BLZE · Backblaze
Conviction · Medium · more likely to lead the S&P 500 over the next three months, by a modest margin
Wrong if: a daily close below $7.59
Note written ·
How this view changed
- · Rating raised from Low to Medium. Results, 2 November 2026: Backblaze reported Q3 2026 revenue of $46.7M, up 26%, with B2 Cloud Storage up 47%, and raised full-year 2026 revenue guidance to $177.8M-$178.2M from $172M-$174M.
Price against the kill line
2.0% clear of its kill line on the 13 November 2026 close.
How to read this
The red mark is the price level of the published kill line: a close through it (a weekly close, on a weekly line) would prove the research note wrong on price. The dot is where the stock closed on 13 November 2026; a dot left of the mark has closed through its line.
The scale is stretched near the line, so close calls are easy to see. More than 8% from the line, the stock reads well clear, with a hollow dot to show the figure is off the drawn scale.
The kill line is the research note's own test. The portfolio sells on business facts, not on a price. How the portfolio decides
Three months against the kill line
Daily closes, to . Red: the kill line, a daily close below $7.59, set on 12 November 2026. The shares are down 60.1% since the close; the S&P 500 is down 2.1% over the same sessions. Figures in the note can cover a different window.
Kill line
A daily close below $7.59, the 5 November 2026 close and the lowest since the 2 November 2026 report, which would erase the post-report rebound and show the market rejecting the beat. Disclosure of a cut or delay to CoreWeave's commitment would also break the case.
Research onlyNot in the portfolio.
Key figures from the filings · Technology
Quarter to 30 September 2026, filed 2 November 2026; valuation at the 13 November 2026 close
- Revenue, latest quarter ($M)
- 46.7
- Revenue, change on a year (%)
- +25.5
- Gross margin (%)
- 64.0
- Operating margin (%)
- −3.0
- Free cash flow, four quarters ($M)
- 27.5
- Net cash, cash less debt ($M)
- 35.8
- Enterprise value to sales (×)
- 2.7
- Free-cash-flow yield (%)
- 5.6
All filed numbers
What Backblaze reports to the SEC in its quarterly and annual filings. Each group states its period and filing date once; a figure dated otherwise says so. Built from the filings known on .
| Quarter to | Revenue ($M) | On a year (%) | Gross margin (%) | Operating margin (%) |
|---|---|---|---|---|
| first filed | 46.7 | +25.5 | 64.0 | −3.0 |
| first filed | 42.7 | +17.7 | 62.8 | −9.8 |
| first filed | 38.7 | +11.7 | 60.9 | −13.8 |
| first filed | 37.8 | +11.8 | 62.0 | — |
| first filed restated | 37.2 | +14.0 | 62.1 | −9.4 |
| first filed restated | 36.3 | +16.0 | 63.5 | −17.2 |
| Pre-tax income ($M) | −2.3 |
| Net income ($M) four quarters: −19.0 | −2.4 |
| Diluted shares, change on a year (%) against the quarter to 30 September 2025 | +9.8 |
| Operating cash flow ($M) | 32.1 |
| Capital spending ($M) | 4.6 |
| Free cash flow ($M) | 27.5 |
| Cash and short-term investments ($M) | 230 |
| Debt ($M) non-current long-term debt | 195 |
| Net cash, cash less debt ($M) | 35.8 |
| Deferred revenue ($M) −4.0% on a year | 34.3 |
| Backlog, orders not yet delivered ($M) +767.7% on a year | 400 |
| Receivables ($M) | 6.7 |
| Inventory ($M) | Not reported |
| Shareholders' equity ($M) | 81.3 |
| Market value ($M) | 489 |
| Enterprise value, market value plus net debt ($M) | 453 |
| Enterprise value to sales (×) | 2.7 |
| Enterprise value to operating income (×) | Not available |
| Price to earnings (×) | Not meaningful |
| Price to book value (×) | 6.0 |
| Free-cash-flow yield (%) | 5.6 |
Short interest (FINRA, settled 15 October 2026, published 26 October 2026): 11.4% of shares outstanding sold short, 4.6 days of average trading to cover, +3.9% since the previous report.
