Backblaze, Inc. 10-K

Item 8. Financial Statements and Supplementary Data BACKBLAZE, INC. INDEX TO THE FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (Deloitte & Touche LLP, Los Angeles, California, PCAOB ID # 34 ) 61 Report of Independent Registered Public Accounting Firm (BDO USA, P.C., San Jose, California, PCAOB ID #243) 62 Consolidated Balance Sheets 63 Consolidated Statements of Operations and Comprehensive Loss 64 Consolidated Statements of Changes in Stockholders’ Equity 65 Consolidated Statements of Cash Flows 66 Notes to Consolidated Financial Statements 67 60 Table of Contents REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the stockholders and the Board of Directors of Backblaze, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheet of Backblaze, Inc. and subsidiaries (the "Company") as of December 31, 2025, the related consolidated statements of operations and comprehensive loss, changes in stockholders' equity, and cash flows, for the year ended December 31, 2025, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025, and the results of its operations and its cash flows for the year ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion. Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. /s/ Deloitte & Touche LLP Los Angeles, California March 10, 2026 We have served as the Company's auditor since 2025. 61 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Backblaze, Inc. San Mateo, California Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Backblaze, Inc. (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ equity, and cash flows for each of the years then ended, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ BDO USA, P.C. We served as the Company's auditor from 2020 to 2024. San Jose, California March 11, 2025 62 Table of Contents BACKBLAZE, INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share and per share data) December 31, 2025 2024 Assets Current assets: Cash and cash equivalents $ 29,182 $ 45,776 Marketable securities 22,199 9,139 Accounts receivable, net 3,482 1,831 Prepaid expenses 4,195 3,457 Other current assets 6,630 5,545 Total current assets 65,688 65,748 Property and equipment, net 57,310 42,949 Operating lease right-of-use assets, net 22,713 15,873 Capitalized internal-use software, net 40,825 41,801 Other assets 5,290 2,187 Total assets $ 191,826 $ 168,558 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 1,588 $ 1,459 Accrued expenses and other current liabilities 9,406 7,584 Finance lease liabilities and lease financing obligations, current 14,873 16,327 Operating lease liabilities, current 5,253 4,026 Deferred revenue, current 30,498 30,407 Total current liabilities 61,618 59,803 Finance lease liabilities and lease financing obligations, non-current 21,292 13,142 Operating lease liabilities, non-current 20,166 12,844 Deferred revenue and other liabilities, non-current 5,529 5,147 Total liabilities $ 108,605 $ 90,936 Commitments and contingencies (Note 11) Stockholders’ Equity Preferred stock, 0.0001 par value; 10,000,000 shares authorized as of December 31, 2025 and 2024; zero shares issued and outstanding as of December 31, 2025 and 2024. — — Class A common stock, $ 0.0001 par value; 113,000,000 shares authorized as of December 31, 2025 and 2024; 58,962,339 shares issued and 58,705,790 outstanding as of December 31, 2025 and 53,375,770 shares issued and outstanding as of December 31, 2024. 6 5 Class B common stock, 0.0001 par value; 295,986 shares authorized as of December 31, 2025 and 2024; zero shares issued and outstanding as of December 31, 2025 and 2024. — — Treasury stock, at cost; 256,549 and zero shares as of December 31, 2025 and 2024, respectively ( 1,983 ) — Additional paid-in capital 306,795 273,602 Accumulated deficit ( 221,597 ) ( 195,985 ) Total stockholders’ equity 83,221 77,622 Total liabilities and stockholders’ equity $ 191,826 $ 168,558 The accompanying notes are an integral part of these consolidated financial statements. 63 Table of Contents BACKBLAZE, INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) For the Years Ended December 31, 2025 2024 2023 Revenue $ 145,835 $ 127,628 $ 102,019 Cost of revenue 57,042 58,285 52,162 Gross profit 88,793 69,343 49,857 Operating expenses: Research and development 46,109 42,098 39,527 Sales and marketing 37,397 44,440 41,270 General and administrative 28,910 29,094 26,965 Total operating expenses 112,416 115,632 107,762 Loss from operations ( 23,623 ) ( 46,289 ) ( 57,905 ) Investment income 1,961 1,422 1,984 Interest expense ( 3,866 ) ( 3,658 ) ( 3,792 ) Loss before provision for income taxes ( 25,528 ) ( 48,525 ) ( 59,713 ) Income tax provision 84 6 — Net loss and comprehensive loss $ ( 25,612 ) $ ( 48,531 ) $ ( 59,713 ) Net loss per share attributable to Class A and Class B common stockholders, basic and diluted (1) $ ( 0.46 ) $ ( 1.11 ) $ ( 1.66 ) Weighted average Class A and Class B common shares outstanding 56,209,667 43,543,023 36,011,446 ________________ (1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following such conversion. See Note 13 for further details. The accompanying notes are an integral part of these consolidated financial statements. 64 Table of Contents BACKBLAZE, INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (in thousands, except share data) Class A Common Stock (1) Treasury Stock Additional Paid-in Capital Accumulated Deficit Total Shares Amount Shares Amount Balance as of December 31, 2022 33,393,737 $ 4 — $ — $ 156,485 $ ( 87,741 ) $ 68,748 Net loss — — — — — ( 59,713 ) ( 59,713 ) Issuance of common stock upon exercise of stock options 2,446,846 — — — 4,613 — 4,613 Issuance of common stock related to the 2021 Equity Incentive Plan 2,327,073 — — — — — — Issuance of common stock related to the 2021 Employee Stock Purchase Plan 695,046 — — — 2,339 — 2,339 Issuance of restricted stock units related to bonus plans 287,908 — — — 1,848 — 1,848 Stock-based compensation — — — — 27,103 — 27,103 Balance as of December 31, 2023 39,150,610 4 — — 192,388 ( 147,454 ) 44,938 Net loss — — — — — ( 48,531 ) ( 48,531 ) Issuance of shares of common stock upon public offering, net of underwriting discounts and commissions and other offering costs 7,187,500 1 — — 36,980 — 36,981 Issuance of common stock upon exercise of stock options 2,526,902 — — — 7,537 — 7,537 Issuance of common stock related to the 2021 Equity Incentive Plan 3,434,104 — — — — — — Issuance of common stock related to the 2021 Employee Stock Purchase Plan 780,206 — — — 2,768 — 2,768 Issuance of restricted stock units related to bonus plans 296,448 — — — 3,507 — 3,507 Stock-based compensation — — — — 30,422 — 30,422 Balance as of December 31, 2024 53,375,770 5 — — 273,602 ( 195,985 ) 77,622 Net loss — — — — — ( 25,612 ) ( 25,612 ) Purchase of treasury stock — — ( 256,549 ) ( 1,983 ) — — ( 1,983 ) Issuance of common stock upon exercise of stock options 1,580,237 — — — 5,268 — 5,268 Issuance of common stock related to the 2021 Equity Incentive Plan 3,085,157 1 — — ( 1,918 ) — ( 1,917 ) Issuance of common stock related to the 2021 Employee Stock Purchase Plan 619,604 — — — 2,550 — 2,550 Issuance of restricted stock units related to bonus plans 301,571 — — — 2,014 — 2,014 Stock-based compensation — — — — 25,279 — 25,279 Balance as of December 31, 2025 58,962,339 $ 6 ( 256,549 ) $ ( 1,983 ) $ 306,795 $ ( 221,597 ) $ 83,221 ________________ (1) On July 6, 2023, all shares of the Company’s then outstanding Class B common stock were automatically converted into the same number of Class A common stock, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following such conversion. See Note 13 for further details. The accompanying notes are an integral part of these consolidated financial statements. 65 Table of Contents BACKBLAZE INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Years Ended December 31, 2025 2024 2023 CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ ( 25,612 ) $ ( 48,531 ) $ ( 59,713 ) Adjustments to reconcile net loss to net cash provided by (used in) operating activities: Noncash lease expense on operating leases 4,944 2,727 2,350 Depreciation and amortization 25,591 28,328 24,912 Impairment loss on long-lived assets 1,159 898 232 Stock-based compensation 26,436 28,628 25,177 Gain on disposal of property and equipment ( 347 ) ( 154 ) ( 292 ) Other, net 686 409 417 Changes in operating assets and liabilities: Accounts receivable ( 1,651 ) ( 1,031 ) 56 Prepaid expenses and other current assets ( 1,527 ) ( 741 ) ( 445 ) Other assets ( 2,673 ) ( 1,346 ) ( 389 ) Accounts payable 402 ( 547 ) ( 295 ) Accrued expenses and other current liabilities 130 948 ( 1,422 ) Deferred revenue and other liabilities, non-current 473 5,505 4,526 Operating lease liabilities ( 4,467 ) ( 2,588 ) ( 2,464 ) Net cash provided by (used in) operating activities 23,544 12,505 ( 7,350 ) CASH FLOWS FROM INVESTING ACTIVITIES Purchases of marketable securities ( 39,530 ) ( 38,097 ) ( 26,358 ) Maturities of marketable securities 26,281 45,693 67,874 Proceeds from disposal of property and equipment 167 455 369 Purchases of property and equipment ( 4,694 ) ( 1,711 ) ( 5,512 ) Capitalized internal-use software costs ( 7,564 ) ( 12,471 ) ( 14,716 ) Net cash (used in) provided by investing activities ( 25,340 ) ( 6,131 ) 21,657 CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on finance lease and lease financing obligations ( 18,164 ) ( 19,503 ) ( 19,510 ) Proceeds from issuance of common stock upon public offering, net of underwriting discounts and commission and other offering costs — 37,434 — Payments of offering costs ( 20 ) ( 383 ) — Proceeds from debt facility 2,454 554 4,273 Repayment of debt facility ( 2,454 ) ( 4,682 ) ( 4,450 ) Payment of debt issuance costs ( 602 ) — — Proceeds from insurance premium financing — — 893 Principal payments on insurance premium financing — ( 893 ) ( 1,545 ) Proceeds from lease financing obligations — — 4,450 Purchase of treasury stock ( 1,983 ) — — Proceeds from exercises of stock options 5,338 7,477 4,708 Taxes paid for net share settlement of equity awards ( 1,917 ) — — Proceeds from ESPP 2,550 2,768 2,339 Net cash (used in) provided by financing activities ( 14,798 ) 22,772 ( 8,842 ) Net (decrease) increase in cash and cash equivalents and restricted cash ( 16,594 ) 29,146 5,465 Cash and cash equivalents and restricted cash, beginning of period 45,776 16,630 11,165 Cash and cash equivalents and restricted cash, end of period $ 29,182 $ 45,776 $ 16,630 RECONCILIATION OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH Cash and cash equivalents $ 29,182 $ 45,776 $ 12,502 Restricted cash, non-current — — 4,128 Total cash and cash equivalents and restricted cash, non-current $ 29,182 $ 45,776 $ 16,630 SUPPLEMENTAL INFORMATION: Cash paid for interest $ 3,738 $ 3,579 $ 3,733 NON-CASH INVESTING AND FINANCING ACTIVITIES: Accrued bonus settled in restricted stock units $ 2,014 $ 3,507 $ 1,848 The accompanying notes are an integral part of these consolidated financial statements. 66 Table of Contents BACKBLAZE INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Note 1. Organization and Description of Business Description of Business Backblaze, Inc. and its subsidiaries (collectively, “Backblaze” or the “Company”) is a high-performance storage cloud platform, designed to help businesses and consumers store, use, and protect their data. 