AI Stock Memo: BLZE - Backblaze - RankAlpha

BLZE

AI Memo

Backblaze

As of 2026-06-03/Confidence medium

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Data freshness

AI Memo

As of 2026-06-03 • Model: RankAlpha Sentiment Codex

Decision Panel

Action, confidence, horizon, and decision blockers at a glance.

Action

—

Confidence

medium

Horizon

—

Key catalyst

Q1 2026 beat with stronger AI traction • 2026-05-04

Expected move: +6%

Biggest risk

The bear case is that not all of the business is accelerating: Computer Backup revenue was flat, Computer Backup NRR softened to 95%, companywide NRR eased to 103% from 105%, and adjusted free cash flow was still negative in Q1. On top of that, the market already sits above the cited median analyst target of $8.34, so upside depends on continued execution rather than a cheap valuation alone.

Invalidation

Break below $7 or thesis failure.

What would change my mind?

The bull case is that Q1 2026 confirmed operational momentum: Backblaze beat the top end of guidance, B2 revenue grew 24% YoY, AI customer count grew 76% YoY, ARR rose 13% YoY, gross margin expanded, and adjusted EBITDA improved materially [#SEC-8K-2026-05-04]. The packet also contains a third-party revision signal saying consensus EPS estimates moved higher over the prior 30 days [#PR-EARNINGS-2026-05-12].

Research note

Recommendation

—

Confidence

medium

As of

2026-06-03

Base target

p=50%

Bull target

$12

p=25%

Bear target

p=25%

Key bullets

Fast scan of bull, bear, and watch items

BullKey bullets

B2 mix shift and margin expansion can compound over the next few quarters
The bull case is that Q1 2026 confirmed operational momentum: Backblaze beat the top end of guidance, B2 revenue grew 24% YoY, AI customer count grew 76% YoY, ARR rose 13% YoY, gross margin expanded, and adjusted EBITDA improved materially [#SEC-8K-2026-05-04].
The packet also contains a third-party revision signal saying consensus EPS estimates moved higher over the prior 30 days [#PR-EARNINGS-2026-05-12].

BearKey bullets

Adjusted free cash flow was still negative in Q1 2026, so the path to durable self-funding is not complete.
Cash and marketable securities of $45.5 million is adequate but not expansive for a small-cap software company if growth or margins wobble.
Companywide NRR slipped to 103% from 105%, suggesting the core retention/money-upside trend is improving but not yet strong.

WatchKey bullets

Q1 2026 beat with stronger AI traction

Summary

High-level snapshot

Recommendation

Model confidence

medium

Timeframe

Asset

Equity

Trigger

Base case: $9 (p=50%)

Bull/Bear spread: +33% / -25%

Vs latest close: Bull +33% · Base +6% · Bear -25%

Scenario probabilities

Bull Target: $12 (p=25%)Base Target: $9 (p=50%)Bear Target: $7 (p=25%)

Commentary

Primary-source evidence is constructive: Backblaze beat the top end of Q1 guidance, B2 growth accelerated, AI customer wins added meaningful annual contract value, and adjusted EBITDA improved [#SEC-8K-2026-05-04]. The only explicit revision signal in the packet is a third-party Zacks note saying consensus EPS estimates moved higher over the prior 30 days [#PR-EARNINGS-2026-05-12], which is supportive but not a substitute for a full Street reset. Coverage remains thin, and there is no reliable post-print price-reaction tape in the packet, so this is a cautious positive rather than a high-conviction breakout call.

As of 2026-06-03 • Updated bi-weekly / post-earningsSource: Internal modelMethodology

Analyst Summary

Thesis highlights from the latest analysis

Bull Case

Bear Case

Drivers

Scannable catalysts and supporting factors

B2 mix shift and margin expansion can compound over the next few quarters

Scenarios

Bull Target (Scenario probability)

$12 / p=25% prob

Base Target (Scenario probability)

$9 / p=50% prob

Bear Target (Scenario probability)

$7 / p=25% prob

Price $9 as of 2026-06-02

Nearest Scenario: Base (∆ 6%)

Targets vs latest close: Bull +33% · Base +6% · Bear -25%

Sentiment & Exposure

News Sentiment (30d)

0.58

Social Sentiment (7d)

0.00

Events

Other notable items detected

EVENT2026-05-04
Q1 2026 beat with stronger AI traction
Backblaze said it exceeded the top end of revenue and adjusted EBITDA guidance in Q1 2026, with revenue up 12% YoY, B2 Cloud Storage up 24% YoY, and AI customer wins contributing about $1.5 million in annual contract value, which keeps the near-term re-rating case intact [#SEC-8K-2026-05-04].
Prob 72.00% • Move 8.00% • Priced-in 55.00%

Short-term Catalysts

Next few weeks

No short-term catalysts

Long-term Catalysts

Months to a year

B2 mix shift and margin expansion can compound over the next few quarters
2026-09-30
The longer thesis is that the mix shift toward B2 and AI-related workloads can keep lifting recurring growth and profitability: ARR rose 13% YoY, B2 ARR rose 28% YoY, large-customer ARR rose 72% YoY, and adjusted EBITDA reached 26% of revenue [#SEC-8K-2026-05-04].
Prob 60% • Move 15% • Priced-in 40%

Risks

Adjusted free cash flow was still negative in Q1 2026, so the path to durable self-funding is not complete.
Cash and marketable securities of $45.5 million is adequate but not expansive for a small-cap software company if growth or margins wobble.
Companywide NRR slipped to 103% from 105%, suggesting the core retention/money-upside trend is improving but not yet strong.
Computer Backup remains a drag, with revenue flat YoY and NRR below B2's level.
Coverage is thin: the packet provides only limited analyst revision detail and no robust post-print target reset.

Peers

Symbol	Summary
DCBO	Useful same-sector SaaS peer for checking subscription growth, retention, and margin scale against a mid-cap enterprise software comp set.
WEAV	Comparable for small-cap software execution and valuation discipline, especially where retention and cash-flow progress matter more than absolute size.
OSPN	Helpful benchmark for mature software valuation and operating leverage, with a different mix but similar need to prove durable cash generation.

Sources

Internal and external references used in this analysis

Model source: RankAlpha Sentiment Codex
Analysis date: 2026-06-03