Backblaze, Inc.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Description of Business

Description of Business

Backblaze, Inc. and its subsidiaries (collectively, “Backblaze” or the “Company”) isa high-performance cloud storage platform that serves as a backbone for data-intensive use cases in artificial intelligence (“AI”) as well as across a broad range of other modern cloud workloads. Customers also use the Backblaze Storage Cloud platform to help ensure the cyber-resilience of their organizations, streamline media workflows, and address a variety of other data-focused application and information technology needs. The Company delivers its services through the Backblaze Storage Cloud platform, a purpose-built, web-scale software architecture operating on commodity hardware. Backblaze’s offerings include B2 Cloud Storage, an Infrastructure-as-a-Service (“IaaS”) solution, and Computer Backup, a Software-as-a-Service (“SaaS”) solution.

Note 2. Basis of Presentation and Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated. The accompanying condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and applicable rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) regarding interim financial reporting. Accordingly, they do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Therefore, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes for the year ended December 31, 2025 included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2025, which was filed with the SEC on March 10, 2026 (the “Annual Report”). In management’s opinion, these unaudited condensed consolidated financial statements have been prepared on the same basis as the annual consolidated financial statements and reflect all adjustments, which consist only of normal recurring adjustments, necessary for a fair statement of the Company’s financial position, results of operations and cash flows for the periods presented. The results of operations for the three and nine months ended September 30, 2026 and 2025 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period.

Reclassifications

To conform to the current period's presentation, a foreign exchange gain of$0.2 million for thethree months ended September 30, 2025 and a foreign exchange loss of$0.4 million for thenine months ended September 30, 2025 that were previously included in "General and administrative" operating expenses are now included within "Other income (expense), net" in the condensed consolidated statement of operations and comprehensive loss for thethree and nine months ended September 30, 2025. This reclassification had no impact on total net loss and comprehensive loss.

To conform to the current period’s presentation, prepaid expenses and other current assets that were previously presented as separate line items have been reclassified and included in “Prepaid expenses and other current assets” in the condensed consolidated statement of cash flows for thenine months ended September 30, 2025.

Emerging Growth Company

The Company is an emerging growth company (“EGC”), as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, EGCs can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an EGC or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these condensed consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. The Company will maintain its EGC status until the fifth anniversary of the Company’s initial public offering. The Company intends to use the extended transition period for any other new or revised accounting standards during the period in which it remains an EGC. As a result, the Company’s Annual Report on Form 10-K for the year ending December 31, 2026 will no longer reflect any reduced disclosure requirements as an emerging growth company.

Significant Accounting Policies

Except as described below, there have been no material changes to the Company’s significant accounting policies as disclosed in its Annual Report on Form 10-K for the year ended December 31, 2025.

Revenue Recognition

Committed-Capacity and Managed Storage Arrangements

The Company recently began offering committed storage capacity and managed storage. Under committed-capacity arrangements, theprovision of reserved storage capacity over the contractual term represents a single performance obligation that is satisfied over time as the capacity is made available to the customer. Revenue is recognized under these arrangements using an output method based on the proportion of contracted storage capacity made available, which reflects the transfer of services to the customer. Under managed storage arrangements, the Company evaluates contract terms to identify one or more distinct performance obligations, which are satisfied either over time as services are rendered or at a point in time upon transfer of control. Revenue recognition commences when the related managed storage become available to the customer, and either the applicable minimum contract commitment begins or the storage capacity is deployed.

Share-Based Consideration Payable to a Customer

Share-based consideration granted to a customer is accounted for as a reduction of the transaction price of the related customer contract. The reduction in revenue is recognized in the same pattern as the related revenue.

Debt

The Company evaluates debt instruments to determine their classification as debt or equity and whether any embedded features, including conversion features, put options, call options, and additional interest, require bifurcation and separate accounting as derivatives under Accounting Standards Codification ("ASC") 815, Derivatives and Hedging. No feature of the Company’s debt required bifurcation, and the notes are accounted for as a single liability measured at amortized cost. Debt issuance costs are generally presented as a direct deduction from the carrying amount of the notes and are amortized to interest expense over the contractual term using the effective interest method.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and the accompanying notes. Such estimates and assumptions include the costs to be capitalized as internal-use software, which include determining whether projects will result in new or additional functionality, the useful lives of other long-lived assets, impairment considerations for long-lived assets, the incremental borrowing rate for lease agreements, lease and non-lease component allocation, estimates related to variable consideration, the expected period of benefit of deferred contract acquisition costs, the fair value of warrant consideration issued to a customer, estimates of performance-based award attainment, certain accrued liabilities, and accounting for income taxes, including estimates for deferred tax assets, valuation allowance, and uncertain tax positions. The Company bases its estimates on historical experience and on assumptions that management considers reasonable. Future actual results could differ materially from these estimates.

During the second quarter of 2025, the Company completed a study on the useful lives of its property and equipment. Effective April 1, 2025, the estimated lives of (i) data center equipment, which includes hard drives, and (ii) machinery and equipment, which includes servers and other infrastructure equipment, were extended on a prospective basis from a range of 3 to 5 years to a uniform 6 years. The reassessment was based on historical data and continuous improvements made to the efficiency and durability of the Company’s storage infrastructure.

