Backblaze Inc

Previous wording

Our business depends, in part, on our ability to add new customers. We believe there is a significant opportunity to further grow our customer base by continuing to make investments in sales and marketing. We will continue investing in our customer acquisition and inbound demand generation activities, which is driven predominantly by our blog content, our case studies, social sharing, earned media, and our self-serve sign up model. We also will continue investing in optimizing the conversion rate of visitors to customers. We intend to leverage this model as an efficient approach to attract new customers, turning them into brand advocates, partners, and more referrals. Furthermore, we plan to continue to build and scale our paid lead generation and outbound sales motion to increasingly grow in the mid-market.

Current wording

Our business depends, in part, on our ability to add new customers. We believe there is a significant opportunity to further grow our customer base by continuing to make investments in sales and marketing. We will continue investing in our customer acquisition and inbound demand generation activities, which is driven predominantly by our blog content, our case studies, social sharing, earned media, and our self-serve sign up model. We also will continue investing in optimizing the conversion rate of visitors to customers. We intend to leverage this model as an efficient approach to attract new customers, turning them into brand advocates, partners, and more referrals.

Previous wording

We believe an increasingly important customer acquisition model is our targeted sales team that is focused on larger customers and channel sales. The sales motion focuses on inbound inquiries, outbound prospecting targeting specific use cases, and volume expansion of our self-serve customers.

Current wording

We believe an increasingly important customer acquisition model is our targeted sales team that is focused on larger customers and channel sales. The sales motion focuses on inbound inquiries, outbound prospecting targeting specific use cases, and volume expansion of our self-serve customers. Furthermore, we plan to continue to build and scale our paid lead generation and outbound sales motion to increasingly grow in the mid-market.

Previous wording

While our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more than 175 countries, with 27% of our total revenue originating outside of the United States for thesix months ended June 30, 2024. We believe international expansion may represent a meaningful opportunity to generate further demand for our solutions in international geographies. We may invest in our operations internationally to reach new customers by expanding in targeted key geographies where we believe there are opportunities for significant return on investment.

Current wording

While our sales and marketing efforts have primarily focused on the United States, our existing customer base spans more than 175 countries, with 27% of our total revenue originating outside of the United States for thenine months ended September 30, 2024. We believe international expansion may represent a meaningful opportunity to generate further demand for our solutions in international geographies. We may invest in our operations internationally to reach new customers by expanding in targeted key geographies where we believe there are opportunities for significant return on investment. We recently partnered with a leader in hybrid cloud solutions in Canada, which will extend our market reach in this region, as noted above.

Previous wording

Our Net Revenue Retention Rate increased by 5% for B2 Cloud Storage as of June 30, 2024 compared to June 30, 2023, primarily due to the price increase that generally became effective in October 2023 and, to a lesser extent, growth from existing customers. Our Net Revenue Retention Rate increased by 2% for Computer Backupas of June 30, 2024 compared to June 30, 2023, primarily due to the price increase.

Current wording

Our Net Revenue Retention Rate increased by 7% for B2 Cloud Storage as of September 30, 2024 compared to September 30, 2023, primarily due to the price increase that generally became effective in October 2023 and, to a lesser extent, growth from existing customers. Our Net Revenue Retention Rate increased by 9% for Computer Backupas of September 30, 2024 compared to September 30, 2023, primarily due to the price increase.

Previous wording

Our Gross Customer Retention Rate was essentially flat for both B2 Cloud Storage and Computer Backup as of June 30, 2024 compared to June 30, 2023.

Current wording

Our Gross Customer Retention Rate decreased by 1% for both B2 Cloud Storage and Computer Backup as of September 30, 2024 compared to September 30, 2023.

