Asana Investor Overview ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ___________________________________________________________________ FORM 10-Q ___________________________________________________________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended July 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM TO Commission File Numb ...

Asana Investor Overview ...

Asana, Inc. (NYSE:ASAN) Q1 2024 Earnings Conference Call June 1, 2023 4:30 PM ET Company Participants Catherine Buan - IR Dustin Moskovitz - Co-Founder & CEO Anne Raimondi - Chief Operating Officer & Head, Business Tim Wan - CFO Conference Call Participants Andrew DeGasperi - Berenberg George Iwanyc - Oppenheimer Steve Enders - Citigroup Jackson Ader - SVB MoffettNathanson Ethan Bruck - Wolfe Research Jason Celino - KeyBanc Capital Markets Josh Baer - Morgan Stanley Robert Simmons - D.A. Davidson Patrick Wa ...

Customer Metrics - As of April 30, 2023, Asana had 19,864 customers spending over $5,000, contributing approximately 73% of revenues, up from 70% with 16,689 customers in the same period of 2022[128]. - The dollar-based net retention rate for Asana was over 110% as of April 30, 2023, compared to over 120% in the same period of 2022[132]. Financial Performance - Revenues for the three months ended April 30, 2023, were $152,411,000, an increase from $120,646,000 for the same period in 2022, representing a year-over-year growth of approximately 26.4%[149]. - Gross profit for the three months ended April 30, 2023, was $137,564,000, compared to $108,208,000 for the same period in 2022, indicating a significant increase[149]. - The net loss for the three months ended April 30, 2023, was $61,468,000, compared to a net loss of $98,868,000 for the same period in 2022[149]. - Non-GAAP net loss for the three months ended April 30, 2023, was $18.5 million, compared to a non-GAAP net loss of $57.4 million for the same period in 2022[172]. - Free cash flow for the three months ended April 30, 2023, was $(16.6) million, compared to $(42.2) million for the same period in 2022[173]. Operating Expenses - Total operating expenses for the three months ended April 30, 2023, were $202,809,000, slightly down from $204,440,000 in the same period of 2022[149]. - Research and development expenses increased to $76,316,000 for the three months ended April 30, 2023, from $65,205,000 in the same period of 2022[149]. - Sales and marketing expenses decreased by $2.9 million, or 3%, to $93.2 million for the three months ended April 30, 2023, mainly due to reduced fees to marketing vendors[159]. - General and administrative expenses decreased by $9.9 million, or 23%, to $33.3 million for the three months ended April 30, 2023, primarily due to a reduction in other operating expenses[160]. Cash and Liquidity - As of April 30, 2023, the company had cash, cash equivalents, and marketable securities totaling $523.5 million[175]. - The company had cash and cash equivalents of $382.2 million and marketable securities of $141.3 million as of April 30, 2023[198]. - The company reported a net cash used in operating activities of $14.6 million for the three months ended April 30, 2023, reflecting a net loss of $61.5 million[186]. - Net cash used in investing activities was $140.4 million for the three months ended April 30, 2023, primarily due to $139.3 million in purchases of marketable securities[188]. - The company reported net cash provided by financing activities of $9.7 million for the three months ended April 30, 2023, mainly from employee stock purchase plans and stock options[191]. Future Outlook - The company expects to continue investing in research and development to enhance its software architecture and add new features[141]. - Current macroeconomic conditions, including elevated inflation and interest rate hikes, are expected to impact global IT spending and customer buying patterns[133]. - The company may seek to raise additional funds through equity or debt in the future to support its operations and growth strategies[182]. - The company plans to continue making additional borrowings under the November 2022 Senior Secured Credit Facility, which is now held by First Citizens BancShares, Inc.[178]. Deferred Revenue - As of April 30, 2023, the company had $263.9 million in deferred revenue, with $257.7 million recorded as a current liability, indicating strong future revenue recognition potential[179]. - For the same period, the company generated a $30.4 million increase in deferred revenue due to increased billings for subscriptions[186]. Currency Exposure - As of April 30, 2023, 22% of the company's sales were denominated in currencies other than U.S. dollars, exposing it to foreign currency exchange rate fluctuations[201]. Workforce Reduction - Asana announced a reduction of its global workforce by approximately 9% on November 15, 2022, to improve operational efficiencies[134].

