![]() He covers cloud and data storage news.Blue Planet Studio/iStock via Getty Images A Quick Take On Backblazeīackblaze ( NASDAQ: BLZE) has filed to raise $100 million in an IPO of its Class A common stock, according to an S-1/A registration statement. Tim McCarthy is a journalist living in the North Shore of Massachusetts. "I would say all of those companies are candidates for IPOs," he said. Raffo added that the success or failure of Backblaze's IPO could potentially dictate the pace of other, similar storage vendors filing IPOs, including Cohesity, Rubrik, Infinidat and Wasabi. "A lot can be done that doesn't require breaking commitments that it's made to existing customers." "It could develop new offerings to better serve that market," he said. McDowell said continued growth might come from markets outside of the U.S., where 28% of its customers are based, according to the IPO filing, and from new markets Backblaze has yet to tap such as the enterprise. "Not only does that increase revenue, it also lowers cost of sales." "By increasing revenue from existing customers, they're talking about a 'land and expand' strategy where their current customers keep putting more data into their cloud," Raffo said. That consistent subscription revenue means Backblaze can likely maintain its price promise, according to Raffo, especially as existing customers become more comfortable backing up to the cloud. The filing indicates average revenue from B2 Cloud Storage per user is $326 annually, while the Computer Backup service generates $99 per user. "We have maintained our per-gigabyte B2 Cloud Storage pricing for five years, and we announced price increases to our unlimited subscription Computer Backup pricing in February 2019 and July 2021 with no material impact on customer retention," the company wrote in its IPO filing. Cloud storage backup since 2007īackblaze launched in 2007 with consumer-grade cloud backups and expanded into business uses with its B2 Cloud Storage product in 2015, providing businesses with features that compete with hyperscalers at competitive prices. "It has no shortage of competitors, and the public cloud guys have no problem undercutting industry pricing to gain business."īackblaze declined to be interviewed for this story before press time. "The danger that Backblaze faces is in maintaining relevance in what's become a cloud-first world," McDowell said. Backblaze's success, however, will depend on its ability to continue to differentiate itself and compete with bigger vendors. Still, the company has carved out a niche in the cloud storage market thanks to its early presence and growth over the past decade, said Steve McDowell, a principal analyst at Moor Insights & Strategy. "Backblaze has been more of a bootstrap company that relies on a little bit of funding and tries to keep losses down instead of taking hundreds of millions of dollars from VCs and spending lavishly to grow," Raffo said. Raffo noted that Backblaze generated $54 million in revenue last fiscal year and $31 million in revenue until June of this year, according to the filing. "The downside is, it's also a highly competitive market, and they face some of the largest IT companies." "They're in a rapidly growing market and have a chance to greatly expand their revenues and income," Raffo said. Its backup offerings compete most directly with other cloud-based backup products such as Druva, Clumio, Datto and Commvault's Metallic backup-as-a-service suite. A crowded marketīackblaze business cloud storage and services compete directly with hyperscalers such as AWS, Azure and Google Cloud Platform, along with smaller cloud storage vendors such as Wasabi. He noted the company's prospectus indicates an expectation to raise between $89.5 million to $103.4 million. ![]() ![]() "Backblaze will probably have to grow faster to keep shareholders happy, but they're not far off where they need to be," said Dave Raffo, a senior analyst at Evaluator Group. The company said money raised from the IPO will be invested into sales and marketing to expand its visibility, increase its total number of data centers and establish new vendor partnerships. Backblaze will probably have to grow faster to keep shareholders happy, but they're not far off where they need to be.ĭave RaffoSenior Analyst Evaluator Group
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