Previous wording

While ARR is not a guarantee of future revenue, we consider over 98% of our revenue recurring in nature for the periods presented. As noted above, our gross customer retention rate has been consis tent over the periods presented at approximately 90%. Although B2 Cloud Storage is paid for by customers in arrears, we recognize revenue in the month these storage services are delivered, and consider this revenue recurring as customers are charged as long as their data is stored with us. Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage net revenue retention rate of 126% as of June 30, 2024. Fees from B2 Cloud Storage (consumption-based arrangements) are recognized as services are delivered. Computer Backup (subscription-based arrangements) revenue is recognized on a straight-line basis over the contractual term of thearrangement beginning on the date that the service commences, provided that all other revenue recognition criteria have been met. See Note 2 to our audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for details on our revenue recognition policy. Additional limitations of ARR include the fact that consumption-based revenue is not guaranteed for future periods, although we believe that our high historic gross customer retention rate is indicative of ARR, and the fact that our subscription terms can be on a monthly basis, although the significant majority of our customers have subscription terms of one year or longer during the periods presented above.

Current wording

While ARR is not a guarantee of future revenue, we consider over 98% of our revenue recurring in nature for the periods presented. As noted above, our gross customer retention rate has been consis tent over the periods presented at approximately 90%. Although B2 Cloud Storage is generally paid for by customers in arrears, we recognize revenue in the month these storage services are delivered, and consider this revenue recurring as customers are charged as long as their data is stored with us. Further, during the periods presented, customers who store data with us generally increase the amount of their data stored over time, as evidenced by our B2 Cloud Storage net revenue retention rate of 128% as of September 30, 2024. Fees from B2 Cloud Storage (consumption-based arrangements) are recognized as services are delivered. Computer Backup (subscription-based arrangements) revenue is recognized on a straight-line basis over the contractual term of thearrangement beginning on the date that the service commences, provided that all other revenue recognition criteria have been met. See Note 2 to our audited consolidated financial statements for the year ended December 31, 2023 included in our Annual Report on Form 10-K for details on our revenue recognition policy. Additional limitations of ARR include the fact that consumption-based revenue is not guaranteed for future periods, although we believe that our high historic gross customer retention rate is indicative of ARR, and the fact that our subscription terms can be on a monthly basis, although the significant majority of our customers have subscription terms of one year or longer during the periods presented above.

Previous wording

Our ARR increased by $19.3 million, or 44%, for B2 Cloud Storage as of June 30, 2024 compared to June 30, 2023, primarily due to the price increase and increased storage by our customers and to a lesser extent, increased sales from B2 Reserve. Our ARR increased by$9.7 million, or 18%, for Computer Backup as of June 30, 2024 compared to June 30, 2023, primarily due to the price increase and, to a lesser extent, growth from existing customers.

Current wording

Our ARR increased by $18.1 million, or 39%, for B2 Cloud Storage as of September 30, 2024 compared to September 30, 2023, primarily due to the price increase and increased storage by our customers and to a lesser extent, increased sales from B2 Reserve. Our ARR increased by$11.5 million, or 21%, for Computer Backup as of September 30, 2024 compared to September 30, 2023, primarily due to the price increase and, to a lesser extent, growth from existing customers.

Previous wording

We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to our customers primarily through either a consumption or a subscription-based arrangement through B2 Cloud Storage and Computer Backup, respectively. Our subscription arrangements generally range in duration from one month to three years, for which we bill our customers up front for the entire period. Our consumption-based arrangements do not have a contractual term and are billed monthly in arrears.

Current wording

We generate revenue primarily from our B2 Cloud Storage and Computer Backup cloud services offered on our platform. Our platform is offered to our customers primarily through either a consumption or a subscription-based arrangement through B2 Cloud Storage and Computer Backup, respectively. Our subscription arrangements generally range in duration from one month to three years, for which we bill our customers up front for the entire period.

Previous wording

During the third quarter of 2023, we announced pricing increases across our Computer Backup and B2 Cloud Storage products, which became effective in October 2023. While the impact of these price increases have inherent uncertainty, we expect a favorable impact to total revenue across our products over the remainder of 2024, and do not expect a significant change in costs solely as a result of the increase. As a result of this price increase, we have not experienced a material impact on customer retention as of June 30, 2024.

