ASAN - Earnings call transcript Q2 2023

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Operator

Good afternoon and thank you for attending today’s Asana Second Quarter Fiscal Year 2023 Earnings Call. My name is Austin, and I’ll be your moderator for today. [Operator Instructions] I’d now like to pass the conference over to our host, Catherine Buan. Catherine, you may proceed.

Catherine Buan

Good afternoon, and thank you for joining us on today’s conference call to discuss the financial results for Asana’s second quarter fiscal 2023. Chief call our Moskovitz, Head Chief and Wan, today’s CEO; Co-Founder of on Tim Raimondi, Anne Operating our me are Asana’s Dustin and Business; With Officer. Financial Officer and free and include will strategic statements expectations financial statements, Today’s cash market call our position forward-looking flow, our opportunities. regarding including our regarding growth plans, outlook,

on most recent risks, XX-K annual refer may differ those statements in on report to forward-looking Form to assumptions statements. those be results and for involve report cause on our cause Form information from actual the and the with results to forth materially risks, quarterly Forward-looking additional filings actual by that XX-Q, different our uncertainties, set expressed from SEC, uncertainties such may statements. implied and Please assumptions that our or materially including

our addition, disclosures measures. financial are GAAP in to to or Relations financial enterprise discuss service customers easy website. is and release our performance on in on of our discussion many deals, ESG today’s These in a data lastly, their and posted need who we and ESG measures comprehensive call use RFP Investor not financial of non-GAAP closest superior earnings for of a In and our equivalents webpage GAAP requirements And available investors.asana.com. we addition will limitations and Reconciliation publish between at which in around are measures investors IR reporting for for with GAAP. versus the non-GAAP substitute measures and measures non-GAAP using non-GAAP during to accordance of financial prepared

report. with over Dustin. along to I’d SASB with that downloadable index climate turn find data the our annual data ESG And You’ll call to like and

Dustin Moskovitz

to Thank and call thank today. on you the everyone for you us joining Catherine,

and enterprise the GAAP We only the revenue on by customers top had deals Across enterprises. and the the and spending more, not $XXX,XXX by are our retention Dollar-based-net grew line. bottom Revenue in seeing XXX%, expectations and our businesses. of are annualized XX% U.S. remains results large driven strength QX line in the well the or beat more overall. $XXX,XXX dollar-based-net beat year-over-year guidance Asana’s is both broad X%, rate at we that spending winning illustrating or most among customers becoming but world’s larger these leading some thus cohorts. retention In time. rate over over rate adoption XXX remain large business committed and is our growth our We and expansion more have enterprise includes overall platform particular, around organizations building our continued at scalable deals rapidly X.X most a plus than management our of of the larger highest the to effective, work growing our business customer capable rate, our our Evidence portion seats. paid million sizes world. rate, industry’s the progress largest over deployments, with serving of end-user adoption success of now the strong all

As XX% our growth line $XXX $XXX to a to the XXXX a result, XX%. for we raising representing million, fiscal year to rate top guidance million of are

continue currency a significant year. expect factor headwinds to be this We to

to XX% growth. represent would XX% guidance our impact, currency the Excluding

found and truly true nature. their and Asana tracked differentiated analysis the from the it better see teams. is value performed get more for work in than than And have market, over have in we We we other you offer this The more the how need industries customers recently this investing projects including work half cross-functional Asana over Portfolios. align $XXX,XXX, we the value, are with companies on market Companies what moved as growing, from more all the built vast leverage this we is And we are with time of We enterprise I jumps that & cross-functional majority their we’ve around track management our result. as technology to last single them it do the the of seen contrast, cross-functional that important trends number a company, iconic bigger This solutions because single Goals higher this up even In of stack, an an delivers for and to employees collaboration matters. see for the work is winning the across in share are in win. using growth investing spending are way These make and enterprise tools help both strategy that leaders. with easy more several becomes. the and most customers collaboration. to product we’ve our greatest how driven are to focusing, we quarters by the XX% and where in being proportion features software.

Asana to delivers and done business being how also creates at shared accountability clarity on level. Leaders every work the have know priorities.

work large and employees applications. Asana team Asana better when this, including to platform in track your incredibly most way used of how and investments responsible, uniquely other customers organization, hub in chat, single your all critical helping sync to frequently connects the That’s existing the people across a it’s business the stands, where to Graph it important around a a a all use critical for does documents, the for especially make because requests powerful, it up giving of email, keep and serves changing goals. as map applications, plans. The place Work company-wide creates

challenges. expect. continue the on of performance and largest to Asana on why continuing at safety, functionalities by expand modern partner global is scale improve for organizations. security, and is enterprises the most complex recognize and as the an essential that to Asana required foundation Companies we are work built This solving

October of successfully value be ways their will a We that product and help in giving a XXth more XXXX big will on year strong companies fiscal cycle on three have we preview top delivering even execute be investors how priorities.

