On Thursday, Oppenheimer maintained an Outperform rating on Backblaze Inc (NASDAQ:BLZE) but lowered the price target to $11 from $13 for the shares. The firm anticipates that Backblaze will report second quarter revenue for 2024 that aligns with the company's guidance of $30.7-31.1 million, representing a year-over-year increase of approximately 25.7% at the midpoint. This figure is slightly down from the 28.1% year-over-year growth reported in the first quarter of 2024.
The analyst expects Backblaze's B2 Cloud Storage to show positive metrics, driven by rising demand from AI applications, gains in the upmarket segment, and the advantages of a recent price increase.
The company's Net Revenue Retention (NRR) for B2 Cloud Storage is projected to remain above 120%, with an anticipated Annual Recurring Revenue (ARR) growth around 40% and at least a 15% year-over-year increase in customer growth.
For the Computer Backup segment, steady growth is expected with an NRR of approximately 100%, which benefits from the price hike initiated in the fourth quarter of 2023. However, the customer count for this segment is likely to remain flat year-over-year, with a slight uptick in churn attributed to the recent price increase and the ongoing effects of customer layoffs.
Operating expenses are projected to continue impacting profitability as the company invests in the long-term growth of its B2 Cloud Storage service. Despite these investments, Backblaze is on track to achieve its targets of an 8-10% EBITDA margin for the year 2024 and to reach free cash flow (FCF) breakeven by mid-2025.
In other recent news, Backblaze, Inc. has reported a robust Q1 growth, with a 28% year-over-year increase in revenue, reaching $30 million. The company's B2 cloud storage revenue grew by 47% to $14.6 million, while computer backup revenue increased by 14% to $15.3 million. Operational efficiencies were highlighted, with an adjusted gross margin improvement to 77% and a positive adjusted EBITDA at $1.9 million.
Recent developments include Backblaze's CFO, Frank Patchel, announcing his retirement, but he will assist with the transition. The company provided Q2 guidance, expecting revenue between $30.7 million and $31.1 million and an adjusted EBITDA margin of 6% to 8%. The full-year 2024 revenue guidance is between $126 million and $128 million, with an adjusted EBITDA margin of 8% to 10%.
Backblaze aims to maintain at least $20 million in cash by the end of 2024 and anticipates generating cash by mid-2025. The company is focusing on innovation, technology, and expansion into the AI market, seeing it as a long-term growth opportunity. Despite a cautious stance on the macroeconomic environment, Backblaze has not observed major shifts in customer behavior.
InvestingPro Insights
As Backblaze Inc (NASDAQ:BLZE) navigates the competitive cloud storage market, recent data and insights from InvestingPro reveal several key metrics. With a market capitalization of $269.14M and a notable revenue growth rate of 21.93% over the last twelve months as of Q1 2024, Backblaze shows a promising upward trajectory. The company's gross profit margin stands at an impressive 50.37%, highlighting efficient operations despite its non-profitable status during the same period. However, the P/E ratio reflects the current challenges, registering at -5.58, which underscores the market's anticipation of future earnings recovery.
InvestingPro Tips for Backblaze suggest a mixed financial outlook. Analysts have revised their earnings upwards for the upcoming period, indicating potential optimism in the company's performance. On the flip side, the company's short-term obligations outweigh its liquid assets, and analysts are not expecting profitability this year. With a moderate level of debt and no dividend payouts, investors are encouraged to consider these factors in their decision-making process. For those looking for more insights, InvestingPro offers additional tips on Backblaze, which can be accessed at https://www.investing.com/pro/BLZE. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and discover more about Backblaze's financial health and market position.
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