Current wording

During the third quarter of 2023, we announced pricing increases across our Computer Backup and B2 Cloud Storage products, which became effective in October 2023. While the impact of these price increases have inherent uncertainty, we expect a favorable impact to total revenue across our products over the remainder of 2024, and do not expect a significant change in costs solely as a result of the increase. As a result of this price increase, we have not experienced a material impact on customer retention through September 30, 2024.

Previous wording

Our price increase amounts noted above are inherent estimates that are based on an average price charged per customer and other assumptions that may offset the increase, such as free egress and impact of the price increase on the amount of data stored and customer license count.

Current wording

Our price increase amounts are inherent estimates that are based on an average price charged per customer and other assumptions that may offset the increase, such as free egress and impact of the price increase on the amount of data stored and customer license count.

Previous wording

The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation. We also incur other non-personnel costs related to our general overhead expenses. We expect that our operating expenses will increase in absolute dollars as we grow our business.

Current wording

The most significant components of our operating expenses are personnel costs, which consist of salaries, benefits, bonuses, and stock-based compensation. We also incur other non-personnel costs related to our general overhead expenses. We expect that our operating expenses will decrease in the near-term as a result of our 2024 Restructuring Plan, however, our operating expenses may increase over time in absolute dollars as we grow our business.

Previous wording

We plan to continue investing in sales and marketing by increasing our sales and marketing headcount, supplementing our self-serve model with a direct sales approach, expanding our partner ecosystem, driving our go-to-market strategies, building our lead generation and brand awareness, and sponsoring additional marketing events. As a result, we expect our investment in sales and marketing to increase in absolute dollars for the foreseeable future. Sales and marketing expenses may fluctuate as a percentage of total revenue from period to period because of the timing and extent of these expenses.

Current wording

We plan to continue investing in sales initiatives, supplementing our self-serve model with a direct sales approach, expanding our partner ecosystem, driving our go-to-market strategies, building our lead generation and brand awareness, and sponsoring marketing events. As a result, we expect our investment in sales and marketing todecrease as a percentage of revenue in the near-term as a result of our 2024 Restructuring Plan, however, our investment in sales and marketing may increase over time in absolute dollars as we grow our business. Sales and marketing expenses may fluctuate as a percentage of total revenue from period to period because of the timing and extent of these expenses.

Previous wording

Interest expense consists primarily of interest related to our finance lease agreements and interest on the outstanding balance of our existing debt facility.

Current wording

Interest expense, net consists primarily of interest related to our finance lease agreements and interest on the outstanding balance of our existing debt facility.

Previous wording

The following table sets forth our condensed consolidated statements of operations data for the periods indicated:

Current wording

The following table sets forth our condensed consolidated statements of operations and comprehensive loss data for the periods indicated:

Previous wording

The following table sets forth our condensed consolidated statements of operations data expressed as a percentage of revenue for the periods indicated:

Current wording

The following table sets forth our condensed consolidated statements of operations and comprehensive loss data expressed as a percentage of revenue for the periods indicated:

Previous wording

Comparison of the Three and Six Months Ended June 30, 2024 and 2023

Current wording

Comparison of the Three and Nine Months Ended September 30, 2024 and 2023

Previous wording

Total revenue increased by$6.7 million, or 27%, for the three months ended June 30, 2024 compared to the same period in 2023. B2 Cloud Storage increased by$4.6 million, approximately$2.1 million of which was due to increased storage, $2.0 million due to the price increase in October 2023, and $0.5 million from sales of B2 Reserve. The remaining increase of$2.1 million was from Computer Backup, approximately$2.4 million of which was due to price increases that went into effect in October 2023 and$0.2 million of which was due to increased storage fees for version history longer than one year. This increase waspartially offset by$0.5 million due to decreased license count.