The change in estimate reduced depreciation expense and decreased net losses by approximately $1.7 million and $4.1 million for the three and nine months ended September 30, 2025, respectively, resulting in increases of $0.03 and $0.07 per basic and diluted share for the three and nine months ended September 30, 2025, respectively.

The continuing effect of the change in estimate resulted in both depreciation expense and net loss being approximately $0.6 million and $2.3 million lower for the three and nine months ended September 30, 2026, respectively, than they would have been under the former estimated useful lives, resulting in favorable impacts of $0.01 and $0.04 per basic and diluted share for the three and nine months ended September 30, 2026, respectively. The Company estimates that depreciation expense and net loss for the remainder of 2026 will be approximately $0.5 million lower than it would have been under the former estimated useful lives.

Comprehensive Loss

The Company does not have any components of other comprehensive income recorded within the condensed consolidated financial statements and therefore does not separately present a statement of comprehensive income in the condensed consolidated financial statements.

Income Taxes

The Company is subject to U.S. federal, state, and foreign income taxes as a corporation. The Company’s tax provision and the resulting effective tax rate for interim periods is determined based upon its estimated annual effective tax rate adjusted for the effect of discrete items arising in that quarter. The effective tax rate for each of thethree and nine months ended September 30, 2026 and 2025 was zero as the Company has incurred continuous operating losses.

Concentrations and Risks and Uncertainties

Credit risk. Financial instruments that potentially subject the Company to credit risk primarily consist of cash, cash equivalents, accounts receivable, marketable securities, and unbilled receivables.

The Company maintains its cash, cash equivalents, and marketable securities with high-quality financial institutions that have investment-grade credit ratings. Although these institutions are considered to be financially sound, deposits may exceed the amounts insured or guaranteed by the Federal Deposit Insurance Corporation, which could subject the Company to risk of loss in the event of the failure of any such financial institution.

The Company is also exposed to credit risk related to accounts receivable and unbilled receivables from customers. The Company does not have separate collateral requirements to support financial instruments subject to credit risk.

Concentration of vendors. The Company acquires infrastructure equipment from third-party vendors. Vendors may have limited sources of equipment and supplies, which may expose the Company to potential supply-chain and service disruptions that could harm the Company’s business.

The following tables present concentrations of vendors and customers that accounted for 10% or more of the Company’s cash disbursements, accounts payable, and accounts receivable.

New Accounting Standards Adopted

In September 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-07, Derivatives and Hedging (Topic 815) and Revenue from Contracts with Customers (Topic 606). This standard adds a scope exception from derivative accounting for certain contracts with an underlying based on operations or activities specific to one of the parties to the contract, and clarifies that share-based noncash consideration receivable from a customer is accounted for under ASC Topic 606, Revenue from Contracts with Customers, unless and until the Company's right to that consideration becomes unconditional. The Company early adopted ASU 2025-07 effective January 1, 2026 on a prospective basis to align the accounting for contractual features in its recently issued notes with the refined scope guidance. The adoption did not have a material impact on the Company's consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets. This standard allows entities to apply a practical expedient when estimating expected credit losses for current accounts receivable and current contract assets that arise from transactions accounted for under ASC Topic 606, Revenue from Contracts with Customers. The Company adopted ASU 2025-05 effective January 1, 2026 on a prospective basis and elected the practical expedient. The adoption did not have a material impact on the Company's consolidated financial statements.

In May 2025, the FASB issued ASU 2025-04, Compensation—Stock Compensation (Topic 718) and Revenue from Contracts with Customers (Topic 606): Clarifications to Share-Based Consideration Payable to a Customer. This standard clarifies the accounting for share-based consideration payable to customers, including that conditions based on a customer’s purchases or potential purchases are performance conditions, and requires entities to estimate whether awards subject to service or performance conditions will vest. The Company early adopted ASU 2025-04 effective January 1, 2026 using the modified retrospective method. The adoption did not result in a cumulative-effect adjustment and did not have a material impact on the Company’s consolidated financial statements.

Recently Issued Accounting Pronouncements

In September 2025, the FASB issued ASU 2025-06, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. This standard updates the recognition model for internal-use software by eliminating the project stage framework and requiring capitalization once projects are approved and completion is probable, and also clarifies related disclosure requirements. This ASU is effective for all entities for fiscal years beginning after December 15, 2027, including interim periods within those years, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard.

In November 2024, the FASB issued ASU 2024-03, “Income Statement (Subtopic 220-40) - Reporting Comprehensive Income - Expense Disaggregation Disclosures.” The ASU requires disclosure of specified information about certain costs and expenses, including (i) certain amounts already required to be disclosed in the same disclosure as the other disaggregation requirements, (ii) a qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated quantitatively, and (iii) the total amount of selling expenses and an entity’s definition of such expenses. For public companies, this ASU is effective for fiscal years beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 on either a prospective or retrospective basis. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of this standard.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures” requiring enhancements and further transparency to certain income tax disclosures, most notably the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December 15, 2024 for public companies and is effective for fiscal years beginning after December 15, 2025 for non-public business entities. In accordance with its EGC status, the Company will implement the standard on a prospective basis beginning with its annual reporting period ending December 31, 2026. The Company does not expect ASU 2023-09 to have a material impact on its consolidated financial statements.

