Backblaze prices upsized $175M convertible notes at 0% interest
What's the deal? Backblaze, the Nasdaq-listed cloud storage platform, has priced $175 million of 0.00% convertible senior notes due 2031 in a private offering to qualified institutional buyers. The company upsized the deal from a previously announced $150 million and gave initial purchasers an option to buy up to $26.25 million more. The sale is expected to close on August 24, 2026.
Why now? The notes carry no regular interest and won't accrete — unusually cheap financing for a company positioning itself as "the storage platform powering AI and data-intensive workloads." The initial conversion price of about $21.94 per share represents a 30% premium over the $16.88 closing price on August 19, 2026.
What's the endgame? Backblaze expects net proceeds of roughly $167.2 million, or $192.7 million if the purchase option is exercised in full. It plans to spend about $15.2 million on capped call transactions and use the rest for general corporate purposes, including capital expenditures.
What could go wrong? Convertible notes risk diluting existing shareholders if converted into stock. To blunt that, Backblaze bought capped calls with a cap price of $33.76 per share, designed to reduce potential dilution or offset cash payments on conversion.
The company can't redeem the notes before August 20, 2029. After that date, it may redeem them for cash if the stock trades at least 130% above the conversion price for a set period.
The signal: At $175 million, the raise sits in the top quartile of funding rounds by size, a notable haul for a mid-cap storage provider. The 0% coupon signals investor appetite to bet on Backblaze's upside as demand for AI-driven data storage climbs.
Read more: Marketscreener
Image credit: ChrisDag
