I have a longstanding tradition of boring Moz readers with our exhaustive annual reports (2012, 2013, 2014, 2015).

If you’re avoiding sorting the recycling, going to the gym, or cleaning out your closet, I have got a *really* interesting post that needs your attention *right now*.

(Yeah. I know it’s March. But check this out, I had pneumonia in Jan/Feb so my life slid sideways for a while.)

Skip to your favorite parts:

Part 1: TL;DR

Part 2: Achievements unlocked

Part 3: Oh hai, elephant. Oh hai, room.

Part 4: More wood, fewer arrows

Part 5: Performance (metrics vomit)

Part 6: Inside Moz HQ

Part 7: Looking ahead

Part 1: TL;DR

We closed out 2016 with more customers and revenue than 2015. Our core SEO products are on a roll with frequent, impactful launches.

The year was not all butterflies and sunshine, though. Some of our initiatives failed to produce the results we needed. We made some tough calls (sunsetting some products and initiatives) and big changes (laying off a bunch of folks and reallocating resources). On a personal level, it was the most emotionally fraught time in my career.

Thank the gods, our hard work is paying off. Moz ended the year cashflow, EBITDA, and net income profitable (on a monthly basis), and with more can-do spirit than in years past. In fact, in the month of December we added a million dollars cash to the business.

We’re completely focused on our mission to simplify SEO for everyone through software, education, and community.

Part 2: Achievements unlocked

It blows my mind that we ended the year with over 36,000 customers from all over the world. We’ve got brands and agencies. We’ve got solopreneurs and Fortune 500s. We’ve got hundreds of thousands of people using the MozBar. A bunch of software companies integrate with our API. It’s humbling and awesome. We endeavor to be worthy of you!

We were very busy last year. The pace and quality of development has never been better. The achievements captured below don’t come even close to listing everything. How many of these initiatives did you know about?

Part 3: Oh hai, elephant. Oh hai, room.

When a few really awful things happen, it can overshadow the great stuff you experience. That makes this a particularly hard annual report to write. 2016 was undoubtedly the most emotionally challenging year I’ve experienced at Moz.

It became clear that some of our strategic hypotheses were wrong. Pulling the plug on those projects and asking people I care deeply about to leave the company was heartbreaking. That’s what happened in August 2016.

As Tolstoy wrote, “Happy products are all alike; every unhappy product is unhappy in its own way.” The hard stuff happened. Rehashing what went wrong deserves a couple chapters in a book, not a couple lines in a blog post. It shook us up hard.

And *yet*, I am determined not to let the hard stuff take away from the amazing, wonderful things we accomplished and experienced in 2016. There was a lot of good there, too.

Smarter people than me have said that progress doesn’t happen in a straight line; it zigs and zags. I’m proud of Mozzers; they rise to challenges. They lean into change and find the opportunity in it. They turn their compassion and determination up to 11. When the going gets tough, the tough get going.

I’ve learned a lot about Moz and myself over the last year. I’m taking all those learnings with me into the next phase of Moz’s growth. Onwards.

Part 4: More wood, fewer arrows

At the start of 2016, our hypothesis was that our customers and community would purchase several inbound marketing tools from Moz, including SEO, local SEO, social analytics, and content marketing. The upside was market expansion. The downside was fewer resources to go around, and a much more complex brand and acquisition funnel.

By trimming our product lines, we could reallocate resources to initiatives showing more growth potential. We also simplified our mission, brand, and acquisition funnel.

It feels really good to be focusing on what we love: search. We want to be the best place to learn and do SEO.

Whenever someone wonders how to get found in search, we want them to go to Moz first. We aspire to be the best in the world at the core pillars of SEO: rankings, keywords, site audit and optimization, links, location data management.

SEO is dynamic and complex. By reducing our surface area, we can better achieve our goal of being the best. We’re putting more wood behind fewer arrows.

Part 5: Performance (metrics vomit)

Check out the infographic view of our data barf.