Note 3. Revenues

Disaggregation of Total Revenue

The following table presents the Company’s total revenue disaggregated by product (in thousands):

The following table presents the Company’s total revenue disaggregated by timing of revenue recognition (in thousands):

Total revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands):

Earned, Unbilled Revenue

As of September 30, 2026 and December 31, 2025, the Company had $5.2 million and $3.7 million, respectively, of unbilled accounts receivable included within other current assets in the condensed consolidated balance sheets.

Deferred Revenue

The following table presents information regarding the Company’s total deferred revenue (in thousands):

Deferred revenue represents the invoiced portion of the Company’s contract liabilities for which the related performance obligations are still outstanding. The Company’s remaining performance obligations (“RPOs”) include deferred revenue as well as future committed revenue under existing customer contracts.

The following table presents the Company’s RPOs (in millions):

(1) The increase in RPOs as of September 30, 2026 was primarily attributable to the CoreWeave Agreement entered into on June 16, 2026, with an aggregate contract value of approximately $335.1 million, less approximately $21.7 million attributable to the fair value of warrants issued to the customer. See Note 12 for further information.

(2) Effective January 1, 2026, the Company has included contracts with an original duration of one year or less in the above RPOs disclosure. To conform to current period disclosure, the Company has similarly included short-term contracts in the comparative disclosure as of December 31, 2025 resulting in an increase of $4.0 million from amounts previously disclosed.

Deferred Contract Costs

The following tables present the Company’s deferred contract costs and amortization of deferred contract costs (in thousands):

Consideration Payable to Customers

The grant-date fair value of the warrants issued to a customer is recognized in additional paid-in capital over the vesting periods using the accelerated attribution method and is recognized as a reduction of revenue based on the expected pattern of revenue recognition from the customer. The difference between these cumulative amounts is recorded as an asset or liability, as applicable. See Note 12 for additional information regarding the warrants. The deferred warrant cost is capitalized and recorded in other assets on the condensed consolidated balance sheets.

During the three and nine months ended September 30, 2026, the Company recognized a reduction to revenue related to the warrants of $0.1 million.

The following table presents the Company's capitalized consideration payable to customers (in thousands):

Note 4. Investments

The following table summarizes the Company’s cash equivalents and marketable securities (in thousands):

Scheduled Maturities

The amortized cost and fair value of the Company’s held-to-maturity investments as of September 30, 2026, by contractual maturity, are shown below.

Aging of Unrealized Losses

As of September 30, 2026, certain securities were in an immaterial unrealized loss position for less than twelve months. There wereno securities in an unrealized loss position as of December 31, 2025.

Note 5. Fair Value Measurements

The following table presents the fair values of the Company’s cash equivalents, held-to-maturity investments and outstanding debt obligations by level within the fair value hierarchy (in thousands):

(1) Investments in money market funds measured at fair value using the net asset value per share practical expedient are not subject to hierarchy level classification disclosure. The Company invests in money market funds that seek to maintain a stable net asset value. These investments include commingled funds that comprise high-quality short-term securities representing liquid debt and monetary instruments where the redemption value is likely to be the fair value. Redemption is permitted daily without written notice.

(2) The fair value of the Company’s convertible senior notes was determined based on observable market prices of identical instruments in less active markets.

There were no transfers between levels of the fair value hierarchy during the periods presented. There wereno material assets or liabilities that were measured at fair value on a non-recurring basis during the three and nine months ended September 30, 2026. During the year ended December 31, 2025, the only significant assets measured at fair value on a non-recurring basis were right-of-use assets related to the Company’s corporate headquarters lease, as discussed in Note 5 to Notes to Consolidated Financial Statements included in the Company’s Annual Report.

Note 6. Property and Equipment, Net

Property and equipment, net consisted of the following (in thousands):

(1) The net book value of the Company’s equipment under finance lease agreements and lease financing obligations was $60.5 million and $45.7 million as of September 30, 2026 and December 31, 2025, respectively.

As of September 30, 2026, the Company had $1.2 million in accruals related to the purchases of property and equipment.

The following table presents property and equipment, net and operating lease right-of-use assets by geographic region (in thousands):

Note 7. Capitalized Internal-Use Software, Net

Capitalized internal-use software, net consisted of the following (in thousands):

Amortization expense of capitalized internal-use software included in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):

(1) Includes $0.1 million and $0.4 million of restructuring charges for the three and nine months ended September 30, 2026, respectively, related to the Company’s 2025 Restructuring and Transformation Plan. See Note 14 for further information.

As of September 30, 2026, future amortization expense is expected to be as follows (in thousands):

Note 8. Leases

Finance Leases

The Company generally enters into finance lease arrangements to obtain hard drives and other infrastructure equipment for its data center operations. The terms of these agreements generally range from three tofive years and certain of these arrangements have optional renewals to extend the term of the lease generally at a fixed price. Finance leases are generally secured by the underlying leased equipment. The Company’s finance leases have original lease periods expiring between 2026 and 2031. Finance lease right-of-use assets are included in property and equipment, net in the Company’s condensed consolidated balance sheets.