Financial Performance and Losses - The company experienced net losses of $407.8 million and $288.3 million for the fiscal years ended January 31, 2023 and January 31, 2022, respectively, with an accumulated deficit of $1,237.6 million as of January 31, 2023[125] - Operating expenses increased to $898.5 million in the fiscal year ended January 31, 2023, compared to $604.7 million in the previous fiscal year[129] - The company expects its revenue growth rate to decline in future periods and anticipates increased operating expenses, which may impact profitability if revenue growth does not offset these expenses[123] - The company's focus on long-term growth and customer success may negatively impact near- and medium-term profitability, with continued investments in sales, marketing, and platform development[129] Revenue Growth and Customer Acquisition - The company's revenue growth depends on factors such as attracting new customers, maintaining dollar-based net retention rates, expanding platform usage, and achieving widespread acceptance in markets outside the United States[122] - The company's ability to convert free and trial users into paying customers and expand usage within organizations is critical for revenue growth and achieving profitability[140] - New customers primarily originate from word-of-mouth and non-paid referrals from existing customers, emphasizing the need to maintain customer loyalty[142] - Subscription-based business model faces risks from non-renewals, downgrades, or failure to convert free/trial users to paid plans, potentially impacting revenue growth[143] - Only a small percentage of free and trial users convert to paid subscription plans, posing a challenge to the company's marketing strategy[144] - Expansion of platform usage within customer base depends on successful direct sales efforts, particularly targeting larger teams and organizations[155] Market and Competitive Risks - The company faces risks related to rapid technological innovation, intense competition, and changing customer needs in its industry, which could impact future growth[124] - Highly competitive industry with low barriers to entry, increasing the risk of price reductions, fewer customers, and reduced revenues[148] - Work management solutions market is in an early stage, and slow adoption or decline in demand could adversely affect the business[147] - Substantially all revenues are derived from a single solution, making market demand and acceptance critical for continued success[146] Operational and Cybersecurity Risks - Cybersecurity threats, including ransomware attacks, could lead to operational disruptions, reputational harm, and financial losses[157] - Remote work increases risks to information technology systems and data, as more employees work outside company premises[163] - Any security breach or compromise could lead to significant legal and financial exposure, adverse publicity, and loss of confidence, potentially harming the company's business and financial condition[164][165] - Security incidents may result in government enforcement actions, litigation, reputational harm, and financial loss, potentially causing customers to stop using the company's services[165] - The company relies on AWS for cloud infrastructure, and any disruption or limitation in access to AWS could seriously harm its operations and business[169][170] - System slowdowns or interruptions due to increased customer base or platform usage could lead to customer loss and require costly infrastructure upgrades[168] - The company's platform must integrate with third-party applications and hardware, and any loss of interoperability could harm its competitive position and financial condition[174][175] - Real or perceived errors, failures, or bugs in the platform could result in negative publicity, loss of data, and regulatory fines, harming the company's business[172] Human Resources and Talent Management - The loss of key personnel, particularly the CEO and co-founder Dustin Moskovitz, could disrupt operations and adversely affect the company's growth[177][178] - The company faces intense competition for highly qualified personnel, and failure to attract or retain talent could hinder innovation and growth[179][180] Brand and Customer Support - Maintaining and enhancing the company's brand is critical for expanding its customer base, and failure to do so could harm its business and financial condition[183] - High-quality customer support is essential for converting free and trial users into paying customers, and any failure in this area could harm the company's reputation and sales[184][185] International Operations and Risks - 40% of the company's revenues for the fiscal year ended January 31, 2023 were generated from customers outside the United States[190] - The company faces risks in international operations, including localization costs, data privacy laws, and regulatory challenges[190] - The company's international operations are impacted by global economic and political conditions, including the Russia-Ukraine conflict[193] Legal and Regulatory Risks - The company is subject to stringent privacy and data protection laws, with non-compliance potentially resulting in regulatory actions, fines, and reputational damage[216][217][218] - GDPR and other foreign privacy laws impose strict requirements, with fines up to €20 million or 4% of global revenues for non-compliance[220] - Cross-border data transfer restrictions, such as those under GDPR, could increase costs and complexity, potentially limiting business operations[221] - The company faces evolving privacy regulations globally, including in Brazil, Japan, and India, which could increase compliance costs and complexity[223] - Domestic privacy laws like CCPA and CPRA impose new obligations, with penalties up to $7,500 per violation, and similar laws are being proposed in other states[224][225] - The company is subject to