Two decades ago, Dustin Moskovitz joined forces with a friend of his who happened to be an engineer at Facebook (NASDAQ:FB).
Their mission was to "help humanity by enabling teams to work together effortlessly." They created an app, which was put to use by Facebook.
In 2008, they founded Asana (NYSE:ASAN) to take their project to another level. Asana's tools include project-management dashboards, timelines, and defined milestones.
Management believes that in 2023, there will be 1.25 billion knowledge workers worldwide, which will represent a $32 billion total addressable market.
With less than $300 million in revenue in 2020, Asana has captured less than 1% of the vast market. In the tech business, success comes from a combination of two factors:
- A strong defense comes in the form of high switching costs or high barriers to entry.
- A potent offense, or the ability to better fulfill its mission and to create new revenue streams.
Asana offers a freemium subscription, allowing companies and their employees to try the product and upgrade when more features are needed.
The more tools are added, the higher the switching cost in terms of complexity to change.
Moreover, Asana managed to fulfill its customers' needs better and to create new revenue streams. The dollar-based customer retention rate was 130% last quarter.
Pandemic-driven demand sent Asiana's revenue soaring 58% in 2020. However, we were not impressed with those numbers as teleworking and the reorganizing of companies to cope with the lockdown contributed enormously to the increase.
Asana 2021 Q1 and Q2 Highlights
- Quarter 1, revenue climbed 61%. Growth even accelerated in quarter 2, with a 72% jump, and gross profit accelerated faster.
- We believe that the company will continue to benefit from the rising demand for its SaaS and that it has the potential to be a multi-bagger.
- Fundamental Overview:
- Revenue could grow by 25.5% for the next three years.
- The gross margin was 82% second-quarter 2021.
- Free cash flow to equity could climb by 65% per year for the next decade.
- The debt to equity ratio was a low 14% as of July 2021.
- Petroski F-score, Altman Z-score, Beneish M-score all tend to indicate that Asana is a healthy company.
- Cash to debt was 149% as of July 2021.