organization. understand decision-makers helping strategic quickly across of by work First, the health the

linked Key about even for work Salesforce, it will make Asana progress Goals. Salesforce and decisions. the better. to our to integration, and eye in informed use product, one number updated, goals bird’s will of and already filter, metadata. it making is to Results market, in Objectives impact Enterprise Universal according Customers able report, be the automatically the to When get soon easier Leaders in a Goals make first to integration Asana we’re including Goals able and ability out-of-the-box GX view Goals software happens the be to for be also Goals will monitor group the Reporting, of Asana

out quality applications. are help that integrations Partners the our improve from work across also We of and their rolling Asana productivity all-new customers

link can milestone as report the previews updates independent that takes cut time by cracks. itself work complete complex A work Meta, with With work of found teams bottlenecks. new help hard for to a Workplace and the found The to project it as PagerDuty, status without integration as with switching integrations important through Rules a receive to fall that also by across as causes more adding can on the XX% Asana teams staff. or study stay much focused Asana stay notifications, and increase create loads between remove to up connected Gmail, see Asana New for when Twilio, Workplace. and tools makes Context by to reduce much processes. Asana Nucleus oftentimes, right errors automating project tasks, from it users tools new XX% automate by that XX%, individuals and for and project

third this compliance. further about that The elevating is note fall we security, our and thing to product roadmap privacy are

Asana in now offers data addition and EMEA. to in residency meet customers’ Australia flexibility needs, and options Japan to

restricted Mobile attachment enhanced employees Controls, secure organizations with Data the ensure app global We’re work anywhere. while also sharing, supporting empowering stays data admins authentication can biometric to and from so Asana with

Archiving plans compliance solutions a new facilitating different offering for and with vigilant while security fall. HIPAA-compliant that still control transmit and consume, the by are close of we and introduce increased and And we actively current API health business and our connection. as For Asana processes, navigate staying I’ll will carefully to cross-functional information partnerships acknowledging through companies cycle. Data IT Loss store, our support managing eDiscovery, macroeconomic for Prevention, that provide important controls this leaders personal and business

We now, and maintaining product conscientiously will continue over Anne. to growth investments balance in while our And it leadership innovation profitability, to turn which managing includes I’ll vision. and our

Anne Raimondi

with It’s make that Dustin. so in investments the product our we in our customers innovation. confident us Thanks, conversations have

indication challenges and customers’ great good As region and led business U.S. we opportunities to needs. move especially These to up with address going our is a product for market, and now In growing our up-market organizations further announcements the they market This overall that a are QX, evolved growth. will help our enterprise product facing has Asana forward. and today, strategy is of segment successfully fit adoption enterprise drive the tier.

are observations. spending road The the just I’ve they the Over These amazing. stories the our with share on several last customers months with couple a me around of key world. been are time

enterprises the to is conversations the processes. and in they not First, do everything thing are showed up mainstream cross-functional that. Digital transformation as with work collaboration is a do, order data, In of business essential an our enterprises, component management they is it’s in authority run moving Dustin chain. their

cross-functionally. work is things Asana get allows fit the is companies platform way The to that done, clear. critical a market

with brands the Second, recognized largest of we closing some the most deals world. are and in

stack them basis, fastest Telecom, successful cohort, Media, of companies such and Services, annualized an XXX% most Some represent to across growing their deals customer and Asana larger up tech have on prominent grow, and year-over-year. spending investments. customers these We and XXX now over help industries, leverage as compete, Financial the Automotive, choosing are $XXX,XXX our

increases Asana, use this customers our more value more the adoption. they product and realize Third, the

users deployments new colleagues. cross-functionally Enterprise more existing seeing quickly are with We collaborate join Asana and

above want over win. beloved never-ending how Our brand. for an chains to customers a a who dollar-based for move love $XXX,XXX been and our come game Asana for Customers products runs retention requests been team, We’ve organization. customer overlapping Asana operational to rate And voices away edits. team calls XXX%. “Asana said: for Thanks and from and streamline has is changer well with email Fourth, One able is to Asana!”. our Asana net

Our have with and remarkable. strong engagement see closing across brand and continue strong equity are deals base. customers to is we large our demand, Overall, we user we

customers, As over adoption use in Fortune Asana. our base, are customer cross-industry we I XX% across look of seeing significant with XXX which broad traction

are how to and contract ensure Warehouse vessel six-figure they the customer. operators Enterprise shipments another their A their container shipping initiatives customer is Asana various workflows, are of and They logistics well one largest few: automotive in Asana across goals. division. are known call for and They customer. Distribution Some toward to are One a of world the Asana divisions are year. adopting is improve this of about with in world’s companies clarity To out of growing the manufacturers Enterprise a important the and organization using largest status R&D most the using the expanding line progressing and critical fulfilled in

of One their of functional orchestrating retail sales convenience chain for employees the in and ensure to global with operations. And across is one efficient thousands largest Enterprise managing field shopping division initiatives, the in chains Asana store Europe headquartered global online and of using Asana using cross technicians Enterprise grocery has supply operations. their companies their telecommunications largest execution and workflows

fact, companies X space in in the are the world the tech technology overall, XX top of customers. In out paying Asana

early use marketing, that financial expanded research, to of Morningstar also traction increasing automate operations, their productivity. are time using gaining help are We saving client workflows, Asana across In critical companies services QX, services. and Asana operational and with again

