speaker Change: Moving down to the income statement, adjusted gross margin was 78% for the quarter, showing continued strength with the all-time high seen in Q3 of 2024.

Mark: We finished the quarter with $55 million in cash and short term investments.

Mark: As a reminder, we raised $37 million in net proceeds in a secondary offering and paid off the line of credit in Q4, which had $4 $7 million outstanding.

Speaker Change: Adjusted EBITDA continues to improve at $4.6 million, or 14% of revenue for the quarter, driven by revenue growth and strong cost management.

Mark: Last year, we disclosed that we expected to end the year with at least $20 million of cash on hand, I am pleased to share that excluding the secondary offering and the line of credit pay off we would have ended the year with $23 million in cash.

Speaker Change: The Q4 adjusted EBITDA margin more than doubled from the prior year and represents an 800 basis points improvement.

Speaker Change: Q4 only partially benefited from the restructuring because a quarter included about half of the benefit on a run rate basis.

Mark: After the successful secondary offering we decided it was best to pay off and close the line of credit which had relatively unfavorable terms.

Speaker Change: This further demonstrates that the operating leverage is efficiently working, which is roughly 75% of our incremental revenue dollar flowing to the bottom line.

We did not see the merit of paying fees to maintain and line of credit with 100% cash restriction of borrowed money.

Turning to the balance sheet.

Speaker Change: We finished the quarter with $55 million in cash and short-term investments.

Mark: Like to highlight that our liquidity as of Q4 has improved what are current ratio going above one for the first time since Q1 of 2023 or eight quarters ago at.

Speaker Change: As a reminder, we raised $37 million in net proceeds in a secondary offering and paid off the line of credit in Q4, which had $4.7 million outstanding.

Mark: Additionally, we have significantly increased our equipment leasing credit lines and now have access to over $80 million in credit, which is more than double from the prior quarter.

Speaker Change: Last year, we disclosed that we expected to end the year with at least $20 million of cash on hand. I am pleased to share that excluding the secondary offering and the line of credit payoff, we would have ended the year with $23 million in cash.

Mark: Our cash flow from operations for the year, our $12 $5 million a dramatic improvement from cash usage of $7 4 million for the same period last year. This represents a $20 million improvement over the prior year and cash flow from operations.

Speaker Change: After the successful secondary offering, we decided it was best to pay off and close the line of credit, which had relatively unfavorable terms.

Mark: Our adjusted free cash flows for the full year were negative $20 million compared to negative $43 million last year, showing a significant improvement of $23 million, primarily as a result of revenue growth and cost cutting initiatives.

Speaker Change: We do not see the merit of paying fees to maintain a line of credit with 100% cash restriction of borrowed money.

Speaker Change: I'd like to highlight that our liquidity as of Q4 has improved with our current ratio going above 1 for the first time since Q1 of 2023 or 8 quarters ago.

Mark: Free cash flow will continue to be a primary focus for us.

Speaker Change: Additionally, we have significantly increased our equipment leasing credit lines and now have access to over $80 million in credit, which is more than double from the prior quarter.

Mark: Moving to guidance.

Mark: We expect our 2025 full year revenues to be in the range of 144 million to $146 million and our Q1 revenues to be within the range of $34 one to $34 5 million.

Speaker Change: Our cash flow from operations for the year are $12.5 million dollars, a dramatic improvement from cash usage of $7.4 million dollars for the same period last year. This represents a $20 million dollar improvement over the prior year in cash flow from operations.

Mark: As a reminder, the price increase which helped drive revenue growth last year has fully lab with the exception of a small percent left on our computer backup business.

Speaker Change: Our adjusted free cash flows for the full year were negative $20 million compared to negative $43 million last year, showing a significant improvement of $23 million, primarily as a result of revenue growth and cost-cutting initiatives.

Mark: In 2025, we expect to exit with <unk> growing over 30% a significant increase.

Mark: And driven primarily by new customer acquisition and expansion of existing customers.

Mark: We just posted our earnings presentation, which highlights our <unk> quarterly outlook for 2025, driven by our go to market transformation.

Free Castle will continue to be a

Moving to guidance.

Speaker Change: We expect our 2025 full-year revenue to be in the range of 144 million to 146 million dollars and our Q1 revenues to be within the range of 34.1 to 34.5 million dollars.

Mark: What youll see is that <unk> hit a low point of growth in Q3 of 2024 and accelerates from that point forward to over 30% by the end of 2025.

Mark: Finally, we project adjusted EBITDA for the full year to be in the range of 16% to 18%.

Speaker Change: As a reminder, the price increase which helped drive revenue growth last year has fully lapped with the exception of a small percent left on our computer backup business.

Mark: And adjusted EBITDA guidance for Q1 to be in the range of 13% to 15%.

Mark: We remain on track to exit Q4 of 2025 with an adjusted EBITDA margin above 20% and we expect to be adjusted free cash flow positive in Q4 of 2025 as well.

Speaker Change: In 2025, we expect to exit with B2 growing over 30%, a significant increase, and driven primarily by new customer acquisition and expansion of existing customers.

Mark: From there on we expect the operating leverage will kick in to help us grow free cash flows in a sustainable way given our low variable costs.

Speaker Change: We just posted our earnings presentation, which highlights our B2 quarterly outlook for 2025 driven by our go-to-market transformation.

As we move to be a rule of 40 company. We are laser focused on executing our go to market strategy and increasing profitability to deliver on these results.

Speaker Change: What you'll see is that B2 hit a low point of growth in Q3 of 2024 and accelerates from that point forward to over 30% by the end of 2025.

Mark: In summary, we are very excited about the path ahead and the momentum that is already in place the great shareholder value and with that let's take your questions operator.

Speaker Change: Finally, we project Adjusted EBITDA for the full year to be in the range of 16% to 18%.

Speaker Change: and Adjusted IBIDA guidance for Q1 to be in the range of 13 to 15 percent.

Speaker Change: Thank you so much and at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad once again star one and in the interest of time, we ask that you. Please limit your questions to one primary question and one follow up.

Speaker Change: We remain on track to exit Q4 of 2025 when adjusted EBITDA margin above 20% and we expect to be adjusted FCP in Q4 of 2025 as well.

Speaker Change: From there on we expect the operating leverage will kick in to help us grow free cash flows in a sustainable way given our low variable cost.

Mark: And with that we will pause just a moment to compile the Q&A roster.

Speaker Change: Okay. It looks like our first question today comes from the line of Jeff Van <unk> with Craig Hallum Capital Group, Jeff. Please go ahead.

