Backblaze, Inc. (BLZE): PESTLE Analysis [Nov-2025 Updated]

You're looking for a clear map of the risks and opportunities for Backblaze, Inc. (BLZE), and the PESTLE framework is defintely the right tool. As someone who's spent decades dissecting companies like this, I can tell you the near-term picture is all about geopolitical data sovereignty and the ongoing price war with the hyperscalers. The company is on track for Annual Recurring Revenue (ARR) over $145 million in 2025, but keeping that gross margin near 65% demands constant technological upgrades and smart navigation of new EU and US cloud regulations. Honestly, the biggest challenge is balancing that impressive growth with the relentless economic pressure from the giants. Let's break down the six macro-factors that matter most.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Political factors

You're looking at Backblaze, Inc. (BLZE) and trying to map the political landscape. The key takeaway is that political factors-specifically data sovereignty and US government procurement-are creating a dual market: a high-growth, high-compliance government sector dominated by hyperscalers, and a compliance-driven international market where Backblaze is making strategic, cost-effective moves.

Backblaze's strategy in 2025 is to focus on the cost-sensitive state/local government and international markets where its price-performance advantage is strongest, rather than competing directly for the multi-billion-dollar federal contracts. The full-year 2025 revenue guidance of between $145.4 million and $146.0 million shows they are growing, but this scale is still far below the major cloud providers who are the primary targets for federal spending.

Increased global pressure for data localization and sovereignty laws.

The global trend toward data localization (requiring data to be stored within a country's borders) is a major political driver for cloud providers. This is a risk, but Backblaze is turning it into an opportunity by strategically expanding its data regions.

The most concrete example in 2025 is the opening of the Canada East (CA East) data region in Toronto, Ontario, in January 2025. This expansion was explicitly done to meet the data sovereignty needs of Canadian businesses in sectors like healthcare, finance, and government. This move allows Backblaze to capture a share of a Canadian cloud services market expected to grow at a compound annual growth rate (CAGR) of nearly 20% in the coming years.

This regional expansion strategy is a direct response to political pressure and regulatory changes, allowing them to compete with larger players by offering a compliant, low-cost solution in key jurisdictions like the European Union (EU Central region in Amsterdam) and Canada.

Geopolitical tensions impacting data center location strategy and expansion.

Geopolitical instability and the desire for national digital resilience are forcing a shift in where data centers are built. The US-China tensions are the primary driver, pushing companies to diversify their supply chains and data footprints away from high-risk areas.

Backblaze's current data center footprint is strategically diversified across North America and Europe, which helps mitigate single-region political risk. The six current data center locations are: Sacramento, Stockton, Phoenix, Reston (US), Amsterdam (Netherlands), and Toronto (Canada). This geographic spread is a competitive advantage over smaller, single-region players, but it also means navigating a patchwork of regulations like the General Data Protection Regulation (GDPR) in the EU.

The decision to expand the US-East data center in Reston, Virginia, doubling its regional data footprint, also reflects a focus on strengthening capacity within a politically stable and secure US region for high-value workloads like AI and High-Performance Computing (HPC).

US-China trade policies affecting hardware supply chain costs and availability.

The renewed escalation of the US-China trade war in 2025 is creating significant cost and availability risks for all IT hardware, which is critical for Backblaze's proprietary Storage Pod infrastructure.

As tariffs and export controls intensify, particularly on advanced technologies and semiconductors, companies reliant on Asian manufacturing are facing a new reality. Historically, the 2018-2020 trade war saw import tariffs for IT goods increase by 20%, and a similar or greater impact is expected in the current phase.

Here's the quick math: Backblaze's core operating model relies on low-cost, high-density storage. Any increase in the cost of hard drives or server components-driven by tariffs or supply chain rerouting to countries like Vietnam or India-directly compresses the company's already thin margins. The company reported a Q3 2025 gross profit of $23.1 million, or 62% of revenue. A significant, politically-induced cost increase in their hardware could quickly erode this margin and threaten their goal of reaching cash flow breakeven in Q4 2025.

The supply chain risk is defintely real.

Government contracts and procurement favoring US-based cloud providers.

The US federal government is a massive, highly lucrative cloud market, but it heavily favors the largest US-based providers with the highest security authorizations.

