Asana Announces Record Second Quarter Fiscal 2023 Revenues

Second quarter revenue growth up 51% year over year

Revenues from customers spending $5,000 or more on an annualized basis grew 64% year over year

Customers spending $100,000 or more on an annualized basis grew 105% year over year

Announces $350 million private placement

Asana, Inc. (NYSE: ASAN)(LTSE: ASAN), a leading work management platform for organizations, today reported financial results for its second quarter fiscal 2023 ended July 31, 2022.

“This quarter we beat our revenue guidance by 6 percent and non-GAAP operating loss guidance by 14 percent," said Dustin Moskovitz, co-founder and chief executive officer of Asana. “Growth was driven by large enterprise deals and momentum in the US, with the number of customers spending $100,000 or more on an annualized basis up 105 percent. We believe that Asana is the most scalable work management platform out there, as evidenced by our broad deployment and millions of users worldwide, including our largest customer deployment of over 100,000 paid seats.”

“I am investing further in Asana because I strongly believe the market opportunity is enormous and that the Work Graph is the best possible solution for helping enterprises achieve their most important goals,” Moskovitz continued, “The market is ready and our customers are validating our strategy every day. With the additional $350 million in capital announced today, we believe we are fully-funded to execute on our current strategies and well-positioned to reach free cash flow positive before the end of calendar 2024.”

Second Quarter Fiscal 2023 Financial Highlights

• Revenues: Revenues were $134.9 million, an increase of 51% year over year.
• Operating Loss: GAAP operating loss was $111.3 million, or 82% of revenues, compared to GAAP operating loss of $60.1 million, or 67% of revenues, in the second quarter of fiscal 2022. Non-GAAP operating loss was $62.6 million, or 46% of revenues, compared to non-GAAP operating loss of $38.6 million, or 43% of revenues, in the second quarter of fiscal 2022.
• Net Loss: GAAP net loss was $113.0 million, compared to GAAP net loss of $68.4 million in the second quarter of fiscal 2022. GAAP net loss per share was $0.59, compared to GAAP net loss per share of $0.40 in the second quarter of fiscal 2022. Non-GAAP net loss was $64.3 million, compared to non-GAAP net loss of $39.8 million in the second quarter of fiscal 2022. Non-GAAP net loss per share was $0.34, compared to non-GAAP net loss per share of $0.23 in the second quarter of fiscal 2022.
• Cash Flow: Cash flows from operating activities were negative $41.6 million, compared to negative $8.5 million in the second quarter of fiscal 2022. Free cash flow was negative $42.3 million, compared to negative $9.3 million in the second quarter of fiscal 2022.

Business Highlights

• Named the Leader in G2’s Enterprise Grid® in the OKR software market, Project Management, Product Management, and others.
• Ended the quarter with over 131,000 paying customers and over 2.5 million paid seats.
• The number of customers spending $5,000 or more on an annualized basis in Q2 grew to 18,040, an increase of 41% year over year. Revenues from these customers in Q2 grew 64% year over year.
• The number of customers spending $50,000 or more on an annualized basis in Q2 grew to 1,141, an increase of 91% year over year.
• The number of customers spending $100,000 or more on an annualized basis in Q2 grew to 462, an increase of 105% year over year.
• Overall dollar-based net retention rate in Q2 was over 120%.
• Dollar-based net retention rate for customers with $5,000 or more in annualized spend in Q2 was over 130%.
• Dollar-based net retention rate for customers with $50,000 or more in annualized spend in Q2 was over 145%.
• Unveiled Employee Impact Suite of features and partnerships which gives managers the tools to better support and empower their teams with improved alignment and focus.
• Launched inaugural Environmental, Social, and Governance report aligned with Sustainability Accounting Standards Board metrics, and furnished our first year of climate data.
• Opened a new Data Center in Australia, our second international Data Center.
• Named a Best Workplaces in Bay Area by Great Place to Work® and Fortune for the Sixth Year in a Row.