Speaker Change: As we move to be a rule-afforded company, we are laser-focused on executing our go-to-market strategy and increasing profitability to deliver on these results.

Jeff Van: Great. Thank you Hey, guys. So just a few from me on the on the partner front. It sounds like you've got a lot of things changing any hard and fast like what are the key metrics you are monitoring for the year, specifically any quantitative goals for for partners and 25.

Speaker Change: In summary, we are very excited about the path ahead and the momentum that is already in place to create a world of value. And with that, let's take your questions. Operator?

Speaker Change: Hey, Jeff good to hear from you this is Glenn.

Speaker Change: Thank you so much and at this time I would like to remind everyone in order to ask a question press star then the number one on your telephone keypad once again star one and in the interest of time we ask that you please limit your questions to one primary question and one follow-up

Jeff Van: So.

Jeff Van: On the partner side, we have the two different parts of it we have the channel and then we have the alliances side of it on the channel.

Jeff Van: Somewhat traditional style metrics. So we look at pipeline and then sales productivity.

Speaker Change: And with that, we will pause just a moment to compile the Q&A roster.

Jeff Van: Sales productivity when we measured average.

Jeff Van: <unk> closed one.

Speaker Change: Okay, looks like our first question today comes from the line of Jeff Van Ree with Craig Hallam Capital Group. Jeff, please go ahead.

Jeff Van: Or a person.

Jeff Van: On the team and so it flows through to the channel that way as well on the alliances side, it's a little more nuanced we're doing co build co marketing co sell so what we're looking to do there.

Speaker Change: Great, thank you. Hey guys, so just a few for me on the on the partner front, it sounds like you've got a lot of things changing. Any hard and fast, like what are the key metrics you're monitoring for the year, specifically any quantitative goals for partners in 25?

Jeff Van: Build up.

Jeff Van: Solutions that we jointly go to the market with <unk> to solve specific customer problems.

Hey Jeff, good to hear from you. This is Gleb.

Jeff Van: Very helpful. And then just one last for me.

Jeff Van: When you look at the two sub segments.

Jeff Van: I think maybe a little further out how do you see btu over say a three to five year period and the same for computer backup in terms of growth rates. What are your ambitions, how do you see it playing out.

Speaker Change: Yes, Hi, Jeff I mean, the way, we see it as we should.

Speaker Change: <unk> finished 2025 would be to growing year over year at 30% plus and then that should continue because its a disruptive solution in the market that's already growing into 18, 19%. So we will beat the market there.

Average ARR, closed one.

Speaker Change: for a person on the team. And so it flows through to the channel that way as well.

Speaker Change: On the Alliance's side, it's a little more nuanced. We're doing co-build, co-market, and co-sell. So what we're looking to do there is build up solutions that we jointly go to the market with to solve specific customer problems.

Speaker Change: On the on the backup side I mean, if you think about the backup side I would say the first half of the year will grow because of the tail winds from the price increase for multi year contract.

Speaker Change: Very helpful. And then just one last for me. When you look at the two sub-segments, think of maybe a little further out. How do you see B2 over, say, a three to five year period and same for computer backup in terms of growth rates? What do you envision? How do you see it playing out?

Speaker Change: And afterwards, it will pretty much follow the customer count that we have on the earnings release since the majority of it is consumers so that would so would exit the year.

Speaker Change: Minus 3%, so overall will be flattish for the year.

Speaker Change: On the backup side.

Speaker Change: Yeah, hi Jeff. I mean, the way we see it is we should finish 2025 with B2 growing year over year at 30% plus, and then that should continue because it's a disruptive solution in a market that's already growing at 18, 19%, so we'll beat the market there.

<unk> term frankly, it's a good business, but it's more about the business side versus the consumer the consumers and the secular.

Speaker Change: Macro decline versus the business side is the growth opportunity and since we are building the installed base. So as good cross selling opportunities can be too and that overall backup solution.

Speaker Change: On the backup side, I mean, if you think about the backup side, I would say the first half of the year,

Speaker Change: Yes, if I could sneak just one last one on gross margins.

Speaker Change: will grow because of the tailwinds from the price increase for multi-year contract. And afterwards, they'll pretty much follow, you know, the customer count.

Speaker Change: Mark just how do you see them progressing as we go through the year.

Speaker Change: Pretty stable.

Speaker Change: That 78%, we exited the year, which would be pretty stable into next year, we don't see any major changes in the adjusted gross margin.

Speaker Change: that we have on the earnings release since the majority of it is consumers.

Speaker Change: So that would, so it would exit the year at, you know, minus 3%, so overall would be flashed for the year.

Speaker Change: Okay, great. Thank you.

Jeff Van: Alright, Jeff Jeff.

Speaker Change: The backup side, you know, longer term, frankly, it's a good business, but it's more about the

Speaker Change: And our next call or excuse me. The next question comes from the line of <unk> with Oppenheimer. Please go ahead.

The business side versus the consumer.

Speaker Change: The consumer is in a secular macro decline versus the business side is the growth opportunity and since we're building the install base, there's good cross selling opportunity between B2 and that overall backup solution.

Jeff Van: Alright. Thanks.

Jeff Van: Appreciate it.

Speaker Change: Great commentary on the business and Mark as well at grid stuff.

Speaker Change: Glenn I wanted to dig into the commentary.

Speaker Change: It looks interesting I guess, maybe you can.

Speaker Change: Yeah, if I could sneak just one last in. Gross margins, Marc, just how do you see them progressing as we go through the year?

Speaker Change: Perhaps give us a little bit more color on the use cases within AI, meaning.

Speaker Change: Pretty stable, you know that's 78% we exited the year which should be pretty stable into next year. We don't we don't see any major changes in that adjusted gross margin.

Speaker Change: One thing to have a customer who has an AI customer.

Speaker Change: If the use cases that they're using it for are not actual delivered towards what theyre doing.

Speaker Change: Just the amount of customers. So help me help me understand in what way is their growth going to translate into your growth.

Okay, great. Thank you.

All right. Thank you, Jeff.

Speaker Change: And our next call, or excuse me, next question comes from the line of Itay Kedron with Oppenheimer. Itay, please go ahead.

Speaker Change: Tom.

Speaker Change: So there will be helpful.

Speaker Change: Yes, thanks for the question.

Thanks, appreciated it.

Speaker Change: And it makes absolute sense.

Speaker Change: The from many of these customers we are very directly tied to the growth.

Speaker Change: Great commentary, Gleb, on the business and Marc as well. Great stuff.