Current wording

Total revenue increased by $7.3 million, or 29%, for the three months ended September 30, 2024 compared to the same period in 2023. B2 Cloud Storage increased by$4.6 million, of which approximately $2.0 million was due to increased storage, an additional $2.0 million of which was due to the price increase in October 2023, and $0.5 million of which was due to increased sales of B2 Reserve. The remaining increase of $2.7 million was from Computer Backup, of which approximately $3.4 million was due to price increases that went into effect in October 2023 and $0.2 million of which was due to increased storage fees for version history longer than one year. The increases in Computer Backup revenue were partially offset by a decrease of $0.8 million due to decreased license count.

Previous wording

Total revenue increased by$13.3 million, or 28%, for the six months ended June 30, 2024 compared to the same period in 2023. B2 Cloud Storage increased by$9.3 million, approximately$4.3 million of which was due to increased storage, $4.0 million due to the price increase in October 2023, and $1.0 million from sales of B2 Reserve. The remaining increase of$4.0 million was from Computer Backup, approximately$4.5 million of which was due to price increases that went into effect in October 2023 and$0.4 million of which was due to increased storage fees for version history longer than one year. This increase waspartially offset by$0.9 million due to decreased license count.

Current wording

Total revenue increased by $20.6 million, or 28%, for the nine months ended September 30, 2024 compared to the same period in 2023. B2 Cloud Storage increased by $13.8 million, of which approximately $6.2 million was due to increased storage, $6.1 million of which was due to the price increase in October 2023, and $1.5 million of which was due to increased sales of B2 Reserve. The remaining increase of $6.7 million was from Computer Backup, of which approximately $7.9 million was due to price increases that went into effect in October 2023 and $0.6 million of which was due to increased storage fees for version history longer than one year. The increases in Computer Backup revenue were partially offset by a decrease of $1.7 million due to decreased license count.

Previous wording

Cost of revenue increased by$1.5 million, or 12%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase was primarily attributable to$0.9 million in depreciation of our infrastructure equipment, which resulted from purchasing additional hard drives and related infrastructure in order to support the growth of our business and$0.6 million related to managing and operating our co-location facilities.

Current wording

Cost of revenue increased by $1.2 million, or 9%, for the three months ended September 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase of $0.9 million in depreciation of our infrastructure equipment, which resulted from purchasing additional hard drives and related infrastructure in order to support the growth of our business and an increase of $0.4 million related to managing and operating our co-location facilities.

Previous wording

Cost of revenue increased by$3.3 million, or 13%, for the six months ended June 30, 2024 compared to the same period in 2023. The increase was primarily attributable to$2.1 million in depreciation of our infrastructure equipment, which resulted from purchasing additional hard drives and related infrastructure in order to support the growth of our business and$1.2 million related to managing and operating our co-location facilities.

Current wording

Cost of revenue increased by $4.5 million, or 12%, for the nine months ended September 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase of$3.0 million indepreciation of our infrastructure equipment, which resulted from purchasing additional hard drives and related infrastructure in order to support the growth of our business, and an increase of $1.5 million related to managing and operating our co-location facilities.

Previous wording

Gross margin was 55% for the three months ended June 30, 2024 compared to 49% for the same period in 2023. The increase in gross margin was primarily due to our revenue growth from the price increases as described above.

Current wording

Gross margin was 55% for the three months ended September 30, 2024 compared to 46% for the same period in 2023. The increase in gross margin was primarily due to our revenue growth from the price increases as described above.

Previous wording

Gross margin was 54% for the six months ended June 30, 2024 compared to 48% for the same period in 2023. The increase in gross margin was primarily due to our revenue growth from the price increases as described above.

Current wording

Gross margin was 54% for the nine months ended September 30, 2024 compared to 47% for the same period in 2023. The increase in gross margin was primarily due to our revenue growth from the price increases as described above.

