Asana(ASAN) - 2026 Q2 - Quarterly Report

FORM 10-Q Filing Information Asana, Inc. filed its Quarterly Report on Form 10-Q for the period ended July 31, 2025, as a large accelerated filer - Asana, Inc. filed its Quarterly Report on Form 10-Q for the period ended July 31, 2025, as a large accelerated filer and not an emerging growth or shell company[2][3][4] Outstanding Common Stock as of August 28, 2025 | Class | Shares Outstanding | | :-------------------- | :----------------- | | Class A Common Stock | 156,685,245 | | Class B Common Stock | 79,561,680 | Special Note Regarding Forward-Looking Statements This section cautions investors about forward-looking statements, which are subject to risks and uncertainties that may cause actual results to differ materially - The report contains forward-looking statements subject to substantial risks and uncertainties, including future financial results, AI deployment, and macroeconomic conditions, cautioning investors that actual results may differ materially[8][9][11] Additional Information This section defines company references and identifies Asana's registered trademarks - References such as 'we' and 'Asana' refer to Asana, Inc. and its consolidated subsidiaries, with 'Asana' and 'Work Graph' identified as registered trademarks[14] Select Risk Factors Affecting Our Business Investing in Asana's Class A common stock involves numerous risks, including growth rate uncertainty, limited operating history, and intense competition - Investing in Class A common stock carries risks such as unpredictable future growth rates, a limited operating history at current scale, a history of losses, and significant quarterly fluctuations, alongside challenges in customer acquisition, market acceptance, and intense competition, particularly with AI integration[15][16] - Further risks include reliance on third-party mobile app marketplaces, exposure to international operational risks, stringent and evolving AI, privacy, and data protection regulations, and potential stock price volatility due to the dual-class stock structure concentrating voting control[17][18] Part I—Financial Information This part presents Asana's unaudited financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements (Unaudited) This section presents Asana's unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, revenue recognition, fair value measurements, debt, commitments, and other financial components for the periods ended July 31, 2025 and 2024 Condensed Consolidated Balance Sheets This section provides a snapshot of Asana's financial position, detailing assets, liabilities, and stockholders' equity as of July 31, 2025, and January 31, 2025 Condensed Consolidated Balance Sheets (in thousands) | As of | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :-------------- | :--------------- | | Assets | | | | Cash and cash equivalents | $184,146 | $184,728 | | Marketable securities | $291,074 | $282,156 | | Total current assets | $598,511 | $600,741 | | Total assets | $883,157 | $891,415 | | Liabilities and Stockholders' Equity | | | | Total current liabilities | $424,082 | $415,817 | | Total liabilities | $658,601 | $663,892 | | Total stockholders' equity | $224,556 | $227,523 | - Total assets decreased by $8.258 million (0.9%) from January 31, 2025, to July 31, 2025, primarily due to slight decreases in cash and cash equivalents and net accounts receivable[21] Condensed Consolidated Statements of Operations This section outlines Asana's financial performance, presenting revenues, gross profit, operating loss, and net loss for the three and six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Operations (in thousands, except per share amounts) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $196,936 | $179,212 | $384,203 | $351,660 | | Gross profit | $176,715 | $159,225 | $344,755 | $313,869 | | Loss from operations | $(49,456) | $(76,797) | $(93,360) | $(142,966) | | Net loss | $(48,360) | $(72,189) | $(88,378) | $(135,911) | | Net loss per share (Basic and diluted) | $(0.20) | $(0.31) | $(0.38) | $(0.59) | - Revenues increased by 10% for the three months and 9% for the six months ended July 31, 2025, with net loss significantly improving from $(72.189) million to $(48.360) million for the three-month period and from $(135.911) million to $(88.378) million for the six-month period[23] Condensed Consolidated Statements of Comprehensive Loss This section details Asana's comprehensive loss, including net loss and other comprehensive income (loss), for the three and six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Comprehensive Loss (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(48,360) | $(72,189) | $(88,378) | $(135,911) | | Total other comprehensive (loss) income | $(692) | $1,694 | $5,114 | $(542) | | Comprehensive loss | $(49,052) | $(70,495) | $(83,264) | $(136,453) | - Comprehensive loss improved for both the three and six months ended July 31, 2025, primarily due to a reduction in net loss, with other comprehensive income positively shifting for the six-month period from foreign currency translation adjustments[25] Condensed Consolidated Statements Stockholders' Equity This section tracks changes in Asana's stockholders' equity, reflecting the impact of net