Speaker Change: Are there strategic vendor that enabled them to succeed so breaking down the AIA data pipeline a little bit there.

Gleb, I wanted to dig in into the AI commentary.

It looks interesting. I guess maybe you can...

Speaker Change: We think of.

Speaker Change: Different components of the pipeline that broadly depending on which customers are doing what so theres data collection, where they need to get data from all over the place where that's coming from and stored somewhere that data processing, which is all of the labeling tagging et cetera, the model training, where they take the data.

Speaker Change: But if the use cases that they're using it for are not actually levered towards what they're doing It's just another customer. So help me. Help me understand in what way is their growth going to translate into your growth That they'll be helpful

Speaker Change: Bring it to some Gpus and then.

Speaker Change: And to create a model there is influence where they run the actual applications.

Speaker Change: Yeah, thanks for the question, Itai, and it makes absolute sense.

Speaker Change: Use the model to get insights and then as monitoring of all the other systems. So we have we have customers who use it.

Speaker Change: From many of these customers, we are very directly tied to their growth. We are their strategic vendor that enables them to succeed. So, breaking down the AI data pipeline a little bit.

Speaker Change: In.

Speaker Change: Each of these areas data collection is one of the most one of the largest areas.

Speaker Change: There's, we think of five different components of the AI pipeline that broadly depending on which customers are doing what. So there's data collection,

Speaker Change: Reduced sports.

Speaker Change: We have customers that are scraping data from across the internet and using that for collection for model training. They are using us as the destination for all of that data.

Speaker Change: where they need to get data from all over the place, wherever that's coming from and store it somewhere. There's data processing, which is all of the labeling, tagging, et cetera. There's the model training where they take the data, you bring it to some GPUs and then train it to create a model. There's inference.

Speaker Change: We have customers who have large datasets from.

Speaker Change: They've built up over years around photography, videography et cetera that they're using to train different models, where cell for AI insights. We have customers who are using for all of those kinds of data collection and storage components.

Speaker Change: where they run the actual applications and use the models to get insights and then there's monitoring of all the systems.

Speaker Change: The next part of it which is data processing the real customers that then take that data use it use our storage and then free growth out.

Speaker Change: So, we have customers who use it in each of these areas. Data collection is one of the largest areas that customers use it for. We have customers that are scraping data from across the internet and using that for collection, for model training. They're using us as the destination for all of that data.

Speaker Change: Two third party and open source tools for data data labeling.

And so they use us for that piece of it model training is actually a significant one for US also we don't do the gpus themselves, but one of the things that you probably heard often is companies are being limited on innovation on AI because of limited access to GPU availability and what they're finding.

Speaker Change: We have customers who have large data sets that they've built up over years around photography, videography, etc., that they're using to train different models or sell for AI insights. We have customers who are using them for all those kinds of data collection and storage components.

Speaker Change: We need to do is get their data too.

Speaker Change: Multi cloud GPU.

Take tech stack and so what they are using us for us keep all the data with us than egress that too which ever GPU cloud has availability of the gpus they need and so they are building the multi cloud GPU environments.

Speaker Change: The next part of it, which is data processing, the customers then take that data, use it, use our storage, and then free Egress out.

Speaker Change: to third-party and open-source tools for data labeling. And so they use this for that piece of it. Model training is actually a significant one for us also. We don't do the GPUs themselves, but one of the things that you've probably heard often is companies are being limited on innovation on AI because of a limited access.

Speaker Change: Where we are at the core that starting point, where their data pipeline.

Speaker Change: And then the for the <unk> side, we have lots of customers who run their actual application on back plays where we are the storage for it and then they are influencing it through one of the places where they have either built their own model or where they use one of the open source models.

Speaker Change: to GPU availability. And so what they're finding they need to do is get their data to a multi-cloud GPU type tech stack. And so what they're using us for is keep all the data with us.

Speaker Change: And then finally on the monitoring side, obviously, they keep one of the log files with us so for many of these customers we are actually.

Speaker Change: The core strategic location, because obviously the AI thrives on the data itself.

Speaker Change: then egress it to whichever GPU cloud has availability of the GPUs they need. And so they're building these multi-cloud GPU environments where we are the core starting point for their data pipeline. And then for the inference side, we have lots of customers who run their actual application on Backblaze where we are the storage for it.

Speaker Change: That's very helpful.

Speaker Change: What I want to add to that is.

Speaker Change: We're obviously incredibly enthusiastic about the traction on the upfront but.

Speaker Change: Until we took a more prudent approach of what to incorporate into the rest of the year.

Speaker Change: Because it's a very nascent industry for us and everybody.

Speaker Change: So us achieving the 30% by Q4 of 2025.

Speaker Change: We didn't bid on this continuing of this space hopefully it does.

Speaker Change: where they've either built their own model or where they use one of the open source models for the information. And then finally on the monitoring side, obviously they keep a lot of the log files with us. So for many of these customers, we are actually the core strategic location because obviously the AI thrives on the data itself.

Speaker Change: And also frankly just too.

Speaker Change: To be clear on what makes up the <unk>.

Speaker Change: The numbers and the guide up there we did have a big <unk>.

Speaker Change: Larger customer loss in Q1, so thats all reflected universe, but it is reflected in these growth numbers. So our new customer acquisition engine is Hudson running that's kind of pretty much what it says.

Speaker Change: What I want to add to that is, you know, we're obviously incredibly enthusiastic about the traction on the AI front, but

Speaker Change: Maybe just one other thing on your specific point.

Speaker Change: I'd say we took a more prudent approach of what to incorporate into the rest of year outlook because it's a very nascent industry for us and everybody. So us achieving the 30% by Q4 of 2025.

Speaker Change: One of our customers.

Is there.

Speaker Change: Is there a billion dollar construction companies so they're not at all an AI company they've been using us for a while for a data backup and cyber resilience.

Speaker Change: We didn't bet on this continuing at this pace, hopefully it does.

Speaker Change: But what they have actually started talking to US now about is how do they evolve their business to take advantage of AI and so the part that they are actually looking at doing with us.

And also, frankly, you know, just to

to be clear on what makes up the...

Speaker Change: The numbers in the guide out there, you know, we did have a big, you know, a larger customer loss in Q1, so that's not reflected in any of this, but it's reflected in these growth numbers.

Speaker Change: Is capturing all of the video footage from their construction sites, that's captured by cameras drones and the rest using.

Using that then to train models.

Speaker Change: New customer acquisition engine is hot and running. That's that's kind of pretty much what it says

Speaker Change: Sure understanding safety on their construction sites tagging all of the.