| Window | Bought | Sold |
|---|---|---|
| 90 daysfrom | $0 | $237K |
| 12 monthsfrom | $0 | $237K |
The thesis
Backblaze's cloud-storage business is accelerating, and the 2 November 2026 quarterly report moved the call toward the shares leading the S&P 500 over the next three months. Revenue was $46.654 million against a $44.4 million to $44.8 million guide, and full-year 2026 revenue guidance rose to $177.8 million to $178.2 million from $172 million to $174 million (company 8-K, 2 November 2026). The rating is Medium because the business results improved while CoreWeave's credit stress still caps the shares. The fourth-quarter report decides it: it will show whether CoreWeave's ramp lifts revenue to the $49.8 million to $50.2 million guide.
Q3 B2 Cloud Storage revenue was $30.5 million, up 47% year over year, and B2 annual recurring revenue was $126.8 million, up 53% (Blocks & Files and Benzinga coverage of the report, 3 November 2026). Management guided fourth-quarter B2 growth to about 60% and 2027 B2 growth to 40% or more (Q3 earnings call, 2 November 2026).
The market has not given the beat much credit. The shares closed at $8.83 on 11 November 2026, 63.2% below the 52-week intraday high of $23.99 set on 4 August 2026, and the 3-month change is −56.8%. That price reflects CoreWeave's financing risk more than Backblaze's own results.
Bullish and bearish views on Backblaze, Inc.
The bull case on Backblaze, Inc. (BLZE), in brief: Storage growth accelerated again. The bear case: the largest customer is financially strained.
Bull case
- Storage growth accelerated again. B2 Cloud Storage grew 47% in Q3 2026 against 34% in Q2, and total revenue grew 26% against 18% (company results, 3 August 2026 and 2 November 2026).
- Profitability beat the guide. The Q3 adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) margin was 33%, above the 27% to 29% guide. The full-year margin guide rose to 30% to 31% (Q3 earnings call, 2 November 2026).
- CoreWeave is ramping. CFO Marc Suidan said CoreWeave "ramps all the way through the middle of next year" and is on track. CEO Gleb Budman called it "a committed contract with committed minimum ramps" (Q3 earnings call, 2 November 2026).
- Contracted revenue is large. The Q2 10-Q reported $313 million of remaining performance obligations tied to CoreWeave, net of $22 million of warrant value (3 August 2026).
- Analysts still rate it Buy. Needham kept its Buy rating and lowered its target to $15 on 3 November 2026, which is above the $8.83 close of 11 November 2026.
Bear case
- The largest customer is financially strained. CNBC reported on 14 October 2026 that CoreWeave bond yields had surged to near 15%. Budman said on the 2 November 2026 call that Backblaze sees no signs of trouble in the contract.
- Capital spending rises sharply. Management expects capex to rise roughly tenfold over the next year. Fourth-quarter property and equipment spending is guided to $65 million to $83 million, against $33 million for the first nine months (Q3 earnings call, 2 November 2026).
- Margins fall before revenue arrives. Suidan said new capacity is temporarily lowering GAAP (generally accepted accounting principles) gross margin by 3 to 6 percentage points. Q3 GAAP gross margin was 64% (2 November 2026).
- Share supply hangs over the price. CoreWeave holds warrants over 4,194,876 Class A shares at a $7.60 strike, registered for resale on 3 August 2026.
- The older business is shrinking. Computer Backup revenue was $16.2 million in Q3, down 2% (2 November 2026).
Price setup
The shares closed at $8.83 on 11 November 2026, after closing at $8.40 on 4 November 2026, $8.27 on 6 November 2026 and $7.99 on both 9 November 2026 and 10 November 2026. They stand below the 200-day average of $9.33 and well below the 50-day average of $11.38 (adjusted daily closes, 11 November 2026).