loss, stock-based compensation, and share repurchases Changes in Stockholders' Equity (in thousands) | Metric | Three Months Ended July 31, 2025 | Six Months Ended July 31, 2025 | | :---------------------------------- | :------------------------------- | :----------------------------- | | Balances at April 30, 2025 | $236,304 | N/A | | Balances at January 31, 2025 | N/A | $227,523 | | Stock-based compensation expense | $64,280 | $113,876 | | Repurchases and retirement of common stock | $(27,792) | $(43,398) | | Net loss | $(48,360) | $(88,378) | | Balances at July 31, 2025 | $224,556 | $224,556 | - Stockholders' equity decreased from $227.523 million at January 31, 2025, to $224.556 million at July 31, 2025, influenced by net losses and common stock repurchases, partially offset by significant stock-based compensation expense[21][31] Condensed Consolidated Statements of Cash Flows This section details Asana's cash inflows and outflows from operating, investing, and financing activities for the six months ended July 31, 2025 and 2024 Condensed Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $46,599 | $13,960 | | Net cash used in investing activities | $(14,742) | $(21,305) | | Net cash used in financing activities | $(36,079) | $(9,281) | | Net decrease in cash, cash equivalents, and restricted cash | $(192) | $(16,808) | - Net cash provided by operating activities significantly increased to $46.599 million for the six months ended July 31, 2025, from $13.960 million in the prior year, largely offset by increased cash used in financing activities due to higher common stock repurchases[36] Notes to Condensed Consolidated Financial Statements This section provides detailed explanations of Asana's accounting policies, financial statement components, and other relevant disclosures Note 1. Organization This note describes Asana, Inc.'s incorporation details, headquarters, and its role as a work management platform - Asana, Inc., incorporated in Delaware on December 16, 2008, and headquartered in San Francisco, California, operates as a leading work management platform for human + AI coordination[41] Note 2. Basis of Presentation and Summary of Significant Accounting Policies This note outlines the basis of financial statement preparation, significant accounting policies, and the impact of macroeconomic conditions and new accounting standards - Financial statements are prepared under GAAP, incorporating wholly-owned subsidiaries and management estimates for key areas, while global macroeconomic events like inflation and fluctuating interest rates continue to create uncertainty and may adversely affect IT spending and platform demand[42][45][46][47] - Asana operates as a single operating segment, with the CEO reviewing consolidated financial information, and adopted ASU 2023-07 on Segment Reporting in fiscal 2025 while evaluating other ASUs for future adoption[56][57][64][65][66] Note 3. Revenues This note details Asana's revenue recognition policies, including deferred balances and remaining performance obligations from customer contracts Revenue Recognition from Deferred Balances (in thousands) | Period | Revenues Recognized from Prior Deferred Balances | | :---------------------------------- | :--------------------------------------------- | | Three Months Ended July 31, 2025 | $88,700 | | Three Months Ended July 31, 2024 | $76,700 | | Six Months Ended July 31, 2025 | $220,400 | | Six Months Ended July 31, 2024 | $194,100 | - As of July 31, 2025, remaining performance obligations from customer contracts totaled $507.3 million, with approximately 75% expected to be recognized as revenue within the next 12 months[70] Deferred Contract Acquisition Costs (in thousands) | Metric | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Beginning balance | $40,518 | $39,381 | | Capitalization of contract acquisition costs | $14,631 | $12,511 | | Amortization of deferred contract acquisition costs | $(13,769) | $(12,493) | | Ending balance | $41,380 | $39,399 | Note 4. Fair Value Measurements This note describes Asana's fair value measurements for financial assets, primarily cash equivalents and marketable securities Fair Value of Financial Assets (in thousands) as of July 31, 2025 | Asset Category | Level 1 | Level 2 | Level 3 | Total | | :-------------------- | :------ | :------ | :------ | :------ | | Cash equivalents | $88,604 | $2,481 | $— | $91,085 | | Marketable securities | $155,120 | $135,954 | $— | $291,074 | | Total assets | $243,724 | $138,435 | $— | $382,159 | - Marketable securities, primarily U.S. government, corporate, and agency bonds, are classified as available-for-sale and carried at fair value, with unrealized losses mainly due to unfavorable interest rate changes, though full carrying value recovery is expected[61][62][75] Note 5. Balance Sheet Components This note provides a detailed breakdown of specific balance sheet items, including property and equipment, and accrued expenses Property and Equipment, Net (in thousands) | As of | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :-------------- | :--------------- | | Total gross property and equipment | $166,202 | $155,276 | | Less: Accumulated depreciation and amortization | $(69,879) | $(59,440) | | Total property and equipment, net | $96,323 | $95,836 | - Depreciation and amortization expense increased to $10.1 million for the six months ended July 31, 2025, from $8.3 million in the prior year period[79] Accrued Expenses and Other Current Liabilities (in thousands) | As of | July 31, 2025 | January 31, 2025 | | :---------------------------------- | :-------------- | :--------------- | | Accrued payroll liabilities | $17,225 | $22,623 | | Accrued sales and value-added taxes | $13,304 | $13,140 | | Accrued taxes for fringe benefits | $13,255 | $13,055 | | Total accrued expenses and other current liabilities | $70,853 | $83,031 | Note 6. Debt This note outlines Asana's debt structure, including its Senior Secured Credit Facility, outstanding term loan, and compliance with financial covenants - Asana holds a November 2022 Senior Secured Credit Facility of $150.0 million, comprising a $50.0 million term loan and a $100.0 million revolving loan facility, with $41.9 million outstanding on the term loan and $78.3 million available under the revolving facility as of July 31, 2025[85][88][89] - The Company was in compliance with all financial covenants as of July 31, 2025, with the facility acquired by First Citizens BancShares, Inc. on March 27, 2023[85][89] Expected Future Principal Payments (in thousands) | Fiscal year ending January 31, | Expected Principal Payments | | :----------------------------- | :-------------------------- | | Remainder of fiscal year 2026 | $2,500 | | 2027 | $39,375 | | Total | $41,875 | Note 7. Commitments and Contingencies This note details Asana's contractual commitments, including standby letters of credit and a significant AWS hosting services contract - Asana has $21.7 million in standby letters of credit for operating leases and a 60-month AWS contract from November 2024, committing $255.0 million for hosting services, with $233.4 million remaining as of July 31, 2025[95][96] Remaining Purchase Commitments under AWS Contract (in thousands) | Fiscal year ending January 31, | Purchase Commitments | | :----------------------------- | :------------------- | | Remainder of fiscal year 2026 | $20,367 | | 2027 | $45,000 | | 2028 | $54,000 | | 2029 | $56,000 | | 2030 and thereafter | $58,000 | | Total | $233,367 | Note 8. Leases This note outlines Asana's operating lease obligations for real estate facilities and associated sublease income Future Minimum Operating Lease Payments (in thousands) | Fiscal year ending January 31, | Operating Lease Payments (Net) | | :----------------------------- | :----------------------------- | | Remainder of fiscal year 2026 | $21,898 | | 2027 | $42,466 | | 2028 | $40,116 | | 2029 | $36,811 | | 2030 and thereafter | $162,830 | | Total undiscounted operating lease payments | $304,121 | | Less: imputed interest | $(88,595) | | Total operating lease liabilities | $215,526 | - The Company holds non-cancelable operating leases for real estate facilities expiring through fiscal 2034, with sublease income increasing to $1.2 million for the six months ended July 31, 2025, from $0.9 million in the prior year[100] Note 9. Net Loss Per Share This note presents Asana's net loss per share calculations, including basic and diluted figures, and weighted-average shares outstanding Net Loss Per Share (in thousands, except per share data) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net loss | $(48,360) | $(72,189) | $(88,378) | $(135,911) | | Weighted-average shares used in calculating net loss per share | 236,218 | 229,760 | 235,550 | 228,430 | | Net loss per share, basic and diluted | $(0.20) | $(0.31) | $(0.38) | $(0.59) | - Net loss per share improved to $(0.20) for the three months and $(0.38) for the six months ended July 31, 2025, from $(0.31) and $(0.59) respectively in the prior year, despite an increase in weighted-average shares outstanding[106] Note 10. Stockholders' Equity This note details Asana's dual-class common stock structure, stock-based compensation expense, and share repurchase program - Asana operates with a dual-class common stock structure, featuring Class A shares with one vote and Class B shares with ten votes, with 156,783,538 Class A and 79,561,680 Class B shares outstanding as of July 31, 2025[107] Stock-Based Compensation Expense (in thousands) | Expense Category | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of revenues | $497 | $393 | $841 | $676 | | Research and development | $30,977 | $34,045 | $55,341 | $60,785 | | Sales and marketing | $18,100 | $17,249 | $32,923 | $32,497 | | General and administrative | $12,580 | $8,420 | $21,216 | $14,789 | | Total stock-based compensation expense | $62,154 | $60,107 | $110,321 | $108,747 | - In July 2025, 1,179,776 performance-based restricted stock units (PSUs) were granted to the new CEO, vesting over three years based on market and revenue conditions, with $0.3 million in stock-based compensation expense recognized for Market-Based Awards during the three and six months ended July 31, 2025[116][118] - The stock repurchase program was amended on May 30, 2025, authorizing an additional $100.0 million for repurchases with $128.2 million remaining available as of July 31, 2025, following the repurchase of 3.0 million shares for $43.4 million during the six months ended July 31, 2025[126][128] Note 