Speaker Change: Yeah, and maybe just one other thing on your specific point, Itay, is...

Speaker Change: The hubs the jacket.

Speaker Change: The gloves and all the other safety components that are part of the construction site requirement and then using that as influence where they can look at new construction going up and making sure that the proper safety measures are being taken so even companies that have nothing to do with AI in general are actually looking at expanding their use cases with us to incur.

Speaker Change: One of our customers is actually, they're a billion dollar construction company, so they're not at all an AI company. They've been using us for a while for data backup and cyber resilience.

Speaker Change: But what they have actually started talking to us now about is how do they evolve their business?

<unk> AI.

Speaker Change: to take advantage of AI. And so the path that they're actually looking at doing with us...

Speaker Change:

Speaker Change: That's helpful. That's helpful.

And then mark on your the acceleration in growth that youre anticipating on <unk> through the year.

Thank you.

Speaker Change: Help me.

Speaker Change: Until the counter intuitive in a way right.

Speaker Change: Help me understand and I understand that all the changes we've made in go to market.

Speaker Change: The booking commentary I was quite interesting, but I guess.

Speaker Change: What in your mind, because it feels like Youre kind of heading in the right direction here, but one in your mind still needs to happen here.

Speaker Change: For you to have very strong visibility.

Speaker Change: And to this end.

Speaker Change: And as always, as you know, God bless and may God protect. Thank you both. Thank you.

Speaker Change: Again, it's not comment to see this type of pattern through the year of acceleration.

That's helpful, that's helpful.

Speaker Change: And so I just kind of wanted to make sure I get my hands around what in your view you kind of already feel very good about and kind of have it in the pocket versus still needs to come for us to be able to deliver to this.

and then Marc on your...

Speaker Change: The acceleration and growth that you're anticipating on B2 through the year. I guess help me It's all the counterintuitive in a way, right? Help me understand and I understand that all the changes you made and go to market and

Speaker Change: Yes, no thats fair and Thats good point.

Speaker Change: So what I would say is.

Speaker Change: The book and commentary was quite interesting, but I guess, what in your mind, because it feels like you're kind of heading in the right direction here, but what in your mind still needs to happen here?

Speaker Change: I think we're off to a really good start right because in Q3 to factor out the price increase we grew 19% year over year and to be too. So already you're seeing an improvement in Q4. So all these things we're talking about record quarters and so on already flowing through there.

Speaker Change: I think this is all execution anytime right I mean, we have like this incredibly healthy win rate.

Speaker Change: into this and because you know again it's it's it's not common to see this type of pattern through the year of acceleration.

Speaker Change: So it is about consistency of execution, we've doubled our sales capacity. So obviously, you've got a ramp of the new people train them the right way make sure your pipelines aligned the right way in terms of how to generates where it generates.

Speaker Change: and so I just kind of wanted to make sure I get my hands around what in your view you kind of already feel very good about and kind of have it in the pocket versus still needs to come for you to be able to deliver to this.

Speaker Change: I think it boils down to continuing our execution and that's for the non what I call. The direct sales model right. I mean glib also spoke about the channel.

Speaker Change: Yeah, no, that's fair, that's a good point, Itai, right? So what I would say is...

Speaker Change: I think we're off to a really good start, right? Because in Q3, if you factor out the price increase, we grew 19% year-over-year in B2. So already you're seeing an improvement in Q4. So all these things we're talking about, record quarters and so on, are already flowing through there.

Speaker Change: And the alliances I wouldn't say that's activated yet nor then we make too much of that into these numbers right I see that more as a <unk>.

Speaker Change: Further benefits flowing into 2026.

Speaker Change: I think this is all execution, right? I mean, we have like this incredibly healthy win rate.

Speaker Change: Got it maybe last one on the computer back up just going back to the answer to the.

Speaker Change: Previous individuals.

Speaker Change: So it is about consistency of execution. We've doubled our sales capacity. So obviously, you've got to ramp up the new people, train them the right way, make sure your pipelines align the right way in terms of how it generates, where it generates.

Speaker Change: Commented on exiting the year to a negative two or 3% I think you said on a year over year basis.

Speaker Change: Price increased fades away.

Speaker Change: I guess should we think about this business going forward not just 25, but.

Speaker Change: So, I think it boils down to continuing our execution, and that's for the, kind of what I call the direct sales model, right? I mean, Gleb also spoke about the channel.

Speaker Change: For the foreseeable future.

Speaker Change: Declining business is there.

Speaker Change: And if thats the case why not take a more proactive approach on the price increases.

Speaker Change: and the Alliance. I wouldn't say that's activated yet, nor did we bake too much of that into these numbers, right? I see that more as further benefits flowing into 2026.

Speaker Change: Just squeezing more and more and more through the price increases I'm just trying to think about.

Speaker Change: The long term longevity of this business.

Speaker Change: Yes.

Speaker Change: <unk>, let me touch on that for a second and then maybe Mark will add as well. So I think what mark talked about is that the the.

Speaker Change: Got it. Maybe last one on the computer backup, just going back to the answer to the previous individual that you kind of commented on, exiting the year to negative 2 or 3 percent, I think you said, on a year-over-year basis as the price increase fades away.

Mark: Consumer side of that business is in a secular macro decline, we don't expect that specifically to change.

Speaker Change: On.

Speaker Change: A significant portion of that computer backup business is also businesses using us for their computer backup ransomware prevention cyber resilience and we do see opportunity there.

Speaker Change: We are signing up customers we launched.

Speaker Change: just squeeze it more and more and more through the price increases. I'm just trying to think about, you know, the long-term longevity of this business.

Speaker Change: <unk> functionality.

Speaker Change: Enterprise control in Q1 of last year. So we do see interest in engagement, there and we see some opportunity it's not the core group.

Gleb Budman: This is Gleb, actually. Let me touch on it for a second, then maybe Marc will add as well. So I think what Marc talked about is that the

Speaker Change: Our growth focus for us as a company right Btu is the primary core growth focus getting back to 30% plus by end of year is where we're putting most of our energy, but there is some opportunity there in terms of price increases and the like we don't rule it out.

Marc Suidan: consumer side of that business is in a secular macro decline, we don't expect that specifically to change.

Marc Suidan: on a significant portion of that computer backup business is also businesses.

Speaker Change: As we've talked about before it's something that we think we have as an option, but at the same time one of the things we do view. It as is it's hundreds of thousands of customers worldwide, who are fans of back blades, who refer customers to us and support us as a community. So.

using us.

for their computer backup, ransomware prevention, cyber resilience.