Financial Outlook

For the third quarter of fiscal 2023, Asana expects:

• Revenues of $138.5 million to $139.5 million, representing year over year growth of 38% to 39%.
• Non-GAAP operating loss of $66 million to $63 million.
• Non-GAAP net loss per share of $0.33 to $0.32, assuming basic and diluted weighted average shares outstanding of approximately 203.0 million.

For fiscal year 2023, Asana expects revenues of $544.0 million to $547.0 million, representing year over year growth of 44% to 45%.

These statements are forward-looking and actual results may materially differ. Refer to the “Forward-Looking Statements” section below for information on the factors that could cause Asana’s actual results to materially differ from these forward-looking statements.

A reconciliation of non-GAAP outlook measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. Asana has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its second quarter fiscal year 2023 non-GAAP results included in this press release.

Earnings Conference Call Information

Asana will hold a conference call and live webcast today to discuss these results at 1:30 p.m. Pacific Time. A live webcast and replay will be available on the Asana Investor Relations website at: https://investors.asana.com. The conference call can also be accessed by dialing (844) 200-6205, or +1 929-526-1599 (outside of the US). The conference access code is 400299.

Forward-Looking Statements

This press release contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management’s beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, statements about reaching cash flow positive before the end of calendar 2024, our ability to execute on our current strategies, Asana’s outlook for the third fiscal quarter and the full fiscal year ending January 31, 2023, expected benefits of our offerings, Asana’s market position, and potential market opportunities. Forward-looking statements generally relate to future events or Asana’s future financial or operating performance. Forward-looking statements include all statements that are not historical facts and in some cases can be identified by terms such as “anticipate,” “expect,” “intend,” “plan,” “believe,” “continue,” “could,” “potential,” “may,” “will,” “goal,” or similar expressions and the negatives of those terms. However, not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including factors beyond Asana’s control, that may cause Asana’s actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: Asana’s ability to achieve future growth and sustain its growth rate, Asana’s ability to attract and retain customers and increase sales to its customers, Asana’s ability to develop and release new products and services and to scale its platform, Asana’s ability to increase adoption of its platform through Asana’s self-service model, Asana’s ability to maintain and grow its relationships with strategic partners, the highly competitive and rapidly evolving market in which Asana participates, Asana’s international expansion strategies, and the impact of the COVID-19 pandemic. Further information on risks that could cause actual results to differ materially from forecasted results are included in Asana’s filings with the SEC, including Asana’s Annual Report on Form 10-K for the year ended January 31, 2022. Any forward-looking statements contained in this press release are based on assumptions that Asana believes to be reasonable as of this date. Except as required by law, Asana assumes no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Use of Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, Asana uses certain non-GAAP financial measures to understand and evaluate its core operating performance. In this release, Asana’s non-GAAP gross profit, gross margin, operating expenses, operating expenses as a percentage of revenue, operating loss, operating margin, net loss, net loss per share, free cash flow are not presented in accordance with GAAP and are not intended to be used in lieu of GAAP presentations of results of operations. These non-GAAP financial measures, which may be different from similarly titled measures used by other companies, are presented to enhance investors’ overall understanding of Asana’s financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found in the accompanying financial statements included with this press release.

Asana believes that these non-GAAP financial measures provide useful information about its financial performance, enhance the overall understanding of Asana’s past performance and future prospects, facilitate period-to-period comparisons of operations, and allow for greater transparency with respect to important metrics used by Asana’s management for financial and operational decision-making. Asana is presenting these non-GAAP financial metrics to assist investors in seeing its financial performance through the eyes of management, and because Asana believes that these measures provide an additional tool for investors to use in comparing its core financial performance over multiple periods with other companies in Asana’s industry.

