How one AI storage company achieved positive free cash flow

Achieving positive free cash flow—where cash flow outpaces day-to-day expenses and capital expenditures—puts CFOs in a better position to execute on financial goals. But for a young organization in a burgeoning industry, it’s easier said than done.

Marc Suidan, CFO of Backblaze, said a change in how the neocloud provider measured operating margins and a switch to a budgeting process that justifies all spending from scratch each year were key to helping the business achieve positive free cash flow status within two years of his joining.

“EBITDA is not a good metric for a company like ours, because we’ve been reporting lots of healthy EBITDA, [but] we’re still burning cash,” Suidan told CFO Brew. “Unless you’re Anthropic and you’re growing 10x every year, nobody wants to see that burning cash.”

Backblaze added adjusted free cash flow, and adjusted free cash flow margin, to its non-GAAP financial measures soon after Suidan became CFO, he said, to reassure investors who were turned off by the cash burning.

Suidan also implemented zero-based budgeting when he arrived in August 2024, rethinking the entire budget with a focus on efficiency and redeploying capital or “driv[ing] it down to the bottom line.”

“That’s how we were able to improve our free cash flow margin year over year so aggressively and that fast,” Suidan said, adding that the company achieved positive free cash flow in Q4 2025. His goal is for Backblaze to maintain that status through this year.

Backblaze’s “North Star,” Suidan said, is to become GAAP net income positive.

A neocloud? The cloud—an imaginary storage bin in the sky that holds all the data you don’t have immediate room for, but want to easily access—has been around for years.

But Backblaze is a neocloud company that offers infrastructure-as-a-service, or on-demand cloud computing servers and storage, minus the physical hardware, allowing enterprises to more quickly deploy applications and grow compute capacity at scale.

“We work with a lot of these neocloud providers, and we service the same customers,” Suidan added. “What’s interesting is, if you think about it, we sell to AI companies, and we sell to companies who sell to AI companies.”

Growing with AI. The neocloud industry rose to prominence in the last several years alongside the AI arms race. Suidan said he’s confident that the more integrated AI becomes in workflows, the more it will accelerate Backblaze’s growth.

Over the last twelve months, Backblaze’s stock price has risen from $5.33 to $7.51 (as of the May 19 close). Suidan told investors on a Q1 earnings call May 4 that its proprietary B2 cloud storage remains a “primary growth driver;” its revenue rose 24% year over year to $22.4 million.

“Next year, each one of us is going to have a few agents deployed—you may deploy five agents. So then you, and five agents, are creating data; all this data has gotta sit somewhere,” Suidan told us.

“I do think we’re going to face some really nice growth from that standpoint. Is there going to be changes in the rate of growth along the way? Of course, but the growth acceleration is definitely going to happen.”