Operating Leases

The Company leases data center spaces and office space under non-cancelable operating leases with various expiration dates. Certain lease agreements include renewal options to extend the lease term at a price to be determined upon exercise. These options are not reasonably certain to be exercised and therefore are not factored in the determination of lease payments. Contingent rental payments are generally not included in the Company’s lease agreements. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company's leases have original lease periods expiring between 2027 and 2033.

In May 2025, the Company entered into an agreement to sublease approximately 12,000 square feet on the second floor of its former corporate headquarters in San Mateo, California. That sublease commenced in June 2025 and expires in March 2029. In August 2026, the Company entered into an agreement to sublease approximately 12,000 square feet on the first floor of the same facility. The first-floor sublease is expected to commence in November 2026 and is scheduled to expire in March 2029. The Company classifies both subleases as operating leases and recognizes fixed sublease income on a straight-line basis over their respective terms and variable reimbursements as the related costs are incurred. Sublease income is recorded as a reduction of operating lease expense in the condensed consolidated statements of operations and comprehensive loss.

Summary of Lease Information

The weighted average remaining lease terms and discount rates as of September 30, 2026 and December 31, 2025 were as follows:

(1) Includes lease financing obligations.

The following table presents the components of lease expense (in thousands):

(1) Substantially all of the depreciation expense on assets acquired through the Company’s finance leases and lease financing obligations is included in cost of revenue in its condensed consolidated statements of operations and comprehensive loss.

(2) Non-lease components represent non-tangible utilities and services associated with the Company’s co-location lease agreements and are not recorded on the Company’s condensed consolidated balance sheets. The Company used judgment and third-party data in determining the stand-alone price for allocating consideration to lease and non-lease components under these lease agreements, such as the price of utilities as compared to its tangible data center footprint within each facility.

The following table presents supplemental cash flow information relating to the Company’s leases (in thousands):

The future minimum commitments for finance leases and lease financing obligations as of September 30, 2026 were as follows (in thousands):

As of September 30, 2026, the Company's future minimum obligations for operating leases and non-cancelable contractual commitments related to non-lease components were as follows (in thousands):

Leases Not Yet Commenced

In July 2026, the Company entered into an agreement to expand its lease for a data center facility, which is expected to commence in the fourth quarter of 2026, with a non-cancelable lease term ofthree years. The undiscounted future lease payments for this lease are approximately €1.4 million, or approximately $1.5 million based on the exchange rate between the Euro and the U.S. dollar as of September 30, 2026.

Note 9. Commitments and Contingencies

Purchase Commitments

Other non-cancelable commitments relate primarily to service agreements to support the Company’s operations. As of September 30, 2026, the Company had $0.7 million, $2.3 million, $0.6 million, and $0.1 million payable for these commitments during the remainder of the year ending December 31, 2026 and the years ending December 31, 2027, 2028, and 2029, respectively.

401(k) Plan

The Company sponsors a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. The Company contrib uted $0.5 million and $0.4 million to the 401(k) plan for the three months ended September 30, 2026 and 2025, respectively, and $1.5 million and $1.4 million to the 401(k) plan for the nine months ended September 30, 2026 and 2025, respectively.

Legal Matters

The Company is involved from time to time in various claims and legal actions arising in the ordinary course of business. Where appropriate, the Company establishes accruals for matters that are both probable and reasonably estimable and generally maintains insurance to cover certain types of litigation claims, subject to policy limits, retentions and deductibles, and other factors. As of September 30, 2026, the Company was not subject to any claims that are expected to have a material adverse effect on its financial position, results of operations, or cash flows. Nonetheless, the outcome of litigation is inherently uncertain; any such matters, individually or in the aggregate, could result in adverse impacts on the Company, including defense and settlement costs, diversion of management resources, and other factors.

Indemnification

The Company enters into indemnification provisions under agreements with other parties from time to time in the ordinary course of business. These agreements may require the Company to indemnify and defend the indemnified party against third-party claims arising from the Company’s activities or from any breaches of representations or warranties made by the Company. To date, the Company has not incurred any material costs or losses in connection with such indemnification obligations. However, it is not possible to reasonably estimate the maximum potential amount under these indemnification agreements due to the unique facts and circumstances of each arrangement. As a result, the Company has not recorded any liabilities related to these obligations in its condensed consolidated financial statements as of the periods presented.

Note 10. Debt

Issuance and Key Terms

On August 24, 2026, the Company issued $201.3 million aggregate principal amount of 0.00% convertible senior notes due in 2031 (the“Notes”) in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933, as amended, which included the full exercise by the initial purchasers of their option to purchase an additional $26.3 million aggregate principal amount of Notes. The Notes were issued pursuant to an indenture dated as of August 24, 2026 (the “Indenture”), between the Company and U.S. Bank Trust Company, National Association, as trustee.

The Notes are senior unsecured obligations and will mature on August 15, 2031, unless earlier converted, redeemed, or repurchased. The Indenture contains customary events of default, upon the occurrence and continuation of which the Notes may become immediately due and payable.

The Company received net proceeds of $194.3 million from the offering, after deducting debt issuance costs. The Company used $17.5 million of the net proceeds to pay the cost of the Capped Calls (as defined below) and intends to use the remainder for general corporate purposes, including capital expenditures.