Previous wording

Research and development expenses decreased by $0.3 million, or 3%, for the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily attributable to $1.1 million related to non-recurring workforce reduction restructuring charges incurred for thethree months ended June 30, 2023 and $0.1 million reduction in overhead and general office expenses, and was partially offset by$0.5 million related to stock-based compensation, and a $0.5 million increase in personnel-related expenses, net of capitalization for internal-use software to support our storage cloud features and offerings.

Current wording

Research and development expe nses increased by $1.1 million, or 11%, for the three months ended September 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase of $1.3 million in personnel-related expenses, net of capitalization for internal-use software to support our storage cloud features and offerings, and an increase of $0.2 million related to stock-based compensation. These increases were partially offset by a decrease of $0.3 million related to overhead and general office expenses.

Previous wording

Sales and marketing expenses increased by $1.1 million, or 11%, for the three months ended June 30, 2024 compared to the same periodin 2023. The increase in sales and marketing expense was primarily attributable to$0.9 million in personnel-related expenses as a result of increased headcount and sales commission incentives to support our targeted marketing activities, and $0.3 million due to increased advertising expenses.

Current wording

Sales and marketing expenses increased by $1.0 million, or 9%, for the three months ended September 30, 2024 compared to the same period in 2023. The increase in sales and marketing expense was primarily attributable to an increase of $0.8 million in personnel-related expenses due to increased headcount and sales commission incentives to support our targeted marketing activities, an increase of $0.1 million due to stock-based compensation, and an increase of $0.1 million due to increased advertising expenses.

Previous wording

Sales and marketing expenses increased by $0.6 million, or 3%, for the six months ended June 30, 2024 compared to the same periodin 2023. The increase in sales and marketing expense was primarily attributable to$1.5 million in personnel-related expenses as a result of increased headcount and sales commission incentives to support our targeted marketing activities, and$0.6 million due to increased advertising and travel expenses, and was partially offset by$1.0 million related to non-recurring workforce reduction restructuring charges incurred for thesix months ended June 30, 2023, a $0.4 million decrease in fees for consultants and contractors, and a $0.2 million decrease in stock-based compensation.

Current wording

Sales and marketing expenses increased by $1.6 million, or 5%, for the nine months ended September 30, 2024 compared to the same period in 2023. The increase in sales and marketing expenses was primarily attributable to an increase of $2.3 million in personnel-related expenses due to increased headcount and sales commission incentives to support our targeted marketing activities, and an increase of $0.8 million due to increased advertising and travel expenses. These increases were partially offset by a decrease of $1.0 million related to non-recurring personnel restructuring charges incurred for the nine months ended September 30, 2023, a decrease of $0.4 million in fees for consultants and contractors, and a decrease in stock-based compensation.

Previous wording

General and administrative expenses increased by $0.3 million, or 5%, for the three months ended June 30, 2024 compared to the same period in 2023. The increase was primarily attrib utable to $0.3 million in personnel-related expenses due to increased headcount, a$0.2 million increase instock-based compensation expenses, and a$0.2 million increase in overhead and general office expenses. This was partially offset by a$0.3 million decrease related to insurance expenses, and a$0.2 million decrease related to professional fees for accounting and tax services.

Current wording

General and adminis trative expenses increased by $0.6 million, or 9%, for the three months ended September 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase of $0.5 million in overhead and general office expenses, an increase of $0.3 million in stock-based compensation expenses, and an increase of $0.2 million in personnel-related expenses due to increased headcount. These increases were partially offset by a decrease of $0.3 million related to insurance expenses.

