Backblaze's $335 million CoreWeave contract doesn't hit its minimums until mid-2027; stock at $12.69
A 43% day in June and doubled price targets made Backblaze's $335 million CoreWeave storage deal the small-cap AI trade of the summer. The contract's own terms defer its minimum revenue commitments to around mid-2027, and the stock has since slipped to $12.69 against a $22.83 average analyst target.
Vincent Jiang · 3 min read
A storage stock went vertical in June
Backblaze−1.77% — Backblaze, down 1.77 percent today opened up 30% on June 23, 2026, after signing a five-year, $335 million, multi-exabyte storage agreement with CoreWeave, the Blackstone- and Nvidia−0.47% — Nvidia, down 0.47 percent today-backed neocloud, its largest contract ever 134. The stock closed at $11.66, up 43%, its best day since early May, on retail chatter up nearly 19,000% in a day 2. William Blair dropped Underperform and called the deal "game-changing"; Citizens went to $14 from $8, Craig Hallum to $16 from $6.50 2.
The re-rating ran twice
A second wave followed Q2 results on August 3: revenue rose 18% to $42.7 million, above guidance, and the full-year outlook was lifted to $172 million to $174 million 4. Oppenheimer moved to $25 from $15, B. Riley to $24, Lake Street and Citizens to $21 56. The average target across seven analysts now sits at $22.83; the shares closed at $12.69 on October 9 6.
Every refreshed Backblaze target sits above the $12.69 tape; two of five clear the convert's strike
Data
| Value | |
|---|---|
| Craig Hallum | $16 |
| Citizens | $21 |
| Lake Street | $21 |
| B. Riley | $24 |
| Oppenheimer | $25 |
The contract's clock says mid-2027
Of the $335 million headline, $22 million is warrant value and $313 million entered remaining performance obligations, more than seven quarters of total company revenue at the Q2 rate 4. The platform piece, roughly 70% of the net contract, reaches its minimum commitment only around mid-2027; the rest is a managed service on hardware CoreWeave+1.05% — CoreWeave, up 1.05 percent today owns, where Backblaze books software and staffing, not hardware margin 4. The validation was priced in June; the revenue is dated 2027.
The bill lands before the income statement
The contract rescued a decelerating business: growth cooled from above 25% through 2024 to about 12% in the two quarters before it 7. Serving it takes capital spending guided to 55% to 65% of 2026 revenue, adjusted free cash flow neutral only through capital leases, and a temporary gross-margin dip 4. The funding came in August: an upsized $175 million convertible, zero coupon, due 2031, struck at $21.94, with capped calls at $33.76 8. The shares closed at $16.88 that day; at $12.69 now, the strike sits 73% above the tape 86.
Backblaze's growth cooled to 12% before the CoreWeave deal lifted Q2 to $42.7M
Data
| Revenue, $M | |
|---|---|
| Q3 '24 | $32.59M |
| Q4 '24 | $33.79M |
| Q1 '25 | $34.61M |
| Q2 '25 | $36.3M |
| Q3 '25 | $37.16M |
| Q4 '25 | $37.76M |
| Q1 '26 | $38.67M |
| Q2 '26 | $42.71M |
The bulls have the quarter on their side
B2 storage revenue grew 34% in Q2, about 26% excluding the May price increase, and CoreWeave is the fourth major AI-cloud customer, with roughly half a dozen managed-storage talks open 49. A CoreWeave vice president credits Backblaze with HDD storage "reliable and easy-to-consume at scale" 3. None of that is a second signed contract, and deployment delays or costlier drives would bite first 9.
The verdict arrives on a schedule
Q3 guidance of $44.4 million to $44.8 million reports in November 4. The decisive tests come later: a second neocloud signing, and CoreWeave's minimums holding to the mid-2027 ramp. Until then, holders own the build, the zero coupon and the wait.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