Conversion

The following table presents the initial conversion terms of the Notes:

The conversion rate for the Notes is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. If the Company declares a cash dividend or distribution per share equal to or greater than the applicable market price of its common stock, holders of the Notes would be entitled to receive a cash distribution based on the shares underlying the Notes without converting their Notes.

Prior to May 15, 2031, holders may convert their Notes only under specified circumstances: (1) beginning in 2027, if the price of the Company's Class A common stock is at least 130% of the conversion price for at least 20 trading days within a period of 30 consecutive trading days in the preceding calendar quarter; (2) during a specified period following 10 consecutive trading days in which the trading price of the Notes is less than 98% of the product of the last reported sale price of the Company’s Class A common stock and the then-effective conversion rate; (3) if the Company calls the applicable Notes for redemption; or (4) upon the occurrence of specified corporate events. Beginning May 15, 2031, holders may convert their Notes at any time through the second scheduled trading day immediately preceding the maturity date.

Upon conversion, the Company may settle its conversion obligation in cash, shares of Class A common stock, or a combination of cash and shares, at its election. In connection with a make-whole fundamental change, as defined in the Indenture, or a notice of redemption, the conversion rate will increase in certain circumstances for holders who convert their Notes in connection with the applicable event. The conversion rate may not exceed 59.2417 shares of Class A common stock per $1,000 principal amount of Notes, subject to adjustment under the Indenture.

Redemption and Repurchase Terms

•Optional Redemption: The Company may redeem the Notes for cash on or after August 20, 2029 (up to 31 trading days prior to maturity) at 100% of principal plus accrued special interest, provided the stock price reaches at least 130% of the conversion price for 20 out of 30 consecutive trading days. At least $100.0 million principal must remain outstanding after any partial redemption. No sinking fund applies.

•Fundamental Change: Holders may require the Company to repurchase their Notes for cash at 100% of principal plus accrued special interest upon a specified fundamental change.

•Event of Default: Upon the occurrence and continuation of certain events of default specified in the Indenture, the principal amount of the Notes, together with accrued and unpaid special interest, may become immediately due and payable in accordance with the acceleration provisions of the Indenture.

Carrying Amount and Interest Expense

The net carrying value of the Notes as of September 30, 2026 was as follows (in thousands):

The Notes were issued at par, do not bear regular interest, and the principal amount of the Notes will not accrete; however, special interest may become payable under certain circumstances in accordance with the terms of the Indenture. Interest expense related to the Notes, consisting entirely of amortization of debt issuance costs, was $0.1 million for each of the three and nine months ended September 30, 2026. The effective interest rate on the Notes was 0.70% for the three and nine months ended September 30, 2026.

Capped Calls

In conjunction with the issuance of the Notes, the Company entered into separately negotiated capped call transactions (the "Capped Calls") with certain financial institutions at a total cost of $17.5 million. The Capped Calls initially cover approximately 9.2 million shares of the Company’s Class A common stock, subject to customary anti-dilution adjustment similar to those applicable to the Notes. The Capped Calls are generally expected to reduce potential dilution of the Company's Class A common stock upon conversion of the Notes and/or offset cash payments the Company may be required to make in excess of the principal amount of converted Notes, in each case subject to a cap. The cost of the Capped Calls is recorded in stockholders' equity as a reduction of additional paid-in capital on the condensed consolidated balance sheets. The Capped Calls are not subsequently remeasured at fair value as long as they continue to qualify for equity classification.

The Capped Calls have an initial strike price of $21.94 per share, which corresponds to the initial conversion price of the Notes, and an initial cap price of $33.76 per share, both subject to certain adjustments. Upon settlement, the Company may receive cash, shares of Class A common stock, or a combination thereof. The Capped Calls are indexed to the Company’s own stock and meet the criteria for equity classification and, therefore, qualify for the derivative scope exception.

As of September 30, 2026, the Capped Calls were out of the money and the Company would not receive shares, cash, or a combination thereof if the Capped Calls were settled as of such date. The settlement value of the Capped Calls would increase with increases in the Company’s stock price, subject to the cap price discussed above, and the settlement method is generally expected to mirror that of the Notes.

Revolving Credit Facility

The Company has a credit agreement, as amended (the “Credit Agreement”), with Citizens Bank, N.A. (the “Lender”), which includes a senior secured revolving credit facility with a total borrowing capacity of up to $50.0 million (the “Revolving Credit Facility”) for general corporate purposes and working capital needs. The Revolving Credit Facility includes a sub-limit of up to $3.0 million for the issuance of letters of credit and matures on April 30, 2030. As of September 30, 2026, the Company hadno outstanding borrowings andno letters of credit under the Revolving Credit Facility and $50.0 million remained available for borrowing.