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-Se rvice (“SaaS”) solution. The Company was incorporated in the state of Delaware on April 20, 2007. Follow-On Offering On November 20, 2024, the Company issued and sold an aggregate of 6,250,000 shares of the Company’s Class A common stock, par value $ 0.0001 per share at a public offering price of $ 5.60 per share (the “Follow-On Offering”). The Company also granted the underwriters an option to purchase up to an additional 937,500 shares of Class A common stock at the same per-share price of $ 5.60 per share. The underwriters exercised their option to purchase the additional shares. The Company received net proceeds of $ 37.4 million from the Follow-On Offering, after deducting the underwriting discounts and commissions and other offering expenses. Offering costs of $ 0.5 million, which consisted of direct incremental legal, accounting, and consulting fees were incurred by the Company in connection with the Follow-On Offering. These costs were offset against the proceeds from the Follow-On Offering. Note 2. Basis of Presentation and Summary of Significant Accounting Policies Principles of Consolidation The accompanying consolidated financial statements and accompanying notes have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of the Company and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Reclassifications To conform to the current period’s presentation, certain prior-period amounts have been reclassified as follows: • Prepaid expenses previously included in “Prepaid and other current assets” have been reclassified to a separate line item in the consolidated balance sheets for the year ended December 31, 2024. • A reclass of approximately $ 0.2 million previously classified as prepaid expenses as of December 31, 2024, has been reclassified to “Other” of other current assets in Footnote 6 and the consolidated balance sheet. • Net accretion of discount on investment securities and net realized investment gains previously presented separately have been reclassified to “Other” in the consolidated statements of cash flows for the years ended December 31, 2024 and December 31, 2023. • Machinery and equipment, previously presented as a separate major asset class of property and equipment in Note 7, have been reclassified to data center equipment for the year ended December 31, 2024. These reclassifications had no impact on total assets, liabilities, or stockholders’ equity. 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 67 Table of Contents 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 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, our Form 10-K for the year ending December 31, 2026 will no longer reflect any reduced disclosure requirements as an emerging growth company. Segment Information The Company has a single operating and reportable segment. In reaching this conclusion, management considers the definition of the chief operating decision maker (“CODM”), how the business is defined by the CODM, the nature of the information provided to the CODM and how that information is used to make operating decisions, allocate resources and assess performance. The Company’s chief operating decision maker is its Chief Executive Officer (“CEO”), who reviews financial information presented on an aggregated basis for purposes of making operating decisions, assessing financial performance and allocating resources. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the 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, estim ates related to variable consideration, valuation of the Company’s Employee Stock Purchase Plan (“ESPP”) expense, 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 of the useful lives of its property and equipment. Effective April 1, 2025, the estimated life of data center equipment, which includes hard drives, servers, and other infrastructure equipment, was 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 increased net income by approximately $ 5.2 million for the year ended December 31, 2025, resulting in an increase of $ 0.09 per basic and diluted share for the year ended December 31, 2025. Comprehensive Loss The Company does not have any components of other comprehensive income recorded within the consolidated financial statements and therefore does not separately present a statement of comprehensive income in the consolidated financial statements. Foreign Currency Foreign currency transaction gains and losses primarily arise from exchange rate fluctuations on monetary transactions denominated in a currency other than the functional currency. Because the functional currency of the Company and its foreign subsidiaries is the United States dollar (“USD”), the Company does not have foreign currency translation adjustments. Transaction gains and losses are included in general and administrative on the Company’s consolidated statements of operations and comprehensive loss. 68 Table of Contents Foreign exchange loss for the periods indicated was as follows (in thousands): For the Years Ended December 31, 2025 2024 2023 Foreign exchange loss $ 451 $ 32 $ 123 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 table presents concentrations of vendors and customers that accounted for more than 10% related to the Company’s cash disbursements, accounts payable, and accounts receivable. For the Years Ended December 31, 2025 2024 2023 Cash disbursement concentration Number of vendors 2 3 2 Total cash disbursements represented by vendors listed above 26 % 36 % 21 % December 31, 2025 2024 Accounts payable concentration Number of vendors 2 1 Total accounts payable balance represented by vendors listed above 23 % 14 % Accounts receivable concentration Number of customers 2 2 Total accounts receivable balance represented by customers listed above 38 % 35 % Revenue. The Company derives substantially all of its revenue from the services operating on its Backblaze Storage Cloud platform: its B2 Cloud Storage and Computer Backup offerings. No customer accounted for more than 10% of the Company’s revenues during the years ended December 31, 2025, 2024 and 2023 . Restructuring The Company classifies certain costs as restructuring charges when they are incurred and considered direct and incremental in connection with management-approved programs that result in significant changes to the scope of the business or the manner in which the business is conducted. Restructuring charges include employee severance and related costs associated with workforce reductions, facility-related costs incurred to exit or consolidate office space, costs associated with strategic transformation initiatives, and other costs directly attributable to restructuring and transforming the Company’s operations. 69 Table of Contents Restructuring costs associated with strategic transformation initiatives are generally recognized as expense as the related services are performed or costs are otherwise incurred, while other restructuring-related costs, including asset impairments, are recognized in accordance with the applicable accounting policies for those costs. Employee severance and related costs are recognized when the Company has committed to a plan of termination, the plan identifies the employees affected and the expected completion date, the actions required to complete the plan indicate that it is unlikely that significant changes will be made to the plan or that the plan will be withdrawn. For involuntary terminations, a liability is recognized in accordance with the applicable guidance based on whether employees are required to render future service to receive the benefits. Revenue Recognition The Backblaze Storage Cloud provides the core platform for the Company’s B2 Cloud Storage and its Computer Backup offerings. The Company derives its revenue primarily from fees earned from customers accessing these offerings through its platform. • B2 Cloud Storage is provided as an IaaS solution and is offered predominantly on a consumption-based model, with fees billed monthly in arrears, and to a lesser extent through capacity-based subscription plans with terms ranging from one to five years . • The Computer Backup is provided as a SaaS solution under subscription arrangements with one month , one -year , and two -year terms, all of which are billed upfront and automatically renew at the end of their respective terms. In addition, customers may incur usage-based fees related to extended version history retention, which are recognized as revenue as the related services are provided. While the majority of the Company’s customers pay via credit card, certain customers’ accounts are invoiced and recorded in accounts receivable and in revenue, or deferred revenue, depending on whether appropriate revenue recognition criteria have been met. As the Company provides its offerings as a hosted service, it does not provide customers the contractual right to take possession of the software at any time, does not incur set up costs, and does not charge an installation fee for its new customers. The Company determines revenue recognition through the following five steps: 1. Identify the contract with a customer. The Company considers the terms and conditions of the contracts and its customary business practices in identifying its contracts under Accounting Standards Codification (“ASC”) 606. The Company determines it has a contract with a customer when: • the contract has been approved by both parties; • it can identify each party’s rights regarding the services to be transferred and the payment terms for the services; • it has determined the customer to have the ability and intent to pay; • the contract has commercial substance; and • it is probable the Company will collect substantially all of the consideration in the contract. The Company applies judgment in determining a customer’s ability and intent to pay based on a variety of factors, including historical payment experience for existing customers and customer profile considerations for new customers. 2. Identify the performance obligations in the contract. Performance obligations promised in a contract are identified based on the services and products that will be transferred to the customer that are both capable of being distinct and are distinct in the context of the contract. The Company’s contracts typically contain a single distinct performance obligation representing one of its Backblaze Storage Cloud platform offerings, which includes either B2 Cloud Storage or Computer Backup services and related customer support. 3. Determine the transaction price. The transaction price is determined based on the consideration the Company expects to receive in exchange for transferring services and products to the customer. Variable consideration is included in the transaction price if, in the Company’s judgment, it is probable that a significant future reversal of cumulative revenue recognized under the contract will not occur. The Company’s variable consideration includes consumption-based revenue and revenue arrangements that offer the right of return. The Company offers a 30 day right of ret urn for its one to five -year subscription-based arrangements and records a refund liability based on historical return data. Certain fees that are considered consideration payable to a customer are accounted for as a reduction of the transaction price. None of the 70 Table of Contents Company’s contracts contain a significant financing component. Revenue is recognized net of any taxes collected from customers, which are subsequently remitted to governmental entities (e.g., sales and other indirect taxes). 4. Allocate the transaction price to performance obligations in the contract. Contracts that contain multiple distinct performance obligations require an allocation of the transaction price to each performance obligation based on a relative standalone selling price (“SSP”). The Company determines SSP for performance obligations based on the price it sells a service or product separately. 