Marc Suidan: And we do see opportunity there, and we are signing up customers. We launched that B1E functionality, the enterprise control in Q1 of last year. So we do see interest and engagement there, and we see some opportunity. It's not the core growth focus for us as a company, right? B2 is the primary core growth focus. Getting it back to 30% plus by end of year is where we're putting most of our energy.

Speaker Change: We want to continue to make sure they feel like they're getting a great value great service and continue to recommend us to others.

Speaker Change: I appreciate it thank you.

Speaker Change: Thank you Doug.

Speaker Change: Yes. Thank you for your time.

Speaker Change: And our next question comes from the line of Simon Leopold with Raymond James Simon. Please go ahead.

Marc Suidan: In terms of price increases and the like, we don't rule it out as we've talked about before. It's something that we think we have as an option, but at the same time, one of the things we do view it as.

Simon Leopold: Thanks for taking the question first thing I wanted to ask about was.

Simon Leopold: Trying to put the AI store data in some context do you have a way of sizing what percent of the B to store data is coming from these AI use cases, and I guess, where I'm coming from is I imagine these are relatively larger datasets and therefore, maybe a higher proportion.

Marc Suidan: It's hundreds of thousands of customers worldwide who are fans of Backblaze, who refer customers to us and support us as a community. So we want to continue to make sure they feel like they're getting a great value, a great service, and continue to recommend us to others.

Speaker Change: <unk> historical but just trying to get away get a sizing of this.

Tim: Yes, Hey, Tim.

Tim: Good question. This is Glenn so one of the things we've talked about is that the data has grown tenfold in one of the things. We mentioned is that there are now three of our top 10 customers. So I would say that it's meaningful in terms of data growth for the organization, it's not massive as a percentage yet because.

Appreciate it. Thank you.

Thank you, Jack.

Tim: Obviously, it's a newer set compared to 17 years of being in business.

Marc Suidan: Do you have a way of sizing what percent of the B2 stored data is coming from these AI use cases?

Tim: But it is a fast growing part of the business in terms of the sizing per customer.

Marc Suidan: And I guess where I'm coming from is I imagine these are relatively larger data sets, and therefore maybe a higher proportion than historical, but just trying to get a way of getting sizing of this.

Tim: We have lots of customers, who are starting small with us they're brand new startups.

Tim: And then we have customers who are already storing.

Tim: Double digit petabytes as individual customers so it's across the across the range.

Gleb Budman: Yeah, hey Simon, that's a good question. This is Gleb. So one of the things we talked about is that the data has grown tenfold, and one of the things we mentioned is that there are now three of our top ten customers.

Speaker Change: Certainly data is a very.

Tim: Very data intensive.

Tim: Segments. So it's something that we believe there's a lot of opportunity.

Simon: So I would say that it's meaningful in terms of data growth for the organization. It's not massive as a percentage yet because obviously it's a newer set compared to 17 years of being in business.

Tim: And when we look at some of these customers of ours that are storing double digit petabytes.

Tim: Some of them are very new companies right. So I talked a moment ago about this construction company. That's looking at doing AI with US $1 billion revenue company they've been around for 100 years, but theyre just starting into the AI side of it but a lot of these companies that are storing multiple petabytes with us.

Simon: But it is a fast-growing part of the business. In terms of the sizing per customer, it varies. We have lots of customers who are starting small with us. They're brand-new startups.

Simon: And then we have customers who are already storing double digit petabytes.

Tim: Started in the last year or two years three years and so we have lots and lots of these little company that just started I wouldn't be surprised if many of those end up becoming multi petabyte customers within a year or two years.

as individual customers.

Simon: So it's across the range. Certainly, AI is a very data-intensive segment, so it's something that we believe there's a lot of opportunity in. And when we look at some of these customers of ours that are storing double-digit petabytes,

Tim: Great. The other thing I wanted to ask about was in January.

Tim: You had announced.

Tim: Our new data center in Canada, and I'm, hoping to get a little bit of context here, because I have lost track of where and how many locations you have so basically trying to understand one how material is the opening up a new data center and the other question is are you exposed to any exchange.

Simon: Some of them are, they're very new companies, right? So, you know, I talked a moment ago about this construction company that's looking at doing AI with us. You know, they're a billion dollar revenue company. They've been around for a hundred years, but they're just starting into the AI side of it. But a lot of these companies that are storing multiple petabytes with us,

Tim: Aaron exchange risk, where do you price everywhere in dollars just a little bit of help understanding that the international efforts. Thank you.

Simon: started in the last year, two years, three years. And so we have lots and lots of these little companies that just started. I wouldn't be surprised if many of those end up becoming multi-petabyte customers within a year or two years.

Tim: Yes, Thanks Simon.

Speaker Change: I'll start and then I'll, let mark touch on the on the currency component.

Tim: We have.

Tim: We have regions that customers can choose in the West Coast U S East Coast U S and Central Europe. So this is our fourth region that we've opened Canada is the fourth so it's fairly significant for us in terms of.

Simon: Great. The other thing I wanted to ask about was, in January you had announced opening a new data center in Canada.

Speaker Change: One out of four.

where and how many locations you have so

Speaker Change: It's brand new and like you said, it's just launched in January one of the things that we did.

Speaker Change: Basically trying to understand, one, how material is the opening of a new data center, and the other question is, are you exposed to any foreign exchange risk, or do you price everywhere in dollars? Just a little bit of help understanding the international efforts. Thank you.

Speaker Change: Was unique with this region is we did it in partnership with an anchor tenant and an anchor partner and so as opposed to building a data center and hoping that they will come we actually worked with a partner.

Speaker Change: Lined up together and then and then build the data center and in partnership with them. So.

Speaker Change: So, we have regions that customers can choose in the West Coast.

Speaker Change: So that de risks.

Speaker Change: The investment behind the new region and it also created a playbook for us effectively of how we want to go about opening other regions in the future. So.

U.S.

East Coast U.S.

Boring.

Speaker Change: region that we've opened. Canada is the fourth. So it's fairly significant for us in terms of, you know,

Speaker Change: So that's on that side of it and then maybe Mark can talk a little bit about the part of the question.

Speaker Change: One out of four. It's brand new, like you said, it's just launched in January. One of the things that we did that was unique with this region is we did it in partnership with an anchor tenant and an anchor partner. And so, as opposed to building a data center and hoping that they will come,

Speaker Change: Simon I would say is there is no meaningful exposure to foreign currency risk. The expenses that are in Canadian on the lower side and the billings. The majority of our Canadian billings would be in USD. So minimal risk there and then also whenever we open a region like we did in Canada.

