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Asana Posts 45% Revenue Increase Despite Tough Macroeconomic Backdrop

Published 03/09/2023, 11:57 AM
Updated 07/09/2023, 06:31 AM
ASAN
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Asana Inc (NYSE:ASAN) shares moved sharply higher on Thursday after the online collaboration software company reported better-than-expected earnings and outlook.

For its fourth quarter, Asana reported a loss per share of $0.15, or $33.2 million. This is better than a loss of $0.25 per share reported for the same quarter of last year. Analysts were looking for a loss per share of $0.27.

Net loss in the three-month period stood at $95 million, or $0.44 per share, compared to a loss of $90 million, or $0.48 per share, in the year-ago quarter. Revenue jumped by 34% year-over-year to $150.2 million, better than the analyst consensus for revenue of $145.08 million.

Solid Results and Even Better Outlook

For the full fiscal 2023, the company posted an adjusted loss of $207.2 million, or $1.04 per share, compared to $162.9 million, or 92 cents per share, a year ago. Revenue in fiscal 2023 jumped 45% to $547.2 million.

“Revenues for the fiscal year were up 45 percent year over year and we reported significant improvement in operating margins,” said Dustin Moskovitz, co-founder and chief executive officer of Asana.

“We are grateful to work alongside some of the largest, most innovative enterprises in the world. This offers us unique insights into their complex business needs which helps to inform our product strategies and investments in areas that can shape the future of work management,” he added.

Asana said the number of customers spending $5,000 or more annually increased by 26% YoY to 19,432, while revenue from these users surged 42% during that period. The number of customers spending over $100,000 rose nearly 50% to 506.

The company reported an overall dollar-based net retention in the quarter of more than 115%, suggesting that customer spending is on the rise. Rates for customers spending $5,000 or more and $100,000 or more jumped to 120% and 135%, respectively.

Asana expects to report a loss per share of $0.18-0.19 for this quarter on revenue of $150-151 million. Analysts were looking for a loss per share of $0.22 on revenue of $150.32 million. On a full-year basis, ASAN expects a loss per share of $0.55-0.59 on revenue of $638-648 million.

Shares received an additional boost when CEO Moskovitz said on the earnings call that he is looking to buy up to 30 million shares. In his opinion, ASAN shares are undervalued “given the scale of the opportunity I see in front of us.”

Accordingly, the trading plan will be executed on June 8, 2023, at earliest.

He also said the company’s large customer base offers “unique insights into their complex business needs, which helps to inform our product strategies and investments in areas that can shape the future of work management.”

Keeps Growing Despite Challenging Macro

Last month, Asana hired two former Salesforce (NYSE:CRM) executives to reinforce its management team. Shannon Sullivan Duffy will be joining the work management company as its new chief marketing officer, while Neeracha Taychakhoonavudh will become the head of the customer experience.

Duffy will move to Asana’s headquarters in San Francisco, where she will take the duties of directing the global marketing strategy. Before joining, Duffy served as an executive vice president of cloud and industry marketing at Salesforce for eight years, after previously working at Facebook (NASDAQ:META), SourceForge, and Jigsaw.

Meanwhile, Taychakhoonavudh will use her new role to support Asana’s global business, after working at Salesforce for 13 years as executive vice president of global customer success.

“Both Shannon and Neeracha bring impressive enterprise experience and proven track records delivering for customers and driving business growth,” said Anne Raimondi, COO and head of business at Asana.

The latest earnings report, as well as the intention to keep strengthening key positions, underline Asana’s solid visibility despite a challenging macro environment. U.S. stocks trade lower this week after Federal Reserve Chair Jerome Powell warned of further interest rate hikes during his two-day monetary policy testimony before Congress.

On the other hand, the US Dollar Index spiked while the Treasury yield inversion reached its steepest level in over 40 years.

In his testimony, Powell reaffirmed the Fed’s commitment to bringing inflation to the 2% target, triggering a new stock sell-off. All three major stock indexes fell more than 1% on Tuesday.

Powell said the recent stronger-than-expected economic data, particularly in the labor market, and persisting inflation have urged the U.S. central bank to hike its policy rate in a more aggressive manner.

According to CME's FedWatch tool, financial markets are now pricing in a 70.5% chance of a half percentage point rate hike at the next Fed policy meeting on March 21 and March 22. The Fed is likely to focus on Friday’s jobs report and next week’s inflation data before committing to a move at its next meeting.

Summary

Asana shares exploded higher on Thursday after the software company reported positive results while guidance also came in ahead of market views. Shares were also boosted by the CEO's commitment to buy up to 30 million Asana shares as he feels they are “undervalued.”

. . .

Shane Neagle is the EIC of The Tokenist. Check out The Tokenist’s free newsletter, Five Minute Finance, for weekly analysis of the biggest trends in finance and technology.

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