The total available market for federal cloud spending is estimated to be between $20 billion and $21 billion in fiscal year 2025, a figure projected to surpass $30 billion by FFY28. However, the largest, multi-billion-dollar contracts like the Joint Warfighting Cloud Capability (JWCC) are being awarded to Amazon Web Services, Microsoft, Google Cloud, and Oracle.

Backblaze's current political strategy focuses on the State, Local, and Education (SLED) market, which is less demanding than federal defense contracts. The company has achieved GovRAMP Progressing Snapshot status and TX-RAMP Provisional Authorization in 2025, which streamlines procurement for state and local agencies. This is a smart, targeted approach.

The focus on GovRAMP and state contracts, which are easier to secure than full Federal Risk and Authorization Management Program (FedRAMP) authorization, is a clear political positioning to maximize returns on compliance investment. It's a deliberate choice to compete on cost and compliance in the SLED sector, rather than on scale and high-security certifications in the federal space.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Economic factors

Global inflation driving up data center operational costs, especially power.

You can't talk about cloud storage economics in 2025 without starting with inflation-it's hitting the physical layer of the internet hard. Backblaze, which runs its own storage pods, faces a direct increase in its Cost of Goods Sold (COGS) from two angles: hardware and construction. The cost of NAND memory, which is essential for Solid State Drives (SSDs) and caching, has surged by roughly 50% since April 2025, with Dynamic Random-Access Memory (DRAM) seeing an astonishing 160% price explosion in recent months.

Plus, the cost to build new data centers has spiked an estimated 15-20% in 2025, largely due to tariffs on imported steel, aluminum, and electronics components. This is a defintely a headwind for any company needing to expand physical capacity to meet demand, even for a cost-leader like Backblaze. Here's the quick math on hardware pressure:

• NAND Memory Price Surge: Approximately +50% since April 2025.
• DRAM Price Surge: Approximately +160% in recent months.
• Data Center Construction Cost Increase: Estimated +15% to +20% in 2025.

Aggressive pricing from hyperscalers (Amazon, Google) forcing margin pressure.

The pricing dynamic in cloud storage is a fascinating paradox right now. On one hand, hyperscalers like Amazon Web Services (AWS) and Google Cloud are still the 800-pound gorillas, but their aggressive pricing is often a decoy. They might offer a low storage rate, but they make up the difference with steep egress fees (the cost to move your data out) and opaque billing models. Backblaze's own 2025 research found that 95% of companies reported unexpected cloud storage charges, with egress fees being a primary culprit.

This hidden cost structure is actually a massive opportunity for Backblaze's transparent, low-egress-fee model, which is why their B2 Cloud Storage segment is the growth engine. While some competitors like Microsoft Azure have reportedly raised prices by 6-12% for business clients, Backblaze's clear-cut pricing makes them a strategic alternative for enterprises trying to manage cloud inflation. You can't beat simple, honest pricing when everyone else is playing shell games.

High interest rates increasing the cost of capital for infrastructure expansion.

Even though the Federal Reserve has started easing, the cost of capital remains significantly elevated compared to the near-zero rates of a few years ago. In October 2025, the Federal Open Market Committee (FOMC) lowered the target range for the federal funds rate to 3.75% to 4.00%. This rate directly impacts the cost of borrowing for infrastructure expansion, which is critical for a growth company like Backblaze.

The company maintains a relatively light debt load with a debt-to-equity ratio of 0.24 as of November 2025, but they still carry substantial total debt of approximately $64.14 million (Most Recent Quarter). Every percentage point on that rate range increases the interest expense for their credit facilities and future debt raises, making every new data center pod more expensive to finance. They secured a new $20 million credit facility in Q2 2025, and the high-rate environment dictates a cautious approach to leveraging that capital.

Strong projected Annual Recurring Revenue (ARR) growth to over $145 million in 2025.

Despite the economic headwinds, Backblaze's core business momentum is strong, driven by the B2 Cloud Storage product. The company's Annual Recurring Revenue (ARR) reached $147.2 million as of the end of Q3 2025, a 13% year-over-year increase. For the full fiscal year 2025, the company projects total revenue to be between $145.4 million and $146.0 million. This strong growth, especially in B2, shows that their value proposition-cost-effective, transparent cloud storage-is resonating with customers who are fed up with hyperscaler pricing. The growth is not uniform, however, as their older Computer Backup revenue has remained flat at $16.5 million for the quarter.

