TipRanks Smart Growth Newsletter #15: Blazing the Cloud
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Dear Investors,
Welcome to the 15th edition of the TipRanks Smart Growth Newsletter.
Through the Smart Growth Newsletter, we aim to provide you with high-potential investment insights to support your growth strategy. Each week, our analysts will identify cutting-edge companies positioned to capture market share and deliver exceptional growth, giving you unique insights for a dynamic investing landscape.
Stocks we recommend have been carefully analyzed and vetted using TipRanks data, ensuring you receive well-researched, high-potential opportunities aimed at delivering substantial, long-term growth. We will present you with a comprehensive analysis that outlines our selection process, giving you clear insights into why each stock stands out as a top growth opportunity.
With that in mind, let’s dive into this week’s top pick and explore why it could be a valuable addition to your Growth portfolio.
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This Week’s Top Growth Pick: Backblaze (BLZE)
Backblaze Inc. provides cloud storage and backup solutions designed for businesses, developers, and individuals seeking scalable, cost-effective data protection. Its platform offers object storage, automated backup, and disaster recovery, enabling users to securely store, access, and manage data with minimal complexity. With a focus on affordability, ease of use, and transparency, Backblaze supports a wide range of industries, including media, IT, and enterprise security. The company’s solutions integrate with third-party applications and multi-cloud environments, allowing organizations to optimize storage infrastructure while maintaining control over their data.
Source: Backblaze Website
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Here’s Why BLZE’s Stock Is Likely to Grow:
❖ Strong Cloud Storage Growth – Backblaze’s B2 Cloud Storage segment is expanding rapidly, driving the company’s transition from a niche backup provider to a broader cloud storage player.
❖ AI and Media Adoption – Increasing demand from AI and media firms is fueling data storage growth, with AI-related data volumes soaring as BLZE secures more high-volume enterprise customers.
❖ Enterprise Expansion – BLZE is securing larger deals, including multi-year enterprise contracts, accelerating its move upmarket and boosting recurring revenue.
❖ Improving Financial Metrics – Expanding margins, positive Adjusted EBITDA, and narrowing losses indicate strong operational progress, positioning the company closer to profitability.
❖ Attractive Valuation – BLZE trades at a discount to both larger, profitable firms and smaller, riskier peers – despite outpacing them in revenue growth.
❖ Bullish Analyst Sentiment – Wall Street analysts rate BLZE a “Strong Buy,” forecasting significant upside as growth trends continue and the path to breakeven becomes clearer.
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Backing Up Growth
Backblaze was founded in 2007 with the goal of making cloud storage and backup both affordable and simple for individuals and businesses. Its growth has been driven by strategic investments, infrastructure expansion, and product innovation, positioning it as a competitive alternative to hyperscale cloud providers.
The company grew steadily, focusing on organic growth and capital efficiency, before going public in November 2021 on the Nasdaq under the ticker BLZE, raising approximately $100 million. To support ongoing expansion, BLZE executed a secondary stock offering in 2024, raising $37 million to bolster liquidity and institutional ownership. The proceeds helped strengthen the company’s balance sheet, fund infrastructure growth, and support investments in enterprise sales and product development.
To support its long-term vision, BLZE has continuously expanded its global storage infrastructure, opening new data centers to enhance capacity and reliability. The addition of a Canadian data center in 2024 marked a key step in broadening its geographic reach and addressing data sovereignty needs. The company has also invested heavily in optimizing its custom-built B2 Cloud Storage platform, enabling cost efficiencies that translate into competitive pricing for customers.
Access to capital has been a crucial enabler of Backblaze’s expansion. Before its IPO, the company operated with a lean financial structure, relying on its high-margin, recurring-revenue Computer Backup business to fund growth. The IPO and secondary offering provided additional financial flexibility, allowing for increased investment in high-growth areas such as B2 Cloud Storage, now the company’s primary expansion driver.
Strategic partnerships with major technology firms have been key to Backblaze’s expansion, enhancing its competitive positioning in enterprise IT and data security markets. Carahsoft, a major government IT distributor, has helped BLZE expand into the public sector, while integrations with Cloudflare (for content delivery and cybersecurity) and Veeam (a leader in enterprise backup and disaster recovery) have positioned Backblaze as a cost-effective cloud storage alternative for businesses adopting multi-cloud strategies.
With increasing enterprise adoption, expanding AI workloads, and rising demand for cost-efficient storage, Backblaze remains focused on scaling its cloud infrastructure, strengthening its partner ecosystem, and refining its business model to sustain long-term growth.
