Blaize Reports 59 Percent Margin in Q2

Globe and Mail

13 hours ago

Key Points
Revenue (non-GAAP) nearly doubled from the previous quarter but missed analyst estimates by about 6%.
Gross margin (GAAP) rebounded significantly to 59%, up from negative levels a year ago.
Management issued guidance for a sharp ramp in revenue in Q3 2025 ($11.0 million to $11.5 million) and narrowed the full-year outlook to $35.0 million to $38.0 million.
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Blaize (NASDAQ:BZAI), a maker of artificial intelligence (AI) hardware and software for edge computing, released its second quarter 2025 results on August 14, 2025. The earnings report showed a nearly twofold sequential revenue increase to $2.0 million (GAAP and non-GAAP), fueled by initial shipments from major contract wins, but still short of analysts' expectations of $2.11 million (non-GAAP). Gross margin (GAAP) improved sharply, reaching 59%, a move from negative territory in the prior-year period. Management's guidance calls for a substantial revenue ramp over the coming quarters and FY2025, supported by large backlogs from recent multi-year deals. The quarter reflected marked commercial momentum but also ongoing cash consumption and costs that remain large relative to current revenue.
Metric Q2 2025 Q2 2025 Estimate Q2 2024 Y/Y Change
EPS (GAAP) $(0.28) $(0.16) $(0.89) -68.5 %
Revenue (GAAP) N/A N/A N/A N/M
Gross Margin (GAAP) 59 % (15 %) 74 pp
Adjusted EBITDA Loss $(12.9 million) $(10.6 million) -21.7 %
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
Understanding Blaize: Business Model and Recent Focus
Blaize (NASDAQ:BZAI) develops AI-focused processors and software designed for real-time data analysis at the "edge"—meaning outside of traditional data centers. Its core products, including AI-focused chips based on its custom Graph Streaming Processor (GSP) architecture and software platforms, power AI tasks in smart infrastructure, industrial automation, defense, and public safety.
Recently, the company has concentrated on building a vertically integrated offering that blends hardware and software with services. Its go-to-market strategy targets large enterprise and government contracts, particularly in Asia and infrastructure-heavy sectors. These efforts are reflected in its push for large, multi-year project wins and a business model that aims to include recurring software content alongside hardware.
Quarter in Review: Financials and Key Developments
GAAP revenue saw strong acceleration, moving from $1.0 million in Q1 2025 to $2.0 million. Management described this as an 'inflection,' shifting from small pilot programs to commercial-scale deployments. Most of the topline came from shipments tied to a major South Asia order, part of a $56 million contract for smart infrastructure that is scheduled to continue through 2026. Despite the sequential gain, quarterly revenue (non-GAAP) fell short of analyst expectations by 6%,
The company's gross margin (GAAP)—what remains after the cost of goods sold—jumped to 59%, recovering from (15)% in Q2 2024. The improved profitability at the gross level (GAAP gross margin of 59%) is a key milestone for a company moving from proof of concept to live projects.
Operating expenses remained elevated, including $6.4 million for research and development and $8.6 million for selling, general, and administrative expenses on a non-GAAP basis. Adjusted EBITDA loss (non-GAAP) was $12.9 million. This was narrower than the prior quarter but still high compared to revenue, with Adjusted EBITDA loss (non-GAAP) of $12.9 million versus $15.4 million for Q1 2025. Research and development expense (non-GAAP) decreased by approximately 10% compared to Q1 2025.
Cash outflows continued, with cash and equivalents dropping to just under $28.6 million at quarter's end from $50.2 million at the end of 2024. Blaize's working capital—money tied up in inventory, receivables, and ongoing operations—remains a point of scrutiny, as the company needs both growing revenue and disciplined expenses to extend its cash runway. Total liabilities exceeded total assets at quarter's end, producing a stockholders' deficit of $4.8 million as of June 30, 2025 (GAAP).
Product highlights this quarter included the launch of the Blaize AI Platform. This is a modular 'plug-and-play' infrastructure stack, built to bring AI software and custom GSP-based silicon to both cloud data centers and edge devices like surveillance cameras or industrial sensors. Management emphasized a hybrid approach, where cloud-based training is combined with low-power, fast AI inference at the edge of networks. This design targets verticals such as smart cities, logistics, and defense. In addition, management highlighted a shift toward more software content in its server deals, making up about 15% of contract value, which could increase recurring revenue potential over time.
Major contract news included a $120 million agreement with Starshine for sovereign-ready Hybrid AI platforms across Asia, and the aforementioned $56 million South Asia smart infrastructure program, as disclosed by Blaize Holdings, Inc. $1.8 million of the South Asia order had shipped, with $4.6 million more expected this year. These contracts form the base of a reported $725 million pipeline of opportunities stretching through 2027, with over $300 million listed in advanced discussions—a sign of growing commercial traction, though the timing of revenue from these deals is still uncertain.
Blaize's Key Business Drivers and Strategic Position
The heart of Blaize's offering is its proprietary edge AI hardware and software. The Graph Streaming Processor (GSP) is a custom chip designed for rapid, power-efficient AI inference—enabling local devices to process data instantly rather than relying on distant, centralized cloud servers. The verticalized software stacks and development toolkits let customers tailor AI for specialized tasks, while the new AI Platform aims to bundle all these elements in a single, ready-to-deploy product suite. Integration of hardware and software improves deployment speed and could support recurring software revenue in new contracts.
Strategic partnerships are essential for expanding reach. Blaize has built alliances with system integrators and independent software vendors in different regions, particularly in Asia and with U.S. defense and infrastructure buyers. Large contracts announced this year reflect the benefits of deeper ecosystem engagement, which supports sales and may shorten the path from pilot to deployment. Partnerships are also helping the company as it migrates from a component supplier to a solutions partner—a pivotal change in how it addresses large-scale infrastructure and government projects.
The regulatory landscape for AI continues to evolve, with new executive orders and state laws shaping the industry. Management remains focused on compliance and adapting to shifting requirements, especially as it moves into government and critical infrastructure markets, which may have higher standards for data security and privacy.
Intellectual property is another focus, with the company emphasizing its portfolio of proprietary silicon and software as key differentiators. While specific patent updates were not detailed this quarter, Blaize maintains a strategy of leveraging unique technology to compete in a fragmented market where innovation, efficiency, and speed are essential to winning new business. Market trends in AI—including the drive towards hybrid cloud-edge computing and multimodal AI—have increased demand for its kind of flexible, programmable systems.
Looking Ahead: Guidance and Themes to Watch
Blaize provided clear guidance for the coming quarters. It projects Q3 2025 revenue (GAAP) between $11.0 million and $11.5 million—a significant sequential increase, underpinned by expected fulfillment of contract backlogs, particularly from the major Asia projects. For FY2025, the company expects total revenue (GAAP) of $35.0 million to $38.0 million, narrowing the previously wide range and reflecting greater confidence in the timing of deployments. Adjusted EBITDA loss is anticipated to be between $55.0 million and $58.0 million for FY2025. Management also expects stock-based compensation to be about $33 million for FY2025.
This rapid forecasted ramp hinges on the successful execution of multi-year contracts and the ability to convert the pipeline to recognized revenue. Management cautions that timing and the final amounts from large contracts can fluctuate. Investors and industry watchers should monitor the pace of contract shipping, acceptance by customers, and evidence of sustainable improvement in margins. Cost discipline, working capital management, and the health of the balance sheet are also crucial given Blaize's ongoing cash outflows. Blaize does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
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