Chicago. conversations hedge an of European in And and the also other one with largest New deal signed American expansion in York are we funds large QX North and banks. with headquartered in We

seeing healthcare industry the as an well. impact in are We

going As a a to enhance expect compliant which HIPAA mentioned, few months, with offering our in customers available forward. to position healthcare we have we Dustin expect broadly

been more stay through to to the big Another core faster has significant competitive. product and is done to In bringing world, and going service be is it that media market industry media. their their digitization needs effectively

premium And deal closed we’re using Asana QX, is In several partner one earlier, as Discovery, where future from with a deploying land Telecom In deal a to RFP Pacific’s as partnerships Vox to noted of They’ve customers They’re choice we is was their another have to major now traction. work. for service they embrace we I industry big of ViacomCBS Three of partner with Asana with media we a proud deal which for of along QX, Also strong ensure Asia close. vertical generating strategic hundreds Asana brands expanded us. Enterprise This other UK, in a companies. Enterprise, Media. a to telcos. closed deal and win of and uptiered we the and revenue internet QX, all largest telecommunications another seats. are media won the British now provider. with for workflows is part process Paramount, core and

fast, telco largest their their products. in to existing are developing in deployed quarter. for leaders also We using of And launch customer, seats in there strategies this it know companies and choosing means companies to technology across to who is for and an course teams world, to is responsive that a expanded Asana Asana because T-Mobile, respective allows They the need leverage the available believe what and industries they new platform are are effective. These management. the be work is innovation cross-functional and organization. Work best the platform collaborate Asana

software the continue as remain to transformation strategy. the meet going we we term, the value believe time short I’ll term intact is it our years, the that, on environment grows to long management trends grow. the needs, hard will We how digital remain not category term return various awareness macro of in unique providing investment. our to While in to customer customers to With Tim. We and current can high and hand predict ongoing it’s to believe and the impact our work win committed in weeks, capabilities importance long secular over

Tim Wan

up-market. revenue $XXX U.S. XXX business the continued rate puts Thank revenue. million, grew XX% basis XX% Revenues billion. for quarterly revenue. overall international came overall. Currency of run revenue would annualized and International growth, cohort represented year-over-year, by is in or XX% revenue good approximately $X,XXX total the XXX would XX% $X.X for XX% year-over-year. speaks rate points you to a more impact of basis indicator revenues in have paying The This revenue growth growth roughly our move year-ago over revenue up have core customers this spending in At in XX% QX, strength year-over-year an International and of at Anne. our grew year-over-year success as currency. of our XX% quarter faster over XX% million, in the XX% annualized at growth accounting at rate quarter. customers the to U.S. end even total leading growth the the without revenue QX Revenue XX% customers us our We up XX% from by showed year-over-year. year-over-year, from an at been XXX,XXX of we of up in from $XXX.X accounting This of continue basis have points. our been X,XXX cohort on now of growth. impacted grew our for growth the the growth and QX,

$X,XXX up spending basis, customers more an on on XX,XXX year-over-year. X,XXX annualized up We XX% have an customers spending more $XX,XXX or We year-over-year. or XX% basis, have annualized now

fastest largest cohort. customers growing remain our Our

can for quarters. believe at an XXX is you this have in cohort on more $XXX,XXX coming and We the to good expect us We annualized basis customers number growing is spending and updating customer XXX% year-over-year. this or metric continue enterprise proxy business, a our

customer these a revenues in given quarter. based define on we reminder, a cohorts GAAP As annualized

as stats health business total the and key $XX,XXX-plus next stats quarters be $XXXX-plus we will website the moving end more core and with on fiscal enterprise believe current disclose the of continue our We’ll to metrics they future the IR year. to business aligned are and as our of sunsetting $XXX,XXX-plus over use of to customers instead use two the plan forward growth customers. for indicators and the We through the success

cohort. net Our strong rates dollar-based across retention remained every

dollar-based rate or more, dollar-based was over dollar-based net-retention over rate spending XXX%. or among customers And net-retention overall spending Our $XX,XXX was XXX%. XXX%. customers rate was Among our net-retention more, $X,XXX over our

calculation. rate is a trailing As four-quarter net-retention reminder, average a dollar-based our

non-GAAP in from be expense would out point and in my million, that $XX.X items of balance year-ago As to will improved like development revenue. margins in the Research XX.X%, discussing of profitability, Gross or quarter. and I remarks. at I XX% to came results I turn was the XX.X%

was XX% XX% and continue loaded million, to investing this of infrastructure revenue, and Sales the size roles in or $X.X second customer our facing year costs proprietary innovation and to our of and deliver of in sales million, million to revenue. in G&A which front help a $XX.X vision. or build beyond. win many capacity will reduction team. half fuel on us marketing We of was related our We the for recruiting includes which our technology $XX.X

have Excluding per $X.XX. the share Operating was of G&A would XX%. was loss and one-time loss percentage million, cost, revenue million, $XX.X margin net $XX.X loss and been as our a loss XX%. Net was operating was

flow. approximately cash sheet and the to balance investments were the marketable QX on securities Moving million. of at including end $XXX and Cash long-term

of recognized from from the obligations, year-over-year. QX year-ago RPO That or deferred million, XX% the months. our grew performance next current was remaining Total RPO, the quarter. of was XX be $XXX.X RPO revenue up end of XX% million, up year-ago the quarter. XX% $XXX.X at will portion over Our XX%