The focus is clearly on B2, which grew 28% year-over-year in Q3 2025, and is expected to grow between 25% and 28% in Q4 2025, often fueled by large, seven-figure expansion deals with existing customers, including a high-growth AI-powered video surveillance client. That's a solid, high-margin trajectory.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Social factors

Growing enterprise demand for multi-cloud and hybrid-cloud strategies.

The social shift away from single-vendor dependence is now a dominant enterprise strategy, creating a clear opportunity for Backblaze. This is not a niche trend; it's the new baseline for IT architecture. According to a 2024 Gartner report, over 92% of large enterprises now operate in a multi-cloud environment, seeking to avoid vendor lock-in and optimize costs.

Backblaze's B2 Cloud Storage is directly positioned to capitalize on this, offering a cost-effective, S3-compatible (Simple Storage Service) platform that acts as a neutral hub for data. The hybrid cloud market, which combines private and public clouds, is projected to hit a value of $158.37 billion in 2025, growing at a Compound Annual Growth Rate (CAGR) of 22.12% through 2030. This means companies need a reliable, affordable second or third cloud, which is exactly what B2 provides.

Backblaze's B2 Cloud Storage revenue growth of 28% year-over-year in Q3 2025, reaching $20.7 million, shows they are successfully capturing this demand. It's a simple choice: flexibility is non-negotiable for modern enterprises.

Increased public awareness and scrutiny of data breaches and privacy issues.

Public scrutiny and regulatory pressure following high-profile data breaches have made data protection a boardroom-level concern, not just an IT task. The financial risk is staggering: the average cost of a data breach in the U.S. surged 9% to a record high of $10.22 million in 2025. The total cost of cybercrime is anticipated to reach $10.5 trillion annually by the end of 2025.

This heightened risk profile drives demand for robust, secondary storage solutions like Backblaze's Computer Backup and B2 Cloud Storage, which offer immutable (unchangeable) backups and disaster recovery. The fact that 82% of companies now consider privacy certifications, like ISO 27701, as a purchasing criterion for vendors underscores the need for demonstrable security. Backblaze is responding by integrating advanced security features, such as AI-powered 'Anomaly Alerts' announced in Q2/Q3 2025, designed to help customers detect potential suspicious activity quickly.

Here's the quick math: paying a little more for a dedicated backup solution is cheap insurance against a $10.22 million average loss.

Shift to remote and hybrid work models driving demand for secure data access.

The hybrid work model is now the default for remote-capable employees. Among this segment of the U.S. workforce, 52% are hybrid, and 27% are fully remote, leaving only 21% fully on-site. This decentralization of the workforce means company data is no longer safely contained within a corporate firewall; it's spread across home offices, laptops, and personal devices.

This reality drives acute demand for two things Backblaze offers: secure, centralized backup for endpoints (Computer Backup) and easily accessible, secure object storage for collaboration (B2 Cloud Storage). Hybrid job postings reflect this permanent shift, having grown from 15% in mid-2023 to nearly a quarter, or 24%, of all new jobs by mid-2025. This trend will only increase the need for seamless, secure data access from anywhere, a core function of cloud storage.

• 52% of remote-capable U.S. employees are now hybrid.
• Hybrid job postings reached 24% of all new jobs by mid-2025.
• 72% of employees feel their company needs to invest in new technologies to support remote work.

Focus on simple, transparent pricing models appealing to small-to-midsize businesses.

A major social factor driving customer choice is the frustration with the complex, opaque pricing structures of the 'hyperscalers' (Amazon Web Services, Microsoft Azure, and Google Cloud Platform). Backblaze's commitment to simple, predictable pricing, often being about one-fifth the price of traditional cloud providers, is a powerful social differentiator. This transparency is especially appealing to Small-to-Midsize Businesses (SMBs) and developers who need to control costs precisely.

The most compelling part of their model is the policy of offering free egress (data download) up to 3x the average monthly data stored, which eliminates the punitive fees that often surprise customers of larger providers. This simple model has allowed Backblaze to grow from its small customer base while simultaneously moving up-market, attracting larger deals like the seven-figure expansion with an existing customer secured in Q3 2025. The appeal of predictable, low-cost storage is a powerful social driver of adoption.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Technological factors

The core of Backblaze, Inc.'s competitive advantage is its technology-driven cost structure, so its success is intirely tied to the pace of innovation in the storage industry. For 2025, the key technological factors are a double-edged sword: massive data demand from AI is fueling growth, but the company must continually invest in next-generation hardware to maintain its industry-leading gross margin.