Speaker Change: We actually worked with a partner, signed up together, and then built a data center in partnership with them.

Speaker Change: We also immediately make sure there is an anchor client to get started off with that way.

Speaker Change: so that that de-risks the investment behind the new region and it also created a playbook for us effectively of how we want to go about opening other regions in the future.

Speaker Change: Call it a sunk cost or the fixed cost to set up that first data center.

Speaker Change: It has quickly recovered.

Speaker Change: An initial claim and then from there we scaled pretty quickly. So I would say there is no. There is no major exposures on the FX side.

Speaker Change: So that's on that side of it, and then maybe Marc can talk a little bit about your other part of the question. Yeah, Simon, what I would say is there's no meaningful exposure to foreign currency risk, the expenses that are in Canadian on the lower side.

Speaker Change: For Canada.

Speaker Change: Thank you.

Speaker Change: Thanks.

Speaker Change: Alright, Thank you Simon.

Speaker Change: And our next question comes from the line of Jason Ader with WB, Jason. Please go ahead.

Speaker Change: and the billings, the majority of our Canadian billings would be in USD.

Jason Ader: Yeah. Thank you. Good afternoon, guys just wanted to ask first maybe for you Glenn.

Speaker Change: So, minimal risk there, and then also whenever we open a region like we did in Canada,

Jason Ader: We've seen kind of a nice resurgence in the backup software market.

Speaker Change: We also really make sure there's an anchor client to get started off with.

Jason Ader: So this theme of cyber resilience and ransomware protection.

Speaker Change: That way, you know, the, call it the sum cost or the fixed cost to set up that first data center is quickly recovered by an initial client and then from there we scale pretty quickly. So I'd say there's no, there's no major exposures on the FX side for Canada.

Jason Ader: The backup market is growing low double digits after growing for as long as I can remember in the kind of mid single digits and I'm. Just wondering have you seen there.

Jason Ader: That.

Jason Ader: The resurgence in the software market impacts were benefit.

Jason Ader: That play is kind of a target for backups.

Thank you.

Thank you very much.

All right. Thank you, Simon.

Jason Ader: Yes, it's a good question, Jason I think we have seen some additional interest.

Speaker Change: And our next question comes from the line of Jason Adder with WB. Jason, please go ahead.

Jason Adder: Thank you. Good afternoon, guys. I just wanted to ask first, maybe for you, Gleb,

Jason Ader: In the business side of it.

Jason Ader: Computer backup and so as we talked about a few minutes ago. The consumer side is in a long term secular decline, but we see opportunity on the business side.

Jason Adder: We've seen kind of a nice resurgence in the backup software market.

Jason Ader: Ransomware, obviously is becoming has been for a while and is continuing to become a larger and larger risk factor for companies, it's often a board level conversation.

to this theme of cyber resilience and ransomware protection.

Jason Adder: The backup market is growing at double digits after growing for as long as I can remember in the kind of mid-single digits. And I'm just wondering, have you seen...

Jason Ader: The number one risk that companies often talk about and backup wallets.

Jason Adder: that resurgence in the software market impacts or benefit backblaze is kind of a target for backups.

Jason Ader: It's not very hot as a as a term is really the best form of protection against ransomware for companies and so.

Jason Ader: We believe that that is an opportunity for us it is an opportunity for us, especially with larger organizations. The go to market transformation is heavily focused on our <unk> side of the business but.

Jason Adder: Yeah, it's a good question, Jason. I think we we've seen some additional interest

Jason Adder: in the business side of computer backup. And so, you know, as we talked about a few minutes ago, the consumer side is in a long-term secular decline, but we see opportunity on the business side.

Jason Ader: But it is also looking at how do we support larger organizations with our computer backup offering and I do think that there is there is opportunity there, especially around messaging to some of the cyber resilience.

Jason Adder: Ransomware obviously is becoming, you know, has been for a while and is continuing to become a larger and larger risk factor for companies. It's often a board-level conversation. It's a, you know, the number one risk that companies often talk about. And backup, while it's...

Jason Ader: Of the need.

Sorry, if the question was confusing I actually meant b to cloud as a backup target. So in other words folks like <unk> and Commvault and others that are selling backup software, obviously, the customer needs a target where to store the backups.

Jason Ader: <unk>.

Jason Ader: So I was just wondering is b to cloud.

Jason Ader: Seem to use case of backup.

Jason Ader: Kind of percolate because of this.

Jason Adder: but it is also looking at how do we support larger organizations with our computer backup offering. And I do think that there is opportunity there, especially around messaging to some of the cyber resilience side of the need.

Jason Ader: Secular trend in the market and acceleration backup software growth.

Jason Ader: I see I misunderstood your question. Thanks for clarifying so it is one of them.

Jason Ader: Backup and cyber resilience MBT is and has been one of our core areas of focus. So we talked about sales plays and the sales plays that we're focused on our application storage, which includes all of the application items, including AI.

Speaker Change: Sorry if the question was confusing. I actually meant B2Cloud as a backup target. So in other words, folks like Veeam and Commvault and others that are selling backup software, obviously the customer needs a target.

Jason Ader: Backup and cyber resilience.

Jason Ader: Media and entertainment and our White label powered by solution. So it is one of our core four sales plays and it is absolutely.

So, I was just wondering, is B2Cloud...

Jason Ader: A significant area.

seeing the use case of backup.

Jason Ader: It has been and continues to be a growth area for us.

Speaker Change: kind of percolate because of this secular trend in the market in acceleration and backup software growth.

Speaker Change: Okay, Great and then.

Jason Ader: One last one for me.

Speaker Change: And also for your clubs.

Speaker Change: When we think about the competitive landscape like at the time of the IPO.

There wasn't much competition I would say like in terms of the <unk>.

Speaker Change: Semi oriented cloud storage platform I mean, you have like wasabi and it's been.

Speaker Change: Couple of other small guys, but.

Speaker Change: And I know you were partnering very closely with folks like digital Osha and cloud for can you just kind of update us on where.

Speaker Change: IT Backup and Cyber Resilience, Media and Entertainment, and our white label Powered by Solutions. So it is one of our core four sales plays, and it is absolutely a significant area that has been and continues to be a growth area for us.

Speaker Change: Where are the competitive landscape sits today are you seeing more competition than you did at the time of the IPO or less or about the same.

Speaker Change: It's a funny question actually because I remember at the time of the IPO a lot of the conversation with.

Speaker Change: Okay, great. And then one last one for me and also for you, Gleb.

