Cloud storage and backup provider backblaze posted revenue growth of 25% in its third calendar quarter 2021 to $17.3 million.
This was the first post-Initial Public Offering set of results and there was a net loss of $6 million, compared to a loss of $1.9 million a year ago. Its recently launched B2 Cloud storage business saw revenue hit $6 million, while the established IT backup business generated $11.2 million in revenue.
CEO Gleb Budman’s earnings statement reads: “We delivered solid and continued growth in the third quarter, driven by rapid 59% revenue growth in B2 cloud storage and steady double-digit growth in 13% in computer backup.”
He noted, “Our successful IPO in November was a significant milestone for the company and market recognition of the middle market public cloud storage opportunity. We believe the future is built on independent clouds, and we plan to use the proceeds of our IPO to help accelerate future growth in this large, fast-growing market.
Although the loss worsened, there was good news on the gross earnings front. It recorded $8.8 million – 51% of revenue – compared to $6.7 million and 49% of revenue in the third quarter of 2020. Cash and cash equivalents were $4.7 million at the end of the quarter, and this amount does not include the net cash proceeds of $103. million since the November 2021 IPO.
William Blair analyst Jason Ader summed up Backblaze as follows: “Like the B2 [Cloud Storage] mix increases over the next couple of years, and as the startup company deploys its new growth capital into sales and marketing, we expect revenue to accelerate (we model growth of 24%, 26%, and 31 % in fiscal years 2021, 2022, and 2023, respectively). Our view is that Backblaze is a pure play on SMB cloud adoption, with investors getting a high-growth independent cloud storage platform backed by a cash cow IT backup business that can also generate cross-selling opportunities.
Backblaze forecasts revenue between $17.7 and $18.2 million for the fourth and final quarter of 2021. This would mean $67.1 million in revenue for the full year 2021 at the midpoint.
The company’s size pales in comparison to cloud service provider hyperscalers, such as Amazon Web Services, which earned $16.11 billion in the third quarter, a figure that was up 39% year-on-year. Wikibon Analytics Society valued that AWS storage revenue for all of 2021 will be $9 billion. He wrote, “We expect AWS storage revenue to exceed $11 billion in 2022 and continue to outpace on-premises storage growth by more than 1,000 basis points over the next three to four years.
Backblaze may be the size of a pilot fish circling the Amazon shark, but its successful IPO and growth shows there is cloud storage life outside of AWS and its hyperscaler competitors Azure, GCP and Alibaba. Competitors like Backblaze can thrive and thrive because AWS and its ilk charge their storage services so high that they give Backblaze a profitable pricing margin – so to speak. For example, Ader points out that BackBlaze’s B2 cloud storage “is a quarter of the price of AWS’s S3 service.”