11. Interest Income and Other Income (Expense), Net This note details Asana's interest income and other non-operating income and expenses, including foreign currency impacts Interest Income and Other Income (Expense), Net (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest income | $4,121 | $5,409 | $8,353 | $10,785 | | Unrealized gains (losses) on foreign currency transactions | $(1,081) | $1,407 | $(1,839) | $882 | | Other non-operating income (expense) | $267 | $(56) | $2,623 | $(547) | | Total interest income and other income (expense), net | $3,307 | $6,760 | $9,137 | $11,120 | - Total interest income and other income (expense), net decreased by 51% for the three months and 18% for the six months ended July 31, 2025, primarily due to lower interest income on marketable securities and unfavorable foreign currency transaction impacts[130] Note 12. Income Taxes This note outlines Asana's income tax expense, primarily from foreign jurisdictions, and the impact of recent tax legislation - Income tax expense was $1.4 million and $2.6 million for the three and six months ended July 31, 2025, respectively, primarily from foreign jurisdictions, with the One Big Beautiful Bill Act (OBBB Act) having no material impact due to a full valuation allowance against deferred tax assets[131][132] Note 13. Geographic Information This note provides a breakdown of Asana's revenues and long-lived assets by geographic area, highlighting international growth Revenues by Geographic Area (in thousands) | Geographic Area | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | United States | $116,499 | $108,232 | $228,036 | $212,658 | | International | $80,437 | $70,980 | $156,167 | $139,002 | | Total Revenues | $196,936 | $179,212 | $384,203 | $351,660 | - International revenues grew by 13.3% for the three months and 12.3% for the six months ended July 31, 2025, indicating continued global expansion and accounting for 41% of total revenues for the six-month period[133][233] Long-Lived Assets by Geographic Area (in thousands) | Geographic Area | As of July 31, 2025 | As of January 31, 2025 | | :-------------------- | :------------------ | :--------------------- | | United States | $242,267 | $248,698 | | International | $14,293 | $13,683 | | Total long-lived assets | $256,560 | $262,381 | Note 14. Restructuring This note details Asana's restructuring plan, including a workforce reduction and associated charges incurred to improve operational efficiencies - In the fourth quarter of fiscal 2025, Asana approved a restructuring plan with a 5% global workforce reduction to improve operational efficiencies, recording total restructuring charges of $6.7 million, with $2.2 million incurred during the six months ended July 31, 2025[136][137] Restructuring Costs for Six Months Ended July 31, 2025 (in thousands) | Expense Category | Severance and Related Charges | Stock-Based Compensation Expense (Benefit) | Total | | :-------------------- | :---------------------------- | :----------------------------------------- | :---- | | Research and development | $1,042 | $(94) | $948 | | Sales and marketing | $885 | $(54) | $831 | | General and administrative | $460 | $(22) | $438 | | Total | $2,387 | $(170) | $2,217 | Note 15. Related Party Transactions This note discloses Asana's transactions with affiliated companies, including lease and advertising expenses - Asana incurred $0.4 million in lease expenses for the three months and $0.8 million for the six months ended July 31, 2025, from an affiliated company, while advertising expenses with another affiliate were not material, decreasing from $0.4 million and $1.0 million in the prior year periods[139][140] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on Asana's financial condition and operational results, highlighting revenue growth, improved operating loss, and significant cash flow from operations, along with key business metrics and non-GAAP measures Overview This overview introduces Asana as a leading work management platform for human + AI coordination, detailing its product offerings and go-to-market strategy - Asana is a leading work management platform for human + AI coordination, offering a tiered, seat-based core product and a consumption-based, no-code Asana AI Studio for AI integration to help customers connect work to company goals[142][148] - The Company utilizes a hybrid go-to-market approach, integrating a product-led model with direct sales and channel partners[143] Key Business Metrics This section highlights Asana's focus on growing high-value customers and details changes in dollar-based net retention rates - Asana focuses on growing 'Core customers' (spending over $5,000) and those spending over $100,000 annually, with Core customers increasing to 25,006 and contributing 76% of revenues for the three months ended July 31, 2025, and customers over $100,000 increasing to 770[145][150][151] - The dollar-based net retention rate was 96% as of July 31, 2025, down from 98% in the prior year, with Core customers at 96% and customers spending over $100,000 at 95%, reflecting impacts from macroeconomic conditions on renewal decisions[153][154] - During the fiscal quarter ended July 31, 2025, Asana secured its largest subscription agreement in history, a $100.0 