Sep 21 2026 11:17 PM EST

Backblaze Raises Full-Year Outlook on AI‑Driven Storage Surge

Backblaze, Inc. (NASDAQ: BLZE) posted second‑quarter 2026 results that topped consensus estimates and announced a multi‑year $335 million storage agreement with CoreWeave. The earnings beat and the strategic contract helped the stock surge 26.94% to $19.79 the day after release, and prompted analysts to lift price targets and raise full‑year revenue and profitability guidance.

Quarterly Results Beat Estimates

Revenue reached $42.71 million, an 18% year‑over‑year increase, and exceeded analyst forecasts by $2.78 million. B2 Cloud Storage drove the growth, generating $26.6 million (+34% YoY), while Computer Backup revenue slipped 2% to $16.1 million. Gross profit held at $26.8 million, representing 63% of revenue, unchanged from the prior year.

Adjusted earnings per share were $0.08, well above the consensus of $0.02, and the net loss per share narrowed to ‑$0.08 from ‑$0.13 a year earlier. Adjusted EBITDA climbed to $12.8 million, a 30% margin, versus $6.6 million (18% margin) in Q2 2025.

CoreWeave Strategic Storage Agreement

In early July, Backblaze signed a 5‑plus‑year agreement with AI‑infrastructure provider CoreWeave valued at approximately $335 million. The deal adds a sizable committed capacity component to Backblaze’s B2 Cloud Storage business and includes warrants for 4.2 million shares at $7.60 each, valued at roughly $22 million, which are recorded as contra revenue.

The agreement boosted remaining performance obligations (RPO) by about $320 million, bringing total RPO to $396 million. Management highlighted the contract as evidence of accelerating demand for AI‑related storage capacity.

Guidance Upgrade and Market Reaction

Following the earnings beat, Backblaze raised its full‑year 2026 revenue outlook to $172 million–$174 million, up from the prior range of $161.5 million–$163.5 million. Adjusted EBITDA margin guidance was lifted to 27%–29%, versus the earlier 23%–25% target. The company also set Q2‑Q3 EPS guidance at $0.02–$0.03.

Analyst sentiment turned positive: Craig Hallum upgraded to Buy with a $16 target; Citizens raised its target to $21; Oppenheimer to $25; Lake Street to $21; B. Riley to $16. The consensus price target climbed from $15.17 to $22.83, and the stock gained roughly 21% over the prior week.

AI‑Driven Growth and Pricing Shift

Backblaze reported a 76% year‑over‑year increase in AI‑related customers and secured $1.5 million of annual contract value from AI training and generative‑AI video wins. The May 1 pricing change that eliminated API transaction fees and raised B2 rates to $6.95 per TB‑month contributed roughly half of the revenue uplift, according to management.

The company’s up‑market momentum is reflected in the 57% YoY rise in customers with more than $50 k annual recurring revenue (ARR) and the 39% YoY increase in B2 ARR to $113 million.

Sector Context and Competitive Position

The broader cloud‑infrastructure market is being reshaped by AI workloads, which now account for the primary driver of cloud spending in 2026. Industry analysts estimate the neocloud market opportunity at $14 billion by 2030, positioning Backblaze’s low‑cost, hard‑drive‑based storage as a cost‑effective alternative to hyperscaler flash offerings.

Backblaze’s focus on B2 Cloud Storage, combined with its recent security feature enhancements (e.g., anomaly alerts, RBAC, bucket access logs), aims to capture enterprise contracts that demand both price efficiency and robust data protection.

Risks and Uncertainties

While the CoreWeave contract adds visibility, the associated warrants are recorded as contra revenue, which could depress reported top‑line growth if utilization falls short of projections. The Computer Backup segment continues to decline, with revenue down 2% YoY, and the business is modeled for a 5% annual decline.

CapEx is expected to consume 55%–65% of revenue in 2026, potentially pressuring gross margins as new equipment is deployed ahead of contract ramp‑up. Guidance excludes variable usage above contracted minimums, leaving upside potential but also uncertainty regarding future cash flow.

Finally, the company’s transition to full‑disclosure reporting by year‑end 2026 and its emerging‑growth‑company status add regulatory and compliance considerations for investors.

Investors will be watching the execution of the CoreWeave agreement, the pace of AI‑related customer acquisition, and the company’s ability to sustain margin expansion amid high CapEx requirements. The next earnings release will provide clarity on whether the raised guidance translates into durable profitability.