5. Recognize revenue when or as the Company satisfies a performance obligation. Revenue is recognized when or as the Company satisfies its performance obligations. The Company’s cloud service arrangements generally represent a single performance obligation that is satisfied over time as a series of distinct services that are substantially the same. The Company measures progress using an output method based on the value of services transferred to the customer and applies the “right to invoice” practical expedient for arrangements in which invoiced amounts correspond directly with the value transferred. Subscription-based arrangements are recognized on a straight-line basis over the contractual term beginning on the service commencement date. Consumption-based arrangements are recognized based on actual usage as services are delivered. The Company also offers a 14-day free trial pe riod for its Computer Backup subscription-based arrangements and it does not enter into a contract with the customer during this trial period. Separately, under its consumption-based arrangements, the Company does not charge customers until at least 10 gigabytes of data have been stored. The non-current deferred revenue balance of $ 5.4 million included in the Company’s consolidated balance sheet as of December 31, 2025 will be recognized starting in 2027 and thereafter. As of December 31, 2024, the Company’s non-current deferred revenue balance was $ 5.1 million, which will be recognized in 2026 and thereafter. For revenue generated from arrangements that involve third-parties, the Company evaluates whether it is the principal or the agent based on maintaining control over the services being provided and maintaining the relationship with the end-customer. The Company’s revenue is reported on a gross basis, as the Company is the principal. Cost of Revenue Cost of revenue includes costs directly associated with the delivery of services and products, which consists of expenses for providing Backblaze’s platform to its customers. These expenses include rent and utilities for operating in data center spaces, personnel costs, network and bandwidth costs, depreciation of the Company’s equipment and finance lease assets in data center spaces and other infrastructure expenses incurred in connection with its customers’ use of its services. The Company periodically receives discounts from third-party vendors that are recorded as a reduction to cost of revenue on its consolidated statements of operations and comprehensive loss. Personnel-related costs associated with customer support and maintaining service availability include salaries, benefits, bonuses and stock-based compensation. Cost of revenue also includes credit card processing fees, amortization of capitalized internal-use software development costs and allocated overhead costs. Research and Development Costs Research and development costs consist primarily of personnel-related expenses associated with the Company’s research and development staff, including salaries, benefits, bonuses and stock-based compensation. Research and development costs also include consultants or professional services fees, costs related to the support and maintenance of systems used in product development, subscription services for use by its research and development organization and an allocation of its overhead costs. Research and development costs are generally expensed as incurred, unless they qualify as capitalized internal-use software. Advertising Costs Advertising costs are expensed as incurred and are included in sales and marketing expenses in the consolidated statements of operations and comprehensive loss. Prior-year amounts have been updated to conform to current year presentation and had no impact on the Company’s previously reported consolidated financial statements. T hese costs were $ 2.5 million, $ 3.0 million, and $ 2.6 million for the years ended December 31, 2025, 2024, and 2023, respectively. 71 Table of Contents Income Taxes The Company accounts for income taxes using the asset and liability method. Deferred income taxes are recognized by applying the enacted statutory tax rates applicable to future years to differences between the carrying amounts of existing assets and liabilities and their respective tax bases and net operating loss and tax credit carryforwards. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance to amounts that are more likely than not to be realized. Where interpretation of the tax law may be uncertain, the Company recognizes, measures and discloses income tax uncertainties. The Company accounts for interest expense and penalties related to unrecognized tax benefits as income tax expense in its consolidated statements of operations and comprehensive loss. The Company is subject to periodic audits by the Internal Revenue Service and other taxing authorities, which may challenge tax positions taken by the Company. Stock-based Compensation All stock-based compensation to employees is measured on the grant date, based on the fair value of the awards on the date of grant. The Company recognizes compensation cost for equity-classified awards on a straight-line basis over the requisite service period, which is generally a vesting period of one to four years . Awards granted under the Company’s bonus plans are accounted for as liability-classified share-based payment awards because the bonus payout represents a fixed monetary amount that is settled in a variable number of shares. For such awards, the Company recognizes compensation cost over the requisite service period based on the fair value of the liability, which is remeasured at each reporting date until settlement. Upon settlement and issuance of restricted stock units (“RSUs”), the awards are reclassified to equity. Stock-based compensation includes RSUs, stock option grants and stock purchase rights under the ESPP. The Company uses the Black-Scholes option pricing model to measure the fair value of its stock options and the stock purchase rights under the ESPP. The Black-Scholes option pricing model requires the use of complex assumptions, which determine the fair value of stock-based awards. Forfeitures are accounted for in the period in which they occur. Cash and Cash Equivalents Cash and cash equivalents include cash and certain highly liquid investments with maturities of 90 days or less at the date of purchase. Cash equivalents are primarily recorded at cost, which approximates fair value. Restricted Cash The Company had restricted cash of $ 4.1 million related to the line of credit agreement with City National Bank as of December 31, 2023 . The Company did no t have a restricted cash balance as of December 31, 2025 and 2024 . Marketable Securities The Company classifies marketable debt securities with original maturities greater than 90 days as held-to-maturity and reports them at amortized cost, with realized gains and losses recognized in earnings. Marketable securities with original maturities of 90 days or less are classified as cash equivalents. The Company determines the appropriate classification of its debt securities at the time of purchase and re-evaluates such determination at each balance sheet date. The Company will recognize an allowance for estimated credit losses on its held-to-maturity securities, using a forward-looking expected loss model, which reflects losses that are expected to be incurred over the life of the financial instrument. The Company uses a roll-rate method to determine the estimated credit losses using factors including historical global average default rates and expected recovery rates on similar credit quality, bond maturity and duration, along with historical experience, current conditions, and forecasts of future economic conditions, if available. The Company monitors the credit profile of its held-to-maturity securities on a periodic basis, using third party data to assess their credit ratings as well as any adverse conditions specifically related to the security. The allowance for credit losses was a nominal amount for the years ended December 31, 2025 an d 2024. 72 Table of Contents Fair Value of Financial Instruments The Company measures financial assets and liabilities at fair value at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are reported under a three-level valuation hierarchy. The classification of the Company’s financial assets within the hierarchy is as follows: Level 1 — Inputs to the valuation methodology are unadjusted quoted prices in active markets for identical assets or liabilities. Level 2 — Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability. Level 3 — Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. The carrying amounts reflected in the consolidated balance sheets for accounts receivable, prepaid expenses, other current assets, accounts payable, and accrued expenses and other current liabilities approximate their respective fair values due to the short maturities of those instruments. Accounts Receivable, Net Accounts receivable are carried at the original invoiced amount less an estimated allowance for expected credit losses based on the probability of future collection. The allowance is estimated based on the Company’s assessment of its ability to collect on customer accounts receivable. The allowance wa s a nominal amount as of December 31, 2025 and 2024. The provision, direct write-offs, and recoveries were also nominal for the years ended December 31, 2025 and 2024. The Company regularly reviews the allowance by considering certain factors such as historical experience, credit quality, age of accounts receivable balances and other known conditions that may affect a customer’s ability to pay. Unbilled Accounts Receivable Unbilled accounts receivable represents recognized and unbilled revenue for consumption-based contracts that is billed monthly in arrears. Substantially all of the Company’s unbilled accounts receivable is charged via a credit card upon billing. Unbilled accounts receivable is included in other current assets on the consolidated balance sheets. The balance of unbilled accounts receivable as of December 31, 2025 and 2024 is presented in Note 6. Deferred Contract Costs The Company’s deferred contract costs are composed of third-party affiliate commissions and, starting in 2024, a commission structure for its sales team. Sales commissions and related taxes and benefits earned by our sales force as well as sales commission earned by marketing affiliates are considered incremental and recoverable costs of obtaining a contract with a customer. Sales commissions for new contracts are deferred and then amortized on a straight-line basis over a period of benefit that we have estimated to be five years . We determined the period of benefit by taking into consideration the duration of our customer contracts, our customer retention rate and the technology development life cycle. Sales commissions for renewal contracts are deferred and then amortized on a straight-line basis over the related contractual renewal period. Amortization expense is included in sales and marketing expenses on the consolidated statements of operations and comprehensive loss. Deferred contract costs are included within other current assets and other assets in the consolidated balance sheets. Property and Equipment, Net Property and equipment, both owned and under finance leases, are stated at cost, less accumulated depreciation, which is computed on a straight-line basis over the asset’s estimated useful life. Leasehold improvements are amortized over the shorter of the useful life of the asset or expected lease term. Improvements that increase functionality of the asset are capitalized and depreciated over the asset’s remaining useful life. Construction-in-progress is not depreciated. Fully depreciated assets are retained in property and equipment until removed from service. 