We ended the year at ~$42.6 million in gross revenue, amounting to ~12% annual growth. We had hoped for better at the start of the year. Moz Pro is still our economic engine, and Local drives new revenue and cashflow.

Gross profit margin increased a hair to 74%, despite Moz Local being a larger share of our overall business. Product-only gross profit margin is a smidge higher at 76%. Partner relationships generally drag the profit margin on that product line.

Our Cost of Revenue (COR) went up in raw numbers from the previous year, but it didn’t increase as much as revenue.

Total Operating Expenses came to about ~$41 million. Excluding the cost of the restructure we initiated in August, the shape and scale of our major expenses has remained remarkably stable.

We landed at -$5.5 million in EBITDA, which was disappointingly below our plan. We were on target for our budgeted expenses. As we fell behind our revenue goals, it became clear we’d need to right-size our expenses to match the revenue reality. Hence, we made painful cuts.

I’m happy/relieved/overjoyed to report that we were EBITDA positive by September, cashflow positive by October, and net income positive by November. Words can’t express how completely terrible it would have been to go through what we all went through, and *not* have achieved our business goals.

My mind was blown when we actually added a million in cash in December. I couldn’t have dared to dream that… Ha ha! They won’t all be like that! It was the confluence of a bunch of stuff, but man, it felt good.

Part 6: Inside MozHQ

Thanks to you, dear reader, we have a thriving and opinionated community of marketers. It’s a great privilege to host so many great exchanges of ideas. Education and community are integral to our mission. After all, we were a blog before we were a tech company. Traffic continues to climb and social keeps us busy. We love to hear from you!

We added a bunch of folks to the Moz Local, Moz.com, and Customer Success teams in the last half of the year. But our headcount is still lower than last year because we asked a lot of talented people to leave when we sunsetted a bunch of projects last August. We’re leaner, and gaining momentum.

Moz is deeply committed to making tech a more inclusive industry. My vision is for Moz to be a place where people are constantly learning and doing their best work. We took a slight step back on our gender diversity gains in 2016. Ugh. We’re not doing much hiring in 2017, so it’s going to be challenging to make substantial progress. We made a slight improvement in the ratio of underrepresented minorities working at Moz, which is a positive boost.

The tech industry has earned its reputation of being unwelcoming and myopic.

Mozzers work hard to make Moz a place where anyone could thrive. Moz isn’t perfect; we’re human and we screw up sometimes. But we pick ourselves up, dust off, and try again. We continue our partnership with Ada Academy, and we’ve deepened our relationship with Year Up. One of my particular passions is partnering with programs that expose girls and young women to STEM careers, such as Ignite Worldwide, Techbridge, and BigSisters.

I’m so proud of our charitable match program. We match Mozzer donations 150% up to $3k. Over the years, we’ve given over half a million dollars to charity. In 2016, we gave over $111,028 to charities. The ‘G’ in TAGFEE stands for ‘generous,’ and this is one of the ways we show it.

One of our most beloved employee benefits is paid, PAID vacation. We give every employee up to $3,000 to spend on his or her vacation. This year, we spent over half a million dollars exploring the world and sucking the marrow out of life.

Part 7: Looking ahead

Dear reader, I don’t have to tell you that search has been critical for a long time.

This juggernaut of a channel is becoming *even more* important with the proliferation of search interfaces and devices. Mobile liberated search from the desktop by bringing it into the physical world. Now, watches, home devices, and automobiles are making search ubiquitous. In a world of ambient search, SEO becomes even more important.

SEO is more complicated and dynamic than years past because the number of human interfaces, response types, and ranking signals are increasing. We here at Moz are wild about the complexity. We sink our teeth into it. It drives our mission: Simplify SEO for everyone through software, education, and community.

We’re very excited about the feature and experience improvements coming ahead. Thank you, dear reader, for sharing your feedback, inspiring us, and cheering us on. We look forward to exploring the future of search together.