How Evernote was made profitable

There is a section in the Bending Spoons IPO filing that should be taught in business schools. It describes, in unusual detail, how they took Evernote - a company that had lost money for roughly a decade - and made it profitable in twelve months. I'll save you the 400 pages.

The headline numbers. Bought in January 2023 for $199.7 million. Revenue that year was $95 million, profit before tax $11.3 million. Profitable in year one. By my estimate it does $120-130 million now at margins most SaaS founders only see in pitch decks.

Now the how. Three levers, pulled hard.

Manpower - Evernote had 341 full-time employees at acquisition. By end of 2024 there were 60. An 82% cut. Management layers went from four to two. And it didn't stop there - in 2025, when Bending Spoons acquired Harvest, they staffed the new team by moving half the remaining Evernote people over. So the product runs on roughly 30 people today.

Back of the envelope - 280 Bay Area salaries, fully loaded, is $50-70 million a year. On a $95 million revenue business. The cost cut alone is the whole profitability story, before a single price hike.

The part that should make every large company uncomfortable is that output went up. Product releases grew 50% in 2023, doubled in 2024, 150+ updates in 2025. They shipped over 6,000 reliability fixes in three years and then dissolved the reliability team because there was nothing left for it to do. Infrastructure cost fell 47% as a share of revenue once they broke the old monolith into microservices. Evidently 341 people were not what kept Evernote alive. Thirty to sixty people were, and the rest was organisational sediment collected over fifteen years.

Pricing - the lever pointed at users. The Personal plan went from $69.99 to $129.99 a year, an 86% hike. The free tier was cut to 50 notes and one notebook - for anyone with years of history, effectively a ransom note. Then a clever inversion: instead of locking features behind a paywall, they made every feature free and put usage limits on them. You get a taste of everything and hit a wall mid-work. By 2025, 51% of all new subscriptions came from someone hitting a usage limit. Revenue per active user in 2025 reached 2.5x the 2022 level.

The captive base - the lever that makes the other two possible. Raise prices 86% on a normal product and your users disappear. Evernote's users did not. Net revenue retention averaged 99%, the best in the whole Bending Spoons portfolio. Average tenure was 7.2 years. These are people with thousands of notes and a decade of memory inside the product. Leaving costs more than paying, and the new owners understood this precisely. The filing says it plainly - revenue growth was driven by higher revenue per subscriber, "partly offset by a decrease in the number of subscribers". Fewer customers, each paying much more. By design.

I keep going back and forth on this one. The operator in me admires the discipline - year-one profitability on a decade-long loss maker is genuinely hard, and most turnarounds fail. The user in me stared at that exact renewal bill and felt fleeced.

Overall - a masterclass in operations. Just remember what the raw material of the masterclass was: a million users who couldn't leave.