73 Table of Contents The following table presents the estimated useful lives of property and equipment: Property and Equipment Useful life Data center equipment (1) 6 years Computer equipment 3 - 5 years Leasehold improvements Shorter of useful life or expected lease term ________________ (1) During the second quarter of 2025, the estimated lives of data center equipment were extended from a range of 3 to 5 years to a uniform 6 years. See “Use of Estimates” above for further details. Capitalized Internal-Use Software, Net The Company capitalizes qualifying software development costs related to new features and enhancements to the functionality of its platform and related products. The costs consist of personnel costs (including related taxes and benefits and stock-based compensation) that are incurred during the application development stage. Capitalization of costs begins when two criteria are met: (i) the preliminary project stage is completed, and (ii) it is probable that the software will be completed and used for its intended function. Capitalization ceases when the software is substantially complete and ready for its intended use, including the completion of all significant testing. Costs related to preliminary project activities and post-implementation operating activities are expensed as incurred. The Company reviews its capitalization criteria for each project individually. Capitalized costs are amortized over the estimated useful life of the software, which is generally five years , on a straight-line basis, and represents the manner in which the expected benefit will be derived. The Company determines the useful lives of identifiable project assets after considering the specific facts and circumstances related to each project. Amortization of capitalized software costs is substantially included in cost of revenue in the consolidated statements of operations and comprehensive loss. Impairment of Long-lived Assets Long-lived assets with finite lives include property and equipment, capitalized internal-use software, certain implementation costs incurred for cloud computing arrangements, and right-of-use assets. The Company evaluates these long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets held and used is measured by comparison of the carrying amount of an asset or an asset group to estimated undiscounted future net cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset exceeds these estimated future cash flows, an impairment charge is recognized in the amount by which the carrying amount of the assets exceeds the fair value of the asset or asset group during the quarter in which the determination is made. Deferred Revenue The Company records deferred revenue when customer payments are received in advance of satisfying the performance obligations on the Company’s contracts. Subscription-based arrangements are generally billed and paid in advance of satisfaction of these performance obligations. Deferred revenue relating to the Company’s subscription-based arrangements that have a contractual expiration date of less than 12 months are classified as current. The Company classifies deferred revenue from services that will be provided in more than 12 months as non-current on its consolidated balance sheets. Leases The Company generally enters into finance lease arran gements for hard drives and related equipment for its data center operations, and operating leases for rental of data center spaces and office space. The Company determines if an arrangement is or contains a lease at inception by evaluating various factors, including if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration and other facts and circumstances. As a majority of the Company’s operating leases do not provide an implicit rate, the Company uses an incremental borrowing rate based on the information available as of the commencement date for each lease component. The discount rate used is the rate of interest that a lessee would have to pay to borrow an amount equal to the lease payments on a collateralized basis over a similar term in a similar economic environment. 74 Table of Contents For finance leases, the lease term generally begins on the date of initial possession of the leased asset, and for operating leases, the term begins when the Company has the right to use the leased space and obtain the economic benefits. The Company does not assume renewals in its determination of the lease term unless the renewals are deemed to be reasonably assured at lease inception. Lease classification is determined at the lease commencement date. The Company records an asset and lease liability on its consolidated balance sheets for leases that have yet to commence when it has the ability to control the underlying asset as that creates a significant right and obligation to the Company. The underlying assets of finance leases are included in property and equipment, net, on the Company’s consolidated balance sheets. Variable lease payments are expensed as incurred and include certain non-lease components, such as maintenance and other services provided by the lessor to the extent the charges are variable. The Company has elected the short-term lease practical expedient for all asset classes, which allows the lessee to not apply the recognition requirements of ASC 842 to short-term leases (leases with original terms of 12 months or less and that do not include a purchase option that the lessee is reasonably certain to exercise). The Company has elected the practical expedient to combine lease and non-lease components for all of its leases, with the exception of leases related to the co-location lease agreement asset class. For co-location lease agreements, the Company only recognizes fixed minimum payments for tangible components as right-of-use assets and operating lease liabilities, as these arrangements may include significant intangible components. Regulatory Developments On July 4, 2025, the One Big Beautiful Bill Act (the “OBBB Act”) was enacted, introducing amendments to U.S. tax laws with various effective dates from 2025 to 2027. The OBBB Act includes significant provisions, such as the permanent extension of certain expiring provisions of the 2017 Tax Cuts and Jobs Act, international tax framework, and the restoration of favorable tax treatment for certain business provisions including the immediate expensing of the US research and development expenditure. The Company has completed its assessment of the tax law changes enacted under the OBBB Act. Based on this assessment, the OBBB Act did not have a material impact on the Company’s consolidated financial statements for the year ended December 31, 2025, and the Company does not expect these changes to have a material impact on future periods. In January 2024, the European Union (“EU”) enacted the EU Data Act, which became effective in September 2025. The legislation establishes statutory rights for EU and European Economic Area (“EEA”) customers, including the ability to terminate contracts with no more than two months’ notice, reimbursement of unused prepaid service, and limitations on early termination penalties, among other changes. These provisions primarily affect the Company’s subscription arrangements with EU and EEA customers by shortening the enforceable contract term and requiring consideration of expanded refund rights. The Company evaluated the implications of the EU Data Act on its customer arrangements, including remaining performance obligations, and determined that it did not have a material impact on the Company’s consolidated financial statements for the current reporting period. The Company has incorporated the provisions of the EU Data Act into its revenue recognition policies and contract assessments and expects to reflect any impact prospectively as customer arrangements are modified or renewed under the new requirements. Recently Issued Accounting Pronouncements In December 2025, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2025-11,“ Interim Reporting (Topic 270): Narrow-Scope Improvements ” This standard improves the navigability of the required interim disclosures and clarifies when the guidance is applicable, as well as provides additional guidance on what disclosures should be provided in interim reporting periods. The amendments in this ASU are effective for fiscal years beginning after December 15, 2027, and interim reporting periods beginning after December 15, 2028. The Company is evaluating the impact this the new standard may have, but does not expect it to have a significant impact on its consolidated financial statements. 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 interim reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the adoption of this standard. 75 Table of Contents 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 Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers . The standard is effective for all entities for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years. Early adoption is permitted, and the standard is to be applied prospectively. 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 our EGC status, the Company will implement the standard beginning with its annual reporting period ending December 31, 2026. This amendment should be applied on a prospective basis and retrospective application is permitted. The Company is currently evaluating the impact of the adoption of this standard. Note 3. Revenues Disaggregation of Total Revenue The following table presents the Company’s revenue disaggregated by solution (in thousands): For the Years Ended December 31, 2025 2024 2023 B2 Cloud Storage $ 79,897 $ 63,335 $ 46,427 Computer Backup 65,938 64,293 55,592 Total revenue $ 145,835 $ 127,628 $ 102,019 The following table presents the Company’s total revenue disaggregated by timing of revenue recognition (in thousands): 76 Table of Contents For the Years Ended December 31, 2025 2024 2023 Consumption-based arrangements $ 77,187 $ 61,459 $ 45,771 Subscription-based arrangements 68,236 65,658 55,679 Point in time arrangements 412 511 569 Total revenue $ 145,835 $ 127,628 $ 102,019 Total revenue by geographic area, based on the location of the Company’s customers, was as follows (in thousands): For the Years Ended December 31, 2025 2024 2023 United States $ 104,567 $ 94,323 $ 73,262 United Kingdom 7,513 6,703 5,463 Canada 6,609 5,757 5,027 Other 27,146 20,845 18,267 Total revenue $ 145,835 $ 127,628 $ 102,019 Deferred Revenue The following table presents information regarding the Company’s deferred revenue (in thousands): December 31, 2025 2024 Deferred revenue $ 35,897 $ 35,554 For the Years Ended December 31, 2025 2024 2023 Total revenue recognized, included in each deferred revenue balance at the beginning of each respective period $ 30,640 $ 26,076 $ 22,983 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 tables presents the Company’s RPOs (in millions): Within 1 Year Over 1 Year (1) Total As of December 31, 2025 $ 35.5 $ 30.7 $ 66.2 As of December 31, 2024 $ 34.3 $ 7.0 $ 41.3 ________________ (1) The increase in remaining performance obligations as of December 31, 2025 was primarily driven by a new multi-year customer contract executed during the fourth quarter of 2025. Deferred Contract Costs The following tables presents the Company’s amortization of deferred contract costs (in thousands): December 31, 2025 2024 Deferred contract costs for marketing affiliates $ 335 $ 542 Deferred contract costs for sales commission $ 2,639 $ 972 77 Table of Contents December 31, 2025 2024 2023 Amortization of deferred contract costs related to marketing affiliates $ 852 $ 1,142 $ 978 Amortization of deferred contract costs related to sales commissions $ 480 $ 126 $ — Note 4. Marketable Securities Fair Values and Gross Unrealized Gains and Losses on Held-to-Maturity Investments The amortized cost, gross unrealized gains and losses, and fair values of interest-bearing securities, by type of security, were as follows (in thousands): Amortized Cost Gross Unrealized Fair Value Net Carrying Value As of December 31, 2025 Gains Losses Cash equivalents Money market funds $ 8,729 $ — $ — $ 8,729 $ 8,729 Total cash equivalents $ 8,729 $ — $ — $ 8,729 $ 8,729 Investments U.S. treasury securities $ 9,461 $ 12 $ — $ 9,473 $ 9,461 Corporate debt securities 12,740 4 — 12,744 12,738 Total investments $ 22,201 $ 16 $ — $ 22,217 $ 22,199 Amortized Cost Gross Unrealized Fair Value Net Carrying Value As of December 31, 2024 Gains Losses Investments Commercial paper $ 9,139 $ — $ ( 2 ) $ 9,137 $ 9,139 Total investments $ 9,139 $ — $ ( 2 ) $ 9,137 $ 9,139 Scheduled Maturities The amortized cost and fair value of held-to-maturity securities as of December 31, 2025 by contractual maturity are shown below. Amortized Cost Fair Value (In Thousands) Within one year $ 22,201 $ 22,217 After one year through five years — — After 5 years through 10 years — — After 10 years — — Total investments $ 22,201 $ 22,217 Aging of Unrealized Losses There were no securities in an unrealized loss position as of December 31, 2025 . As of December 31, 2024 , certain securities were in an immaterial unrealized loss position for less than twelve months. 