The 52-week closing low is $3.31 (30 March 2026). The $7.60 warrant strike sits just below the post-report range. Above that strike the warrants carry value for the largest customer. CoreWeave scheduled its own Q3 2026 call for 10 November 2026 (CoreWeave investor relations). Backblaze closed at $7.99 that day and $8.83 on 11 November 2026.
The insider selling on record is small: the CEO sold 12,855 shares and the CFO 2,110 shares at $15.82 on 21 August 2026 (SEC Form 4 filings, 24 August 2026). Backblaze filed its Q3 10-Q on 2 November 2026.
Catalysts ahead
- ~February 2027 (est.): Q4 and full-year 2026 report. Shows whether revenue reaches the $49.8M-$50.2M guide and whether B2 growth reaches the roughly 60% management targeted as CoreWeave ramps.
What would change the view
A daily close below $7.59, the 5 November 2026 close and the lowest since the 2 November 2026 report, which would erase the post-report rebound and show the market rejecting the beat. Disclosure of a cut or delay to CoreWeave's commitment would also break the case.
The risks this note tracks, each with what would confirm it:
- CoreWeave's funding strain spreads to its Backblaze contract. Confirmed by: a disclosed cut, delay or renegotiation of the CoreWeave commitment, or CoreWeave remaining performance obligations below the $313M reported on 3 August 2026.
- Revenue falls short of the raised guidance as the ramp slips. Confirmed by: Q4 2026 revenue below the $49.8M low end of the guide, or Q4 B2 growth well under the roughly 60% management targeted on 2 November 2026.
- Capital spending and margin pressure outrun revenue. Confirmed by: gross-margin compression beyond the 3 to 6 percentage points management forecast, or Q4 capex above the $65M-$83M range.
- Share supply from CoreWeave warrants and the convertible notes weighs on the price. Confirmed by: form 4 or Schedule 13G filings showing CoreWeave sales of the registered warrant shares.
What it trades with
Backblaze trades as a satellite of CoreWeave's credit. It fell 22.26% on 14 October 2026, the day CNBC reported CoreWeave's bond yields near 15%. The shares track neocloud financing news more closely than they track cloud-storage peers. A CoreWeave funding event would likely weigh on Backblaze regardless of its own results. Evidence of CoreWeave financing stability would likely help it.
The evidence, claim by claim (8)
- Q3 2026 revenue was $46.654M against a $44.4M-$44.8M guide; B2 Cloud Storage revenue was $30.5M, up 47% year over year; Computer Backup revenue was $16.2M, down 2%. Backblaze Q3 2026 results 8-K and Blocks & Files, 3 November 2026 · as of
- Full-year 2026 revenue guidance raised to $177.8M-$178.2M from $172M-$174M; Q4 revenue guided to $49.8M-$50.2M against a $46.988M estimate. Backblaze Q3 2026 results · as of
- Q3 GAAP gross margin 64%; adjusted EBITDA margin 33%; full-year adjusted EBITDA margin guide raised to 30%-31% from 27%-29%. Backblaze Q3 2026 earnings call transcript · as of
- Q4 property and equipment capex implied at $65M-$83M against $33M for the first nine months; management expects capex to rise roughly tenfold over the next year. Backblaze Q3 2026 earnings call transcript · as of
- CFO Suidan said CoreWeave ramps through the middle of 2027 and is on track; CEO Budman called it a committed contract with committed minimum ramps. Backblaze Q3 2026 earnings call transcript · as of
- Needham maintained its Buy rating and lowered its Backblaze price target to $15. Needham note via company-news headline, 3 November 2026 · as of
- Remaining performance obligations attributed to CoreWeave were $313M, net of $22M of warrant value. Backblaze Q2 2026 10-Q · as of
- CoreWeave bond yields surged to near 15% as AI-debt concerns spread. CNBC, 14 October 2026 · as of
Sources
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