million three-year term with a global technology leader[151] Current Economic Conditions This section discusses how global macroeconomic events, including inflation and fluctuating interest rates, continue to create economic uncertainty and affect IT spending - Global macroeconomic events, including inflation, fluctuating interest rates, and geopolitical unrest, continue to create economic uncertainty, expected to adversely affect global IT spending, customer buying patterns, and sales cycles[155] Components of Results of Operations This section breaks down Asana's revenue sources, cost of revenues, and operating expenses, outlining their key drivers and expected trends - Revenues are primarily derived from subscription fees for the cloud-based platform, driven by paying customers, user count, and subscription plan level, with a consumption-based AI product also contributing[156][157] - Cost of revenues encompasses hosting fees, personnel expenses, third-party implementation fees, and amortization of capitalized internal-use software, with gross profit expected to increase in dollar amount while gross margin remains relatively consistent long-term[158][160] - Operating expenses (R&D, Sales & Marketing, G&A) are significantly influenced by personnel-related costs and stock-based compensation, with R&D expenses expected to increase in dollar amount but decrease as a percentage of revenues over time, driven by AI integration investments[161][162] - Sales and marketing expenses are projected to remain the largest operating expense in dollar amount, increasing absolutely but decreasing as a percentage of revenues over time, while general and administrative expenses are also expected to increase in dollar amount due to public company costs but decrease as a percentage of revenues[164][166][167] Results of Operations This section analyzes Asana's financial performance, comparing key metrics for the three and six months ended July 31, 2025, against the prior year periods Comparison of Three Months Ended July 31, 2025 to Three Months Ended July 31, 2024 This comparison highlights revenue growth, gross margin improvement, and reduced operating loss for the three months ended July 31, 2025 Key Financials (Three Months Ended July 31, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Revenues | $196,936 | $179,212 | $17,724 | 10% | | Cost of revenues | $20,221 | $19,987 | $234 | 1% | | Gross margin | 90% | 89% | | | | Research and development | $79,376 | $91,151 | $(11,775) | (13)% | | Sales and marketing | $106,677 | $108,649 | $(1,972) | (2)% | | General and administrative | $40,118 | $36,222 | $3,896 | 11% | | Loss from operations | $(49,456) | $(76,797) | $27,341 | (36)% | | Net loss | $(48,360) | $(72,189) | $23,829 | (33)% | - Revenue growth of 10% was driven by new paying customers and higher-priced subscription plans, with gross margin improving to 90%; operating expenses decreased by 4%, primarily from a 13% reduction in R&D and 2% in Sales and Marketing, leading to a significant improvement in loss from operations[176][179][180][181][182] - Interest income and other income (expense), net decreased by 51% due to lower interest income and unfavorable foreign currency impacts, while interest expense decreased by 17% from lower interest rates[184] Comparison of Six Months Ended July 31, 2025 to Six Months Ended July 31, 2024 This comparison details revenue growth, gross margin improvement, and reduced net loss for the six months ended July 31, 2025 Key Financials (Six Months Ended July 31, in thousands) | Metric | 2025 | 2024 | $ Change | % Change | | :-------------------------- | :----- | :----- | :------- | :------- | | Revenues | $384,203 | $351,660 | $32,543 | 9% | | Cost of revenues | $39,448 | $37,791 | $1,657 | 4% | | Gross margin | 90% | 89% | | | | Research and development | $154,503 | $173,942 | $(19,439) | (11)% | | Sales and marketing | $206,518 | $212,981 | $(6,463) | (3)% | | General and administrative | $77,094 | $69,912 | $7,182 | 10% | | Loss from operations | $(93,360) | $(142,966) | $49,606 | (35)% | | Net loss | $(88,378) | $(135,911) | $47,533 | (35)% | - Revenue increased by 9% for the six-month period, driven by new customers and higher-priced plans, with gross margin improving to 90%; total operating expenses decreased by 4%, with R&D down 11% and Sales & Marketing down 3%, resulting in a 35% reduction in net loss[185][187][188][189][190] - Interest income and other income (expense), net decreased by 18% due to lower interest income on marketable securities, partially offset by favorable foreign currency impacts, while interest expense decreased by 16% from lower interest rates[192] Non-GAAP Financial Measures This section presents Asana's non-GAAP financial measures, including adjusted operating income, net income, and free cash flow, highlighting operational efficiency Non-GAAP Financial Measures (in thousands) | Metric | Three Months Ended July 31, 2025 | Three Months Ended July 31, 2024 | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Non-GAAP income (loss) from operations | $14,007 | $(15,658) | $22,144 | $(31,428) | | Non-GAAP net income (loss) | $15,103 | $(11,050) | $27,126 | $(24,373) | | Free cash flow | $35,382 | $12,760 | $39,377 | $8,485 | | Adjusted free