78 Table of Contents Note 5. Fair Value Measurements The following table presents the level within the fair value hierarchy at which the Company’s held-to-maturity investments are measured (in thousands): As of December 31, 2025 Level 1 Level 2 Other (1) Total Cash equivalents Money market funds $ — $ — $ 8,729 $ 8,729 Investments U.S. treasury securities 9,473 — — 9,473 Corporate debt securities — 12,744 — 12,744 Total $ 9,473 $ 12,744 $ 8,729 $ 30,946 ________________ (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. As of December 31, 2024 Level 1 Level 2 Total Investments Commercial paper $ — $ 9,137 $ 9,137 Total $ — $ 9,137 $ 9,137 There were no transfers between levels of the fair value hierarchy for the years ended December 31, 2025 and 2024. During the years ended December 31, 2025 and 2024, 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. In 2024, the Company recognized an impairment related to a partial exit from its headquarters building, and in 2025, the Company recognized an additional impairment upon its complete exit from the same building. These impairments were measured using discounted cash flow models with Level 3 inputs, informed by market data and valuation information obtained from third-party specialists, including assumptions related to expected sublease cash flows and market participant discount rates. Note 6. Other Current Assets Other current assets consisted of the following (in thousands): December 31, 2025 2024 Unbilled accounts receivable, net $ 3,746 $ 2,864 Receivable from payment processor 615 1,347 Other 2,269 1,334 Total other current assets $ 6,630 $ 5,545 79 Table of Contents Note 7. Property and Equipment, Net Property and equipment, net consisted of the following (in thousands): December 31, 2025 2024 Data center equipment $ 95,958 $ 71,424 Leased and financed data center equipment (1) 66,569 65,037 Computer equipment 2,286 2,239 Leasehold improvements 181 244 Construction-in-process 89 311 Total property and equipment 165,083 139,255 Less: accumulated depreciation and amortization ( 107,773 ) ( 96,306 ) Total property and equipment, net $ 57,310 $ 42,949 ________________ (1) The net book value of the Company’s equipment under finance lease agreements and lease financing obligations was $ 45.7 million and $ 35.7 million as of December 31, 2025 and 2024, respectively. The following table presents property and equipment, net and operating lease right-of-use assets by geographic region (in thousands): December 31, 2025 2024 United States $ 67,193 $ 47,930 Canada 2,871 3,309 The Netherlands 9,959 7,583 Total property and equipment, net and operating lease right-of-use assets $ 80,023 $ 58,822 Note 8. Capitalized Internal-Use Software, Net Capitalized internal-use software, net consisted of the following (in thousands): December 31, 2025 2024 Developed software $ 68,837 $ 59,435 General and administrative software 144 144 Total capitalized internal-use software 68,981 59,579 Less: accumulated amortization ( 28,156 ) ( 17,778 ) Total capitalized internal-use software, net $ 40,825 $ 41,801 Amortization expense of capitalized internal-use software included in the consolidated statements of operations and comprehensive loss is as follows (in thousands): For the Years Ended December 31, 2025 2024 2023 Cost of revenue (1) $ 10,398 $ 6,989 $ 3,598 General and administrative 10 10 28 Total amortization expense of capitalized internal-use software $ 10,408 $ 6,999 $ 3,626 ________________ (1) Includes $ 0.1 million of restructuring charges for the year ended December 31, 2025. See Note 16 for additional information. 80 Table of Contents As of December 31, 2025, future amortization expense is expected to be as follows (in thousands): Year Ending December 31, 2026 $ 11,936 2027 10,935 2028 9,290 2029 6,358 2030 2,153 Thereafter 153 Total $ 40,825 Note 9. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, 2025 2024 Accrued compensation $ 5,436 $ 3,620 ESPP withholding 371 485 Accrued expenses 1,815 1,457 Accrued value-added tax 1,225 1,139 Other 559 883 Accrued expenses and other current liabilities $ 9,406 $ 7,584 Note 10. 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 term of t hese agreements primarily range from three to five 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 2030. Finance lease right-of-use assets are included in property and equipment, net on the Company’s 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 into 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. Th e Company's leases have original lease periods expiring between 2026 and 2033 . Summary of Lease Information The weighted average remaining lease terms and discount rates as of December 31, 2025 and 2024 were as follows: December 31, 2025 December 31, 2024 Operating leases Finance Leases (1) Operating leases Finance Leases (1) Remaining lease term 5.4 years 2.5 years 4.4 years 1.9 years Discount rate 6.9 % 12.6 % 7.2 % 11.9 % ________________ (1) Includes lease financing obligation costs. 81 Table of Contents The following table presents the components of lease expense (in thousands): For the Years Ended December 31, 2025 2024 (1) 2023 (1) Finance lease costs Depreciation expense (2) $ 9,131 $ 12,674 $ 14,059 Interest expense $ 3,407 $ 2,444 $ 2,827 Lease financing obligation costs Depreciation expense (2) $ 1,307 $ 2,664 $ 1,366 Interest expense $ 229 $ 675 $ 409 Operating lease costs Rental expense related to lease components $ 5,920 $ 3,397 $ 3,128 Rental expense related to non-lease components (3) 4,340 5,010 4,999 Variable lease costs 4,358 4,086 1,798 Short term lease costs — — 716 Total operating lease costs $ 14,618 $ 12,493 $ 10,641 Total included in cost of revenue $ 13,879 $ 11,384 $ 9,063 Total included in general and administrative $ 739 $ 1,109 $ 1,578 ________________ (1) The presentation of prior period data has been revised to conform to current year presentation. There have been no changes to the reported amounts, rather certain amounts have been disaggregated to further improve clarity and transparency. (2) 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 consolidated statements of operations and comprehensive loss. (3) Non-lease components are related to non-tangible utilities and services used in the Company’s co-location lease agreements, which are not recorded on the Company’s 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): For the Years Ended December 31, 2025 2024 2023 Operating cash flows Cash paid for interest on finance lease and lease financing obligations $ 3,734 $ 3,119 $ 3,236 Cash paid for operating lease liabilities $ 5,636 $ 4,012 $ 2,801 Non-cash items Equipment acquired through finance leases $ 24,864 $ 17,105 $ 13,094 Right-of-use assets obtained in exchange for operating lease obligations $ 12,674 $ 9,206 $ 5,448 During the year ended December 31, 2023, the Company entered into two sale-leaseback arrangements with vendors to provide an aggregate of $ 4.5 million in cash proceeds for previously purchased hard drives and related equipment. The Company concluded the related lease arrangements would be classified as a lease financing obligation as the Company was reasonably certain to exercise the purchase option within the arrangement. Therefore, the transaction was deemed a failed sale-leaseback and was accounted for as a financing arrangement. The assets continue to be depreciated over their useful lives, and payments are allocated between interest expense and repayment of the financing liability. The Company did not enter into any sale-leaseback arrangements during the years ended December 31, 2025 and 2024. 82 Table of Contents The future minimum commitments for finance leases and lease financing obligations as of December 31, 2025 were as follows (in thousands): Year Ending December 31, Finance leases Lease financing obligations Total 2026 $ 17,986 $ 487 $ 18,473 2027 13,672 — 13,672 2028 5,856 — 5,856 2029 4,997 — 4,997 2030 84 — 84 Total future minimum commitments 42,595 487 43,082 Less imputed interest ( 6,893 ) ( 24 ) ( 6,917 ) Total $ 35,702 $ 463 $ 36,165 As of December 31, 2025 , the Company's future minimum obligations for operating leases and non-cancellable contractual commitments related to non-lease components were as follows (in thousands): Year Ending December 31, Operating leases Non-lease components Total 2026 $ 6,780 $ 3,886 $ 10,666 2027 5,604 3,075 8,679 2028 5,265 3,081 8,346 2029 4,162 2,559 6,721 2030 3,163 1,352 4,515 Thereafter 5,525 109 5,634 Total future minimum commitments 30,499 $ 14,062 $ 44,561 Less imputed interest ( 5,080 ) Total $ 25,419 In June 2025, the Company amended an existing lease for a data center facility to (i) extend the non-cancellable term of the original lease and (ii) expand into additional infrastructure designed to support multiple-storage offerings. This expansion is expected to commence in the second quarter of 2026 and includes a non-cancellable lease term of approximately 7 years. The original lease term was also extended to align with this period. The Company concluded that the multi-storage data center space represents a separate asset class from the Company’s existing co-location data center space. As a result, the lease and non-lease components related to this expanded space are combined in accordance with the Company’s established lease accounting policy. The Company accounted for the lease amendment as a modification under ASC 842. The amendment consists of two components: (i) an extension of the original lease term, which was remeasured as of the modification date, and (ii) a lease for additional, distinct space, which will be accounted for as a separate lease component and measured at its commencement date in the second quarter of 2026. The Company applied an incremental borrowing rate (“IBR”) of 6.8 % to remeasure the lease liability. The IBR was estimated based on current market rates for secured borrowings with similar terms and adjusted for the Company’s credit profile. As of December 31, 2025, the Company had approximately $ 17.5 million of future minimum undiscounted lease payments related to the expanded lease space, which has not yet commenced and, accordingly, is not included in the operating lease commitments table above. Note 11. Commitments and Contingencies Contractual Commitments Other non-cancellable commitments relate mainly to service agreements to support the Company’s operations. As of December 31, 2025, the Company had non-cancelable purchase commitmen ts of $ 2.5 million, $ 2.2 million, and $ 0.8 million payable during the years ending December 31, 2026, 2027, and 2028, respectively. 