Backblaze's B2 grew 47%, but CoreWeave's deal is paid in $21.94 converts, triple the $7.40 share price
B2 storage grew 47% while CoreWeave barely contributed; the same night's 10-Q prices the anchor deal in customer warrants, zero-coupon debt and a conversion strike about triple the share price.
Richard Tang · 3 min read
Backblaze's+3.69% — Backblaze, up 3.69 percent as of its last quote November 2 report settles one argument and prices another 1. B2 Cloud Storage, the object-storage tier built on the commodity drive pods behind its consumer backup business, grew 47% from a year earlier, and full-year guidance went up 1.
The telling detail came from chief financial officer Marc Suidan: neither CoreWeave+6.73% — CoreWeave, up 6.73 percent today nor the other large "neocloud", as GPU-centric clouds are known, contributed significantly to that acceleration 2. The AI demand underneath Backblaze is broad. What it costs the people funding the company sits in the 10-Q filed the same night 3.
Cheap drives became the capacity tier AI builders rent
The chain runs from hardware up. Backblaze runs its own storage cloud on commodity hardware and sells S3-compatible object storage with egress free up to three times the data stored, which is what makes it the cheap tier where AI shops park training data behind expensive GPUs 3 4.
Revenue growth bottomed near 12% in early 2026, then snapped back to 26%
The growth curve turned before the anchor customers began paying
Data
| Revenue growth, % YoY | |
|---|---|
| Q4 '23 | 25.3% |
| Q1 '24 | 28.1% |
| Q2 '24 | 27.2% |
| Q3 '24 | 28.8% |
| Q4 '24 | 17.6% |
| Q1 '25 | 15.5% |
| Q2 '25 | 16% |
| Q3 '25 | 14% |
| Q4 '25 | 11.8% |
| Q1 '26 | 11.7% |
| Q2 '26 | 17.7% |
| Q3 '26 | 25.5% |
CoreWeave, the GPU cloud serving AI labs, signed a master agreement on June 16, 2026, for committed capacity, about 70% of it hosted in Backblaze's own data centers: two order forms, five and seven years, worth about $335 million, a deal we covered in October as a credit bet 2 5. About $21.7 million of that value is warrants issued to CoreWeave, netted out of the contract's stated worth 3 5.
The anchor customer is paid partly in Backblaze's own stock
The build is funded with $201 million of convertible notes due 2031 that pay no interest 3. They convert into about 9.2 million shares at $21.94, roughly triple the $7.40 the stock closed at before the report, and capped calls offset the dilution only up to a $33.76 ceiling: old holders pay if the AI story works 3 6. The signed order book, what the filing calls remaining performance obligations, jumped from $70 million to $400 million at quarter-end, chiefly on CoreWeave 3.
CoreWeave's converts strike about triple where the stock traded before the report
Data
| Value | |
|---|---|
| Share price, pre-report | $7.4 |
| Needham target | $15 |
| Citizens target | $21 |
| Conversion price, 2031 notes | $21.94 |
| Capped-call ceiling | $33.76 |
Net of the warrants, the two order forms work out to roughly $45–63 million a year over five- and seven-year terms 3. Against guidance of $177.8–178.2 million for 2026, that is between a quarter and a third of revenue riding on one customer 1.
The bottleneck moved from demand to deployment
The growth is broader than the anchor. Strip out a May price increase worth about 12 points and organic B2 growth still accelerated, from 26% to 35% 7. Management guides B2 growth near 60% this quarter while CoreWeave's minimum commitments step up monthly through July 2027, and equipment arriving ahead of usage will temporarily cost 3 to 6 points of gross margin 2 7 8.
The stock jumped 12% on November 3, from that $7.40 pre-report close 1 6. Analysts at Needham kept their Buy but cut their target by about a third, to $15; analysts at Citizens (Rustam Kanga) reiterated $21 6 9.
CoreWeave is, in effect, buying storage with Backblaze's own stock. What that costs existing holders depends on two measurable things: whether B2 growth holds near this pace as the anchor minimums step up through July 2027, and how much of the warrants and the $21.94 converts turns into real shares. The first shows up in revenue; the second, in the share count.
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