Summary of Asana's Conference Call Company Overview - **Company**: Asana - **Industry**: Software, specifically in the Collaborative Work Management (CWM) space - **Key Personnel**: Sonali Parikh (CFO), Aziz Meghji (FP&A) Core Points and Arguments 1. **Product Leadership and Growth Opportunity**: Asana is positioned as a leader in the CWM category with significant growth potential, particularly in enterprise markets, driven by innovation and a strong product offering [5][6][7] 2. **AI Studio Launch**: The recent launch of AI Studio is expected to differentiate Asana from competitors, enhancing its product capabilities through context-aware AI [6][15][21] 3. **Competitive Landscape**: Asana competes in a fragmented market but differentiates itself through its work graph, which integrates AI capabilities, allowing for cross-functional collaboration [15][19][20] 4. **Large Contract Win**: Asana secured a landmark $100 million Total Contract Value (TCV) deal, marking a significant achievement in scalability and enterprise adoption [30][34] 5. **Upsell Opportunities**: The large contract does not include AI Studio or service plans, indicating potential for future upselling and expansion within the client [33][36] 6. **Enterprise Go-to-Market Strategy**: Approximately 60% of Asana's business comes from corporate and enterprise clients, with plans to enhance channel partnerships to drive growth [41][42] 7. **Operating Efficiency**: Asana has improved its operating margin from -9% to over 4%, with a focus on maintaining high gross margins (90%) while driving growth [55][56] 8. **AI Strategy Importance**: The AI roadmap is a critical differentiator in enterprise negotiations, with a focus on making AI adoption frictionless for customers [24][25] 9. **Future Outlook**: Asana aims to establish itself as a leader in AI collaboration tools and improve net retention rates through focused initiatives [69][72] Additional Important Insights 1. **Cultural Impact of Leadership Changes**: Dustin Moskovitz is transitioning to a more strategic role focused on AI, which is expected to enhance Asana's vision and operational effectiveness [63][64] 2. **Channel Growth Potential**: There is a significant opportunity to increase revenue from channel partnerships, which currently represent a small percentage of overall ARR [42][44] 3. **Focus on Retention**: Asana is prioritizing improvements in net retention rates, particularly in its monthly business segment, which has historically contributed to churn [72][73] 4. **Investment in Lower-Cost Geographies**: The company is shifting hiring strategies to include lower-cost regions, which is expected to positively impact overall cost structure [61][62] This summary encapsulates the key points discussed during the conference call, highlighting Asana's strategic direction, competitive advantages, and future growth opportunities.

Core Insights - Asana achieved its first non-GAAP operating profit in Q1 FY2026, with revenue of $187.3 million, marking a 9% year-over-year increase and a significant improvement in non-GAAP operating margin by over 1,300 basis points [1][2][3] Financial Performance - The gross margin remained strong at approximately 90%, while adjusted free cash flow margin improved by over 700 basis points to 5%, reflecting effective cost control measures [2] - The company reported a positive operating income of $8.1 million, representing a 4% margin, which is 300 basis points above the midpoint of guidance [3] Strategic Developments - AI Studio surpassed $1 million in annual recurring revenue (ARR), with evidence of its ARR growth outpacing traditional seat-based ARR in select accounts [4][5] - The introduction of the Smart Workflow Gallery and AI Studio Plus tier aims to enhance adoption among SMBs and enterprises, reducing reliance on per-seat pricing [4] Contractual Achievements - Asana secured a record-breaking three-year contract renewal valued at over $100 million, increasing remaining performance obligations to approximately $521 million, a 37% year-over-year increase [6] - Despite the significant total contract value, there was a modest downgrade in annual contract value (ACV), which is expected to impact net revenue retention in Q2 FY2026 [6][7] Future Outlook - Guidance for Q2 FY2026 anticipates revenue between $192 million and $194 million, reflecting 7%-8% year-over-year growth, with a non-GAAP operating margin of 4%-5% [9] - Full-year revenue guidance for FY2026 has been revised to $775 million to $790 million, indicating 7%-9% growth year-over-year, with an increased target for non-GAAP operating margin of at least 5.5% [9]