cash flow | $35,439 | $12,760 | $45,321 | $8,485 | - Non-GAAP income from operations and non-GAAP net income showed significant improvements, turning positive for the three and six months ended July 31, 2025, compared to prior year losses, excluding stock-based compensation, related payroll tax, and restructuring costs[195][196][197] - Free cash flow and adjusted free cash flow saw substantial increases for both periods, indicating improved liquidity and operational efficiency, with adjusted free cash flow for the six months ended July 31, 2025, at $45.3 million, up from $8.5 million in the prior year[195][199] Liquidity and Capital Resources This section discusses Asana's liquidity sources, including cash, marketable securities, credit facility, and deferred revenue, and future capital requirements - As of July 31, 2025, Asana's primary liquidity sources totaled $475.2 million in cash, cash equivalents, and marketable securities, with an accumulated deficit of $1,960.3 million offset by positive cash flows from operating activities[202][203] - The November 2022 Senior Secured Credit Facility provides up to $150.0 million, with $41.9 million outstanding on the term loan and $78.3 million available under the revolving credit facility as of July 31, 2025; the stock repurchase program was amended to authorize an additional $100.0 million, with $128.2 million remaining available[204][206][208] - Deferred revenue totaled $313.6 million as of July 31, 2025, with $312.5 million as a current liability; current liquidity is deemed sufficient for the next 12 months, but future capital needs depend on revenue growth, AI R&D investments, and international expansion[210][211] Cash Flows This section analyzes Asana's cash flow activities, highlighting significant increases in operating cash flow and changes in investing and financing activities Summary of Cash Flows (in thousands) | Cash Flow Activity | Six Months Ended July 31, 2025 | Six Months Ended July 31, 2024 | | :---------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $46,599 | $13,960 | | Net cash used in investing activities | $(14,742) | $(21,305) | | Net cash used in financing activities | $(36,079) | $(9,281) | - Net cash provided by operating activities increased significantly to $46.6 million for the six months ended July 31, 2025, from $14.0 million in the prior year, driven by non-cash adjustments to net loss and favorable changes in accounts receivable and deferred revenue[214][215][216] - Net cash used in investing activities decreased to $14.7 million, primarily due to higher maturities of marketable securities offsetting purchases, while net cash used in financing activities increased to $36.1 million, mainly due to higher common stock repurchases[217][219] Contractual Obligations and Commitments This section confirms no material changes to contractual obligations beyond those previously disclosed, including the AWS contract - No material changes in contractual obligations occurred during the six months ended July 31, 2025, beyond those disclosed in the Annual Report on Form 10-K and the AWS contract mentioned in Note 7[221] Indemnification Agreements This section notes Asana's indemnification agreements with various parties and the absence of material demands for indemnification - Asana enters into indemnification agreements with directors, officers, customers, vendors, and partners for matters including intellectual property infringement, with no material demands for indemnification made during the six months ended July 31, 2025 or 2024[223] Critical Accounting Estimates This section highlights the significant estimates and assumptions required for financial statement preparation, particularly for stock-based compensation - Financial statement preparation requires significant estimates and assumptions, particularly for stock-based compensation expense related to Performance-Based Awards, which involve market and performance conditions[224][226] Recent Accounting Pronouncements This section refers to Note 2 for information on recently adopted and issued accounting pronouncements, including those related to segment reporting and income taxes - The Company refers to Note 2 for information on recently adopted and issued accounting pronouncements, including ASU 2023-07 (Segment Reporting), ASU 2023-09 (Income Taxes), and ASU 2024-03/2025-01 (Expense Disaggregation Disclosures)[227] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details Asana's exposure to market risks, specifically interest rate risk and foreign currency risk, and assesses their potential impact on the Company's financial statements - Asana faces interest rate risk from highly liquid investments and variable-rate borrowings under its credit facility, though a hypothetical 100 basis point increase in interest rates would not materially impact financial statements[229][230] - The Company faces foreign currency risk as 27% of sales for the six months ended July 31, 2025, were non-U.S. dollar denominated, and a portion of operating expenses are in foreign currencies, though a hypothetical 10% change would not result in material gains or losses[231][232][233] Item 4. Controls and Procedures Management, including the CEO and CFO, evaluated the effectiveness of Asana's