Source: Backblaze Website
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A Niche in the Cloud
Backblaze occupies a unique position in the cloud storage and backup market by focusing on affordability and simplicity. Its solutions cater to individuals, developers, and businesses, with Backblaze B2 Cloud Storage and Computer Backup as its primary offerings.
Backblaze B2 Cloud Storage is a low-cost, scalable object storage service priced at just $0.005/GB per month, making it one of the most cost-effective options available. Offering storage at about one-fifth the cost of major cloud providers, Backblaze appeals to developers, IT teams, and businesses that need to store large volumes of data without incurring excessive costs.
Meanwhile, the company’s Computer Backup service provides unlimited cloud backup for personal computers and servers at a fixed price of $5-7 per month. Known for its ease of use, this service offers automatic, continuous backups, ensuring seamless data protection without complex configurations. Backblaze’s services follow a straightforward pricing model and integrate effortlessly with third-party applications, eliminating unnecessary complexity.
Beyond cost-effectiveness, Backblaze’s competitive advantages include its vendor-neutral approach and proprietary infrastructure. Unlike many competitors, Backblaze owns and operates its own storage infrastructure, using commodity hardware and custom software to maintain low costs while scaling effectively. This self-sustaining infrastructure model allows it to offer predictable pricing without the hidden fees common among hyperscale cloud providers.
Backblaze has also cultivated an ecosystem of strategic partnerships that extend its market reach. Key collaborations include Carahsoft (expanding into the public sector), Cloudflare (enhancing security and content delivery), and Veeam (strengthening enterprise backup capabilities). The company’s reputation for customer satisfaction and high ROI is reflected in its 2025 G2 industry award for “Leader and Best ROI” in cloud storage and backup.
Backblaze continues to innovate within its niche. A prime example is B2 Live Read, a feature allowing users to access and edit data even while uploading, streamlining workflows for media and entertainment companies. Real-world applications abound, the Super Bowl Champion Philadelphia Eagles’ decision to replace tape archives with Backblaze B2, highlighting the practical performance of its solutions in demanding, high-data environments.
Source: Backblaze Website
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Riding the Data Wave
Backblaze operates at the intersection of two rapidly expanding market trends: cloud Infrastructure-as-a-Service (IaaS) and cloud-based backup/disaster recovery. Both sectors are experiencing strong tailwinds, with the global cloud storage market projected to grow at a 21.7% CAGR through 2032 and Disaster Recovery as a Service (DRaaS) expanding at a 27.2% CAGR through 2030.
Driving this growth is the massive rise in global data creation. As data volumes continue to soar, so does the demand for cost-effective, reliable storage and backup solutions. Backblaze is well-positioned to benefit, especially as businesses embrace multi-cloud and hybrid cloud strategies to avoid vendor lock-in and manage costs.
The growing threat of ransomware and tightening compliance regulations have made secure, scalable backup solutions essential. BLZE’s affordable, easy-to-use services are a strong fit for SMBs and distributed enterprises looking for no-frills disaster recovery options.
Emerging sectors such as AI and media content creation offer another path for growth. AI firms require vast storage capacity for training datasets, and many are turning to Backblaze B2. Several AI firms rank among BLZE’s top customers, with data stored by AI companies having grown by 65% in the past year alone. Similarly, media and entertainment companies, reliant on high-bandwidth workflows, are moving away from costly on-premise storage in favor of cloud solutions like Backblaze. These trends suggest future growth vectors for B2 Cloud Storage as industries with massive data needs look for cost-effective cloud solutions.
Competition is intense, with Amazon, Google, and Microsoft leveraging bundled services and enterprise relationships to dominate the market. Backblaze’s edge lies in transparency, customer service, and a singular focus on storage and backup. Unlike hyperscalers with sprawling cloud portfolios, Backblaze specializes in affordable, efficient cloud storage – a key competitive advantage.
However, BLZE is realistic about its business mix. The consumer backup market is slowing as more individuals use built-in device backups and cloud sync tools. To sustain growth, Backblaze is shifting its focus upmarket, targeting enterprise and developer adoption. The company is securing larger contracts, including multi-year deals over $1 million, and expanding into enterprise IT and high-performance cloud storage.
Challenges include pricing pressure from larger providers, customer retention against bundled alternatives, and the hurdle of convincing enterprises to adopt a smaller vendor. However, Backblaze doesn’t need to take market share from tech giants to grow – the expanding cloud storage market leaves ample room for players offering predictable pricing, simplicity, and vendor-neutrality. With strong industry tailwinds, increasing enterprise adoption, and rising demand from AI and media industries, Backblaze is well-positioned to scale its cloud storage business and sustain long-term growth.
