Evernote Says Cyber Breach Which Cost Millions Wasn’t From China

Evernote Corp., an online note-taking and document storage service, said a March cyber attack that obtained usernames and encrypted passwords cost “many millions of dollars” and didn’t come from China.

The attack wasn’t state-sponsored and appears to have come from identity-theft groups, Chief Executive Officer Phil Libin said in an interview in Beijing today. An investigation with the help of U.S. security firm Mandiant Corp. is nearly finished and details will be available in a few weeks, he said.

Mandiant in February said China may be behind a group that has hacked at least 141 companies worldwide since 2006. Evernote has fully recovered from the March attack, which cost “many millions of dollars,” and the Redwood City, California-based company is growing faster than before the breach as it adds 100,000 new users per day, Libin said.

“The recovery is very expensive and will be ongoing for a long time,” he said. “Because our promise is we want people to trust us with their lifetime memories, we had to overreact.”

Evernote, like Dropbox Inc., lets users store documents, images and other content in remote data centers, accessible from mobile devices including smartphones and tablet computers. The company said in August it planned to delay holding an initial public offering until at least 2015 as it works to convert users of its free product into paid subscribers.

Libin reiterated the company will not rush into an IPO, and that a sale will take “a couple of years.”

Evernote today released a Chinese version of its software aimed at corporate clients that was released in the U.S. in December. The company’s China service, which started one year ago today, is adding more than 10,000 users a day, accounting for more than 10 percent of global user growth.

The company makes money by using a so-called freemium model, offering a free version that can be upgraded to a paid membership with more perks. Evernote in March said it had 50 million users around the world, a third of which are in the U.S.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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