Backblaze flips its storage model: a $335M CoreWeave bet turns a laggard tape into a leader

AI's capacity tier arrives as a capital-light managed-storage contract, re-rating a name that spent two years in drawdown.

BLZE · Earnings Call · 2026-08-03

Two years of grinding drawdown — the stock had given back roughly half its value off the November 2021 peak — flipped in a single quarter. In the 90 trading days through late August, Backblaze returned +360%, peaking at $20.43 before a shallow ~23% pullback. The reason sits in one sentence from CEO Gleb Budman at the top of the Q2 call: “We also signed the largest contract in Backblaze's history, a $335 million multi-year agreement with CoreWeave” — Gleb Budman, Co-founder, CEO, and Chairperson of the Board · 2026-08-03. It is the clearest evidence yet that the CoreWeave deal — and the managed storage model behind it — has rewritten the company's narrative.

The pivot from storage provider to storage operator

The strategic shift is genuine, not a re-labeling of the old story. Backblaze's own keyword history shows capacity tier and architectural freedom were brand-new themes this quarter (both spiked to top-of-list momentum), while B2 Neo — the white-label engine touted through fiscal 2025 — fell hardest as a theme in the same window. A year ago the pitch was different: “B2 Neo is a white label offering” — Gleb Budman, Co-Founder, CEO and Chairperson of the Board · 2026-02-24 — you bring data, we own the stack. The new model inverts that.

they provide us the data center space, they provide us how much storage they would like, we provide the bill of materials, they buy the equipment, they hand it to us, but it's actually our people in that part of the data center, which is cordoned off for our purposes. But it's our people racking, stacking, managing with our software that part of the storage stack.
Gleb Budman, Co-founder, CEO, and Chairperson of the Board · 2026-08-03

That is fundamentally different economics: Backblaze sells software and operational muscle on customer-owned hardware. As Budman put it in his prepared remarks, "this managed storage approach represents a capital light service model that brings our technology and operating expertise directly into a customer's infrastructure." The managed-service component carries no CapEx requirement at all — a meaningful lever for a company that, in the most recent filed quarter (Q1 2026, period end March), was still burning cash.

A re-rating backed by numbers

The scale of the re-rating deserves emphasis because the fundamentals were, until now, modest. Revenue reached $42.7M in Q2, up 18% year over year — the strongest growth in six quarters — and B2 accelerated to 34% year over year, its best print in seven. B2 revenue growth was broad-based; gross margin improved to 63% on the May 1 price increase and continued operating leverage. The structural step-up is visible in the prior quarter's gross margin of 60.9%. Adjusted EBITDA margin hit 30%, up 1,200 basis points year over year. The contract structure adds a new dimension: committed minimum spend. "We retain additional upside as usage above those minimums is built on a consumptive basis," Suidan noted (component 7676431184715212349), and contracted demand is now the backbone of guidance. The company raised full-year 2026 revenue guidance to $172–174M (19% growth, up from 11% previously) and pointed to B2 growing over 40% in 2027 off the CoreWeave minimums and the previously announced $15M+ TCV deal. Executing against that, however, requires capital: CapEx is expected to run 55–65% of revenue in 2026, funded through capital leases and a growing cash pile.

Looking ahead to 2027, based on the B2 underlying business fundamentals, CoreWeave's minimum RAB, and the previously announced $15 million plus TCV deal, we expect B2 revenue to grow over 40% year over year.
Marc Suidan, Chief Financial Officer · 2026-08-03

Gleb Budman was explicit that the CoreWeave win is compounding, not one-off: “the announcement has helped, I think, elevate the -- elevate Backblaze as a key player in the AI infrastructure stack” — Gleb Budman, Co-founder, CEO, and Chairperson of the Board · 2026-08-03.

Why it matters — and the risk not to ignore

The contrast with prior quarters is stark. In the fall of 2025, the narrative was about moving upmarket slowly, closing six- and seven-figure deals, and weathering the occasional "large customer churn" scare. A year ago the company was still defending why it could win AI workloads without GPUs of its own ("we are seeing the AI companies growing much faster, about three times faster than our average customer," Budman told analysts in May 2025). Today the company is effectively the capacity tier for the AI buildout — flash where required, HDD everywhere else, with free egress and high throughput as the moat. The stock's +360% move in 90 days suggests the market is pricing a durable winner. But the setup carries two genuine risks. First, the deal is back-ended — CoreWeave ramps over the coming year and only hits its minimum around mid-2027 — so the bulk of contracted value lands beyond the current fiscal year. Second, the managed-storage model monetizes as a service fee on customer-owned hardware; if neoclouds eventually decide to insource what they now rent, the durability of that revenue is untested. Those are the questions that, with a $445M market cap and a stock up 3.6x in a quarter, will determine whether the tape holds or gives back the move.