Asana believes excluding the following items from the GAAP Condensed Consolidated Statements of Operations is useful to investors and others in assessing Asana’s operating performance due to the following factors:

• Share-based compensation expenses. Although share-based compensation is an important aspect of the compensation of our employees and executives, management believes it is useful to exclude share-based compensation expenses to better understand the long-term performance of our core business and to facilitate comparison of our results to those of peer companies.
• Employer payroll tax associated with RSUs. The amount of employer payroll tax-related items on employee stock transactions is dependent on Asana’s stock price and other factors that are beyond its control and that do not correlate to the operation of the business.
• Non-cash and non-recurring expenses. Non-cash expenses include the amortization of debt discount and non-cash interest related to the senior mandatory convertible promissory notes and non-recurring expenses include direct listing fees. Asana believes the exclusion of the non-cash and non-recurring items provides useful supplemental information to investors and facilitates the analysis of our operation results and comparison of operating results across reporting periods.

There are a number of limitations related to the use of non-GAAP measures as compared to GAAP measures of gross profit, gross margin, operating expenses, operating expenses as a percentage of revenue, operating loss, operating margin, net loss, and net loss per share, including that the non-GAAP measures exclude stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in Asana’s business and an important part of its compensation strategy.

Asana also uses the non-GAAP financial measure of free cash flow, which is defined as net cash from operating activities less cash used for purchases of property and equipment and capitalized internal-use software costs, plus non-recurring expenditures such as capital expenditures from the purchases of property and equipment associated with the build-out of Asana’s corporate headquarters in San Francisco. Asana believes free cash flow is an important liquidity measure of the cash that is available, after capital expenditures and operational expenses, for investment in its business and to make acquisitions. Asana believes that free cash flow is useful to investors as a liquidity measure because it measures Asana’s ability to generate or use cash. There are a number of limitations related to the use of free cash flow as compared to net cash from operating activities, including that free cash flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.

Definitions of Business Metrics

Customers spending over $5,000, $50,000, and $100,000 on an annualized basis

We define customers spending over $5,000, $50,000, and $100,000 as those organizations on a paid subscription plan that had $5,000 or more or $50,000 or more or $100,000 or more in annualized GAAP revenues in a given quarter, respectively, inclusive of discounts.

Dollar-based net retention rate

Asana’s reported dollar-based net retention rate equals the simple arithmetic average of its quarterly dollar-based net retention rate for the four quarters ending with the most recent fiscal quarter. Asana calculates its dollar-based net retention rate by comparing its revenues from the same set of customers in a given quarter, relative to the comparable prior-year period. To calculate Asana’s dollar-based net retention rate for a given quarter, Asana starts with the revenues in that quarter from customers that generated revenues in the same quarter of the prior year. Asana then divides that amount by the revenues attributable to that same group of customers in the prior-year quarter. Current period revenues include any upsells and are net of contraction or attrition over the trailing 12 months, but exclude revenues from new customers in the current period. Asana expects its dollar-based net retention rate to fluctuate in future periods due to a number of factors, including the expected growth of its revenue base, the level of penetration within its customer base, and its ability to retain its customers.

About Asana

Asana helps organizations orchestrate their work, from small projects to strategic initiatives. Headquartered in San Francisco, CA, Asana has more than 131,000 paying customers and millions of free organizations over 200 countries and territories. Global customers such as Amazon, Affirm, Japan Airlines, and Sky rely on Asana to manage everything from company objectives to digital transformation to product launches and marketing campaigns. For more information, visit www.asana.com.

Disclosure of Material Information

Asana announces material information to its investors using SEC filings, press releases, public conference calls, and on its investor relations page of Asana’s website at https://investors.asana.com. Asana uses these channels, as well as social media, including its Twitter account (@asana), its blog (blog.asana.com), its LinkedIn page (www.linkedin.com/company/asana), its Instagram account (@asana), and its Facebook page (www.facebook.com/asana/), to communicate with investors and the public about Asana, its products and services and other matters. Therefore, Asana encourages investors, the media and others interested in Asana to review the information it makes public in these locations, as such information could be deemed to be material information.

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(1) Amounts include stock-based compensation expense as follows:

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