Continued rapid innovation in storage density and hard drive technology.

Backblaze's business model depends on leveraging the steady, predictable decline in the cost-per-gigabyte of Hard Disk Drives (HDDs). This trend is defintely continuing in 2025, driven by new recording technologies. You see manufacturers pushing the limits with Heat-Assisted Magnetic Recording (HAMR) and Microwave-Assisted Magnetic Recording (MAMR) to increase areal density.

Here's the quick math: if Backblaze can swap out an older 16TB drive for a new 32TB drive at only a marginal cost increase, their cost of goods sold (COGS) per stored terabyte drops significantly. This is how they maintain a pricing advantage over hyperscalers. Toshiba, Western Digital, and Seagate are all moving to deliver 30TB+ drives this year, which is crucial for Backblaze to keep its infrastructure costs low and its gross margin high.

Need to constantly upgrade infrastructure to maintain a gross margin near 65%.

While new HDD technology is an opportunity, it also represents a capital expenditure risk. To stay competitive, Backblaze must constantly cycle its storage pods with the latest, densest drives. This investment is required to support the company's strong profitability metrics. For instance, the company reported a Gross Profit Margin of 62% in Q3 2025, up from 55% in Q3 2024, and a Gross Margin of 63% in Q2 2025. Hitting or exceeding the aspirational 65% margin requires disciplined, high-volume hardware procurement and efficient data center operations.

The table below shows the recent gross margin performance, which highlights the importance of this operational efficiency:

AI/ML adoption requiring massive data sets, increasing demand for B2 Cloud Storage.

Artificial Intelligence and Machine Learning (AI/ML) are the single biggest tailwind for Backblaze's B2 Cloud Storage business in 2025. AI models need massive, affordable datasets for training and inference, and B2's low-cost, open-cloud architecture is a strong fit. The growth here is explosive. In Q2 2025, data stored by AI customers grew by an astonishing 40x year-over-year, and the number of AI-focused clients increased by 70%.

This massive demand is directly accelerating the B2 segment, which saw revenue growth of 29% in Q2 2025 and 28% in Q3 2025. To capitalize on this, Backblaze launched a new offering called B2 Overdrive, specifically designed for throughput-intensive workloads like AI/ML, and they signed their first six-figure customer for it just two months after launch in early Q3 2025. That's a clear signal that the market needs this type of high-performance, cost-predictable storage.

Development of new object storage features like immutability and compliance tools.

To attract and retain larger, compliance-focused enterprise customers, Backblaze is rapidly rolling out advanced security and management features for B2 Cloud Storage. These features are critical for moving beyond simple backup and into primary storage for complex workflows.

Key technological developments in 2025 include:

• AI-powered Anomaly Alerts: This feature, in private preview as of Q3 2025, analyzes usage patterns to detect suspicious activity, such as spikes in downloads that could signal data exfiltration or a ransomware attack.
• Enterprise Web Console & Role-Based Access Controls (RBAC): Also in private preview, this allows large teams to manage petabytes of data while enforcing the principle of least privilege, a core tenet of zero-trust security.
• Bucket Access Logs: Now generally available, these logs provide detailed, S3-compatible records of all operations on objects, which is essential for security monitoring and compliance forensics.
• Object Lock: This feature, which enables data immutability, is a foundational defense against ransomware and helps customers meet regulatory retention requirements.

These new tools, which build on existing SOC-2 compliance, are helping to address enterprise security concerns, which is a major barrier for cloud adoption.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Legal factors

Enforcement of the EU Data Act and US Cloud Regulations Impacting Data Transfer

The legal landscape for cloud storage providers like Backblaze, Inc. is defintely becoming more complex, driven by aggressive international and domestic regulatory shifts in data sovereignty and competition. The most immediate challenge in 2025 is the phased application of the European Union's Data Act, which became applicable in part starting September 12, 2025. This law focuses on non-personal data and aims to curb vendor lock-in by requiring providers to make it easier for customers to switch platforms and take their data with them, regardless of existing contractual agreements. For a US-based company, this means re-engineering data management systems for European customers.