While billings, significant in impact to impact. calculated that call currency I a such we year-over-year factor billings we out don’t since the normally calculated when grew this comment on XX% wanted quarter, currency had

free flow operating capitalized activities, and $XX.X excluding flow negative million cash Our and was items. used less costs, margin equipment or XX.X% defined software is a non-recurring property basis. QX In cash free as on from net negative in cash cash

outlook. our Moving on to

For year-over-year. rates of XXXX of XX% million XX% representing QX $XXX.X $XXX.X million, we expect to growth fiscal to revenues

million, which year-over-year. expenses We operations non-GAAP is decline in $XX of to of expect from loss a million $XX growth operating significant

quarter-over-quarter And includes outstanding diluted the which at $X.XX are targeting XXX midpoint. to we flat shares assuming million issued average We of newly weighted $X.XX loss basic share net and expect margins the operating shares. per approximately of

year. XX% of to For the representing $XXX XX% growth expect to to for million XXXX, fiscal we be revenues rate full the year a million, full $XXX

basis We impact by points. growth full expect to year our XXX negatively approximately FX

currency XX% have our growth XX% been year-over-year. the would impact, to Excluding

the between margin year. loss fiscal be operating for full XX% XX% expect to to We

can you our from we As front investments for guidance, the year. see our loaded

margin the even expect half, the should versus of more and points operating half the You improvement X first in year. percentage of improvement loss year second next

in to cash you We are execute common was purchased A common September of our X, In seen Dustin will press approximately of addition, to $XXX of $XX.XX we flow, today’s which of strategies CEO. shares Class share, our XX year on the release, current A in closing placement Class XXXX. price as to we stock This stock increase our a have capital per the trading by which our positive private will funding announced provide million million at million achieve targeting total. over this before on $XXX cash sufficient free investment for and believe that us XXXX. calendar balance additional Friday, end

the major In of momentum we already slowed expenses QX, on We’ve from growth XX% QX growth part to efficiencies. you’ll are it significantly addition, manifest headcount here initiatives and in in to and a our our to in R&D in G&A are headcount showing first. of moderated undertaking highlighting change see and the management. expense some as focus commitment X% We’ve begin sequentially

leveraging are are existing sales example, we’ve the successfully infrastructure last over ramped. quarters, built reps on that We several the for our ensuring focused

out pacing initiatives. investments other go various also ROI in are We the and geographic market markets to highest prioritizing

to With more focus flow. structure high working We line drive growth, significant and a to cash on we solid manage efficiencies spend. have and leverage generating taken on margins, are cost are increased our we strong gross free path to believe measures actively our top in

strategy the being to helped our our scalable product changes widely no to deployed are most term at most has and platform us there across succeed long that space. Importantly, date

product in our continue some final in our the hand example, growth announcements I’ll to enterprise. product activities continue remarks. to will drive that, to marketing to success in for closing With will the it These Dustin back we and and momentum October. enterprise high support behind For invest

Dustin Moskovitz

their every I The customers investing Tim. which Thanks in every goals, clarity strongly are market the believe level. strategy possible for validating necessitate at because enormous market am day. Enterprises workflows most is and is always the opportunity our achieve ready I the and solution involve Graph important best our that Asana and cross-functional is further Work helping

work management the know Finally, to our best is and I achieve very team in hungry mission. our

stages earliest We are and still in intend win. to we the

Catherine Buan

I’ll back for it And the to with questions. turn that, operator

Operator

Instructions] Thank Our from Bracelin is [Operator question you. with first Brent Sandler. Piper

Brent Bracelin

cohort, Thank you. in double-click cohort growth customers. into $XXX,XXX-plus large the Good to afternoon. customer I triple-digit wanted

segment you customers, having Sounds Dustin? to you’re like is guess, maybe there I can sales emphasize large market really here. to of cross-functional to in What of tremendous marketing collaboration where strength enterprise, do or for the momentum redirect large and what amount driving a appear the And is Anne maybe success? in the a resonating some are things dollars be

Dustin Moskovitz

a because when from for of product Dustin. the strategy, shines I that it activity cross-functional nature. is which finding is organizations Asana that you cross-functional our all I in collaborative This And is we’re differentiate doing Yes. mean, question. -- more larger lot really really think have competitors the majority Thanks of to is in strategic work. they’re

in and So we so I that finding proposition it, you loop. think a were that using value to feedback nice make want

investing to the product further road cross-functionally. in we’re map used most emphasize functionality So, the that’s

but of talked great being a launch over those powerful. And going a in road October, to lot Goals a like Goals, is enhancements so even improvements of we’re & That’s map about and doing -- Reporting, Portfolios. reporting, a it’s improving report there. there’s able to little also year bit that Improving make our some includes the on old around more next lot things

really make senior back really that sales organizations, make So leaders these it we larger approach. of useful the And useful feed for and to into that Graph it more value accentuate Work right more us the teams, then, executives. large helps to our

give can we So senior sort Graph have the of levels team We Work the understand. not can able of broadly, think of do sales to and as give pyramid around to the value-based team insight of to only clarity. they’re we increases clarity sometimes the the productivity how but teaching or to the leaders selling to upper we

personas larger appeal right the customer more back lot feeding can more a we’re through making organizations, types our find into targeting of there’s So well, as channels to yes, feed our to that approach can journey. do that way and spend messages we sure having in having then that then all and those there. buyers marketing And the

Brent Bracelin

just here Thank thinking this two bridge peers. infusion. helpful. a the the three It’s tied provides getting still additional million you about color in where $XXX sounds the sales that for flow years? next next Where cash to the would the flow. within revenue to to on that basis positive follow-up get through be years? see relative It couple marketing Any most on you Is how free are you. and then a amount Tim. free hot How a there great the over most healthy of of improvement? really in seems see XX% efficiency there And cash it are could going drive you drive here like of years Thanks. to cash of leverage positive you to