Summary of Asana Conference Call Company Overview - **Company**: Asana - **Event**: Bank of America Conference - **Key Participants**: Mike Funk (Bank of America), Matt Bullock (Software Analyst), Sonali (CFO), Aziz (AI Studio Lead) Key Points and Arguments Financial Guidance and Currency Impact - Asana guided for a revenue growth of **7% to 9%** for the year, with an **8% midpoint** [7][9] - Previous guidance in March was **8% to 9%**, with currency fluctuations impacting the ARR base by approximately **$5.5 million** [12][19] - The company experienced a **50 basis point tailwind** from foreign exchange (FX) for the full year, although it only contributed about **20 basis points** to Q1 growth [14][15] - The guidance incorporates a **worsening macroeconomic environment**, with elongated sales cycles and increased buyer scrutiny noted [21][23] Major Contracts and Customer Relationships - Asana secured a **$100 million Total Contract Value (TCV)** deal over three years, marking the largest deal in the company's history [30] - The deal involved an expansion of seats but included some discounting due to the long-term nature of the contract [32] - The renewal process was strategic, trading off some pricing for long-term visibility and stability [33] Net Retention Rate (NRR) Challenges - NRR is currently a priority for Asana, with the company acknowledging it is not at desired levels [39] - The recent contract downgrade will pressure NRR, expected to decrease by at least **one percentage point** [40] - Strategies are in place to improve NRR, including better coverage of the small business base and the introduction of AI Studio [41][42] AI Studio Developments - AI Studio crossed the **$1 million ARR** threshold shortly after its launch, indicating strong demand and adoption [46] - The platform is seeing significant uptake among larger customers, with **40% of the top 100 customers** enabled on AI Studio [48] - Future enhancements include the introduction of a **Smart Workflow Gallery** and **AI Teammates**, aimed at increasing adoption among non-builders [50][51] Margin Improvement and Cost Management - Asana reported a **1,300 basis point year-over-year improvement** in operating profit, with expectations for continued margin expansion [61] - The company has made strategic cuts, including a **5% reduction in workforce**, to optimize costs [62] - Gross margins are strong at **90%**, providing significant operating leverage for future growth [63] Small and Medium Business (SMB) Growth - The SMB segment is growing above the corporate average, driven by optimized marketing spend and improved onboarding processes [74][78] - Efforts are being made to reduce churn in the SMB base, which is critical for improving overall net retention [78] Additional Important Insights - The macroeconomic environment is described as more uncertain than in previous quarters, necessitating a cautious approach to guidance [24][25] - Asana's management emphasizes the importance of balancing growth with efficiency, aiming for sustainable long-term value creation [72][73] - The company is focused on leveraging AI capabilities to enhance customer engagement and drive future growth [72][73]

Core Insights - Asana Inc's shares dropped 17.71% despite a recent earnings beat, indicating market concerns despite positive financial results [1] Financial Performance - Asana reported total revenue of $187 million, reflecting an 8.6% growth year-on-year and a 1.0% beat to the midpoint of its guidance [2] - The operating margin was 4.3%, significantly higher than the guidance midpoint of 1.3%, with management projecting a midpoint of 4.7% for the next quarter and raising the full-year operating margin guidance to 5.5% from 5.0% [3] - Non-GAAP earnings were 5 cents per share, surpassing the consensus estimate of 2 cents per share [4] Customer Metrics - The number of customers with $100,000+ annual recurring revenue (ARR) reached 728, a 20% increase year-on-year [2] - Net Revenue Retention (NRR) declined by 1 point quarter-on-quarter across core customers and $100K+ customers, attributed to macro pressures [5] Deal Activity - Asana secured its largest deal in history worth $100 million, extending the contract term from one year to three years, although this resulted in a lower average annual contract value [7] - Billings were reported at $175 million, falling short of the consensus estimate of $213 million, while remaining performance obligations (RPO) growth of 11% missed expectations of 13% [6] Guidance and Market Sentiment - Management adjusted the revenue guidance range for the full year to $775-$790 million, citing macroeconomic risks [6] - Analysts have varied ratings on Asana, with Piper Sandler maintaining an Overweight rating and raising the price target from $17 to $19, while RBC Capital Markets reiterated an Underperform rating with a price target of $10 [9]

Core Insights - Asana Inc's stock (NYSE:ASAN) dropped 17.3% to $15.71 despite better-than-expected first-quarter results, primarily due to slowing revenue growth and a warning about potential retention rate declines in the second quarter [1] Group 1: Stock Performance - Following the recent earnings report, ASAN's stock experienced price-target adjustments, with five analysts rating it as "buy" or better, ten as "hold," and three as "sell" [2] - The 12-month consensus price target for ASAN is $16.69, representing a 5.8% premium to its current price [2] - Prior to the recent decline, ASAN's stock had been recovering from a bear gap of 24.2% on March 11, which had brought shares down to $11.58 [3] - Year-to-date, ASAN's equity is down 16.4% [3] Group 2: Options Activity - ASAN has seen 13 times its typical overall options volume, with calls and puts trading at an even pace [5] - The most popular options include the weekly 6/6 15-strike put and the 6/6 16-strike call, with new positions opening at the latter [5]

Group 1 - The article discusses Asana (NYSE: ASAN) and previously assigned a hold rating, suggesting that investment would be safer when the business shows positive growth inflection [1] - The author notes pockets of strength in Asana's performance during 1Q26, indicating potential for future growth [1] Group 2 - The author emphasizes a diverse investing background, incorporating fundamental, technical, and momentum investing strategies to refine the investment process [1] - The purpose of writing on Seeking Alpha is to track investment ideas and connect with like-minded investors [1]