Also, the US government is tightening its own controls on cross-border data flows. The Department of Justice's new Rule on Preventing Access to U.S. Sensitive Personal Data and Government-Related Data by Countries of Concern took effect on April 8, 2025. This rule prohibits certain bulk transfers of U.S. sensitive personal data to entities with significant ownership or residency ties to countries like China, Russia, or Iran. The annual reporting requirements for restricted transactions involving cloud services begin on October 6, 2025, adding a significant due diligence and audit burden to Backblaze's compliance program.

The core risk here is the potential invalidation of the Transatlantic Data Privacy Framework (TADPF), which currently allows data transfers from the EU to the US. If the European Court of Justice were to challenge the TADPF, as it has with previous agreements, Backblaze would face a massive compliance hurdle for its EU Central (Amsterdam) region data center, necessitating a clear, pre-planned exit strategy to avoid fines and service disruption. One challenge is that US cloud providers need to implement measures to prevent non-EEA governmental authorities from accessing non-personal data under the EU Data Act.

Stricter Compliance Requirements (e.g., HIPAA, CCPA) for Customer Data Handling

Compliance with sector-specific and state-level privacy mandates is a non-negotiable cost of doing business, especially as Backblaze focuses on its B2 Cloud Storage enterprise segment. The company maintains certifications and policies to meet the stringent standards of the Health Insurance Portability and Accountability Act (HIPAA) and the California Consumer Privacy Act (CCPA), now expanded by the California Privacy Rights Act (CPRA).

For healthcare and other regulated industries, Backblaze acts as a Business Associate (BA) and will execute a Business Associate Agreement (BAA) with Covered Entities. This legally obligates them to safeguard Protected Health Information (PHI) using measures like AES 128-bit encryption and secure transmission via HTTPS. Similarly, the company satisfies CCPA/CPRA obligations, applying consumer rights like the right to know, correct, and opt-out, and extending these regulations to all customers to the best of their ability, not just California residents.

While specific 2025 General and Administrative (G&A) expenses for legal are not broken out, the company's overall expected Revenue for full-year 2025 is between $145.0 million to $147.0 million, with an Adjusted EBITDA margin range of 17%-19%. Compliance costs are embedded in G&A and R&D, and the ongoing investment in these areas is crucial to maintain their SOC 2 Type II certification and other compliance standards. They must keep spending to stay compliant.

Ongoing Litigation Risk Related to Patent Infringement in Cloud Technology

The cloud and data storage sector is a hotbed for intellectual property (IP) disputes, and this risk is escalating. The 2025 Annual Litigation Trends Survey shows that 46% of companies reporting increased IP exposure cited greater vulnerability to patent disputes over the last year. For cloud companies, the increased use of Artificial Intelligence (AI) is a major driver, with 55% of respondents expecting their IP exposure to grow due to AI technology.

While Backblaze does not have a publicly reported, active, large-scale patent infringement lawsuit in 2025, the industry trend is a clear risk. The company is being proactive, however. In July 2025, Backblaze introduced a new 'Legal Hold' feature for its Computer Backup with Enterprise Control product. This feature allows businesses to instantly preserve a user's entire backup history, ensuring rapid compliance with legal, regulatory, or HR data-retention requirements. This move directly mitigates the risk of fines and sanctions related to e-discovery and data spoliation in future litigation.

Need for Robust Service Level Agreements (SLAs) to Manage Customer Expectations

In the highly competitive Infrastructure as a Service (IaaS) market, a robust Service Level Agreement (SLA) is the primary legal tool for managing customer expectations around reliability and availability, and for outlining financial liabilities when performance dips. Cloud providers are continually pushing the limits on uptime guarantees.

Backblaze must compete with industry benchmarks that are constantly being raised. For instance, a competitor, UpCloud, improved its core services SLA to 99.999% uptime, effective May 1, 2025. Even a major player like Google Cloud offers a >= 99.95% Monthly Uptime Percentage for its Standard storage class in a multi-region location.

The key SLA metrics for cloud storage revolve around four factors:

• Availability/Uptime: The percentage of time the service is accessible.
• Durability: The probability of data remaining intact (often cited as eleven nines, or 99.999999999%).
• Performance/Latency: The speed of data access.
• Disaster Recovery: The time to restore service after an outage.

A failure to meet the SLA triggers financial penalties, typically in the form of service credits. With Backblaze's B2 Cloud Storage Annual Recurring Revenue (ARR) at $80.7 million as of Q2 2025, a widespread outage could lead to a significant, albeit capped, revenue hit due to SLA credits.

