This caught me by surprise as well because I am pretty sure they have stated before that they were profitable.
https://news.ycombinator.com/item?id=15074289
>Finally, Backblaze is profoundly different than CrashPlan in that we never really raised any bank financing or VC financing. We're 90% employee owned, and there are no deep pockets. CrashPlan raised something like $150 million which comes with "pressure to grow fast or die". Backblaze is free of any such pressure, we own our own fate.
https://news.ycombinator.com/item?id=21006216
> Yev here -> we HAVE to be cash-flow positive since we're not VC-funded. When we started the company it was bootstrapped, so "making enough money to survive" has always been a part of the equation!
That last comment was from 2019, yet according to the S-1, they were actually unprofitable. What's going on here? Were they profitable before, then suddenly taking on a massive loss? Their loss in 2020 was huge compared to the one in 2019.
It looks like much of the difference comes down to stock-based compensation. This doesn't cost the company any cash, but under GAAP, it has to be recorded as an expense. (IANAA, so take what I say with a grain of salt).
Judging from their current numbers the service is profitable on a per user basis, less marketing expenses.
This is a pretty reasonable way to look at it. Being cashflow positive means you can turn up marketing to grow and turn it down if needed.
It’s also important to note that being cash flow positive is not the same as being GAAP/IFRS profitable (Net Income).
I had a drive fail and I thought I was OK...and then I discovered that my Crashplan backup archives on my own server were unreadable after they shut down Crashplan personal backup services.
I couldn't even install the client, either - they silently updated the client to have a logic time bomb and refuse to install.
There are many reasons why cash-flow and profitability can be out of step with each other, for instance, you might have capital expenditures that are going to influence future years' books, you might have an interest carrying bank loan, you may have invested money into acquiring users whose lifetime value is larger than the cost to acquire them but you haven't broken even on that yet, it's possible to have the reverse and so on.
Accounting for all this - and doing so properly - is not as easy as it may seem to be for an outsider or someone who is used to just sell their own hours, where you can immediately see the difference between income and costs and label that profits.
And even there the situation can get more complex, for instance, if work is done in one year but the invoice is sent in the next. Profit wise you are booking that money in the year the work was done, even if the actual cash only lands in the next. Pre-paid services are even more complicated (here you typically partition a chunk of the income month-by-month until the total amount is accounted for).
And the cost of the pods will be capitalized and depreciated so a large surge in buildings won’t necessarily lead to bad financials.
I was curious about this as well:
Cost of revenue consists of expenses for providing our platform and cloud services to our customers. These expenses include operating in co-location facilities, network and bandwidth costs, and depreciation of our equipment and capital lease equipment in co-location facilities. Personnel-related costs associated with customer support and maintaining service availability, including salaries, benefits, bonuses, and stock-based compensation are also included. Cost of revenue also includes credit card processing fees, amortization of capitalized internal-use software development costs, and allocated overhead costs.
We intend to continue to invest additional resources in our infrastructure and related personnel, and our customer support organization, to support the growth of our business. Some of these investments, including costs of infrastructure equipment (including related depreciation) and expansion, are incurred in advance of generating revenue, and either the failure to generate anticipated revenue or fluctuations in the timing of revenue could affect our gross margin from period to period.
50% gross profit is not great compared to a SaaS company, but still not terrible compared to <insert literally any other company that isn't enabled by tech>.
They also generate ~$12M in net cash from operating activities. So "profitable" is a weird one here. They'll have to continually invest in data centers and hardware, but generally speaking they are turning cash pretty well.