Source: Backblaze Website
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Scaling the Cloud
Backblaze has delivered consistent double-digit revenue growth in recent years, with 2024 revenue reaching $127.6 million, up 25% YoY (vs. ~20% in 2023). Growth remains driven by B2 Cloud Storage, which surged 36% to $63.3 million, now making up half of total revenue and solidifying Backblaze’s expansion beyond its legacy backup business.
For 2025, Backblaze projects $144-146 million in revenue (13-15% growth), a more conservative forecast due to consumer backup headwinds and gradual enterprise adoption. However, B2 growth is expected to accelerate through the year, from ~22% YoY in Q1 to over 30% by Q4. Additional upside exists – Q4 2024 bookings exceeded the previous three quarters combined, signaling potential revenue acceleration if new deals onboard successfully. The company also expanded go-to-market leadership in 2024 and continues innovating with features like B2 Live Read, enhancing its enterprise appeal.
Source: Backblaze Q4 and FY 2024 Investor Presentation
Backblaze’s Annual Recurring Revenue (ARR) reached ~$136 million, up 16% YoY, with 116% Net Revenue Retention (NRR) – a sign of strong B2 adoption. The company secured a $1M+ annual contract expansion with an existing enterprise customer, reinforcing its move upmarket. Moreover, AI adoption has become an emerging growth driver as AI-related data stored on Backblaze expanded nearly tenfold, fueled by a 65% increase in AI customers. Three AI companies are now ranked among Backblaze’s top 10 customers, highlighting its expanding role in high-volume data applications.
Backblaze is still in expansion mode, reinvesting to capture more of the growing cloud storage market. As such, it remains unprofitable, though losses are narrowing. The company reported an adjusted net loss of $17.5 million in 2024, significant improvement from -$30.5 million in 2023. Adjusted EPS improved to -$0.40 from -$0.85, reflecting ongoing cost efficiencies and revenue scale.
Profitability metrics are trending in the right direction. Gross margins expanded to 54% from 49%, with an adjusted gross margin of ~78%, highlighting strong unit economics. Operating leverage is improving – Adjusted EBITDA turned positive in H2 2024, reaching ~14% of revenue in Q4.
Cash flow trends underscore financial progress. Operating cash flow hit $12.5M in 2024, up $20M YoY, while FCF improved by $23M but remained negative at ~$20M. Backblaze raised $37M in 2024 via a secondary stock offering, bringing its cash reserves to $55M – providing 2.5 years of runway at current burn rates. The company is targeting FCF breakeven by late 2025, a milestone that would extend its cash runway and support continued growth without requiring additional capital.
Source: Backblaze Q4 and FY 2024 Investor Presentation
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Priced for Opportunity
Backblaze’s stock is up over 7% year-to-date, despite a post-earnings (or rather, post-guidance) sell-off amid broader market anxiety. This pullback has made the stock even more attractive from a valuation standpoint, with a Price-to-Sales (P/S) ratio of ~2.2, sitting below all comparable peers.
A discount relative to larger, profitable firms like Dropbox and Box is understandable given BLZE’s lack of profitability and small-cap status. However, it also trades below the P/S multiples of smaller, riskier peers, despite posting faster revenue growth than all of them. The 2024 secondary stock offering may have temporarily weighed on shares, though it fortified the balance sheet for continued expansion.
At these levels, the modest P/S suggests valuation upside if Backblaze sustains ~20%+ revenue growth and moves closer to breakeven. Analyst sentiment remains notably bullish. According to TipRanks-rated top Wall Street analysts, BLZE is a “Strong Buy,” with an average 12-month price target implying over 78% upside.
While only a handful of analysts cover BLZE (given its size), their optimistic stance reflects confidence in its growth strategy and execution. They see an undervalued growth story, assuming Backblaze continues closing the profitability gap. Analysts also point to improving financial metrics, which de-risk the stock compared to a year ago.
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To Sum It All Up
Backblaze is a cloud storage and backup provider focused on affordability, simplicity, and transparency. It serves businesses, developers, and individuals with scalable object storage and automated backup solutions, integrating seamlessly into multi-cloud environments. The company has expanded beyond its legacy backup business, with its cloud storage platform driving strong growth. Strategic partnerships and increasing enterprise adoption, particularly in AI and media sectors, reinforce its competitive position. While not yet profitable, Backblaze is improving margins, cash flow, and operational efficiency. Its stock trades at a discount to peers despite faster growth, creating an attractive valuation opportunity. Analysts remain bullish on its long-term potential, citing expanding market share, strong customer retention, and a clear path toward breakeven. Positioned in the rapidly growing cloud infrastructure market, Backblaze is set to capitalize on rising data storage demand.
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Click here for more stock analysis from TipRanks Macro & Markets research analyst Yulia Vaiman
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