- Revenue: $179.2 million, up 10% year over year.
- Free Cash Flow: $12.8 million or 7% on a margin basis.
- Number of Core Customers: 22,948, with core customer revenue growing 11% year over year.
- Customers Spending $100,000 or More: 649 customers, growing 17% year over year.
- Dollar-Based Net Retention Rate: Overall 98%, core customers 99%, and customers spending $100,000 or more 103%.
- Gross Margin: 89%.
- Research and Development Expenses: $56.5 million or 32% of revenue.
- Sales and Marketing Expenses: $91.1 million or 51% of revenue.
- General and Administrative Expenses: $27.7 million or 15% of revenue.
- Operating Loss: $15.7 million, with an operating loss margin of 9%.
- Net Loss: $11.1 million, with a net loss per share of $0.05.
- Cash and Marketable Securities: $521.6 million.
- Remaining Performance Obligation (RPO): $394.5 million, up 18% year over year.
- Deferred Revenue: $289.2 million, up 11% year over year.
- Stock Repurchase Program: $19.7 million shares repurchased at an average price of $13.64 per share.
- Q3 Revenue Guidance: $180 million to $181 million, representing growth of 8% to 9% year over year.
- Q3 Non-GAAP Loss from Operations: $19 million to $18 million, with an operating margin of negative 10% at the midpoint of guidance.
- Q3 Net Loss per Share Guidance: $0.07, assuming 227 million shares outstanding.
- Full Fiscal Year 2025 Revenue Guidance: $719 million to $721 million, representing growth of 10% year over year.
- Full Fiscal Year 2025 Non-GAAP Loss from Operations: $58 million to $55 million, with an operating margin of negative 8% at the midpoint of guidance.
- Full Fiscal Year 2025 Net Loss per Share Guidance: $0.20 to $0.19, assuming 227 million shares outstanding.
Release Date: September 03, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Asana Inc (ASAN, Financial) reported a 10% year-over-year revenue growth, ahead of their guidance.
- The company achieved a free cash flow positive of $12.8 million, reflecting operational discipline.
- The number of customers spending over $100,000 grew 17% year over year.
- Asana Inc (ASAN) is seeing strong early momentum in their AI Studio beta program, attracting industry leaders across various sectors.
- The company is expanding its enterprise offerings and pursuing FedRAMP certification, unlocking new market opportunities in government agencies and regulated industries.
Negative Points
- Macro headwinds persist, impacting overall growth.
- The technology vertical remains a drag on overall revenue growth.
- Ongoing budget scrutiny and longer sales cycles continue to impact business, leading to deal delays.
- The company is experiencing elongated decision-making cycles for larger deals, causing some deals to push out of the quarter.
- Despite positive indicators, the overall dollar-based net retention rate was 98%, indicating some challenges in retaining revenue from existing customers.
Q & A Highlights
Q: Can you offer what gives you confidence in the acceleration implied in 4Q based on what you're seeing at the start of 3Q?
A: Tim Wan, CFO: We are past the larger renewals that were likely downgrades, which will be a tailwind for reaccelerating the business. Some deals that we hoped to close in Q2 have moved into Q3 but remain in the pipeline. We are encouraged by the pipeline and the bottoming out of our gross renewal rate.
Q: Can you talk about when changes around Asana AI and pricing could be a bigger driver of growth down the line?
A: Dustin Moskovitz, CEO: We are introducing AI Studio, a new package that customers can purchase starting in Q4. We expect some revenue from this in Q4, but not material revenue. The hope is that it will build quickly into early next year, with early customers triggering incremental consumption revenue.
Q: Any sense for why deals were pushed, how big they were, and what gives you confidence they will close next quarter?
A: Anne Raimondi, COO: The decision-making cycle for larger deals has elongated, but sentiment remains stable. A good percentage of deals that pushed out of Q2 closed in August, and the rest remain in the pipeline. Our focus is on big deal conversion rates.
Q: Can you give more context on the CFO transition?
A: Dustin Moskovitz, CEO: This has been a long conversation with Tim Wan. He wanted to take some time off and think about his next career move. The timing is coincidental, and we are excited to work with our new CFO, Sonalee Parekh.
Q: Have you reached a point of stability with most of your tech customers, and what are you seeing from a logo churn standpoint?
A: Anne Raimondi, COO: While tech was a drag on growth, it remains important for partnerships and innovation. We saw stability in retention and renewals. Diversification outside of tech is a main focus, with non-tech sectors showing mid-teens growth.
Q: Can you talk more about how the competitive landscape has evolved over the last 12 months?
A: Dustin Moskovitz, CEO: We haven't seen much change in the competitive landscape. Customers are hesitating to make decisions, which is likely what our competitors are seeing as well.
Q: Can you give more color on how to think about billings trends over the next few quarters?
A: Anne Raimondi, COO: We are seeing continued improvement in revenue operations and execution. Investments in enablement, streamlining processes, and focusing on larger deals are giving us confidence. EMEA and Japan led revenue growth this quarter.
Q: What do you think is causing the stall out across the software industry?
A: Dustin Moskovitz, CEO: The unwinding of over-hiring and overspending during the pandemic, budget control, and massive uncertainty in the economic environment and AI's impact are contributing factors. Enterprises are being judicious about new vendor relationships and consolidating vendors.
Q: How do you see the world of AI agents playing out, and how will Asana's AI agents be differentiated?
A: Dustin Moskovitz, CEO: AI agents will focus on specific jobs to be done rather than being drop-in replacements for humans. Asana agents will have predefined workflows and instructions, making them more productive and less likely to go off the rails.
Q: What is the number one metric investors should focus on for Asana?
A: Tim Wan, CFO: Seats are the North Star metric. The more seats we deploy, the more value we deliver across an organization. This will help us differentiate the product and demonstrate more value, leading to pricing power over time.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
