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01/10 16:34
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call summary highlights several positive aspects, such as growth in AI-related opportunities, strong customer retention, strategic alliances, and progress in go-to-market transformation. The Q&A section reveals management's focus on customer needs and value, with no immediate plans for price increases, maintaining stability. Despite some unclear responses, the overall sentiment is positive, supported by strategic investments and optimistic guidance on financial health and market strategies. The prediction is a positive stock movement of 2% to 8%.
Total Revenue $36.3 million, up 16% year-over-year. The increase was driven by solid direct sales bookings and strong AI tailwinds, including a significant AI customer.
B2 Revenue $19.8 million, up 29% year-over-year. The growth was attributed to accelerated B2 growth initiatives and AI-driven use cases.
Adjusted EBITDA Margin 18%, doubled year-over-year. This improvement was due to robust cost controls and stronger revenue performance.
Gross Margin 63%, up from 55% in the prior year. The improvement was primarily due to a change in the estimated useful life of fixed assets and benefits of scale across infrastructure.
Adjusted Free Cash Flow Margin Negative 11%, a 1,000 basis point improvement from negative 21% a year ago. This was driven by stronger revenue performance and cost controls.
Net Revenue Retention (NRR) Overall NRR was 109%, down from 114% last year. B2 Cloud Storage NRR was 112%, down from 126% last year, mainly due to the price increase lapping.
Computer Backup Revenue Grew 4% year-over-year, driven by the October 2023 price increase, though the benefit has largely ended.
B2 Overdrive: Launched and signed its first six-figure customer within two months. It offers the highest throughput performance per dollar in the market, targeting high-performance needs like AI use cases.
New Security Tools: Introduced Anomaly Alerts (AI-based suspicious data transfer detection), Enterprise Web Console (role-based access controls), and Bucket Access Logs (detailed data usage visibility). These tools enhance performance and security for customers.
AI Market Expansion: AI customers grew 70%, and data stored by these customers increased 40x year-over-year. Three of the top 10 customers are now AI companies, compared to none a year ago.
Upmarket Focus: The number of customers generating over $50,000 in ARR increased by 30% year-over-year, with a growing pipeline of six-figure opportunities. Added another seven-figure customer, marking the fourth consecutive quarter with such a win.
Revenue Growth: Total revenue reached $36.3 million, up 16% year-over-year. B2 revenue grew 29% year-over-year, driven by direct sales and AI tailwinds.
Cost Efficiency: Adjusted EBITDA margin doubled year-over-year to 18%. A zero-based budgeting exercise freed up $8 million in expenses for 2025, with half redeployed for growth.
Gross Margin Improvement: Gross margin improved to 63% from 55% last year, driven by better hardware utilization and operational scale.
AI Integration: AI is being integrated across products and internal operations, including the launch of AI-driven tools and cultural shifts led by the Chief Human Resources Officer.
Stock Repurchase Program: Announced a $10 million stock repurchase program to manage equity dilution, expected to reduce dilution by 15%-25%.
Market Conditions: Potential variability in revenue growth due to reliance on large AI customers, which may lead to fluctuations in financial performance.
Competitive Pressures: Challenges in differentiating from competitors, especially hyperscalers, who impose surprise fees but may still dominate the market.
Regulatory Hurdles: No explicit mention of regulatory challenges, but the company operates in a highly regulated tech environment, which could pose risks.
Supply Chain Disruptions: No explicit mention of supply chain issues, but reliance on hardware and infrastructure could expose the company to potential disruptions.
Economic Uncertainties: Potential impact of broader economic conditions on customer spending, particularly in cost-conscious environments.
Strategic Execution Risks: Dependence on successful execution of go-to-market transformation and AI initiatives to sustain growth and profitability.
Revenue Guidance for Q3 2025: The company expects revenues to be in the range of $36.7 million to $37.1 million, with B2 revenue growing in the range of 28% to 30%.
Full-Year Revenue Guidance for 2025: The company has raised its revenue guidance to be in the range of $145 million to $147 million, up from the previous range of $144 million to $146 million, driven by better-than-expected B2 performance.
Adjusted EBITDA Margin Guidance for Q3 2025: The company is guiding adjusted EBITDA margins to be in the range of 17% to 19%.
B2 Revenue Growth Outlook: The company expects B2 revenue growth to exit the year with at least 30%.
Computer Backup Revenue Outlook: The company expects Computer Backup revenue to decline in the low to mid-single digits on a quarterly basis in the second half of 2025.
Free Cash Flow Guidance: The company remains on track to achieve adjusted free cash flow positivity in Q4 2025.
Stock Repurchase Program: The Board has approved a stock repurchase program of up to $10 million over the next 12 months. The proceeds for this buyback will come from exercise stock options and the employee stock purchase plan. This cash-neutral move aims to improve the company's dilution trajectory. Combined actions are expected to reduce the projected path of stock-based compensation dilution by approximately 15% to 25%. The long-term goal is to reduce dilution from stock-based compensation down to 0.
The earnings call reveals mixed signals: while there's optimism with raised revenue guidance and strong B2 growth, concerns arise from AI customer variability, delays in large deals, and lack of clear timelines for growth targets. The restructuring and focus on operational efficiency are positive, but uncertainties remain. Given these factors, the overall sentiment is neutral, reflecting both potential and risks.
The earnings call summary highlights several positive aspects, such as growth in AI-related opportunities, strong customer retention, strategic alliances, and progress in go-to-market transformation. The Q&A section reveals management's focus on customer needs and value, with no immediate plans for price increases, maintaining stability. Despite some unclear responses, the overall sentiment is positive, supported by strategic investments and optimistic guidance on financial health and market strategies. The prediction is a positive stock movement of 2% to 8%.
The earnings call presents strong financial performance with 18% revenue growth and improved cash flow, alongside optimistic guidance for B2 growth and EBITDA margins. The Q&A reveals stable gross margins and strategic AI use cases, though there's a minor concern about Computer Backup's decline. Despite a secondary offering, the positive outlook for cash flow and B2 growth, plus the new data center, indicates a likely positive stock reaction.
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