anti-corruption laws like the FCPA and UK Bribery Act, with non-compliance risking investigations, fines, and reputational harm[228] - The company may face intellectual property claims, which could result in costly litigation and require changes to its platform[200][201][203] - The company relies on trademarks and brand names to differentiate its products, but third-party challenges could force rebranding efforts[210] - The company is subject to potential litigation, which could be costly and divert management attention[211] Financial and Tax Risks - The company may face increased tax liabilities due to changes in tax laws, potentially impacting sales and cash flows[235][236] - The company has experienced ownership changes, limiting the utilization of net operating loss carryforwards (NOLs) under Sections 382 and 383 of the Internal Revenue Code[239] - The company entered into a $150 million credit agreement, including a $50 million term loan and a $100 million revolving loan facility, with potential liquidity risks due to the closure of Silicon Valley Bank[241][243] - The credit agreement includes financial covenants requiring a consolidated adjusted quick ratio of 1.25 to 1.00 and minimum cash adjusted EBITDA, tested quarterly[244] - The company may face challenges in maintaining effective internal control over financial reporting, which could impact financial statements and investor confidence[245][246][248] - Fluctuations in foreign currency exchange rates could adversely affect the company's revenues and results of operations[250] - The company's financial results may be impacted by changes in accounting principles or incorrect estimates related to critical accounting policies[245][251] Stock and Corporate Governance - The trading price of the company's Class A common stock may be volatile and subject to significant fluctuations[254] - The company's stock price has experienced significant volatility despite year-over-year revenue growth, influenced by general downturns and instability in equity markets[257] - The dual-class stock structure concentrates voting control with founders and executives, limiting influence from other stockholders on corporate matters[261] - Class B common stock holds 10 votes per share, while Class A common stock holds 1 vote per share, with founders and executives controlling a majority of voting power[261] - Future transfers of Class B common stock will generally convert to Class A common stock, potentially increasing voting power for long-term holders[262] - The dual-class structure may exclude the company from certain stock indices, potentially reducing investment from passive funds and affecting stock price[265] - Sales of substantial amounts of Class A common stock, particularly by founders and executives, could cause the stock price to decline[266] - The company may issue additional capital stock or convertible securities, potentially diluting existing stockholders and impacting stock price[267] - The company does not intend to pay dividends in the foreseeable future, retaining earnings for business growth[273] - Compliance with public company regulations may strain resources, increase costs, and divert management attention from business operations[272] - The company's largest stockholder, Dustin Moskovitz, holds significant voting power, influencing director elections and major corporate decisions[259] - Additional stock issuances could result in significant dilution to stockholders, with $450.0 million convertible notes issued in 2020 and 19,273,127 shares of Class A common stock sold in 2022 for $350 million[275] - The company's corporate charter and Delaware law provisions may hinder attempts by stockholders to change management or acquire a controlling interest, potentially lowering the trading price of Class A common stock[276] - Delaware law prohibits a person owning 15% or more of voting stock from merging or combining with the company for three years without prescribed approval, limiting opportunities for stockholders to receive a premium[277] Cash and Foreign Currency Risks - The company's cash and cash equivalents increased from $240.4 million in January 2022 to $526.6 million in January 2023, with marketable securities decreasing from $74.4 million to $2.7 million[387] - 21% of the company's sales in the year ended January 31, 2023, were denominated in currencies other than U.S. dollars, with expenses primarily in U.S. dollars, exposing the company to foreign currency risk[389] - The company has not entered into derivative or hedging transactions for foreign currency risk, as the impact is not projected to be material, but may do so in the future if exposure increases[390] Mergers, Acquisitions, and Fraud Risks - The company may engage in mergers and acquisitions, which could disrupt operations, dilute stockholder value, and increase expenses[197][198][199] - The company is exposed to risks of fraudulent activity, which could lead to substantial costs and loss of the ability to accept credit card payments[194][195] Open Source and Third-Party Software Risks - The company uses open source and third-party software, which could lead to litigation or restrictions on commercializing solutions, potentially requiring the release of proprietary code[212][213] - Non-compliance with open source licenses could result in significant legal expenses, re-engineering costs, and potential damages, including being enjoined from selling the platform[213] - Open source software poses greater risks than commercial software due to lack of warranties, controls, and increased security vulnerabilities[214] - Loss of third-party software licenses could disrupt platform functionality, leading to business harm and financial losses[215] Catastrophic Events and Business Continuity - Catastrophic events, such as natural disasters or health crises, could disrupt operations and harm the company's business and financial condition[253]