disclosure controls and procedures, concluding they were effective as of July 31, 2025, with no material changes in internal control over financial reporting identified - As of July 31, 2025, Asana's disclosure controls and procedures were deemed effective, providing reasonable assurance of timely recording, processing, summarizing, and reporting of required information[235] - No changes in internal control over financial reporting were identified during the quarter ended July 31, 2025, that materially affected or are reasonably likely to materially affect the Company's internal control over financial reporting[236] Part II—Other Information This part covers other information including legal proceedings, risk factors, equity sales, and exhibits Item 1. Legal Proceedings Asana is not currently a party to any material pending legal proceedings, though it may be subject to various claims in the ordinary course of business - Asana is not a party to any material pending legal proceedings, but may face claims in the ordinary course of business[238] Item 1A. Risk Factors This section details a comprehensive list of risks that could materially and adversely affect Asana's business, financial condition, results of operations, and growth prospects, categorized into business and industry, government regulation and legal matters, capital allocation, ownership of Class A common stock, and general risks Risks Related to Our Business and Industry This section outlines risks related to Asana's business and industry, including growth uncertainty, competition, AI integration, and operational challenges - Asana's future growth rates may not match prior performance due to factors like customer acquisition, retention, pricing, and market acceptance of new features, especially AI, with a limited operating history at current scale and a history of losses offering no assurance of future profitability[240][241][243][244] - The Company's focus on long-term growth over short-term profitability may lead to continued losses, with quarterly results fluctuating significantly due to demand, retention rates, new feature success (including AI), economic conditions, and security breaches[246][249] - Key risks include attracting new customers, converting free/trial users, expanding organizational usage, and developing market-accepted new features; failure to manage growth, maintain high-quality customer support, or adapt to evolving work management trends could harm the business[253][254][256][257][260][309][310] - The highly competitive work management industry, with rapid technological changes, requires Asana to depend on technology developments, including successful AI deployment, platform adaptability, brand strength, and effective sales and marketing; security incidents, including cyber-attacks and data compromises, pose significant risks leading to potential regulatory actions, litigation, reputational harm, and financial losses[261][262][263][265][268][269][270][274][275][279] - The use of AI and machine learning technologies introduces legal, business, and operational risks, including regulatory scrutiny (e.g., EU AI Act), potential for inaccurate content, and ethical concerns, while reliance on third-party infrastructure (like AWS) and software presents risks of service outages or disruptions[284][285][286][287][288][289][290][291] - The loss of key personnel, intense competition for talent, and challenges in maintaining company culture during growth could adversely affect business, while international operations expose Asana to various regulatory, economic, and political risks, including data localization laws and geopolitical conflicts[300][301][303][315][316] Risks Related to Government Regulation and Legal Matters, including Taxation and Intellectual Property This section covers risks from intellectual property claims, evolving regulations (AI, privacy, data protection), anti-corruption laws, and changes in tax laws - Asana may face intellectual property rights claims and other expensive litigation, potentially resulting in unfavorable outcomes, and failure to protect its intellectual property (trademarks, copyrights, patents, trade secrets) could diminish brand value and competitive advantage[327][328][330][331] - Reliance on 'open source' and third-party software could impose unanticipated conditions or lead to litigation, while stringent and evolving U.S. and foreign laws related to AI, privacy, data protection, and security (e.g., EU GDPR, CCPA), pose risks of regulatory actions, fines, litigation, and reputational harm for non-compliance[338][341][342][343][345][350] - Asana is subject to anti-corruption, anti-bribery, and export/import/trade sanction laws; past inadvertent violations of U.S. sanctions laws were resolved with warning letters, but future non-compliance could lead to significant penalties and business harm[356][357][358][359] - Changes in tax laws (e.g., One Big Beautiful Bill Act) or their application could increase costs and harm business, and the Company may be required to collect sales, value-added, or other taxes in new jurisdictions, creating administrative burdens and potentially increasing customer costs[362][363][364][365] Risks Related to Our Capital Allocation Strategy This section