Work management software maker Asana (NYSE: ASAN) fell short of the market’s revenue expectations in Q1 CY2025, but sales rose 8.6% year on year to $187.3 million. Its non-GAAP profit of $0.05 per share was significantly above analysts’ consensus estimates.
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Asana (ASAN) Q1 CY2025 Highlights:
- Revenue: $187.3 million (8.6% year-on-year growth)
- Adjusted EPS: $0.05 vs analyst estimates of $0.02 (significant beat)
- Adjusted Operating Income: $8.14 million vs analyst estimates of $2.70 million (4.3% margin, significant beat)
- Revenue Guidance for Q2 CY2025 is $193 million at the midpoint, roughly in line with what analysts were expecting
- Management raised its full-year Adjusted EPS guidance to $0.22 at the midpoint, a 12.8% increase
- Operating Margin: -23.4%, up from -38.4% in the same quarter last year
- Net Revenue Retention Rate: 95%
- Annual Recurring Revenue: $773.4 million at quarter end, up 8.9% year on year
- Billings: $174.8 million at quarter end, down 11.9% year on year
- Market Capitalization: $4.47 billion
StockStory’s Take
Asana’s first quarter results were shaped by its first achievement of non-GAAP profitability and the early traction of its AI Studio offering. Management highlighted that AI Studio reached $1 million in annual recurring revenue (ARR) during Q1, with adoption spanning diverse industries such as manufacturing, financial services, and retail. CEO Dustin Moskovitz pointed to a "landmark" $100 million, three-year renewal with a global enterprise, describing it as a demonstration of Asana’s capacity to handle complex, cross-functional workflows at scale. The company also noted ongoing momentum outside the technology sector, with non-tech verticals growing faster than the overall business and enterprise customer expansion continuing, particularly for customers spending over $100,000 annually.
Looking ahead, Asana’s guidance is grounded in expanding its AI capabilities and broadening access to AI Studio through new product tiers and workflow templates. Management described a robust product roadmap, including the upcoming AI Studio Plus tier for small and mid-sized businesses and the planned launch of AI teammates—digital agents designed to further automate workflows. CFO Sonalee Parekh noted, “The low end of our guidance range incorporates a more cautious view, factoring in potential macroeconomic headwinds and increased buyer scrutiny, particularly in enterprise and technology sectors.” The company aims to balance continued investment in product innovation and customer success with ongoing efficiency measures, expecting that new AI-driven features and improved onboarding will support long-term retention and growth.
Key Insights from Management’s Remarks
Management attributed the quarter’s performance to strong enterprise deal activity, rapid AI Studio adoption, and improved operating efficiency, while acknowledging ongoing challenges in customer retention and net revenue retention rates.
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AI Studio adoption accelerates: The AI Studio platform surpassed $1 million in annual recurring revenue within months of general availability, with management highlighting widespread adoption across several industries and geographic regions. Customers are using AI Studio to automate business-critical workflows, and early usage patterns indicate increasing credit consumption and engagement over time.
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Enterprise deals drive visibility: Asana secured the largest deal in its history—a $100 million, three-year renewal with a major global employer. While this deal expanded total contract value, it involved a modest annual contract value (ACV) downgrade, which management expects will weigh on net revenue retention (NRR) in subsequent quarters. The contract provides long-term revenue visibility and is seen as validation of Asana’s value in large-scale, complex organizations.
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Non-tech verticals outpace tech: Growth in non-technology sectors, such as manufacturing, energy, and financial services, continues to exceed that of the tech sector. Management noted that non-tech verticals now comprise the majority of new business and are growing in the mid-teens year over year, supporting a diversified customer base.
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Partner channel momentum: Asana’s revamped partner program contributed to double-digit growth in partner-led deals, particularly in APAC and EMEA regions. Nearly 40% of APAC transactions involved channel partners, with partners playing a key role in scaling AI Studio adoption and supporting digital transformation initiatives.
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Efficiency improvements support margins: Cost reductions and operational discipline, including reallocation of resources to higher-productivity regions and tighter marketing spend, contributed to significant improvement in non-GAAP operating margins and positive free cash flow for the quarter. Management cited ongoing efforts in vendor rationalization, geographic workforce optimization, and increased productivity as levers for further margin expansion.
Drivers of Future Performance
Asana’s outlook is shaped by AI product expansion, continued enterprise adoption, and the need to address retention challenges amid evolving macroeconomic conditions.
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AI-driven product expansion: The company is introducing new AI Studio tiers, including Plus and Pro, and rolling out the Smart Workflow Gallery to accelerate adoption across customer segments. Management expects broader access to AI functionality will drive incremental revenue growth and reduce reliance on seat-based licensing.
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Retention and customer health initiatives: Asana is focusing on lowering churn and downgrades, especially among small businesses and enterprise accounts, through targeted onboarding, health scoring, and foundational service plans. Management believes these efforts, along with new product add-ons, will gradually improve net revenue retention despite near-term headwinds from large contract renewals and budget scrutiny.
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Macroeconomic and procurement risks: Management acknowledged early signs of buyer caution, especially in the enterprise and technology verticals, which could result in slower sales cycles and increased downgrade activity. The expanded guidance range for the year reflects this uncertainty, and Asana plans to maintain cost discipline to preserve profitability if market conditions worsen.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be monitoring (1) the uptake of new AI Studio tiers and workflow templates across customer segments, (2) progress in mitigating churn and driving net revenue retention improvement, and (3) the pace of large enterprise deal activity and partner-led sales execution. The rollout of AI teammates and further product add-ons will also be key indicators of Asana’s ability to drive incremental growth and diversify its revenue base.
Asana currently trades at a forward price-to-sales ratio of 5.6×. In the wake of earnings, is it a buy or sell? Find out in our full research report (it’s free).
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