Previous wording

General and administrative expenses increased by $0.2 million, or 1%, for thesix months ended June 30, 2024 compared to the same period in 2023. The increasewas primarily attributable to $0.4 million in personnel-related expenses due to increased headcount, a $0.3 million increase in stock-based compensation expenses, a $0.3 million increase in overhead and general office expenses, a $0.3 million increase in indirect tax, and a $0.3 million increase in fees for consultants and contractors. This was partially offset by a $0.5 million decrease related to professional fees for accounting and tax services, a $0.5 million decrease related to insurance expenses, and $0.3 million related to non-recurring workforce reduction restructuring charges incurred for the six months ended June 30, 2023.

Current wording

General and administrative expenses increased by $0.8 million, or 4%, for the nine months ended September 30, 2024 compared to the same period in 2023. The increase was primarily attributable to an increase of $0.8 million in overhead and general office expenses, an increase of $0.7 million in personnel-related expenses due to increased headcount, an increase of $0.6 million in stock-based compensation expenses, an increase of $0.5 million in fees for consultants and contractors. These increases were partially offset by a decrease of $0.8 million related to insurance expenses, a decrease of $0.5 million related to professional fees, a decrease of $0.3 million related to non-recurring personnel restructuring charges, and a decrease of $0.3 million related to litigation expense incurred for the nine months ended September 30, 2023.

Previous wording

Investment income decreasedby $0.2 million, or 30%, for the three months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to a lower average marketable securities portfolio balance, partially offset by increased interest rates on our marketable securities.

Current wording

Investment income decreasedby $0.1 million, or 30%, for the three months ended September 30, 2024 compared to the same period in 2023. The decrease was primarily due to a lower average marketable securities portfolio balance, partially offset by increased interest rates on our marketable securities.

Previous wording

Investment income decreased by $0.4 million, or 34%, for the six months ended June 30, 2024 compared to the same period in 2023. The decrease was primarily due to a lower average marketable securities portfolio balance, partially offset by increased interest rates on our marketable securities.

Current wording

Investment income decreased by $0.5 million, or 33%, for the nine months ended September 30, 2024 compared to the same period in 2023. The decrease was primarily due to a lower average marketable securities portfolio balance, partially offset by increased interest rates on our marketable securities.

Previous wording

Interest expense was relatively flat for the three and six months ended June 30, 2024 compared to the same periods in 2023.

Current wording

Interest expense remained flat during the three and nine months ended September 30, 2024 compared to the same periods in 2023.

Previous wording

Our provision for income taxes was immaterial for the three and six months ended June 30, 2024 and 2023.

Current wording

Our provision for income taxes was immaterial for the three and nine months ended September 30, 2024 and 2023.

Previous wording

Our management uses adjusted EBITDA to assess our operating performance. We define adjusted EBITDA as net loss adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, investment income, income tax provision, and other non-recurring charges. We use adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance by excluding certain items that may not be indicative of our business, results of operations or outlook. We consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of total revenue.

Current wording

Our management uses adjusted EBITDA to assess our operating performance. We define adjusted EBITDA as net loss adjusted to exclude depreciation and amortization, stock-based compensation, interest expense, investment income, income tax provision, realized and unrealized gains and losses on foreign currency transactions, impairment of long-lived assets, and other non-recurring charges. We use adjusted EBITDA to evaluate our ongoing operations and for internal planning and forecasting purposes. We believe that adjusted EBITDA, when taken together with our GAAP financial results, provides meaningful supplemental information regarding our operating performance by excluding certain items that may not be indicative of our business, results of operations or outlook. We consider adjusted EBITDA to be an important measure because it helps illustrate underlying trends in our business and our historical operating performance on a more consistent basis. We define adjusted EBITDA margin as adjusted EBITDA as a percentage of total revenue.

Previous wording

(1) $125 thousand of stock-based compensation expense is classified as workforce reduction and related severance charges in the table above for the six months ended June 30, 2024, as it was incurred as part of our restructuring program. See Note 16 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding restructuring charges.

