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Evernote Eyes End 2013 IPO

Posted on Friday, Jul 13th 2012

Researcher Info-Tech believes that the growth of mobile devices is helping to advance the consumer technology market faster than the corporate technology market. Among one of the key markets experiencing strong growth is digital note-taking.

Evernote’s Financials
Mountain View, California–based Evernote was founded in 2007 and is among the leading providers of digital note-taking services. Evernote describes its goal as to help people “remember everything.” Its app lets users save text, images, media, voice memos, or even handwritten notes onto the cloud so that they can access them later. Of late, Evernote has been testing a new video-recording feature. For now, the service is available for Japanese users who access Evernote on the NTT DoCoMo network. Their documents can be accessed over multiple platforms, including Microsoft Windows, Mac OS, Android, iOS, BlackBerry, and Symbian.

The company is among the few that have made it big using the freemium model. Any user can download the Evernote app free. Then, for a charge of $5 a month or $45 a year, users can upgrade to a premium version. Under the premium version, users can upload as much as 1GB of data a month and can also access their documents offline. Evernote Premium users can also collaborate with other users on their documents.

The company has also begun to successfully orient itself in different verticals. It recently released Evernote Food, an app focused on helping users save memories about food experiences. According to management, Food users are among the most engaged of the various user bases. Other specialized apps include Evernote Hello, to help remember contacts; Evernote Clearly, to save reading material; and Evernote Peek, to turn documents into study notes.

Evernote has more than 34 million users across the web and mobile platforms, of which nearly 1.1 million are paying members. It plans to reach 100 million users by the end of next year. Analysts estimate that it is operating at annual revenues of close to $100 million.

To date, the company has received funding of more than $166 million from investors, including T.Rowe Price Associates, Harbor Pacific Capital, Allen and Company, Meritech Capital, CBC Capital, Sequoia Capital, Morgenthaler Ventures, and DOCOMO Capital. Its latest round of funding, held earlier this year, brought in $70 million and pegged its valuation at $1 billion.

Analysts have been looking forward to an IPO by Evernote. Recent reports suggest that the company is considering such a move, but not until the end of 2013. It plans to give itself more freedom till then by keeping away from intense public scrutiny.

Evernote’s International Expansion
Evernote has a much bigger presence in the U.S. than in other countries and is trying to change that. Seventy percent of subscribers are based in the U.S. and 18% in Japan. As part of its international expansion, it recently launched a Chinese version of their app, Yinxiang Biji. China is its third-biggest market, with more than a million users.

Evernote’s Acquisitions
Since 2011, Evernote has been on an acquisition spree. Recently, it acquired Penultimate, a handwriting recognition app for the iPad. Evernote was working on developing a similar app but decided to buy Penultimate instead. The Penultimate app appears like a notebook and lets users write on their devices using their fingers instead of a stylus. Their app sells for $0.99 a download.

Earlier last year, it acquired graphic utility Skitch. Skitch lets users express their comments by using annotations, shapes, and sketches instead of words. At the time of acquisition, Skitch had 100,000 users. The app is now available through Evernote Skitch.

Last year Evernote also bought other start-ups, including Notable Meals, Readable, and Minds Momentum, and transformed them into Evernote Food, Evernote Clearly, and the soon to be released to-do list app, respectively.

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