The Credit Agreement contains customary restrictive financial and operating covenants, including limitations on the Company’s ability to incur additional indebtedness, pay dividends, make certain investments, sell assets, repurchase shares up to $15.0 million in any fiscal year, and engage in other specified transactions. The Credit Agreement also requires the Company to comply with financial covenants on a quarterly basis, including (i) minimum liquidity of $30.0 million held on deposit with the Lender, over which the Company retains control and considers as cash and cash equivalents, (ii) a maximum total leverage ratio of 6.75 to 1.00 for the quarter ended September 30, 2026 and decreases over time to 3.75 to 1.00 for the quarter ending December 31, 2027 and thereafter, and (iii) a minimum fixed charge coverage ratio of 1.50 to 1.00 through the quarter ending March 31, 2027 and 1.65 to 1.00 for the quarter ending June 30, 2027 and thereafter.

The financial covenants use trailing twelve-month consolidated EBITDA, as defined under the Credit Agreement, which includes specified adjustments and exclusions. As a result, consolidated EBITDA as defined under the Credit Agreement may differ materially from Adjusted EBITDA as presented elsewhere in this report. As of September 30, 2026, the Company was in compliance with the covenants under the Credit Agreement.

The above-described terms of the Credit Agreement reflect a series of amendments, beginning April 30, 2026 through August 24, 2026.

On April 30, 2026, the Company entered into an amendment to the Credit Agreement. The amendment, among other things, (i) extended the maturity date from June 4, 2027 to June 4, 2028, (ii) reset the option that allows the Company to extend the maturity date by one year, subject to certain conditions, and (iii) modified certain negative covenants, including increasing the limit on share repurchases from up to $10.0 million to up to $15.0 million per fiscal year and increasing the limit on permitted acquisitions to up to $20.0 million of cash consideration.

On June 30, 2026, the Company entered into an amendment to the Credit Agreement that modified a negative covenant to increase the permitted indebtedness for capital leases to $150.0 million outstanding.

On August 18, 2026, the Company entered into an amendment to the Credit Agreement that permitted the Company to issue the Notes and enter into the related Capped Calls.

On August 24, 2026, in connection with the closing of the offering of the Notes, the Company entered into an amendment to the Credit Agreement, which resulted in the terms described above, as follows: (i) increased the total borrowing capacity of the senior secured revolving credit facility from $20.0 million to $50.0 million, (ii) extended the maturity date of the Credit Agreement from June 4, 2028 to April 30, 2030 and eliminated the one-year extension option, and (iii) modified certain financial covenants under the Credit Agreement, including by adding a new fixed charge coverage ratio test, removing the minimum consolidated EBITDA threshold, increasing the minimum liquidity requirement and revising the maximum total leverage ratio thresholds.

Note 11. Stockholders’ Equity

Share Repurchase Program

In August 2025, the Company’s Board of Directors (the “Board”) approved a share repurchase program authorizing the Company to repurchase up to $10.0 million of its Class A common stock through August 1, 2026. The program was intended to offset dilution resulting from stock-based compensation. Repurchases were funded from the proceeds of employee stock option exercises and from employee contributions under the Company’s 2021 Employee Stock Purchase Plan (the “2021 ESPP”). The program terminated in accordance with its terms on August 1, 2026, at which time approximately $6.6 million remained unused under the authorization.

Note 12. Stock-Based Compensation

Restricted Stock Units (“RSUs”)

RSUs granted under the Company’s 2021 Equity Incentive Plan (the “2021 Plan”) and the 2024 New Employee Equity Incentive Plan (the “Inducement Plan”) generally vest based on continued service up to afour-year period for employees and over aone-year period for non-employee directors and consultants.

RSU activity for thenine months ended September 30, 2026 was as follows:

(1) Includes 58,166 RSUs that were settled in cash upon vesting. The Company expects to settle substantially all other outstanding RSUs in shares, with a limited number of specifically identified grants expected to be settled in cash. The shares underlying the cash-settled RSUs were returned to the applicable equity incentive plan and became available for future issuance.

As of September 30, 2026, total unrecognized compensation cost related to RSUs was $26.7 million, which will be recognized over a weighted-average period of 2.3 years.

Performance-based RSUs (“PSUs”)

PSUs granted under the 2021 Plan vest based on the Company’s achievement of a predefined year-over-year B2 Cloud Storage revenue growth target for the fiscal year ended December 31, 2026, subject to continued service through the requisite service period. PSUs are settled in shares of Class A common stock.

During the nine months ended September 30, 2026, the Company awarded PSUs based on the expected attainment ofone-year performance targets, consisting of 128,205 PSUs subject toone-year cliff vesting and 914,048 PSUs that vest over athree-year service period, with one-year cliff vesting for the initial tranche followed by quarterly vesting thereafter.

The number of PSUs earned will range from 0% to 150% of the initial award. Compensation expense for PSUs is recognized using an accelerated attribution method over the requisite service period for each separately vesting tranche, based on the grant-date fair value and the number of PSUs probable of vesting. The Company revises its estimate of the achievement of performance conditions at each reporting period, with cumulative catch-up adjustments recorded in the period of change.

PSU activity for thenine months ended September 30, 2026 was as follows:

As of September 30, 2026, management estimated the payout level for the PSUs at 150% of target. Based on this estimate, the Company recognized $1.2 million and $2.3 million of stock-based compensation expense related to these awards during the three and nine months ended September 30, 2026, respectively. As of September 30, 2026, total unrecognized compensation cost related to PSUs was $3.9 million, which will be recognized over a weighted-average period of 1.1 years.