Current wording

(1) $125 thousand of stock-based compensation expense is classified as workforce reduction and related severance charges in the table above for the nine months ended September 30, 2023, as it was incurred as part of our restructuring program. See Note 16 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for additional information regarding restructuring charges.

Previous wording

Since inception, we have financed operations primarily through payments received from our customers and, in later periods from the net proceeds from our IPO. As of June 30, 2024 and December 31, 2023, our principal sources of liquidity were cash, short-term investments and restricted cash, non-current of $28.3 million and $33.4 million, respectively. In general, our restricted cash may only be used to pay down our debt facility.

Current wording

Since inception, we have financed operations primarily through payments received from our customers and, in later periods from the net proceeds from our IPO. As of September 30, 2024 and December 31, 2023, our principal sources of liquidity were cash, short-term investments and restricted cash, non-current of $25.6 million and $33.4 million, respectively. In general, our restricted cash may only be used to pay down our debt facility.

Previous wording

We generally enter into finance lease arrangements to obtain hard drives and related equipment for our data center operations. We also generally enter into leases for our facilities for data centers and office space under non-cancelable operating leases with various expiration dates. As of June 30, 2024, our future minimum commitments for these finance leases and lease financing obligations including interest were approximately $10.9 million and $19.7 million for the remainder of the year ending December 31, 2024 and thereafter, respectively. The weighted average discount rate for finance leases was 11.4% as of June 30, 2024.

Current wording

We generally enter into finance lease arrangements to obtain hard drives and related equipment for our data center operations. We also generally enter into leases for our facilities for data centers and office space under non-cancelable operating leases with various expiration dates. As of September 30, 2024, our future minimum commitments for these finance leases and lease financing obligations including interest were $5.9 million and $25.6 million for the remainder of the year ending December 31, 2024 and thereafter, respectively.

Previous wording

As of June 30, 2024, our future minimum commitments for commenced operating leases, which include both lease and non-lease components, were $2.9 million and $24.0 million for the remainder of the year ending December 31, 2024 and thereafter, respectively. For further information and our future minimum commitments on our finance leases and operating leases, see Note 10 and Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Current wording

As of September 30, 2024, our future minimum commitments for commenced operating leases were $2.7 million and $37.7 million for the remainder of the year ending December 31, 2024 and thereafter, respectively. For further information and our future minimum commitments on our finance leases and operating leases, see Note 10 and Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Previous wording

In addition, we have purchase commitments that relate mainly to infrastructure agreements used to facilitate our operations. As of June 30, 2024, we had non-cancelable purchase commitments of $0.7 million and $0.6 million payable during the remainder of the year ending December 31, 2024 and the year ending December 31, 2025, respectively.

Current wording

In addition, we have purchase commitments that relate mainly to infrastructure agreements used to facilitate our operations. As of September 30, 2024, we had non-cancelable purchase commitments of $0.3 million and $0.9 million payable during the remainder of the year ending December 31, 2024 and the year ending December 31, 2025, respectively.

Previous wording

For the six months ended June 30, 2024, cash provided by operating activities was $5.6 million, which resulted from a net loss of $21.4 million, adjusted for non-cash charges of $26.0 million and net cash inflow of $1.0 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $13.9 million for depreciation and amortization expense and $11.1 million for stock-based compensation expense. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $4.0 million increase of deferred revenue, which increased due to our growing sales and timing of collections from our customers, offset in part by a $1.0 million increase in accounts receivable, a $0.8 million decrease of operating lease liabilities, a $0.7 million decrease in accounts payable, and a $0.3 million decrease in accrued expenses and other current liabilities, which decreased primarily due to our accrued compensation and due to timing of payment of our expenses. Cash provided by operations increased for the six months ended June 30, 2024, as compared to the same period in 2023 primarily due to our growing customer base, increased storage from existing customers and the price increase that began to take effect in October 2023, partially offset by increased expenditures related to managing and operating our co-location facilities, and increased spending in support of our expanded research and development and sales and marketing spending to support business growth.