Tim Wan

this Great Yes. question. Tim. Hey Brent, is

So, what -- focused all I across would say whole is on the we’re efficiencies incredibly organizations. across gaining

then time see of we attention where income inefficiencies in you’ll moving you and upmarket. is G&A in R&D. focus see as us can over kind to kind of operating the improvement sales of And marketing and statement where first that gains and think I divert our expect

be pull in. in see, which you’ll enterprise, I grew think more investments seen may America payback in. markets North in are ROI As unknown, the and may going in where that areas double we’re back momentum we’ve that those down continue those and be us invest the longer or to see you to in can And the XX%, the

infrastructure. a of can really trying the what to we’re investments So, mindful around existing also we that rigorous focus making, really the be get with we’re have but

Operator

Our Alex next is Research. Wolfe question from with Zukin

Alex Zukin

me okay? Perfect. hear you Hey me guys. Can guys you Can hear okay?

Dustin Moskovitz

you. for can We Go Yes. it. hear

Alex Zukin

one just Dustin, for the maybe, guess -- or guys. I first Perfect. you Anne,

descoped. -- prospects about of kind the companies deals type of And you’re conversations of having amount environment, about where prospects, larger a even when of think for enterprise and lot the think that larger a of investors cycles you’re debate dovetail how or I of macro -- in must-haves having when falls talking some of a category. kinds your there’s you us asking the customers senior versus that you they healthy some tougher as are this software terms the mission-critical get questions in in with about think sales at about they’re conversations nice-to-haves, leaders As or with lengthening

sales So, asking it’s seeing what actually all, impacting is cycles, if I it And a of helpful of conversations kinds what way then, -- a or now are long of to is right kind quick at how that have you? you follow-up.

Anne Raimondi

Yes. Hey Anne. Thanks off. it’s question. Alex, that start I’ll for

some the I the So, that early conscious we’re impacting growth But purchasing we and it’s clearly is software we’re mean management still are the that work persistent. seeing overall. environment is what in macro seeing solve of height given problems

product I meeting able So, what been has to And great. our think which road the as I’ve we’re be on differentiated customers, the strategy. with been seeing response to, Dustin is mentioned,

trying out those throughout are rapidly goals how and can conversations around with figure CEOs, organization. CIOs, they the COOs, to adjust So who plans cascade specifically

they’re fashion. to a with really And agile so Asana, able that in do

quickly. respond they And much about more can so, we’re the conversations in environment how are having this

also are And because in and monitoring where product. larger because Goals deals, having are a see specific overall, cycle we’re working than higher-level of asked that to been our on in times. You cycle we’re But come very it’s customers move terms bit And we we’ve organizations, times scrutinizing those from. as conversations spend. going certainly, that a upmarket of about are question deal longer we’re positive

Alex Zukin

closer get get a contemplating goal to higher-margin of that profitability accelerate these -- and more higher cash breakeven there, that I are Where out-year able profile I and balance move you the focus, that I you to company. you to growth flow of we margin or target in kind contribution progress you ‘XX. start then growth guess, -- the profit more calendar think the you’re calendar a with And around what think exiting of as getting stay to profile rate, guess of to entails? operating is the the another are long-term just around incremental question Is that to customers? funding kind calling to Perfect. of profitability upmarket by that ‘XX driven or

Dustin Moskovitz

Hey. actually the just I foreseeable was so XXXX, also This out time long line to the way we by a it’s in XXXX. out. Dustin. want And calendar of the future, clarify calendar end that’s laid that is before but

customers. have those upmarket exactly manage for in it as cost to business better opportunities that we want investing that’s a to line. and sort available also you But in the as real not look the we’ll and on it And of sort because hope it’s to we category, line. we that growth our for the So, to and are naturally said, sure cross margins little certainly But cash managing in move going we’re best much so will of we to the we’re at depend moment happen the in going as win predict make hard there’s opportunities. well how larger growth, somewhat and invest to what’s I time. holding profile to be just a

the think a also margins rate. the slower I So, past with given profit growth the long in run we’ve -- come long-range

slower, in either and that we’ll like so growth should that investing sort that a be the growing and profile. expand growing investors trade-off seek hopefully of way, margin either to we’d we’re favorable think I we’re So, for to quickly, or somewhat continue then really

Operator

from Our Berenberg. next is Andrew DeGasperi with question

Andrew DeGasperi

in year? of metrics, could Just I terms meaningfully on way full was you the worsening any have of stayed any framework in whether discuss you customer or wondering, it increased, just year also follow-up. a conditions in the the the the maybe And has has I churn for assuming back And steady? guidance, half are

Tim Wan

we’ve seeing also would and baked Andrew, the say then enterprise then international, momentum America outlook Europe. North is and respect guidance, to in adjusted really Tim. our Hey is particularly this we’re with for what that in I in

really feel within kind margin respect of levers to guidance, about rate, it we that operating with our number also have retention we’re We of a the expecting hold net control. good knowing different steady. And to our

it frankly changes say or large to and XXX%. the expansion haven’t accounts really different above continue any rate additional about the deterioration Europe, cascading -- net kind we companies especially hold degree provide moment on will I hopefully, biggest But paying and that good We it for where a at would I probably -- feel seen about guidance. enterprise is the don’t thought within software some quite color will the or of commented how and in Europe, impact the And provides the contained just there just know. the have all economic the on is it we will just be effect? what dramatic unknown larger -- of

