From:Joel Gascoigne
To:Shareholders
Subject:September 2023 Shareholder Update
Date:October 28, 2023

September 2023 Shareholder Update

ℹ️ Sent to shareholders on October 28, 2023

Hi there,

See below for our September numbers, my Q3 reflection as well as key updates and what’s coming soon at Buffer. As always, hit reply to share any comments or ask questions.

Key numbers

MRR
$1,502,364 -0.30%
ARR
$18,028,368 -0.30%
Customers
57,005 -0.51%
MAU
146,966 -0.23%
ARPU
$26.42 +0.27%
Team Size
81 no change
Net Income
-$45,859 +14.57%
Bank Balance
$4,155,635 -0.39%
Runway
54 months 4 years, 6 months
  • We’ve seen another relatively flat month, with a slight MRR decline of 0.3%. This flat state is our new normal, and while we are working hard to move towards growth, it is a welcome change from our prior decline trend. Relative to decline, being flat is growth, and so we feel confident our trajectory in the upcoming 6-12 months.
  • We’re continuing to see customers decline faster than we’d like. We’re still seeing healthy growth of customers on our New Buffer segment, therefore these declines are coming from our legacy cohort churning at a slightly faster pace than New Buffer.
  • Monthly Active Users has remained flat, while we have seen growth in signups throughout the year. This is something we want to see change in the coming couple of quarters.
  • We’re putting some extra focus on activation, onboarding and growth for New Buffer to help here, as well as looking towards New Buffer continuing to take over even more as the dominant segment. These different pieces I believe will get us towards customer growth.
  • Average Revenue Per User has continued to grow at a healthy pace. This is occurring largely due to the increasing number of channels / social networks we support within Buffer. It’s great to see ARPU grow without any pricing changes in the past 2 years, which indicates that our strategy of serving wider use cases while keeping the entry point of the product accessible can work.
  • With a consistent net loss of around $50k in the past 3 months, we are close to breaking even. With some slight growth as well as a little diligence in our expenses, we believe we can break even again in the next year, and start to see profitability and growth in the profit margin. This is important to us for our goal to exist and thrive for the long-term.

Note-worthy updates and reflections

Notes

During September we launched a significant upgrade to our collaboration functionality with Notes. This allows customers to add context to their posts and communicate with team members in their Buffer account and work together to shape and finalize content before it is posted. Notes are also available to solo Buffer users, and take the form of internal notes which can serve as reminders for yourself for later. Notes is available on all plans, including free. Read more

Quick Navigator

We also launched what we’re calling our Quick Navigator, which is a navigation menu you can open by hitting the CMD+K / CTRL+K keyboard shortcut, or from the Help menu in our navigation. This is a pattern that has been established in the past few years, which felt particularly powerful for us to implement for users. Through this menu, you can easily navigate to various tools within Buffer, to specific channels, and various parts of your account. Read more

Q3 reflection

Q3 2023 was our best Q3 since 2020 in terms of MRR growth rate, with a tiny 0.07% decline quarter-over-quarter from Q2. 2023 continues to be a turnaround year, and we’re now far enough into the year to feel confident in this outcome. At our current pace, we are on track for a 1.25% decline. This is a significant improvement from our 7.57% decline in 2022. The entirety of the decline occurred in Q1, and we have been flat since then. This puts us in a very strong position heading into the new year, with a real opportunity to see growth in 2024.

We’re now seeing consistently flat results. This is something we’re celebrating as we had 3 years of decline while we shifted our strategy including our pricing, positioning and packaging. At our scale ($18M ARR, 55,000+ customers), generally the trajectory is fairly predictable and therefore it is quite difficult to “turn the ship” and see immediately different results. We’ve been putting significant effort into this turnaround, and it’s wonderful to see the fruits of our product, engineering, community, go to market and cultural shifts. With that type of predictability, it is unrealistic to go from decline to immediate growth, and we now find ourselves in the transitionary flat period.

From here, our work is to follow through to a phase of healthy growth and thriving for the company. This is something that we’re all very excited about and are fully committed to making happen. Many in the team have joined during this challenging period of the company, and have enjoyed joining a company with strong values and a long-term focus, while having the opportunity to work on a real challenge of a turnaround. Others have been at the company for 7, 8, 9, even 10 years and have seen all the different phases and enjoy being at a company where we can weather these market and company challenges while staying true to our mission and values, and are happy to experience and contribute to the entire journey of getting back to healthy growth. With over 4 years of runway with our cash balance, we’re still in a very strong position as we see the light of growth ahead.

What’s coming up

Tags

We’re launching Tags soon, which will enable you to tag posts and ideas with one or more labels to give greater organization and workflow capabilities. This has been a top request for our Create space, one of the newest parts of the product which is getting a lot of positive feedback, but can fairly quickly become hard to manage. Tags are a significant upgrade to our prior Campaigns functionality, now allowing you to use multiple tags. We’re rolling this out to all plans, and there will be a limit of 3 tags for the free plan which should be enough to get some real value, while also providing a powerful upgrade path to our paid plans.

New Salary System

We’re close to finalizing our new salary system, which we will roll out internally in the next month. We’ve switched our salary data source from Radford to Carta, which feels more better suited to our industry and size of company. It has given us much simplified and more accurate benchmarks for the roles in the company. We’ve worked for many months on the salary system, and it will resolve a lot of debt that has built up over the years in our salary formula, which had led to discrepancies at times across areas and roles. The work on this has also led to a very healthy revisiting of levels of roles and individuals across the company, to resolve any inconsistencies which had built up there too. It’s a big step forward for us in terms of our commitment to transparency, simplicity, consistency and fairness.

New company-wide support tool

After using Zendesk for 4 years, we are very excited to return to Help Scout which we used for the majority of our journey. We switched to Zendesk for a number of helpful capabilities as we scaled, and for bringing all of our support channels together. Over time, however, we found that Zendesk was overkill for our needs, had a variety of different bugs and issues which degraded the customer service experience, and we also decided to approach channels in a native way rather than bringing it all together. Something we lost with the switch 4 years ago which was culturally significant, was our ability to have a seat for everyone in the company and easy access to read and respond to customers’ emails. We’re delighted that with our new Help Scout contract, we’ve been able to work with them so that everyone in the team can have a login and use the tool. This is a big step forward as part of our overall strategy of viewing our customer communication tools as shared tools rather than owned purely by a single area.

Thanks for reading! I’ll be back in touch soon with the October update.

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