addresses risks related to Asana's capital allocation, including the need for future capital and restrictions imposed by credit facility covenants - Asana may require additional capital in the future, with no assurance of favorable financing terms, and an inability to raise capital could adversely affect business growth[367] - Operating activities may be restricted by covenants under the November 2022 Senior Secured Credit Facility, including financial covenants like a consolidated adjusted quick ratio and minimum cash adjusted EBITDA, where default could lead to immediate repayment obligations[369][370] Risks Related To Ownership of Our Class A Common Stock This section discusses risks associated with owning Asana's Class A common stock, including price volatility, concentrated voting control, and potential dilution - The trading price of Asana's Class A common stock may be volatile and decline significantly due to factors like fluctuations in operating results, macroeconomic conditions, analyst coverage, and sales by major stockholders[371][372] - Dustin Moskovitz, co-founder and Chair, beneficially owns a majority of the voting power, concentrating control and limiting other stockholders' influence, further reinforced by the dual-class structure (Class B with 10 votes, Class A with 1 vote) concentrating voting control with insiders[374][375] - The dual-class structure may lead to a lower or more volatile trading price for Class A common stock and potential ineligibility for certain stock indices, while sales of substantial amounts of Class A common stock, especially by insiders, could cause the trading price to decline[377][379][380] - Asana's share repurchase program does not obligate the Company to acquire any specific amount of stock and may not enhance long-term value, while future stock issuances could result in significant dilution to existing stockholders[384][386][390] - Provisions in corporate charter documents and Delaware law may prevent or hinder attempts to change management or acquire a controlling interest, potentially affecting stock price, and exclusive forum provisions restrict stockholders' choice of judicial forum for certain disputes[391][392][393][394] General Risks This section covers general risks including changes in accounting principles, control deficiencies, foreign currency fluctuations, and catastrophic events - Changes in GAAP or their interpretations could adversely affect reported financial results, and failure to maintain effective disclosure controls and internal control over financial reporting could impact financial statement accuracy and compliance, potentially leading to restatements or delisting[396][397][399][400] - Asana faces exposure to foreign currency exchange rate fluctuations, which can adversely affect revenues and results of operations, and incorrect estimates or judgments related to critical accounting policies could also negatively impact financial results[401][402] - Catastrophic events, health epidemics, or geopolitical conflicts (e.g., Ukraine-Russia, Middle East) may disrupt business operations, international commerce, and the global economy, potentially causing system interruptions, reputational harm, and data loss[403][404] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section reports no recent unregistered sales of equity securities and details the Company's stock repurchase activity under its authorized program - No unregistered sales of equity securities were reported; the stock repurchase program was amended on May 30, 2025, to authorize an additional $100.0 million for repurchases, with $128.2 million remaining available as of July 31, 2025[405] Stock Repurchase Activity (Three Months Ended July 31, 2025, in thousands, except per share data) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | Approximate Dollar Value of Shares that May Yet Be Purchased | | :-------------------- | :------------------------------- | :--------------------------- | :--------------------------------------------------------- | | May 1 - May 31 | — | $— | $156,041 | | June 1 - June 30 | 1,631 | $14.10 | $133,048 | | July 1 - July 31 | 327 | $14.67 | $128,248 | | Total | 1,958 | | | Item 3. Defaults Upon Senior Securities This item is not applicable to Asana for the reported period - This item is not applicable[407] Item 4. Mine Safety Disclosures This item is not applicable to Asana for the reported period - This item is not applicable[408] Item 5. Other Information No other information is reported under this item for the period - No other information is reported[409] Item 6. Exhibits This section lists all exhibits filed with the Quarterly Report on Form 10-Q, including corporate documents, offer letters, equity incentive plan forms, and certifications - Exhibits include the Restated Certificate of Incorporation, Amended and Restated Bylaws, Offer Letter for Daniel Rogers (new CEO), 2020 Equity Incentive Plan forms, and certifications from the CEO and CFO[411] Signatures The report is duly signed on behalf of Asana, Inc. by its Chief Executive Officer, Daniel Rogers, and Chief Financial Officer, Sonalee Parekh - The report is signed by Daniel Rogers, Chief Executive Officer, and Sonalee Parekh, Chief Financial Officer, on September 3, 2025[417]