Andrew DeGasperi

get forward? in free the of Great. I cash you going if build invest just And of to -- maybe, here Dustin, in buffer it then to continue investment, I flow-positive. are makes was see we itself time But to to time sense, your size Asana a expect guess, to to from terms to wondering

Dustin Moskovitz

reiterate a can me. question. it to when really the how for want looking it’s is little and just somewhat And about program but decisions about big investments And on really this long-term think potential relative as I sort the stock but call, future And great made. diligent do I ongoing standpoint. slow market are like these I’ve a bit That’s the investor I something opportunity a holds, investment I’m that, the this makes an even don’t talked from is. but just the say of to about always it’s I anything what past of not the last sense big to

important reactions lens market. that through to the I always short-term to than think investment it’s just decisions rather And the see in changes so,

Operator

from Our Jefferies. next from question is Brent Thill

Brent Thill

made And time. through many this broader why Tim, of opening base? you are ownership. the go guess Dustin, to many stake consider for Thanks. you on your curious, up and through of a are are over we -- seeing a following not just leverage why Obviously, you marketing. sense. more list I can why broaden made Just considerable your on that investors? just And in asking the not thoughts kind this most walk sales Did

just an running line leverage force perhaps like underpenetrated? still the you to a throttle more sense you when XX% there so of Is number. biggest can that that’s revenue, You’re you it’s start seems it Give is high see because item the on extremely leverage just because us full out which feel of.

Tim Wan

where start marketing, sales we’ve also and think front-loaded respect question we sales With to I’ll and related I’ll many commenting the Maybe our on take marketing, of call mentioned to the I the funding. on this and then the Yes. expect that much sales hiring of to for to be -- really front-loaded. kind we the and this productive was sales year, those ramp and have capacity And year. and the in reps back next investment very enable half much more

reps in I we and as be enable in back marketing kind year, those over and next maybe more make more sales the of QX them So, expect think to successful you should time. leverage half, see

committee special the one. actually information of and should to Board all agree special available the So, we option. funding to placement. considerations, have the the committee evaluate to management and there’s and best the that And did you respect with a the that options is that different lot was definitely X-K, details with the members a that’s Board the the and this a related different X-K, were more this in the And lot independent we to of But us. read

Operator

Steve Our Enders next with from Citi. question is

Steve Enders

and do we fiscal kind thinking I view reaching what investment there plans as your needed in is you’re there about kind and EBIT kind begin that a guess, I to to be the similarly, and versus of we model at seems be the breakeven, -- happen reverse we should you the on would that guess, in about as of kind were of before? see think downward, into least the we making And change any get that ‘XX when to here? begins leverage think of basis at some how look trending, outlook to still dollar

Tim Wan

Yes.

the leverage. that how when question first expect second see to would the answer to we expect of you of turn in of kind me terms and should model part Let

see So this margin, the to margin back in expect improvement flow year. you X next improvement should margin of much points cash operating but starting that for about year, free our and operating half more in significant

this really to we online next investments that in come off a again, the help year. moderated growth, more going infrastructure. and we’ve front-loaded of headcount growth and drive but dramatically many lot us is efficiency to for many that made the We’ve headcount So our of existing get half year this back

to little positive margin and free plan we improving -- -- take time, have free ‘XX. get but So to flow operating in before place that’s calendar path it’s cash cash do of to flow see a ‘XX cash calendar free now a bit going of margin -- to a and the end

Dustin Moskovitz

We last sorry, customers take speculative was color been changed. about areas, my revenue less of capital. best -- comes how with some the more And economy us. They It’s were a on And some to I the an time more same had have an less just color access where money concrete plans those up more us dynamics. -- potential the basically I’ll know number year, we’re just hard And we per the first is same And that those of around things of be currency stronger add to that do there’s a do of seats, number have the up some offers. counterfactual. little to And now I’ll focusing markets. definitely in economy, just going to made this and investments Dustin. on speculative sort we cost, in just around result this around mechanically, the relative think coming my best emerging is more to profitability just add that more of this for of and sense. more in profit not investing to geographic more channel where at is strong, emphasis profitable. it literally to it exchanges, on opportunity easier sort But

programmatic to upmarket. as of in it the broad every where every also But -- we’re sort And we’re consequence, sort means region shortens same go so, the where we’re we’re that line spend at the a doing into profitability. developing after of more markets hiring, not time. of just putting focusing and And our segment time

to with that And well different But of the years our a limit in economy, and may plan. so make mean operate a to again, it dual it growth of there’s doesn’t relative next it’s bit sense couple so counterfactual. as to a rate the

Steve Enders

seeing enterprise guess business of the That’s I and very guess, I as you resonate Perfect. have of think that on Okay. kind kind -- helpful. adoption, about And tier the how of you current of of should the the in we to versus that quarter in the think And about those from upgrading kind environment? expansion some came the higher-priced how tiers? feeds mix kind of been

Anne Raimondi

is Anne. -- answer that answer this I’ll question. I’ll that Yes.