Financial Data and Key Metrics Changes - In Q1, total revenues reached $187.3 million, representing a 9% year-over-year increase, exceeding the midpoint of guidance by 1% [37] - Non-GAAP operating margins improved by over 1,300 basis points year-over-year, achieving a 4% operating income margin for the first time [5][43] - Adjusted free cash flow margin improved by over 700 basis points year-over-year, reaching 5% for the quarter [5][45] - The company reported a net income of $12 million, or $0.05 per share [43] Business Line Data and Key Metrics Changes - The number of core customers (spending $5,000 or more annually) grew to 24,297, with revenues from core customers increasing by 10% year-over-year [37] - Customers spending $100,000 or more annually grew by 20% year-over-year, totaling 728 customers [38] - Non-tech verticals grew in the mid-teens year-over-year, with notable growth in manufacturing, energy, media, and financial services [5][27] Market Data and Key Metrics Changes - International revenue grew by 11% year-over-year, with strong demand particularly in EMEA and Japan [25][26] - The company has not observed a material change in demand across segments or regions compared to previous quarters, although there are signs of increased buyer scrutiny [26][48] Company Strategy and Development Direction - The company aims to position itself as the leader in human and AI coordination, with a focus on AI Studio as a key growth driver [20][23] - Strategic initiatives include launching the Smart Workflow Gallery and AI Studio Plus to enhance customer engagement and adoption [15][17] - The company is committed to long-term profitable growth, focusing on customer health, acquisition, and value through product innovation, especially in AI [23][49] Management's Comments on Operating Environment and Future Outlook - Management noted early signs of budget pressures and tool consolidation among enterprise customers, particularly in the Americas region [82] - The company expects net retention rates to be pressured in Q2 due to downgrades, particularly in the enterprise and tech verticals [39][48] - Despite short-term challenges, management remains confident in long-term improvements in net retention due to investments in customer success and AI Studio [41][84] Other Important Information - The company repurchased $15.6 million of its Class A common stock during the quarter, with an increased share repurchase authorization of $100 million [46] - The company updated its full-year revenue guidance to $775 million to $790 million, reflecting a 7% to 9% year-over-year growth [47][49] Q&A Session Summary Question: Can you provide details on the $1,000,000 ARR for AI Studio? - The $1,000,000 ARR consists of diverse customers across regions and industries, primarily from the AI Studio Pro platform fees, with potential for increased consumption in the future [54][55] Question: What impact does the $100,000,000 contract renewal have? - The renewal represents the largest deal in Asana's history, with a modest downgrade in annual contract value (ACV) impacting net retention, particularly in the tech vertical [60][61] Question: How is the company addressing competition in AI? - The company differentiates itself by integrating AI into workflows, allowing for seamless human-AI collaboration, which enhances customer success across various use cases [71][72] Question: What are the expectations for revenue from tech customers? - The tech vertical remains stable, with non-tech growing in the mid-teens, despite the impact of the recent large renewal [78][79] Question: How is the company navigating macroeconomic pressures? - The company is actively working to mitigate churn and contraction through enhanced customer success management and flexible pricing strategies [83][84]

Financial Data and Key Metrics Changes - In Q1 2026, total revenues reached $187.3 million, representing a 9% year-over-year increase, exceeding the guidance midpoint by 1% [37] - Non-GAAP operating margins improved significantly, achieving a positive operating income margin of 4%, a 1,300 basis point improvement year-over-year [4][42] - Adjusted free cash flow margin was 5%, reflecting an improvement of over 700 basis points year-over-year [4][44] Business Line Data and Key Metrics Changes - Non-tech verticals grew in the mid-teens year-over-year, outpacing overall growth, with notable growth in manufacturing, energy, media and entertainment, and financial services [4][27] - The number of customers spending $100,000 or more annually grew by 20% year-over-year, indicating strong enterprise customer acquisition [5][38] Market Data and Key Metrics Changes - International revenue grew by 11% year-over-year, with strong demand particularly in EMEA and Japan [25][26] - The overall dollar-based net retention rate was 95%, with core customer NRR at 96% [38] Company Strategy and Development Direction - The company is focusing on AI Studio as a key growth driver, with plans to enhance customer adoption through initiatives like the Smart Workflow Gallery and AI Studio Plus [14][17] - A strategic emphasis is placed on customer health, acquisition, and value delivery through product innovation, particularly in AI [22][27] Management's Comments on Operating Environment and Future Outlook - Management noted early signs of increased buyer scrutiny and elongated decision-making processes, particularly in enterprise and tech segments [26][47] - The company remains confident in long-term NRR improvement due to investments in customer success and AI Studio [40][48] Other Important Information - The company achieved non-GAAP profitability for the first time, marking a significant milestone [3][4] - A landmark $100 million contract renewal was secured, providing greater visibility into future revenues despite a modest downgrade in annual contract value [5][60] Q&A Session Summary Question: Breakdown of AI Studio's $1,000,000 ARR - The $1,000,000 ARR consists of diverse customers across regions and industries, primarily from the AI Studio Pro platform fees, with potential for increased consumption in the future [52][54] Question: Details on the $100,000,000 contract renewal - The renewal was in the tech vertical, representing the largest deal in Asana's history, with a modest downgrade in annual contract value but significant long-term visibility [57][60] Question: ROI perspective on AI Studio - The company is seeing instances where AI Studio ARR exceeds seat-based ARR, indicating strong value delivery, and is optimistic about achieving larger accounts by year-end [66][73] Question: Impact of macroeconomic pressures - Early signs of customer budget pressures and tool consolidation were noted, particularly in enterprise and mid-market segments, but the company is implementing strategies to mitigate churn [81][84] Question: Revenue guidance adjustments - The lower end of the revenue guidance reflects prudent assumptions about potential macroeconomic pressures and their impact on net retention [88]