83 Table of Contents During 2024, the Company made payments of $ 0.2 million to a related party, Meaningful Works, for marketing services per terms of an agreement. An executive officer of Meaningful Works is an immediate family member of the Company’s CEO. As of December 31, 2024 , the scope of services has been completed per terms of the agreement. 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 contributed $ 1.9 million, $ 2.0 million, and $ 1.9 million to the 401(k) plan for the years ended December 31, 2025, 2024, and 2023, 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 December 31, 2025, 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 consolidated financial statements as of the periods presented. Note 12. Debt Revolving Credit Facility On June 4, 2025, the Company entered into a credit agreement (the “Credit Agreement”) with Citizens Bank, N.A. (the “Lender”), establishing a senior secured revolving credit facility with a total borrowing capacity of up to $ 20.0 million (the “Revolving Credit Facility”) to be used for general corporate purposes and working capital needs. The Revolving Credit Facility allows for borrowings, repayments, and re-borrowings up to the total capacity, subject to compliance with the terms of the Credit Agreement. The Revolving Credit Facility includes a sub-limit of up to $ 3.0 million for the issuance of letters of credit. The Credit Agreement is scheduled to mature on June 4, 2027, at which point all obligations become due. The Credit Agreement includes an option that allows the Company to extend the maturity date by one year , subject to certain conditions. The Company incurred $ 0.6 million of deferred financing costs related to the Revolving Credit Facility, which are amortized on a straight-line basis over the facility’s two-year term and recorded in other assets on the consolidated balance sheet as of December 31, 2025. The Revolving Credit Facility is secured by a first-priority lien on substantially all assets of the Company and its consolidated subsidiaries, each of which also guarantees the obligations under the facility. Borrowings under the facility bear interest at a variable rate, at the Company’s discretion, equal to either (a) the average Secured Overnight Financing Rate (“SOFR”) plus 3.25 % or (b) a base rate, as defined in the Credit Agreement, plus 2.25 %. Additionally, the Credit Agreement requires the payment of a commitment fee of 0.35 % on the unused portion of the Revolving Credit Facility and a letter of credit availability fee of 0.125 % on outstanding letters of credit. As of December 31, 2025, the Company had no outstanding borrowings under the Revolving Credit Facility. As of December 31, 2025, no letters of credit were outstanding and $ 20.0 million was available for borrowing under the Revolving Credit Facility. The fair value (level 2 of the fair value hierarchy described in Note 2) of this debt instrument 84 Table of Contents approximates the carrying value as borrowings under this debt instrument are based on a current variable market interest rate. Debt Covenants under the Credit Agreement The Credit Agreement contains customary restrictive financial and operating covenants, including limitations on our ability to incur additional indebtedness, pay dividends, make certain investments, sell assets, and engage in other specified transactions. In August 2025, in connection with the establishment of a new share repurchase program (see Note 11 for further information), the Company amended the Credit Agreement to permit share repurchases of up to $ 10.0 million, thereby excluding such repurchases from the covenant restrictions. The Credit Agreement also requires the Company to comply with the following financial covenants on a quarterly basis: (i) a minimum liquidity of $ 10.0 million held on deposit with the Lender, over which the Company retains control and considers as cash and cash equivalents, (ii) a minimum consolidated earnings before interest, taxes, depreciation and amortization (“EBITDA”) (as defined below) threshold, and (iii) a maximum total leverage ratio of 2.75 to 1.00 , which is calculated based on consolidated EBITDA. The Credit Agreement defines consolidated EBITDA on a trailing four fiscal quarter basis and includes specified adjustments and exclusions. As a result, EBITDA as defined under the Credit Agreement may differ materially from Adjusted EBITDA as presented elsewhere in this report. For example, the calculation of EBITDA under the Credit Agreement includes exceptions and caps related to adjustments for (i) restructuring and other strategic initiatives, (ii) legal settlements, (iii) completed acquisitions, and (iv) all other non-cash and non-specified non-recurring charges. As of December 31, 2025, the Company was in compliance with the covenants under the Credit Agreement. RCA Debt Facility In December 2023 , the Company entered into a fourth amendment related to the revolving credit agreement (as amended, the “RCA”) with City National Bank. Under this amendment, the maximum borrowing available was reduced from $ 30.0 million to $ 20.0 million. On December 10, 2024, the Company voluntarily terminated the RCA agreement. At the time of termination, no amounts were outstanding under the RCA, as the Company had fully paid down the revolving credit amount following the closing of the Follow-On Offering in November 2024. Total interest expense and amortization of debt issuance costs related to the RCA was $ 0.7 million and $ 0.6 million for the years ended December 31, 2024 and 2023. Insurance Premium Financing Agreement In November 2023, the Company entered into an insurance policy with annual premiums totaling $ 1.2 million . The Company executed a finance agreement with AFCO Premium Credit LLC over a term of twelve months to finance the payment of the total premiums owed. The finance agreement required a $ 0.3 million down payment, with the remaining $ 0.9 million plus interest paid over three quarterly installments. As of December 31, 2024, the balance was paid in full. Total interest expense related to this agreement was a nominal amount for the year ended December 31, 2024. Note 13. Stockholders’ Equity Common Stock From the time of its initial public offering through July 5, 2023, the Company had two outstanding classes of common stock, Class A common stock and Class B common stock. The rights of the holders of Class A common stock and Class B common stock were identical, except for voting, transfer, and conversion rights. On July 6, 2023, all of the Company’s then-outstanding shares of the Company’s Class B common stock were automatically converted (the “Conversion”) into the same number of shares of Class A common stock pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation. No additional shares of Class B common stock will be issued following the Conversion. In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion. 85 Table of Contents Equity Incentive Plans 2011 Equity Incentive Plan (the “2011 Plan”) The Company adopted the 2011 Plan to provide stock-based awards to employees, directors, and service providers. The 2011 Plan expired in September 2021, and no new awards may be granted under it. Awards granted before expiration remain outstanding and continue to be governed by the terms of the 2011 Plan until they are exercised, forfeited, or expire. Shares that are forfeited, canceled, or expire become available for issuance under the Company’s 2021 Equity Incentive Plan. 2021 Equity Incentive Plan (the “2021 Plan”) Under the 2021 Plan, the Company may grant options, stock appreciation rights, RSUs, restricted stock awards, other equity-based awards and incentive bonuses to employees, officers, non-employee directors and other service providers of the Company and its affiliates. The number of shares available for issuance under the 2021 Plan automatically increases on January 1 of each year from 2022 through 2031 by an amount equal to the lesser of: (i) 4,784,100 shares, (ii) 5 % of the total number of shares of Class A common stock outstanding on the preceding December 31, or (iii) a smaller number of shares determined by the Company’s Board of Directors. 2021 Employee Stock Purchase Plan (the “2021 ESPP”) The number of shares available for issuance under the 2021 ESPP automatically increases on January 1 of each year from 2022 through 2041 in an amount equal to the lesser of: (i) 1,913,630 shares, (ii) 2 % of the total number of shares of Class A common stock outstanding on the preceding December 31, or (iii) a smaller number of shares determined by the Company’s Board of Directors. 2024 New Employee Equity Incentive Plan (the “Inducement Plan”) On August 2, 2024, the Company adopted the Inducement Plan, pursuant to which the Company reserved 414,740 shares of its Class A common stock to be us ed exclusively for grants of equity-based awards to individuals who were not previously employees or directors of the Company. Reserved Shares for Future Issuance The Company had reserved shares of common stock for future issuance as follows: December 31, 2025 2011 Equity Incentive Plan Shares subject to options outstanding 3,501,410 2021 Equity Incentive Plan Shares subject to options outstanding 996,615 Restricted stock units outstanding 4,325,318 Shares available for future grants 6,625,371 2021 Employee Stock Purchase Plan Shares available for future purchases 1,413,677 2024 Inducement Plan Restricted stock units outstanding 283,759 Shares available for future grants 48,148 Total 17,194,298 Share Repurchase Program In August 2025, the Company’s Board of Directors 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 is intended to offset dilution resulting from stock-based compensation. Repurchases are to be funded from the proceeds of employee stock option exercises and from employee contributions under the 2021 ESPP. 86 Table of Contents Repurchases may be made from time to time in open market transactions, pursuant to Rule 10b5-1 trading plans, or through other means, in accordance with Rule 10b-18 under the Securities Exchange Act of 1934, as amended. The timing, number of shares repurchased, and prices paid for the shares under this program will depend on general business and market conditions as well as corporate and regulatory limitations, prevailing stock prices, and other considerations. The share repurchase program may be suspended, modified, or discontinued at any time and does not obligate the Company to acquire any amount of Class A common stock. During the year ended December 31, 2025, the Company repurchased a total of 256,549 shares of its Class A common stock for $ 2.0 million. As of December 31, 2025, approximately $ 8.0 million remained available for repurchases under the program. Note 14. Stock-Based Compensation Restricted Stock Units RSUs granted under the 2021 Plan and the Inducement Plan generally vest based on continued service up to a four-year period for employees, and over a one-year period for non-employee directors. RSU activity for the year ended December 31, 2025 was as follows: Shares Weighted-average grant date fair value per share RSUs unvested as of December 31, 2024 4,764,133 $ 6.18 Granted 4,303,690 $ 6.65 Vested ( 3,388,866 ) $ 6.30 Forfeited ( 1,069,880 ) $ 6.56 RSUs unvested as of December 31, 2025 4,609,077 $ 6.44 The weighted-average grant date fair values per unit of RSUs granted during the years ended December 31, 2025, 2024 and 2023, were $ 6.65 , $ 6.97 and $ 5.06 , respectively. The total grant date fair values of RSUs that vested during the