We and in are seeing growth strong business both enterprise tiers.

revenue in increase XX% which an is of they’re QX, So, of year-over-year. XX% contributing

a two larger especially those value lot that’s for So,, really that really signal in tiers -- important them and are to finding of they’re customers, positive that.

adoption make in from had those standpoint of value in adding those sure of mentioned of Goals continuing go-to-market tiers. and sort and we strong that so, we’re both tiers Goals, we’re of to as upcoming improvements well And We see the lot announcements a driving of a both

Operator

Our George with next is question Iwanyc Oppenheimer. from

George Iwanyc

much your environment perspective? seeing staying a growing cases what the or Anne, on you’re give Is on following you answer, wall-to-wall and many up competitive pretty from update maybe deployment in us can maybe consistent? that

Anne Raimondi

Yes. Thanks so much for that question.

tops-down We especially from grow. are that product continues are adopting to wall-to-wall, a sort that as seeing in segment Goals companies particular mid-market our perspective in our of that

initiative. the cross-functional our lot as we to important of so their Dustin are really with customers And that that a mentioned, fact helping is most due

like Goals. the more and of brings other Asana, And done work sort being we’re it -- providing is then so that who in in then are from colleagues top-down want visibility And into in that naturally visibility in fashion. they how their that when and seeing, a are more agile can make coming executives sure are make they their where to opportunities planning bottlenecks, are where decisions

planning, is and enter are that’s our about we’re driving enter the as as prospective doing they’re So, we customers excited planning, of more doing much a customers interest that strategic season where really also in Goals something -- lot Asana. we

George Iwanyc

around pipeline? you uncertainty just generation? any customer Okay. new And Are customer And us I perspective Anne, the could give the like expansion. new some macro maybe understand with on seeing you changes

Anne Raimondi

customers. we really expand that we lot Yes. with to about The opportunity way is pipeline our have of think existing a

we Fortune are still of for of companies, XX% growth. So, in a seat but XXX have opportunity we lot

environment hard a working this it opportunity. this serving we’re on team they’re reaching in basis. pipeline around weekly to on super we managing make in grateful to that sure incredibly also and about is and really world quickly think monitoring then, the environment. of way vigilant And so, we how that we lot customers I’m are our the focus have on other in a And

Operator

Our next from Securities. question FBN Seyrafi is from Shebly

Shebly Seyrafi

kind growth next year, of slowed materially. headcount consensus slower the think ‘XX. fiscal revenue How just the headcount headcount related half growth XX% revenue impacts do of What you down you has growth your to in growth And that, your then are anticipating the at back you So, growth? year?

Tim Wan

Hey this is Shebly, Tim.

has we, So, our year. again, front-loaded environment hires macro is of this what I would The changed. many say

continue drive and think how they say, We’re around in and markets reps would ramping as very being, lot that those and and a itself are. how to And enable reps those help growth we reps successful, more of successful I for -- what be are gain rigorous those I more provide us. will traction to

We’ve our that do call. We’re for guidance of probably QX -- and of back provide at half. kind next guidance to not kind now the year. We’ll on this ready right for for given earnings the year

of of thinking a we’re So hopefully, to the sense about how kind enough business. have data that’s

Shebly Seyrafi

anticipate your an seeing peers in cycles, the back software seeing in needing more Are of you C-level have the of half do lot you in elongation a year? any compression, approvals. United that far? the sales deal noted so of secondly, at States, And Okay. that least And

Anne Raimondi

I’ll Ann. is that. this answer So

more in We’re especially certainly involved. buying companies, are enterprise decision-makers in there process, larger the environment in seeing this that

customers. I that serve as think we we’re move monitoring times. deal certainly larger we also cycle of and conscious just expected that But our upmarket and

have Something which is mind faster healthy to also to continue close cycle business, we has much very in keep a commercial times.

Operator

next question D.A. is from Robert with Davidson. Our Simmons

Robert Simmons

one. then churn? you of side And in seeing are conversion? of things, of the free-to-paid flip on gross the top-of-funnel type last more kind on up also activity, and terms following of [indiscernible] Kind What

Tim Wan

particularly seen customers. we material haven’t Yes. I any in our maintain large gross on change, low continue at would to say digits. Those single the churn,

really that of continue the add seen funnel, And a think in first to we cross-functional the teams the the funnel. to we top nature top think of to back our -- and haven’t win move and allows in of I of think enterprise. and how I that focus the Certainly, platform part value your I So it of is demonstrates the any expand. the terms is dramatic to upmarket shifts in point

go-to-market a would So, in shift of is, terms we’re I own of kind even where our in focusing. say, there

Anne Raimondi

higher paid to Yes. markets to sales think to with way and the lifetime is segments and direct we’re dial our value. our customers spend on The motion I’ll with on add continuing acquisition are about that. turn aligned it to that better

So seeing that’s And maybe change any we’re your about how not conversion, to in then free-to-paid top-of-funnel. answer think on question our that to quarter-over-quarter.