Current wording

For the nine months ended September 30, 2024, cash provided by operating activities was $10.3 million, which resulted from a net loss of $34.2 million, adjusted for non-cash charges of $42.5 million and net cash inflow of $2.0 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $21.3 million for depreciation and amortization expense, $19.5 million for stock-based compensation expense, and noncash lease expense on operating leases of $1.7 million. The net cash inflow from changes in operating assets and liabilities was primarily the result of a $5.3 million increase of deferred revenue, which increased due to our growing sales and to timing of collections from our customers and a $0.8 million increase in accrued expenses and other current liabilities. The cash inflows were largely offset by an increase in accounts receivable of $2.0 million due to timing of collections, payments of operating lease liabilities of $1.3 million, and a $0.4 million decrease in accounts payable. Cash provided by operations increased for the nine months ended September 30, 2024, as compared to the same period in 2023 primarily due to our growing customer base, increased storage from existing customers and the price increase that began to take effect in October 2023, partially offset by increased expenditures related to managing and operating our co-location facilities, and increased spending in support of our expanded research and development and sales and marketing spending to support business growth.

Previous wording

For the six months ended June 30, 2023, cash used in operating activities was $10.4 million, which resulted from a net loss of $31.5 million, adjusted for non-cash charges of $22.9 million and net cash outflow of $1.9 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $11.9 million for depreciation and amortization expense and $10.7 million for stock-based compensation expense. The net cash outflow from changes in operating assets and liabilities was primarily the result of a $1.6 million decrease in accrued expenses and other current liabilities, which decreased primarily due to our accrued compensation and due to timing of payment of our expenses, a $1.4 million decrease of operating lease liabilities, and a $0.2 million decrease in accounts payable, offset in part by a $0.9 million increase in prepaid and other current assets and a $0.3 million increase of deferred revenue, which increased due to our growing sales and timing of collections from our customers.

Current wording

For the nine months ended September 30, 2023, cash used in operating activities was $10.6 million, which resulted from a net loss of $47.5 million, adjusted for non-cash charges of $38.7 million and net cash outflow of $1.8 million from changes in operating assets and liabilities. Non-cash charges primarily consisted of $18.3 million for depreciation and amortization expense and $18.7 million for stock-based compensation expense. The net cash outflow from changes in operating assets and liabilities was primarily the result of a $2.0 million decrease of operating lease liabilities, a $1.1 million increase in accounts receivable, a $0.6 million decrease in accounts payable and a $0.4 million decrease in accrued expenses and other current liabilities, which decreased primarily due to our accrued compensation and due to timing of payment of our expenses, offset in part by a $1.7 million increase of deferred revenue, which increased due to our growing customer base and timing of collections from our customers and a $0.9 million decrease in prepaid and other current assets. Cash used in operations was relatively flat for the nine months ended September 30, 2023, as compared to the same period in 2022 as our increase in net loss was comprised of non-cash charges of stock-based compensation expense and depreciation and amortization expense, partially offset by an increase in deferred revenue.

Previous wording

Cash provided by investing activities during the six months ended June 30, 2023 was $17.0 million, resulting primarily from the $38.5 million maturity of our short-term investments, offset in part by the purchase of short-term maturity investments of $9.7 million, $7.1 million related to the development of internal-use software for adding new features and enhanced functionality to our platform, and capital expenditures of $4.7 million in support of infrastructure deployments to support our growing business.

Current wording

Cash used in investing activities during the nine months ended September 30, 2024 was $11.9 million, resulting primarily from the purchase of short-term maturity investments of $32.5 million. Cash used of $10.2 million related to the development of internal-use software for adding new features and enhanced functionality to our platform, and $0.9 million was related to capital expenditures in support of infrastructure deployments to support our growing business. Cash used was partially offset by $31.4 million of proceeds from the maturity of our short-term investments and $0.3 million from the disposition of certain hard drives.