Warrants

In June 2026, the Company entered into a multi-year Master Strategic Agreement with CoreWeave, Inc. (“CoreWeave”) under which the Company will provide committed B2 Cloud Storage capacity and managed storage on CoreWeave’s infrastructure (the “CoreWeave Agreement”). In connection with the CoreWeave Agreement, the Company issued CoreWeavetwo equity-classified warrants to purchase an aggregate of 4,194,876 shares of Class A common stock, consisting of an initial warrant to purchase 3,053,314 shares (the “Initial Warrant”) and an additional warrant to purchase 1,141,562 shares (the “Additional Warrant”). Each warrant has an exercise price of $7.60 per share, subject to customary adjustments, and may be exercised for cash or on a cashless basis.

The Initial Warrant vests intwenty equal quarterly installments over five years, subject to continuation of the related order form. The Additional Warrant vests in tranches based on purchase orders issued for managed storage capacity, with each tranche vesting intwenty equal quarterly installments over five years. The applicable order forms may be terminated under specified circumstances. If an order form is terminated, no further vesting occurs, and the related warrant remains exercisable only with respect to the portion vested as of the termination date. Any unvested portion of each warrant becomes fully vested and exercisable immediately prior to a change in control of the Company, as defined in the agreement, occurring before termination of the related order form, subject to certain conditions and the potential for forfeiture. The Initial Warrant expires on June 16, 2032, and the Additional Warrant expires on June 16, 2035.

The grant-date fair value of warrants expected or probable to vest is capitalized using an accelerated attribution method over the respective vesting periods.

Warrant activity for thenine months ended September 30, 2026 was as follows:

The warrants had a weighted-average grant-date fair value of $5.18 per warrant share, representing an aggregate grant-date fair value of approximately $21.7 million. The following table summarizes the Black-Scholes option pricing model used in estimating the per share grant date fair value of the customer warrants:

Bonus Plan

The Company maintains an annual bonus program under which bonus awards are contingent upon the achievement of corporate performance targets and individual performance objectives, and are generally settled in RSUs issued under the Company’s 2021 Plan. Bonus amounts represent fixed monetary values that are settled in a variable number of RSUs based on the Company’s stock price at the date of settlement. Participants must generally remain employed with the Company through the payout date to maintain eligibility for bonus awards. The requisite service period for these awards begins on the date the Compensation Committee of the Board (the “Compensation Committee”) approves the bonus plan and ends on the payout date. The 2026 bonus plan will be settled in cash for a limited number of executives and employees engaged through third-party employment arrangements. The expense for cash-based bonus awards is excluded from stock-based compensation expense.

In February 2026, the Compensation Committee approved the issuance of RSUs with an aggregate grant-date fair value of approximately $4.1 million based on actual performance against the targets set in the bonus plan for the year ended December 31, 2025. Upon issuance,689,790 RSUs vested and were settled on a net share basis with a fair value of $2.6 million.

Pursuant to the bonus plans, the Company recognized $2.9 million and animmaterial amount in stock-based compensation during the three months ended September 30, 2026 and 2025, respectively, of which the Company capitalized $0.5 million and animmaterial amount, respectively, for the development of internal-use software. The Company recognized $8.7 million and $2.0 million in stock-based compensation during the nine months ended September 30, 2026 and 2025, respectively, of which the Company capitalized $1.4 million and $0.2 million, respectively, for the development of internal-use software.

Stock Options

As of September 30, 2026, all outstanding options were fully vested and generally expireten years from the date of grant.

A summary of stock option activity under the Company’s equity plans and related information is as follows:

The intrinsic value of options exercised for the nine months ended September 30, 2026 and 2025 was $11.8 million and $4.7 million, respectively.

2021 ESPP

The Company recorded stock-based compensation under the 2021 ESPP of $0.6 million and $0.7 million for the three months ended September 30, 2026 and 2025, respectively, of which the Company capitalized $0.1 million and animmaterial amount in each period for the development of internal-use software. The Company recorded stock-based compensation under the 2021 ESPP of $1.7 million for each of the nine months ended September 30, 2026 and 2025, respectively, of which the Company capitalized $0.3 million and $0.2 million for the nine months ended September 30, 2026 and 2025, respectively, for the development of internal-use software.

As of September 30, 2026, the total unrecognized stock-based compensation expense related to the 2021 ESPP was $0.8 million and is expected to be recognized over a weighted average period of 0.6 years.

The following table summarizes the Black-Scholes option pricing model used in estimating the fair value of the stock purchase rights under the 2021 ESPP during the second quarter of 2026 and 2025.

Total Stock-Based Compensation Expense

Stock-based compensation expense included in the condensed consolidated statements of operations and comprehensive loss was as follows (in thousands):

During thethree and nine months ended September 30, 2026, the Company capitalized$1.1 million and$3.4 million, respectively, of stock-based compensation for the development of internal-use software. During thethree and nine months ended September 30, 2025, the Company capitalized$0.5 million and$2.0 million, respectively.