Speaker Change: How are you entering in competing into a space, where some of the world's largest companies are currently in their rate with Amazon and Google and Microsoft isn't that the most competitive market you could possibly plan. So.

Gleb Budman: When we think about the competitive landscape, like at the time of the IPO, there wasn't much competition, I would say, like in terms of a...

Speaker Change: So in some ways I would say.

Gleb Budman: SMB-oriented cloud storage platform. I mean, you have like Wasabi and a couple other small guys. But...

Speaker Change: In a way.

Speaker Change: <unk> has not evolved that much competitively because Amazon, Google, Microsoft where their Amazon, Google Microsoft Osaka is still there.

Gleb Budman: And I know you were partnering very closely with folks like DigitalOcean and CloudFlare. Can you just kind of update us on where the competitive landscape sits today? Are you seeing more competition than you did at the time of the IPO, or less, or about the same?

Speaker Change: Having said that I think one of the thing that has happened also since then is.

Speaker Change: Companies have broadly realize that cloud storage is an incredibly important component of the tech stack.

Gleb Budman: It's a funny question, actually, because I remember at the time of the IPO, a lot of the conversation was, you know, how are you entering and competing into a space

Speaker Change: And from a variety of reasons, having that data with Amazon or Google or Microsoft is not necessarily the best choice and so various other companies have started offering some kind of storage, including a variety of our partners right. So.

Gleb Budman: where some of the world's largest companies are currently in there, right, with Amazon and Google and Microsoft. Isn't that the most competitive market you could possibly play in? So, in some ways...

Speaker Change: Cloud.

Speaker Change: As a partner of ours, they were a partner of our pre IPO, They launched a storage offering digital ocean.

Gleb Budman: I would say, in a way, the market has not evolved that much competitively because Amazon, Google, and Microsoft were there. Amazon, Google, and Microsoft are still there. Having said that, I think one of the things that has happened also since then is

Speaker Change: Did volcker did.

Speaker Change: Obi age I mean, there's there's a variety of other companies that have their own storage offerings. Many of these are still partners of ours, because companies, who want best of breed provider for our storage someone who's very scalable high performance very affordable designed for the <unk>.

Gleb Budman: Companies have broadly realized that cloud storage is an incredibly important

component of the tech stack.

Gleb Budman: And for a variety of reasons, having that data with Amazon or Google or Microsoft is not necessarily the best choice.

Speaker Change: <unk> cloud.

Speaker Change: These are the customers choose back points for that and so our partner is still want to support their customers with those kinds of requirements.

and so...

Gleb Budman: Various other companies have started offering some kind of storage, including a variety of our partners. Cloudflare is a partner of ours. They were a partner of ours pre-IPO. They launched a storage offering. DigitalOcean did. Vulture did. OVH. There's a variety of other companies that have their own storage offerings. Many of these are still partners of ours

Speaker Change: Alright. Thank you good luck.

Speaker Change: Thank you.

Speaker Change: Thanks, Jason.

Speaker Change: And our next question comes from the line of Maxwell <unk> with Lake Street Capital markets. Maxwell. Please go ahead.

Maxwell: Hey, guys. Congrats on the quarter was wondering if you could share potentially a growth rate of customers with over 50000 and IRR for the year I think you heard shared like a number related to that in Q2 I believe it was like 55% was curious what that was for the year and I guess for follow up I mean, what does that <unk>.

Gleb Budman: provider for storage, someone who's very scalable, high-performance, very affordable, designed for the open cloud, you know, these are the customers choose Backblaze for that and so our partners still want to support their customers with those kinds of requirements.

Maxwell: Guidance anyway for the growth of customers with over 50000 and they are for 2025.

Mark: Yes, <unk> this is mark.

Mark: Disclose it we didn't disclose it this quarter, but what I would say is the momentum on that front there has been really good.

All right, thank you. Good luck. Thank you. Thanks, Jason.

Mark: We talked about moving upmarket and what's interesting is we're obviously winning quite a few 50000 above but theres also we're on our third deal now that's kind of in that million plus range right.

Speaker Change: And our next question comes from the line of Maxwell Michaelis with Lake Street Capital Markets. Maxwell, please go ahead.

Maxwell Michaelis: Hey guys, congrats on the quarter. Was wondering if you could share potentially a growth rate of customers with over 50,000 in ARR for the year. I think you had shared like a number related to that in Q2, I believe it was like 55%. Was curious what that was for the year. And I guess for a follow up, I mean, what does that B2 guide insinuate for the growth of customers with over 50,000 in ARR for 2025? Thanks.

Mark: Right around $1 million, so it's been really positive.

Mark: We're growing and where we're headed and that growth rate assumes ongoing momentum on that front.

Mark: Alright, thanks, guys.

Matt: Thanks, Matt.

Thank you.

Speaker Change: And our final question today comes from the line of Zach Cummins with B Riley Securities. Please go ahead.

Marc Suidan: Hi Maxwell, this is Marc. We didn't disclose it this quarter, but what I would say is the momentum on that front has been really good.

Matt: Hi, there Ethan Waddell, calling in for Zach coming from some of my questions.

I mean, we talked about moving upmarket.

Speaker Change: When you speak to your four key sales plays it sounds like maybe powered by Black backed players. This quarter. Your upmarket strategy I was sort of wondering to what extent the other three are.

Maxwell Michaelis: And what's interesting is, you know, we're obviously winning quite a few, 50,000 and above, but there's also...

Maxwell Michaelis: We're on our third deal now that's kind of in that million-plus range, or right around a million. So it's been really positive where we're going and where we're headed, and that growth rate assumes ongoing momentum on that front.

Speaker Change: Yes, it's a good question so what I would say first of all as all four of our core to our up market strategy. They have a slightly different approach in terms of what we're offering to the customers, but our application storage customers are getting bigger our backup customers are getting bigger media and entertainment customers are getting bigger the powered.

All right. Thanks, guys.

Thanks, Marc. All right.

Thank you.

Hi deals are bigger because they are integrated into their other platforms, but frankly, all four of them are larger organizations. So if you think about the we talked about the.

Speaker Change: And our final question today comes from the line of Zach Cummins with E-Raleigh Security. Zach, please go ahead.

Speaker Change: Hi there, Ethan Waddell calling in for Zach Cummins. Thanks for my questions. When you speak to your four key sales plays, it sounds like maybe power by back plays is core to your upmarket strategy. I was sort of wondering to what extent the other three are?

Speaker Change: We gave a sample of customers to whom which did 50 K a one which did 100 care are all of those were application storage customers.

Speaker Change: On the call.

