Summary
Revenue of $162.5 million in the second quarter of fiscal 2024 rose 20.4% from the prior-year quarter. Revenue for the six months ended July 31, 2023 was $314.9 million, up 23.2%. Gross profit of $146.2 million rose 20.7%, and gross margin edged up to 90.0% from 89.8%. The margin line is the steadiest part of the report, and it gives management room to keep funding sales and product work.
Profitability improved at the bottom line. GAAP operating loss narrowed to $73.4 million, an operating margin of -45.2%, from a loss of $111.3 million, a margin of -82.5%, in the second quarter of fiscal 2023. GAAP net loss narrowed to $71.4 million from $113.0 million, and diluted loss per share came to $0.33 versus $0.59. Excluding share-based compensation and other items, non-GAAP operating loss was $10.4 million against $62.6 million a year earlier, and non-GAAP net loss was $8.4 million, or $0.04 per share, against $64.3 million and $0.34. The spread between GAAP and adjusted results stays wide, and that gap is the central valuation question.
Cash was the standout. Operating cash flow was $20.2 million for the quarter, up from negative $41.6 million a year earlier, and free cash flow was $14.6 million versus negative $42.3 million. For the six months, operating cash flow was $5.6 million, up from negative $82.8 million, while free cash flow was negative $2.0 million against negative $84.5 million. Capital expenditures, a cash outflow, rose to $4.1 million from $0.6 million. Deferred revenue, current, stood at $254.9 million on July 31, 2023, up 23.1% from a year earlier, and remaining performance obligations were $333.4 million.
Customer metrics kept growing, though the expansion rates cooled. Asana ended the quarter with 20,782 customers spending $5,000 or more on an annualized basis, up 15% year over year, and that group contributed about 74% of revenue in the quarter. Customers spending $100,000 or more rose 20% to 553. The overall dollar-based net retention rate was over 105%, down from over 120% a year earlier. It was over 110% for the $5,000-plus accounts against over 130%, and over 125% for the $100,000-plus accounts against over 145%. Expansion is still positive, but the direction of those retention rates is the clearest warning sign in the release.
Guidance for the third quarter of fiscal 2024 points to year over year growth of 16%, a non-GAAP operating loss of $25.0 million to $23.0 million, and non-GAAP net loss per share of $0.11 to $0.10 on roughly 221 million shares. For the full fiscal year, the outlook calls for growth of 17% to 18%, a non-GAAP operating loss of $93.0 million to $85.0 million, and non-GAAP net loss per share of $0.42 to $0.39 on about 219 million shares. Both targets still assume a non-GAAP operating loss, so profitability on that basis is not planned inside fiscal 2024.
Management listed a long set of external risks: elevated inflation, Federal Reserve rate increases, bank failures, supply chain disruptions, currency swings, the Russian invasion of Ukraine, and the residual impact of the COVID-19 pandemic. Those conditions could weigh on global IT spending and lengthen sales cycles. Competition in work management, the ability to keep and expand customers, and the integration of artificial intelligence are also named risks. Asana cut about 9% of its global workforce in November 2022 and keeps investing in products such as Asana Intelligence, while adding Ed McDonnell as chief revenue officer.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q2 FY2024 | Q1 FY2024 | QoQ | Q2 FY2023 | YoY |
|---|---|---|---|---|---|
| Revenue | $162.5M | $152.4M | +6.6% | $134.9M | +20.4% |
| Gross profit | $146.2M | $137.6M | +6.3% | $121.1M | +20.7% |
| Gross margin | 90.0% | 90.3% | -0.3 pp | 89.8% | +0.2 pp |
| Research & development | $84.4M | $76.3M | +10.6% | $75.2M | +12.1% |
| Sales & marketing | $96.4M | $93.2M | +3.4% | $110.4M | -12.6% |
| General & administrative | $38.8M | $33.3M | +16.6% | $46.8M | -17.1% |
| Total operating expenses | $219.6M | $202.8M | +8.3% | $232.4M | -5.5% |
| Operating income (loss) | -$73.4M | -$65.2M | -12.5% | -$111.3M | +34.1% |
| Operating margin | -45.2% | -42.8% | -2.4 pp | -82.5% | +37.3 pp |
| Net income (loss) | -$71.4M | -$61.5M | -16.2% | -$113.0M | +36.8% |
| Net margin | -44.0% | -40.3% | -3.6 pp | -83.8% | +39.8 pp |
| Diluted EPS | -$0.33 | -$0.28 | -$0.05 | -$0.59 | +$0.26 |
| Customers | 20,782 | 19,864 | +4.6% | — | — |
| Net retention rate | 105.0% | 110.0% | -5.0 pp | 120.0% | -15.0 pp |
Risks
MD&A Current Economic Conditions flags elevated inflation, U.S. Federal Reserve rate hikes, bank failures, supply chain disruptions, currency fluctuations, the Russian invasion of Ukraine, and residual COVID impacts, which have harmed and may continue to harm global IT spending and customer buying patterns.
The company says macroeconomic conditions have caused and may continue to cause longer sales cycles, reduced renewal rates, reduced customer spend, and delayed payments, especially as it targets larger enterprise customers that require costly and less predictable sales efforts.
Risk factors repeatedly highlight that the company must successfully deploy artificial intelligence in its product while competitors may use AI or machine learning to improve their offerings; it also notes limited insight into data privacy or security practices of third-party AI data suppliers.
Management states that it expects its revenue growth rate to decline in future periods and that recent rapid growth rates may not be indicative of future growth, even though FY2024 Q2 revenue was up 20.4% versus the prior-year quarter.
The November 2022 plan to reduce global headcount by approximately 9% may not deliver anticipated savings and operational efficiencies, and the company may need additional workforce reductions; the restructuring and future reductions may also hurt recruiting and retention.
Substantially all revenues come from a single work management solution, so changes in demand, market acceptance, or customer preferences for that platform could disproportionately harm results.
The platform relies on Amazon Web Services for cloud computing infrastructure, and any significant disruption, pricing increase, termination, or unfavorable change in AWS terms could harm operations and customer satisfaction.
The November 2022 Senior Secured Credit Facility contains financial covenants, including a consolidated adjusted quick ratio of 1.25 to 1.00 and minimum cash adjusted EBITDA tested quarterly; non-compliance could make borrowings immediately due and payable.
For the six months ended July 31, 2023, 39% of revenues were generated outside the United States, exposing the company to foreign regulatory, data privacy, tax, currency, and geopolitical risks, including the Russia-Ukraine conflict and related sanctions.
The company's marketing strategy relies on free and trial subscription plans, but historically only a small percentage of free or trial users converted to paid plans; failure to convert would keep hosting costs while limiting revenue growth.
The company depends on co-founder, President, CEO, and Chair Dustin Moskovitz and other key personnel; it has no key person insurance, and loss of these individuals could disrupt operations and growth.
SaaS KPIs
All quarters →Free cash flow
Non-GAAP operating margin
Paying Customers
Non-GAAP Operating Loss
Summary, forecast, risks and KPIs are extracted from Asana, Inc.'s SEC filings for Q2 FY2024 (10-Q / 10-K and the 8-K earnings release); GAAP figures in the summary are checked against the reported XBRL data. They can contain errors; the filings are authoritative. Processed Oct 2, 2026.