Asana Investor Overview Q4 FY23 Forward-Looking Statements This presentation and the accompanying oral presentation include express and implied "forward-looking statements" 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, estimates, forecasts ...

Asana, Inc. (NYSE:ASAN) Q4 2023 Earnings Conference Call March 8, 2023 4:30 PM ET Company Participants Catherine Buan - Investor Relations Dustin Moskovitz - Co-Founder & Chief Executive Officer Anne Raimondi - Chief Operating Officer & Head, Business Tim Wan - Chief Financial Officer Conference Call Participants Jackson Ader - SVB MoffettNathanson Alex Zukin - Wolfe Research Andrew DeGasperi - Berenberg Rob Oliver - Robert W. Baird Brent Bracelin - Piper Sandler George Iwanyc - Oppenheimer Robert Simmon ...

Financial Data and Key Metrics - Q3 revenue grew 41% YoY to $141.4 million, with an annualized quarterly revenue run rate of $566 million [25] - US revenue grew 47% YoY, accounting for 61% of total revenue, while international revenue grew 33% YoY, accounting for 39% [25] - Gross margin was 89.6%, down from 90.7% in the year-ago quarter [27] - Operating loss was $52.6 million, with an operating loss margin of 37% [28] - Net loss was $52.4 million, with a net loss per share of $0.26 [28] - Free cash flow was negative $48.5 million, or negative 34% on a margin basis [29] Business Line Data and Key Metrics - 493 customers spending $100,000 or more in annualized GAAP revenue, up 78% YoY [8] - Dollar-based net retention rate was over 120%, with over 140% for customers spending $100,000 or more [26] - Largest deployment reached over 150,000 paying seats, further widening the lead in enterprise deployments [8] - HIPAA-compliant offering opened new doors in healthcare and insurance sectors, with multiple deals closed [14] Market Data and Key Metrics - US market grew 47% YoY, while international growth was 33% YoY, impacted by currency fluctuations [25] - Strong traction in enterprise organizations and larger deployments, despite softer SMB and very small business markets [18] - Multi-year deals increased sequentially and on an annualized basis, with more customers making longer-term commitments [19] Company Strategy and Industry Competition - Focus on building out Asana's Work Graph as a critical navigation system for companies [15] - Strategic differentiation recognized by Forrester Wave in two areas: Work Graph data model and goal management structure [13] - Continued investment in product innovation and enterprise success, with a focus on driving growth and enhancing global go-to-market execution [17] Management Commentary on Operating Environment and Future Outlook - Macroeconomic environment has been challenging, with budget tightening and longer deal cycles impacting US business [9][18] - Expectation that macroeconomic factors will persist through Q4 and into the next fiscal year [9] - Commitment to achieving free cash flow positive by the end of calendar 2024 [17] Other Important Information - Restructuring resulted in a 9% reduction in global headcount, with expected annualized savings of roughly $40 million [28] - Remaining performance obligations (RPO) were $271.6 million, up 43% YoY, with 86% to be recognized over the next twelve months [29] Q&A Session Summary Question: Impact of macroeconomic weakness on work management prioritization - Increased scrutiny on spending, with executives seeking higher and faster ROI, leading to a pause in decision-making rather than de-prioritization [36][37] Question: Timeline to breakeven from restructuring - No change in timeline, with savings from restructuring estimated at $40 million annually, and commitment to achieving free cash flow positive by end of calendar 2024 [39] Question: Headcount reduction details and impact on growth - Reduction focused on sales and marketing, with adjustments made to align with enterprise growth and efficiency [42][43] - Reacceleration of hiring dependent on macroeconomic signals and customer demand [45][46] Question: Trends in expansion and free-to-paid conversions - Expansion trends slowed, particularly in mid-market and smaller accounts, with customers pausing growth or hiring more slowly [49][50] - Expansion deals easier to close in enterprise segments, with some customers repurposing licenses for internal expansion [52][53] Question: Incentives for multi-year deals in challenging budgetary environment - Multi-year deals often involve negotiated pricing and different payment terms, with an increase in such deals observed in Q3 [73] Question: Industry vertical breakout and impact of tech sector slowdown - Tech sector represents a plurality but not majority of revenue, with strong traction in media, automotive, financial services, healthcare, and other industries [76][77] - Pause in tech sector expansion, but other industries continue to embrace digital transformation [78] Question: Path to free cash flow breakeven and macroeconomic dependency - Company feels comfortable achieving free cash flow positive by end of calendar 2024 under current macroeconomic conditions, but acknowledges potential for surprises [94] Question: Long-term strategy and competitive positioning - Focus on becoming the leading pure-play work management platform for enterprises, with strong signs of success in large customer segments [98][99] - Primary risk is macroeconomic surprises, with a focus on further widening product differentiation and market clarity [100][101] Question: Strategy change when competing against larger incumbents - Focus on understanding customer business problems and delivering ROI, with adoption and KPIs as key metrics for investment decisions [105][106] Question: Marketing budget leverage in enterprise push - Moving upmarket provides leverage across all functions, including marketing, with continued importance of marketing in reaching enterprises and building awareness in less mature markets [108]