Speaker Change: We talked about the customers that each expanded by over 100 K.

Speaker Change: Yeah, it's a good question. So what I would say, first of all, is all four are core to our upmarket strategy, they have a slightly different approach in terms of what we're offering to the customers.

Speaker Change: As from existing customers those are applications storage customers, So I would say.

Speaker Change: All four are meaningful.

Speaker Change: But our application storage customers are getting bigger. Our IT backup customers are getting bigger. Our media and entertainment customers are getting bigger. The powered by deals are bigger because they are integrated into their other platforms. But frankly, all four of them are larger organizations. So if you think about the, you know, we talked about the, you know, we gave a sample of customers that, you know, two of them which did 50K AR, one which did 100K AR. All of those were application storage customers.

Speaker Change: And strategic to our upmarket momentum.

Speaker Change: Got it that's helpful. Thanks.

Speaker Change: And then as you are in.

Speaker Change: For a nice ramp up for Btu in them.

Speaker Change: The coming year or are there any other cost levers that you can pull for margins. Besides those of you spoke to last quarter.

Speaker Change: Zack are you referring to gross margin or.

Speaker Change: Or.

Speaker Change: Operating margin or free cash flows.

Speaker Change: We've talked about the customers that each expanded by over 100k from existing customers. Those are application storage customers. So I would say all four are meaningful and strategic to our upmarket momentum.

Speaker Change: More more operating margin, but anything that you can speak to.

Speaker Change: Yes, I mean on the on the listen our operating leverage is <unk> 75 on the dollar right. So.

Speaker Change: Our opex will roughly be kind of in line dollar for dollar in 2025, what it was in 2020 for US. So we're holding the line because we did that whole zero based budgeting exercise, where we've been able to redeploy investments into sales capacity.

Speaker Change: Got it. That's helpful. Thanks. And then as you aim for a nice ramp-up for B2 and...

Speaker Change: the coming year. Are there any other cost levers that you can pull for margins besides those you spoke to last quarter?

Speaker Change: And that's allowing us to fund all of that growth.

Speaker Change: And while holding the Opex line there. So thats created some really good operating leverage and that's what will get us to be free cash flow positive right.

Speaker Change: Zach, are you referring to gross margin or operating margin or free cash flows?

Speaker Change: Right around Q4 of 25.

More operating margin, but anything that you can speak to.

Speaker Change: Now in terms of additional cost opportunities I would tell you the culture. That's always been in this company and that we're instilling.

Speaker Change: Yeah, I mean on the, on the, listen, our operating leverage is 75 cents on the dollar, right? So it, our, our OPEX

Speaker Change: As always scrutinized and rethink everything.

Speaker Change: Anything thats available that we can do more efficiently, we're always going to look to do so this is not just the.

Speaker Change: what it was in 2024. So we're holding the line because we did that whole zero-based budgeting exercise.

Speaker Change: A onetime exercise that we just did it as kind of the ongoing part of our culture going forward.

where we've been able to redeploy investments into sales capacity.

Speaker Change: and that's allowing us to fund all that growth and while holding the OPEX line there. So that should create some really good operating leverage and that's what will get us to be free cash flow positive right around Q4 of 2025.

Speaker Change: Understood.

Speaker Change: The extra color. Thank you.

Speaker Change: Alright, Thank you Zack.

Speaker Change: And that does conclude our Q&A session today and with that I will now turn the call back over to glad before closing remarks glib.

Glib: Thank you I appreciate it.

Speaker Change: Now in terms of additional cost opportunities, I would tell you the culture that's always been at this company and that we're instilling is, you know, always scrutinize and rethink everything.

Glib: I think we're really excited about the financial side of where we're headed getting <unk> to be over 30% growth in Q4 of this year getting our adjusted EBITDA to be over 20% in Q4 getting to.

Speaker Change: Anything that's available that we could do more efficiently, we're always going to look to do. So this is not just a one-time exercise that we just did. It's kind of the ongoing part of our culture going forward.

Glib: Free cash flow positive both on an adjusted EBITDAR and adjusted basis for free cash flow. Those are I think meaningful financial improvements to the to the way we have the company. We're excited about our opportunity that were seeing with AI and the product innovations the go to market transformation progress that.

Understood. Well, I appreciate the extra color. Thank you.

All right. Thank you, Zach.

Gleb Budman: And that does conclude our Q&A session today. And with that, I will now turn the call back over to Gleb for closing remarks. Gleb?

Glib: We're making and our general path to rule of 40.

Glib: So I want to thank everyone for joining us today I want to extend a special thanks to the <unk> team the changes and improvements we have made on the go to market front and on our platform is no small feat.

Thank you. I appreciate it.

Gleb Budman: You know, I think we're really excited about the financial side of where we're headed, getting B2 to be over 30% growth in Q4 of this year, getting our adjusted EBITDA to be over 20% in Q4, getting to free cash flow positive both on an adjusted EBITDA and adjusted basis for free cash flow. Those are, I think, meaningful financial improvements.

Glib: In addition, while the cost cutting we did in Q4 was hard.

Glib: Our employees have done an amazing job embracing the changes.

Glib: I'm proud of the team's commitment to drive innovation in storage for our customers and partners.

Glib: And I believe will create significant shareholder value as a result.

Gleb Budman: to the way we have the company. We're excited about our opportunity that we're seeing with AI and the product innovations, the go-to-market transformation progress that we're making, and our general path to Role 40.

Glib: Thank you for joining us on the call, we'll see you next quarter.

Glib: Next club and ladies and gentlemen that concludes today's call.

Glib: Once again you may disconnect have a great day everyone.

Gleb Budman: So I want to thank everyone for joining us today. I want to extend a special thanks to the Backvoice team. The changes and improvements we've made on the go-to-market front and on our platform is no small feat.

Gleb Budman: In addition, while the cost-cutting we did in Q4 was hard, our employees have done an amazing job embracing the changes. I'm proud of the team's commitment to drive innovation in storage for our customers and partners, and I believe we'll create significant shareholder value as a result.

Speaker Change: Thank you for joining us on the call. We'll see you next quarter.

Thanks, Gleb. And ladies and gentlemen, that concludes today's call.

Once again, you may disconnect. Have a great day, everyone.

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Speaker Change: Asha's Dead Boy nichts They transportation is hell No matter how healthy he is There's no creation Um.. There's someone who just is In time In time Mmm

Speaker Change: In our charity, we ask people to share their stories. We want you, during this time of crisis, to tell, remember and commit to the same story, to tell your story. We're all human beings. We must be here to help others, we must help ourselves,

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