Dustin Moskovitz

work just to it’s the you Can point customer lines, XX ours the like I And small at look just of other one real companies, actually I have high-volume indicative very sometimes worth of just business customers, the when between just of jump that pointing SMBs well I health. as in but less top-of-funnel out, quick? want reading not on by small than customer the sometimes businesses, those think really and dominated very some that numbers out as management people employees. are total count sort a

it’s where less more really can be only upmarket, so, because of a good the that’s we’re And focused. Fortune indicator in customers and for there paying our focusing XXX leading given to be first-time us shift XXX, total

we expansion. And on lot seats. growth a our total So, focused on time report paid more to over of business like like and things why our is that’s

sort then our developing scale over health about prior growing market. our I XXX% volume out, bigger lot year. the fastest, acquiring And those not ties number the customers, you into new I dollar that how of think question back for A must expanding we’ll next And we’re additionally, it point existing the climbing. retention just And net in in a keeps again, really of of is and high get metric to evaluating of customers. customers our where management think and grow growth overall. a as work important the I companies that’s will be public

and similar as does or cohort XXX% better over that or it’s $XXX,XXX more, $XX,XXX for well. spending number customers So, translate to a

Operator

from JPMorgan. Our Pinjalim next is Bora question with

Pinjalim Bora

XX% in a players out? Fortune clearly, How claim XXX do But seeing lot think very the so these in a you peers -- kind time? probably How opportunity customer -- over some number a large you of CWM within obviously peers solid do of game you’re accounts. How see higher. of large traction front. Over your do the is coexist this about play kind you of of accounts Dustin, also these a number. or similar really your mix of great

Dustin Moskovitz

to asking that hear for you Thank I exactly Yes. love thing. type question. of that

economy right our us. in are talk small customers tend do to used that in and tend competitors what one in other accounts, at trust which those smaller, go in lot of this somebody is about not single we work are all just but we’ve hear using used deployments more know task talked you becomes you returns through And management special seeing to really increasing or Our Asana work of signs horizontal scale assign find team. everyone designed whole a first. out by deploy of competitive They their We from siloed deployment products, really seats give that you largest company. really want theory that, to much Asana, tend with into coexistence to you be infrastructure we’re functions. place further can if to anything industry. a now to their strategy firms haven’t you management product heard to mapping of be where strength coexisting a have experience these -- organization, largest that you to used the deployment I the our these that’s as they’re see pockets difference when And is like it’s in And increasing get talking tools the the company. the they’re about using a from in the It information, don’t you as with to out to XXX,XXX largest including about and all.

seats. talk but Sometimes different they about users, that’s active than paid

double down on reach into that So, confident I to pretty intend we success. customers, we have farthest those that and big feel the

Pinjalim Bora

the understand as bookings kind reach the us this versus of channel or calendar are portion flow as down move -- And that the two coming of it you from breakeven important in about slow How might today thinking you. be be of of towards building to Thank you -- Maybe end end ‘XX, indirect by goal would you Understood. especially cash how the indirect for the next channel? this years. help channel what hiring? at

Anne Raimondi

channels. small speak can a part It’s still indirect great but of the traction world. to we’re I Yes. partners some our business, with all over seeing

great seeing reach. We Europe, into both Throughout to traction of us partners India. have our and kind extend great industries in bring geographies we’re

So, that. still I business, would continue of in we to early invest It’s important say also as an that. but in see just that we’ll our part ourselves

Operator

question next Baer Our Stanley. Josh with Morgan is from

Josh Baer

over years, of seen markets software as a in various the versus in suites. solutions preference think as swing I we’ve -- pendulum far best-of-breed

over has And versus I’m three the work to state that the suites? what’s dynamic market, best-of-breed changed that the management last So, your macro Thanks. wondering, in given just environment? five of between months

Dustin Moskovitz

we outcomes work differentiation differentiated management big various richest value that management. the think a talked When over within customers. great for area sometimes That’s for software, one about best-of-breed this. product we’re question. work the most Yes. believers surface categories for I’ve companies of want and Certainly, has about product the years is and achieving really the the And

most players that product as solution organizations some we’re customers customers of local who the the see given We particular at So, it’s the they honestly, that it now. really, sort with engage stage are. in that to those like management, your of order And about the a a their whole sell sort management still suite. have haven’t work bundle to larger products that with I be behavior thinking even for include some compromise still really would We But and itself. more development within these of It’s dangerous category thought larger work to lot are difficult that just place divisions seeing in team. part of think right of of of this factor seen examples. a even Asana it think I honestly

that’s the as marked So, the part for anything looks I foreseeable haven’t definitely context. still future. change what like macro of seen

Operator

Our (sic) is next question [JMP from Patrick Securities]. with JPMorgan Walravens

Patrick Walravens

It’s you. JMP. Thank

forces. the like maybe with in So for there’s seems government major it or a all opportunity probably the Asana armed those in Anne Dustin, federal employees

how FedRAMP are not, that Asana in you do where And about process? is So, And opportunity? authorized? you if feel that

Anne Raimondi

Hey. for Thanks question. that

believe we everywhere there’s think for Asana that I cross-functional opportunity that there’s an collaboration.

broad think we Government verticals, local federal. as so, government. to And and both certainly about and industries from we’re super which is like looking

HIPAA the interest and compliance especially healthcare I We that for are mentioned, FedRAMP in on Dustin demand process. around think is out you’ll the focused customers. and meeting But customer our we’re same making see early looking really at sure us things needs, compliance. finishing then like take we’re approach

Operator

Q&A. That concludes our

now to remarks. closing any hand conference Catherine I’ll So, the back for

Catherine Buan

for everyone joining Thanks today. us

have I they’re be about Before CIO, one on the how October talking be and amazing to using just with we in Francisco. remind some strategic initiatives. an for XXth It of intimate Asana Q&A wanted close event our will here out, do we San best they’ll It’s you, customers. an

So looking look you. Thank you. out for invitation seeing we’re to the and forward

Operator

Thank That concludes for your call. today’s you participation.

disconnect now your You lines. may

Asana (ASAN) 8 Sep 222023 Q2 Earnings call transcript