Customer Metrics - As of April 30, 2025, the company had 24,297 Core customers, contributing approximately 75% of revenues, up from 22,162 Core customers contributing 74% of revenues as of April 30, 2024[141]. - The dollar-based net retention rate for Core customers was 96% as of April 30, 2025, down from 102% in the prior year, indicating a decline in revenue retention from existing customers[145]. Revenue and Growth - The company reported revenues of $187.3 million for the three months ended April 30, 2025, representing a $14.8 million increase or 9% growth compared to $172.4 million for the same period in 2024[167]. - The company entered into its largest subscription agreement in history in May 2025, valued at $100 million over a three-year term, billed annually[142]. Profitability and Expenses - Gross profit for the three months ended April 30, 2025, was $168.0 million, with a gross margin of 90%, consistent with the prior year[163]. - Operating expenses totaled $211.9 million for the three months ended April 30, 2025, a decrease from $220.8 million in the same period in 2024[163]. - The net loss for the three months ended April 30, 2025, was $40.0 million, compared to a net loss of $63.7 million for the same period in 2024[163]. - Research and development expenses were $75.1 million for the three months ended April 30, 2025, down from $82.8 million in the prior year, reflecting a focus on efficiency[163]. - Sales and marketing expenses were $99.8 million for the three months ended April 30, 2025, compared to $104.3 million in the same period in 2024, indicating a strategic investment approach[163]. - General and administrative expenses increased by $3.3 million, or 10%, driven by a $1.8 million increase in personnel-related costs[174]. Cash Flow and Financial Position - Free cash flow was $3,995 thousand for the three months ended April 30, 2025, compared to a negative $4,275 thousand in the same period of 2024[186]. - As of April 30, 2025, the company had cash, cash equivalents, and marketable securities totaling $470.8 million[188]. - As of April 30, 2025, the company had $290.3 million in deferred revenue, with $289.0 million recorded as a current liability[194]. - Net cash provided by operating activities for the three months ended April 30, 2025, was $6.8 million, reflecting a net loss of $40.0 million adjusted by non-cash items[199]. - The company reported a decrease in deferred revenue of $12.5 million due to decreased billings for subscriptions during the three months ended April 30, 2025[199]. - Net cash provided by investing activities for the three months ended April 30, 2025, was $4.2 million, primarily from $41.0 million in maturities of marketable securities[201]. - Net cash used in financing activities for the three months ended April 30, 2025, was $5.5 million, mainly due to $14.5 million in repurchases of Class A common stock[203]. - The company had cash and cash equivalents of $193.8 million as of April 30, 2025[212]. Future Outlook and Strategic Plans - The company anticipates continued investment in research and development, particularly in AI integration, with expenses expected to increase in dollar amount but decrease as a percentage of revenues over time[153]. - The company may seek to raise additional funds through equity or debt in the future to support its capital requirements[195]. - The company believes its current cash and marketable securities will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months[195]. Currency and Risk Management - 27% of the company's sales for the three months ended April 30, 2025, were denominated in currencies other than U.S. dollars[216]. - The company does not currently enter into derivative or hedging transactions for foreign currency risks but may consider it if exposure increases[217].

Q1'26 ASANA'S MISSION Asana Investor Overview Forward-Looking Statements This presentation and the accompanying oral presentation include express and implied "forward-looking statementsˮ within the meaning of the Private Securities Litigation Reform Act of 1995, including but not limited to, statements regarding our financial outlook, product development, business strategy and plans, and market trends, opportunities and positioning. These forward-looking statements are based on current expectations, estimat ...