Cloud service provider BackBlaze went public on Thursday on NASDAQ (BLZE), selling 6.25 million shares for $100 million. They claim to have 500,000 customers. After a day of trading, the stock closed higher at $22.04 today.
Looking at their financials, I was a bit disappointed.
First, they are pulling in $53 million in revenue annually, which seems surprisingly low to me. Their investor presentation claims $65m annual, which is Q2 of 2021 if taken on an annual basis.
So looking at that $65m,
- two-thirds (almost exactly) is computer backup ($43m), which has 430,000 customers.
- one-third is B2 cloud storage ($22m, with 70,000 customers).
My reaction to this is that if 2/3 of their revenue is computer backup, they should be profitable given that is a 14-year-old, mature product that should be paying handsome profits by now. But they are losing money at present.
Your average B2 customer is spending $314/year, or $26.19/month. It’d be interesting so see what that breakdown is – are there a few large enterprise whales and a long tail of other users, or is it more flat?
The average computer backup customer is paying $100/year, which is confusing since their product tops out at $84 a year if you pay month-to-month. Most users are probably paying the annual $70/year subscription, so where is the other $30/year? Their product is “one computer, one subscription”. BTW, this product was priced at $50/year about two years ago.
Out of that $53m revenue in their TTM comes $31.7m in operating costs, which includes $11.9m in selling and marketing expense. R&D is $13m/year. They also have $31.5m in debt. I’m not sure how good those ratios are, though their lean and mean R&D reminds me of their prowess in designing and running their own storage subsystems and networks.
It’s interesting that both of their business continue to grow at nice clips (23% annually for computer backup, 66% for B2) so I guess they’re doing the right thing and getting into the market while they have a nice story to sell. If they can profitably scale then this may be a good time to get in, given that they’re at only a $50-60m company. On the other hand, they’re not making a profit despite having a core business than goes back to 2007, and have a nice chunk of debt.
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The $100 number is likely multiple computers. Want two computers backed up? That’ll be $140/yr.
Well. Its cheaper.