Backblaze, Inc. (BLZE) stock intrinsic value fair value estimate & owner earnings analysis

Backblaze sells cloud storage (B2 Cloud Storage for businesses and Computer Backup for individuals and small firms). Revenue has grown every year, from $67.5M in 2021 to $145.8M in 2025 (+14% in 2025), with price increases since October 2023 and growing enterprise storage. The business has no borrowings and about $51M of cash and securities at year-end 2025. The issue is what is left for shareholders. We measure owner earnings as operating cash flow, less working-capital swings, less stock compensation (a real cost, paid in shares), less the capital spending needed to keep the platform running. We count capitalized internal software ($7.6M in 2025) as spending, not just equipment ($4.7M). On that basis owner earnings were about -$52.6M in 2023 (-$1.46 per share), -$29.7M in 2024 (-$0.68) and -$7.9M in 2025 (-$0.14). Reported operating cash flow of $23.5M in 2025 looks healthy only because $26.4M of stock compensation is added back and share count rose from 36M to 56M over the period. Amortization of intangibles is not a material factor here. Ten years of history were not available; we use the three years since the company's post-IPO scale, and a median of about -$0.68 per share. Growth reconciliation: owner earnings improved by roughly $22M in 2025 versus 2024 and by a similar amount the year before. We assume no further improvement in the base case beyond what is already visible, since lower stock compensation, sales efficiency from the November 2025 restructuring plan (further charges of $4.7-7.5M through Q1 2027) and price increases are plans or trends, not secured results. Bear case ($0): owner earnings stay negative, cash is consumed and further share issuance dilutes holders; nothing evidenced supports positive value. Base case ($0.50): the business roughly reaches break-even after stock compensation, and value approximates the cash cushion rather than a stream of earnings; earning power is not credited. Bull case ($3): the two-year pattern of about $20M annual improvement continues for one more year to roughly +$14M of owner earnings (about $0.24 per share), then grows with revenue and fades over time. What would make this wrong: if stock compensation falls sharply while revenue keeps growing 14% at high gross margins, earnings power could be far larger than we credit; conversely, if cash burn resumes, the cushion shrinks. Because the company has no earnings we can evidence, the margin-of-safety price sits well below the cash-backed value and assumes owner earnings turn positive.