years ended December 31, 2025, 2024 and 2023, were $ 21.3 million, $ 23.3 million and $ 15.8 million, respectively. As of December 31, 2025, total unrecognized compensation cost related to RSUs was $ 26.9 million, which will be recognized over a weighted-average period of 2.02 years. In February 2026, the Company’s Compensation Committee approved the issuance of RSUs totaling 2,036,670 . These RSUs have service-based vesting periods that are satisfied over three years . The Company expects to recognize $ 8.9 million in stock-based compensation on a straight-line basis over the vesting period of these awards. Bonus Plan The Company maintains an annual bonus program under which bonus awards are contingent upon the achievement of corporate performance targets and are 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 remain employed with the Company through the pay out date to maintain eligibility for bonus awards. The requisite service period for these awards begins on the date the Compensation Committee approves the bonus plan and ends on the payout date. In February 2025, the Compensation Committee approved the issuance of 301,571 RSUs, which vested upon issuance, related to bonus awards earned based on actual corporate performance for the year ended December 31, 2024. In January 2025, the Compensation Committee approved the bonus plan for the year ended December 31, 2025. While the bonus program for 2025 initially contemplated settlement in a combination of cash and RSUs, the Compensation Committee subsequently determined that bonus awards for the period would be settled entirely in RSUs. In February 2026, the Compensation Committee approved the issuance of RSUs with an aggregate grant-date fair value of approximately $ 4.1 million in settlement of bonus awards earned based on actual corporate performance for the year ended December 31, 2025 . Upon issuance, 689,790 RSUs vested and were settled on a net share basis. 87 Table of Contents Pursuant to the bonus plans, the Company recognized $ 3.8 million, $ 2.2 million, and $ 3.0 million in stock-based compensation during the years ended December 31, 2025, 2024, and 2023, respectively , of which the Company capitalized $ 0.3 million of stock-based compensation expense during the years ended December 31, 2025 and 2024, and $ 0.5 million during the year ended December 31, 2023 for the development of internal-use software. Stock Options Stock options granted under the equity plans generally vest based on continued service over four years and expire ten years from the date of grant. A summary of stock option award activity under the Company’s equity plans and related information is as follows (in thousands, except share, price and year data): Outstanding stock options Weighted- average exercise Price Weighted- average remaining contractual life (years) Aggregate intrinsic value Balance as of December 31, 2024 6,378,753 $ 7.28 4.95 $ 12,136 Options granted — — Options exercised ( 1,580,237 ) 3.33 Options cancelled ( 300,491 ) 11.13 Balance as of December 31, 2025 4,498,025 $ 8.42 4.19 $ 3,818 Vested and exercisable as of December 31, 2025 4,498,025 $ 8.42 4.19 $ 3,818 The intrinsic value of options exercised was $ 5.4 million, $ 13.9 million, and $ 8.8 million for the years ended December 31, 2025, 2024, and 2023, respectively. There was no unrecognized compensation cost as of December 31, 2025. ESPP The Company maintains an ESPP under which eligible employees may purchase shares of the Company’s Class A common stock through payroll deductions, subject to IRS and plan limitations. Offering periods last 24 months and include purchase dates at six -month intervals. Shares are purchased at 85 % of the lower of the fair market value of the stock at the beginning of the offering period or on the applicable purchase date. If the fair market value of the Company’s Class A common stock on a purchase date is lower than the fair market value at the beginning of the offering period, the offering period is automatically reset and participants are enrolled in a new offering period, resulting in incremental modification expense recognized in stock-based compensation expense on a straight-line basis over the new offering period. The reset provision under the ESPP was triggered on November 20, 2025, May 20, 2025, and November 20, 2024 each resulting in incremental modification expense of $ 0.8 million, $ 1.0 million, and $ 0.2 million. The ESPP will terminate in November 2041, unless extended by the Board of Directors in accordance with its terms. The Company recorded stock-based compensation expense under this plan of $ 2.2 million, $ 1.6 million, and $ 4.2 million f or the years ended December 31, 2025, 2024 , and 2023, respectively, of which $ 0.3 million, $ 0.5 million, and $ 0.8 million, respectively, was capitalized for the development of capitalized internal-use software. As of December 31, 2025 , the total unrecognized stock-based compensation expense related to the ESPP was $ 2.8 million, which is expected to be recognized over a weighted average period of 0.79 years. 88 Table of Contents The following table summarizes the Black-Scholes option pricing model weighted-average assumptions used to estimate the fair value of the ESPP stock purchase rights for the years ended December 31, 2025 and 2024: For the Years Ended December 31, 2025 2024 2023 Expected term (in years) 0.5 - 2.0 0.5 - 2.0 0.5 - 2.0 Expected volatility 61 % - 85 % 48 % - 74 % 46 % - 64 % Risk-free interest rate 3.55 % - 4.32 % 4.31 % - 5.43 % 4.29 % - 5.43 % Expected dividend yield — % — % — % Total Stock-Based Compensation Expense Stock-based compensation expense included in the consolidated statements of operations and comprehensive loss was as follows (in thousands): For the Years Ended December 31, 2025 2024 2023 Cost of revenue $ 1,557 $ 1,907 $ 1,986 Research and development 12,094 11,277 9,218 Sales and marketing 6,130 9,505 8,801 General and administrative 6,655 5,939 5,172 Total stock-based compensation expense (1) $ 26,436 $ 28,628 $ 25,177 ________________ (1) Stock-based compensation expense includes restructuring charges of $ 2.5 million incurred during the year ended December 31, 2024, including $ 0.3 million related to cost of revenue , $ 0.9 million related to research and development costs, $ 1.2 million related to sales and marketing costs, and $ 0.1 million related to general and administrative costs. Stock-based compensation expense includes restructuring charges of $ 0.1 million incurred during the year ended December 31, 2023, which were related to sales and marketing and general and administrative costs. Nominal stock-based compensation expense related to restructuring was recognized during the year ended December 31, 2025. See Note 16 for additional information. During the years ended December 31, 2025, 2024, and 2023 the Company capitalized $ 2.6 million, $ 4.0 million and $ 5.0 million, respectively, of stock-based compensation for the development of capitalized internal-use software and property and equipment. Additionally, during the year ended December 31, 2024 , the Compensation Committee approved amendments to outstanding vested stock options held by certain former employees in connection with their voluntary separation from the Company to extend the option expiration and also accelerate the vesting of RSUs. As a result of the modifications, the Company recognized $ 1.1 million of expense, of which $ 0.8 million is recorded in sales and marketing and $ 0.3 million is recorded in general and administrative expense on the Company’s consolidated statements of operations and comprehensive loss. Note 15. 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 diluted net loss per share attributable to common stockholders is computed by giving effect to all potentially dilutive common stock equivalents during the period. For purposes of this calculation, the Company’s stock options, share purchase rights pursuant to the Company’s ESPP, shares issuable under the Bonus Plan, and unvested RSUs are considered to be potential common stock equivalents, but have been excluded from the calculation of diluted net loss per share attributable to common stockholders as their effect is antidilutive. On July 6, 2023, all of the Company’s then-outstanding shares of Class B common stock, par value $ 0.0001 per share, were automatically converted into the same number of shares of Class A common stock, par value $ 0.0001 per share, pursuant to the terms of the Company’s Amended and Restated Certificate of Incorporation (the “Conversion”). No additional shares of Class B common stock will be issued following the conversion. In addition, on July 7, 2023, the Company filed a Certificate of Retirement with the Secretary of State of the State of Delaware effecting the retirement of the shares of Class B common stock that were issued but no longer outstanding following the Conversion. 89 Table of Contents Prior to the Conversion, Class A and Class B common stock were the only outstanding equity in the Company. The rights of the holders of the Class A common stock and Class B common stock were identical, except with respect to voting, transfer, and conversion. Accordingly, the Class A common stock and Class B common stock shared equally in the Company’s net losses. The following table presents the calculation of basic and diluted net loss per share (in thousands, except share and per share data): For the Years Ended December 31, 2025 2024 2023 Numerator: Net loss and comprehensive loss attributable to common stockholders $ ( 25,612 ) $ ( 48,531 ) $ ( 59,713 ) Denominator for basic and diluted net loss per share: Weighted average Class A and Class B common shares outstanding – basic and diluted 56,209,667 43,543,023 36,011,446 Net loss per share attributable to Class A and Class B common stockholders – basic and diluted $ ( 0.46 ) $ ( 1.11 ) $ ( 1.66 ) 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: December 31, 2025 2024 2023 RSUs 2,445,618 2,245,142 5,256,833 Stock options 3,709,619 5,193,911 9,307,142 Shares issuable pursuant to the ESPP 1,286,191 191,271 101,430 Bonus Plan 277,014 152,636 106,147 Total 7,718,442 7,782,960 14,771,552 Note 16. Restructuring 2025 Restructuring and Transformation Plan In November 2025, the Company initiated a restructuring and transformation plan designed primarily to improve efficiency and enhance the performance of its sales and marketing functions to support its go-to-market initiatives (the “2025 Restructuring and Transformation Plan”). The 2025 Restructuring and Transformation Plan includes the reallocation of resources, the redesign of sales and marketing strategies and processes, and other corporate actions. During the year ended December 31, 2025, the Company incurred charges of approximately $ 2.5 million, including employee termination expenses, an impairment charge related to the Company’s exit from its corporate headquarters facility, and other transformation costs. The Company expects to incur additional charges of approximately $ 4.7 million to $ 7.5 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 $ 0.8 million to $ 1.2 million, and other business transformation costs. Restructuring costs related to the 2025 Restructuring and Transformation Plan for the year ended December 31, 2025 were as follows (in thousands): Workforce reduction $ 970 Impairment loss on right-of-use asset 901 Other transformation costs 667 Total restructuring costs $ 2,538 90 Table of Contents The following table summarizes liabilities incurred under the 2025 Restructuring and Transformation Plan that are included in accounts payable and accrued expenses and other current liabilities on the consolidated balance sheet (in thousands): Workforce Reduction Transformation Total Balance as