Backblaze, Inc. (BLZE) - PESTLE Analysis: Environmental factors

Pressure from investors and customers for data center energy efficiency.

The pressure for energy efficiency in data centers is no longer just an environmental concern; it's a direct financial lever, especially for a company like Backblaze, Inc. whose entire value proposition is cost-effective cloud storage. While the company does not publicly disclose a Power Usage Effectiveness (PUE) metric for its data centers, its operational model is fundamentally built on efficiency.

Backblaze's proprietary Storage Pod architecture, which maximizes storage density by fitting up to 45 drives in a 4U enclosure, directly translates to lower power consumption per terabyte of data stored. This design is a key component in offering up to 3.2x lower Total Cost of Ownership (TCO) compared to legacy hyperscalers, a figure validated by independent analysis in 2025. The financial incentive drives the environmental one: less power used means lower operational costs, which directly contributed to a Q3 2025 Adjusted EBITDA of $8.4 million.

The market is prioritizing efficiency, and Backblaze's competitive advantage is rooted in this:

• Lower TCO: Up to 3.2x savings for customers over competitors.
• Operational Cost Savings: Efficiency directly impacts the bottom line, helping drive the Q3 2025 gross profit to $23.1 million.
• Hardware Longevity: The Q2 2025 Annualized Failure Rate (AFR) for their drive fleet was 1.36%, down from 1.42% in Q1 2025, indicating longer hardware lifecycles and reduced embodied energy waste from manufacturing new equipment.

Need to source renewable energy for new data center build-outs.

The demand for cloud services, especially with the acceleration of AI workloads, is driving unprecedented energy consumption, with global data center electricity use growing by 45% between 2018 and 2024. For Backblaze, which announced a significant data center expansion in its US-East region in 2025 [cite: 13 (from first search)], securing clean power is a strategic necessity to manage long-term energy costs and meet stakeholder expectations.

While major hyperscalers have aggressive targets-like Google's goal to achieve 24/7 carbon-free energy by 2030-Backblaze's smaller scale means its strategy is often focused on helping customers reduce their own Scope 3 emissions. This is a smart, defintely realistic approach. The industry trend is toward Power Purchase Agreements (PPAs), with virtual PPAs representing 57% of all corporate renewable energy procurement in 2025. Backblaze's current model of leveraging colocation facilities means its direct control over energy sourcing is limited, but their growth will necessitate a formal renewable energy strategy, likely starting with PPAs or high-efficiency colocation partners, to support their projected full-year 2025 revenue of up to $146.0 million.

E-waste regulations impacting the disposal and recycling of retired hardware.

The disposal of retired IT assets, particularly hard drives, is a significant environmental and data security risk. Global e-waste is projected to reach 74 million metric tons by 2030 [cite: 4 (from first search)], and regulations like Extended Producer Responsibility (EPR) laws are becoming stricter in 2025, mandating higher recycling quotas [cite: 1 (from first search)].

Backblaze mitigates this risk through a transparent, multi-step process for retiring its own data center hardware and a customer-facing recycling program. This process is critical for compliance with the patchwork of US state and federal e-waste laws, as well as international standards like the EU's Waste Electrical and Electronic Equipment (WEEE) Directive [cite: 3 (from first search)].

Here's the quick math on their hardware lifecycle management:

Reporting requirements on carbon footprint becoming standard for public companies.

As a NASDAQ-listed public company, Backblaze faces increasing scrutiny to provide transparent environmental, social, and governance (ESG) data. While their focus has been on operational transparency (e.g., Drive Stats reports) and financial performance (Q3 2025 Net Loss was an improved $3.8 million), the market is rapidly moving toward mandatory carbon footprint reporting.

The trend is clear: 47 jurisdictions worldwide have enacted specific data center energy efficiency legislation as of early 2025 [cite: 21 (from first search)]. Customers of hyperscalers now receive carbon footprint dashboards to calculate their own Scope 3 emissions [cite: 24 (from first search)]. Backblaze's current strategy of helping customers meet their own sustainability goals by eliminating power-hungry on-premises hardware is a good start, but the company must soon translate its inherent efficiency into a verifiable, reported carbon metric. The risk is that a lack of formal Scope 1, 2, and 3 reporting could be perceived by institutional investors as a governance gap, especially as their Annual Recurring Revenue (ARR) for Q3 2025 reached $147.2 million.