Note 13. Net Loss per Share Attributable to Common Stockholders

Basic net loss per share attributable to common stockholders is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period. The Company uses the treasury stock method to determine the potentially dilutive common stock equivalents of the Company’s stock options, warrants, share purchase rights pursuant to the Company’s 2021 ESPP, shares issuable under the Company’s bonus plans, and unvested RSUs, PSUs, RSUs subject to cash-settlement election. The Company uses the more dilutive of the if-converted method or the two class method to determine the potential dilutive effect of convertible notes. The Capped Calls are antidilutive and are excluded from diluted EPS.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data):

Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential common shares outstanding would have been antidilutive. The weighted average potential shares of common stock that were excluded from the computation of diluted net loss per share attributable to common stockholders for the periods presented are as follows:

Note 14. Restructuring

2025 Restructuring and Transformation Plan

In November 2025, the Company initiated a restructuring and transformation plan designed primarily to improve the effectiveness and efficiency of its sales and marketing functions and accelerate product innovation in support of its go-to-market objectives (the “2025 Restructuring and Transformation Plan”). The 2025 Restructuring and Transformation Plan includes the redesign and implementation of new strategies and processes, organizational realignment and reallocation of resources, and other corporate actions.

Restructuring costs related to the 2025 Restructuring and Transformation Plan for the three and nine months ended September 30, 2026 and from the inception of the plan through September 30, 2026 were as follows (in thousands):

(1) The impairment loss relates to the Company’s exit from its corporate headquarters facility.

The following table presents the restructuring costs as reported in the consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2026 (in thousands):

The following table presents the stock-based compensation costs related to the Company’s restructuring activity as reported in the condensed consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2026 (in thousands):

As of September 30, 2026, the Company expects to incur additional charges of approximately $0.9 million to $2.0 million through the first quarter of 2027, at which time the 2025 Restructuring and Transformation Plan is expected to be completed. These charges include estimated employee termination expenses of approximately $0.2 million and other business transformation costs.

The following table summarizes liabilities incurred under the 2025 Restructuring and Transformation Plan that are included in accounts payable, accrued expenses and other current liabilities on the condensed consolidated balance sheet (in thousands):

2024 Restructuring Plan

In November 2024, management approved a restructuring plan intended to improve the Company’s cost structure and operating efficiency (the “2024 Restructuring Plan”). The 2024 Restructuring Plan included an involuntary reduction in headcount of approximately 12% of the Company’s workforce. In addition, as part of the 2024 Restructuring Plan, the Company reduced its footprint at its corporate headquarters. The 2024 Restructuring Plan was substantially completed as of December 31, 2024.

The 2024 Restructuring Plan resulted in total restructuring charges of $4.9 million, which were recognized in the fourth quarter of 2024, and primarily consisted of employee severance and benefits in connection with the workforce reduction, which amounted to $3.9 million. The Company also recorded an impairment charge of $0.9 million to its operating right-of-use assets related to the lease of the Company’s corporate headquarters and $0.1 million of professional services fees related to the execution of the Company’s 2024 Restructuring Plan.

In the second quarter of 2025, the Company recorded a $0.1 million credit to the estimated severance and benefits costs and an incremental impairment charge of $0.1 million related to the execution of the sublease of the Company’s corporate headquarters. No other restructuring charges were recognized under the 2024 Restructuring Plan during the three and nine months ended September 30, 2026 and 2025.

Note 15. Segment Reporting

The Company operates inone operating and reportable segment, which derives revenue from the services operating on its storage platform. The Company’schief operating decision maker (the “CODM”)is its Chief Executive Officer, who reviews financial information presented on a consolidated basis for purposes of making operating decisions, assessing financial performance and allocating resources.

Measure of Segment Assets

The CODM reviews asset information on a consolidated basis; accordingly, the measure of segment assets is total consolidated assets as reported on the condensed consolidated balance sheet.

Measure of Segment Profit or Loss

The key GAAP measure of segment profit or loss utilized by the CODM is consolidated net income (loss), which is presented on the consolidated statements of operations and comprehensive loss, and is used to monitor budget versus actual results.

Significant Segment Expenses

The CODM also evaluates operating performance using adjusted research and development, adjusted sales and marketing, and adjusted general and administrative (collectively, “adjusted operating expenses”) and adjusted cost of revenue that the Company defines as each respective GAAP expense category excluding stock-based compensation expense, depreciation and amortization, restructuring costs, and other non-recurring charges. These adjusted expense measures provide the CODM with greater transparency into the underlying trends in the Company’s business by facilitating period-to-period comparisons of its ongoing cost structure, excluding the impact of certain non-cash or non-recurring items that may not be indicative of the Company’s operating performance. These measures are intended to assist in forecasting and budgeting, in order to inform resource-allocation decisions. The table below presents adjusted cost of revenue and each adjusted operating expense as well as the items excluded from each adjusted measure for the three and nine months ended September 30, 2026 and 2025 (in thousands):

(2) $0.4 million and $0.9 million of stock-based compensation expense for the three and nine months ended September 30, 2026, respectively, are classified as restructuring charges in the table above.

(3) To conform to current period presentation, nominal amounts of restructuring charges that were previously included in other segment items are presented in "Restructuring costs" for the three and nine months ended September 30, 2025.

(4) Other segment items include investment income, interest expense, foreign exchange (gain) loss, impairment of long-lived assets, litigation settlement costs, and income tax provision.