of January 1, 2025 $ — $ — $ — Charges incurred 970 667 1,637 Noncash charges — ( 109 ) ( 109 ) Cash payments during the period ( 460 ) ( 393 ) ( 853 ) Balance as of December 31, 2025 $ 510 $ 165 $ 675 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 a reduction in headcount of approximately 12 % of the Company’s workforce and a reduction of the Company’s footprint at its corporate headquarters. The 2024 Restructuring Plan was substantially completed by December 31, 2024. Restructuring costs related to the 2024 Restructuring Plan for the years ended December 31, 2025 and 2024 and from inception to date were as follows (in thousands): Year Ended December 31, 2025 Year Ended December 31, 2024 Inception to Date Workforce reduction $ ( 125 ) $ 3,897 $ 3,772 Impairment loss on right-of-use asset 59 898 957 Professional fees — 66 66 Total $ ( 66 ) $ 4,861 $ 4,795 The majority of the workforce reduction costs incurred in connection with the 2024 Restructuring Plan were related to noncash stock-based compensation. The Company accelerated certain of the RSUs awarded to employees impacted by the 2024 Restructuring Plan and also extended certain of the employees’ options to satisfy the settlement of termination benefits to impacted employees. The workforce reduction costs related to the noncash stock-based compensation amounted to $ 2.5 million, of which $ 2.1 million related to the acceleration of RSUs and $ 0.4 million related to the extension of options. The following table presents a summary of the liabilities related to the 2024 Restructuring Plan that are included within accrued expenses and other current liabilities on the consolidated balance sheet (in thousands): Balance as of January 1, 2024 $ — Charges incurred 3,928 Noncash stock-based compensation ( 2,524 ) Cash payments during the period ( 1,049 ) Balance as of December 31, 2024 355 Cash payments during the period ( 230 ) Other adjustments ( 125 ) Balance as of December 31, 2025 $ — 2023 Restructuring Plan In January 2023, the Company initiated measures to reduce headcount to pursue greater cost efficiency and align strategic initiatives (the “2023 Restructuring Plan”). All costs under the 2023 Restructuring Plan were incurred during the year ended December 31, 2023 for workforce reduction costs totaling $ 3.6 million. During this period, approximately 1 % of the 91 Table of Contents Company’s workforce terminated employment voluntarily and 4 % terminated employment involuntarily. As a result, the Company incurred employee termination expenses and other associated costs. The following table presents a summary of the liabilities related to the 2023 Restructuring Plan (in thousands): Balance as of January 1, 2023 $ — Severance and other personnel costs 3,616 Cash payments during the period ( 3,616 ) Balance as of December 31, 2023 $ — Cumulative Restructuring Costs Total restructuring costs related to the Company’s restructuring plans were reported in the consolidated statements of operations and comprehensive loss were as follows (in thousands): For the Years Ended December 31, 2025 2024 2023 Restructuring Costs Cost of revenue $ 115 $ 460 $ — Research and development 285 1,278 2,311 Sales and marketing 687 1,867 1,025 General and administrative 1,385 1,256 280 Total $ 2,472 $ 4,861 $ 3,616 The following table presents the stock-based compensation costs related to our restructuring activity as reported in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2024 (in thousands): For the Years Ended December 31, 2025 2024 2023 Stock-based Compensation Cost of revenue $ — $ 291 $ — Research and development — 885 — Sales and marketing 11 1,225 80 General and administrative — 123 45 Total $ 11 $ 2,524 $ 125 Note 17. Segment Reporting 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 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. 92 Table of Contents 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”) that we define as each respective GAAP expense category excluding stock-based compensation expense, depreciation and amortization, restructuring costs, and other non-recurring charges. These adjusted operating expense measures provides the CODM with greater transparency into the underlying trends in our business by facilitating period-to-period comparisons of our ongoing cost structure, excluding the impact of certain non-cash or non-recurring items that may not be indicative of our operating performance. These measures are intended to assist in forecasting and budgeting, in order to inform resource-allocation decisions. The table below presents each adjusted operating expense for the years ended December 31, 2025, 2024, and 2023 as well as the items excluded from each adjusted measure (in thousands): For the Years Ended December 31, 2025 2024 2023 Revenue $ 145,835 $ 127,628 $ 102,019 Adjusted cost of revenue 30,234 28,448 25,845 Adjusted research and development 33,302 30,166 27,505 Adjusted sales and marketing 30,474 34,103 31,335 Adjusted general and administrative 20,061 21,875 21,304 Depreciation 15,085 21,329 21,286 Amortization (1) 10,408 6,999 3,626 Stock-based compensation (2) 26,425 26,104 25,052 Restructuring costs 2,472 4,861 3,616 Other segment items (3) 2,986 2,274 2,163 Net loss and comprehensive loss $ ( 25,612 ) $ ( 48,531 ) $ ( 59,713 ) ________________ (1) $ 0.1 million of amortization expense for the year ended December 31, 2025 is classified as restructuring charges in the table above, as these charges were incurred as part of our 2025 Restructuring and Transformation Plan. (2) $ 2.5 million and $ 0.1 million of stock-based compensation expense for the years ended December 31, 2024 and 2023, as well as a nominal amount for the year ended December 31, 2025, are classified as restructuring charges in the table above. (3) Other segment items include investment income, interest expense, foreign exchange (gain) loss, legal settlement costs, impairment of long-lived assets, and income tax provision. Note 18. Income Taxes The following table presents the components of net loss before income taxes (in thousands): For the Years Ended December 31, 2025 2024 2023 United States $ ( 25,628 ) $ ( 48,656 ) $ ( 59,713 ) Non-U.S. 100 131 — Loss before provision for income taxes $ ( 25,528 ) $ ( 48,525 ) $ ( 59,713 ) 93 Table of Contents The provision for income taxes included in the consolidated statements of operations and comprehensive loss is comprised of the following (in thousands): For the Years Ended December 31, 2025 2024 2023 Current Federal $ — $ — $ — State 56 6 — Non-U.S. 28 — — Total current 84 6 — Deferred: Federal — — — State — — — Non-U.S. — — — Total deferred — — — Total provision $ 84 $ 6 $ — The following table presents a reconciliation of the statutory federal rate of 21% and the Company’s effective tax rate: For the Years Ended December 31, 2025 2024 2023 Statutory federal income (benefit) rate ( 21 ) % ( 21 ) % ( 21 ) % Increase (decrease) resulting from: State income tax rate ( 3 ) % ( 4 ) % ( 4 ) % Change in valuation allowance 29 % 37 % 29 % Stock-based compensation 3 % ( 4 ) % 2 % Tax credits ( 7 ) % ( 7 ) % ( 6 ) % Other ( 1 ) % — % — % Effective tax rate — % — % — % 94 Table of Contents Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The components of the Company’s deferred tax assets and liabilities consisted of (in thousands): December 31, 2025 2024 Deferred tax assets: Net operating loss (“NOL”) carryforwards $ 42,537 $ 31,417 R&D credit carryforwards 15,710 13,829 Stock-based compensation 2,635 2,646 Research and experimental expenditures under IRC Section 174 13,523 19,382 Lease liabilities 6,219 4,189 Disallowed interest expense 3,965 3,438 Accruals and other 1,461 1,335 Total gross deferred tax assets 86,050 76,236 Valuation allowance ( 69,974 ) ( 62,492 ) Total net deferred tax assets 16,076 13,744 Deferred tax liabilities: Property and equipment, net ( 2,012 ) ( 1,024 ) Right of use assets, net ( 5,602 ) ( 3,936 ) Capitalized internal-use software ( 8,462 ) ( 8,784 ) Total deferred tax liabilities ( 16,076 ) ( 13,744 ) Net deferred tax liabilities $ — $ — Deferred income taxes reflect the net tax effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Realization of deferred tax assets is dependent upon future earnings, if any, the timing and amount of which are uncertain. Based on evidence of Company's earnings history, the net U.S. deferred tax assets have been fully offset by a valuation allowance. The val uation allowance increased by $ 7.5 million, $ 17.9 million, and $ 17.6 million during the years ended December 31, 2025, 2024, and 2023, respectively. As of December 31, 2025, the Company had federal and state NOL carryforwards of $ 172.5 million and $ 109.7 million, respectively. The federal NOL carryforwards consisted of $ 16.0 million generated before January 1, 2018, which will begin to expire in 2030 and are able to offset 100% of taxable income. The NOLs generated after December 31, 2017 of $ 156.5 million carryforward indefinitely, and can only offset 80% of taxable income when utilized with exception of NOLs generated in 2018 to 2020 which carryforward indefinitely and can offset 100% of taxable income for tax years beginning before January 1, 2021, as provided by the CARES Act. State net operating loss carryforwards in the amount of $ 90.6 million begin expiring in 2029 and approximately $ 19.1 million have an indefinite life. The Company has federal research and development (“R&D”) credit carryforwards of $ 13.1 million which will begin to expire in 2032 and California R&D credit carryforwards of $ 6.6 million which do not expire. The Company also has $ 0.1 million of California enterprise zone credits which will begin to expire in 2028. Utilization of some of the federal and state net operating loss and credit carryforwards are subject to annual limitations due to the “change in ownership” provisions of the Internal Revenue Code of 1986 (specifically Section 382), as amended, and similar state provisions. The Company performed a Section 382 analysis through December 31, 2024 and determined that ownership changes occurred in the year 2007, 2009, 2012, and 2024. The ownership changes identified had no significant 95 Table of Contents impact on federal and state net operating losses. The annual limitations may result in the expiration of net operating losses and credits before utilization in the future. Uncertain Income Tax Positions The following table summarizes the activity related to the Company’s unrecognized tax benefits (in thousands): For the Years Ended December 31, 2025 2024 2023 Balance at beginning of year $ 2,467 $ 1,889 $ 1,239 Tax positions related to the current year: Additions 316 628 649 Reductions — — — Tax positions related to the prior year: Additions 20 — 1 Reductions — ( 50 ) — Balance at end of year $ 2,803 $ 2,467 $ 1,889 The total amount of unrecognized tax benefits as of December 31, 2025 was $ 2.8 million, all related to federal and state tax jurisdictions . If recognized, these unrecognized tax benefits would not affect the effective tax rate because the Company maintains a full valuation allowance against its deferred tax assets. As of December 31, 2025, the Company had no interest related to unrecognized tax benefits. No amounts of penalties related to unrecognized tax benefits were recognized in the provision for income taxes. The Company does not anticipate any significant change within twelve months of this reporting date. The Company files income tax returns in the U.S. federal jurisdiction and various state jurisdictions. The Company is subject to U.S. federal and state income tax examination for calendar tax years beginning in 2007 due to NOLs that are being carried forward for tax purposes. Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosures None.