Summary
Asana closed the third quarter of fiscal 2021 with revenue of $58.9 million, up 55% from $38.1 million in the prior-year quarter. The top line also grew 60% year to date, reaching $158.6 million from $99.1 million. Gross profit rose to $51.6 million from $32.8 million, and gross margin improved to 87.6% from 86.0%. Profitability on a GAAP basis stayed deeply negative. Operating loss narrowed to $61.9 million from $63.1 million a year earlier, and operating margin improved to -105.1% from -165.7%. Net loss widened to $73.3 million from $62.8 million, and diluted loss per share was $0.65. For the first nine months, net loss widened to $150.2 million from $93.3 million, and diluted loss per share was $1.70.
Operational momentum stayed strong. Asana ended the quarter with over 89,000 paying customers, up from over 73,000 a year earlier. Customers spending over $5,000 on an annualized basis grew to 8,938, an increase of 58% year over year, and those spending over $50,000 grew to 318, an increase of 104%. The overall dollar-based net retention rate was over 115%, down from over 120% a year earlier. High-spend cohorts held up better. Dollar-based net retention was over 125% for customers spending over $5,000 on an annualized basis and over 140% for those spending over $50,000. The top 100 customers accounted for approximately 11% of revenue in the quarter and 10% for the nine-month period. No single customer accounted for more than 1% of revenue.
Cash generation remained negative. Operating cash flow was negative $34.4 million in the quarter and negative $74.7 million for the first nine months, compared with negative $24.0 million in the prior-year nine-month period. Capital expenditures were $22.8 million in the quarter and $35.2 million year to date, up from $1.9 million in the prior-year nine-month period, largely tied to the build-out of the new corporate headquarters. Free cash flow was negative $19.5 million, compared with negative $11.6 million in the prior-year quarter. On a non-GAAP basis, operating loss was $37.3 million, or 63.3% of revenue, compared with $21.5 million, or 56.3% of revenue, a year earlier. Non-GAAP net loss was $38.3 million, compared with $21.2 million, and non-GAAP net loss per share was $0.34, compared with $0.30. Total deferred revenue stood at $90.1 million as of October 31, 2020.
Management raised its fiscal year outlook. For the fourth quarter of fiscal 2021, Asana guided to year-over-year revenue growth of 43% to 45%, non-GAAP operating loss of $42.5 million to $39.5 million, and non-GAAP net loss per share of $0.27 to $0.25, assuming basic and diluted weighted average shares outstanding of approximately 158 million. For the full fiscal year 2021, the company guided to year-over-year revenue growth of 55%, non-GAAP operating loss of $130.8 million to $127.8 million, and non-GAAP net loss per share of $1.24 to $1.21, assuming basic and diluted weighted average shares outstanding of approximately 106 million.
The quarter came with familiar risks. Asana competes in a highly competitive and rapidly evolving market, and it must keep attracting and retaining customers, increase sales to existing accounts, ship new products, and scale its platform. The COVID-19 pandemic has disrupted its operations and those of its partners and customers. Management said the pandemic hit smaller businesses disproportionately, and that pressure contributed to the decline in the overall dollar-based net retention rate. Interest expense tied to the senior mandatory convertible promissory notes issued to a trust affiliated with the CEO weighed on the bottom line. The company also continues to spend on its corporate headquarters and expects to incur additional costs as a public company. It has a history of losses and negative operating cash flow.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2021 | Q2 FY2021 | QoQ | Q3 FY2020 | YoY |
|---|---|---|---|---|---|
| Revenue | $58.9M | — | — | — | — |
| Gross profit | $51.6M | — | — | — | — |
| Gross margin | 87.6% | — | — | — | — |
| Research & development | $33.0M | — | — | — | — |
| Sales & marketing | $48.0M | — | — | — | — |
| General & administrative | $32.5M | — | — | — | — |
| Total operating expenses | $113.5M | — | — | — | — |
| Operating income (loss) | -$61.9M | — | — | — | — |
| Operating margin | -105.1% | — | — | — | — |
| Net income (loss) | -$73.3M | — | — | — | — |
| Net margin | -124.4% | — | — | — | — |
| Net retention rate | 115.0% | — | — | — | — |
Risks
COVID-19 has temporarily closed offices, disrupted partners and customers, and caused longer sales cycles and a disproportionate impact on smaller businesses. The dollar-based net retention rate declined year over year to over 115% as of October 31, 2020 from over 120% as of October 31, 2019.
The shift toward larger enterprise customers requires costly and sophisticated sales efforts with longer sales cycles and less predictability. Sales and marketing expenses increased $12.1 million, or 34%, during the three months ended October 31, 2020.
The work management market is highly competitive with competitors including Smartsheet, monday.com, Microsoft, Google, and Atlassian. Price pressure and COVID-19-related price concessions could reduce revenue, gross profit, and gross margin and cause loss of market share.
Success depends on key personnel, especially co-founder, President, CEO, and Chair Dustin Moskovitz. Competition for sales, engineering, and executive talent is intense in the San Francisco Bay Area, equity incentives may be less effective, and the company has no key person insurance.
Net loss widened to $150.20 million for the nine months ended October 31, 2020 from $93.34 million in the prior-year period. Operating cash flow for the nine months was down 210.8% to negative $74.70 million, and accumulated deficit was $479.9 million as of October 31, 2020.
Data protection laws including GDPR, CCPA, CPRA, and Schrems II create compliance costs and potential fines up to €20 million or 4% of global revenues. Evolving rules could require costly data localization or product changes.
The company expects its revenue growth rate to decline in future periods even after revenue rose 54.7% in FY2021 Q3 and 60.0% year to date. Operating expenses are expected to increase, and if revenue growth does not offset those increases, financial condition will be harmed.
Security breaches could expose confidential data and require breach remediation. Risk is increased by COVID-19-themed phishing attacks because most employees work remotely on non-corporate-managed networks.
The platform is hosted on AWS under a long-term commitment. Any significant disruption, limitation of access, price increase, or unfavorable terms could harm operations, and transitioning cloud providers would require significant time and expense.
Substantially all revenues derive from a single solution, so slower adoption of work management solutions would disproportionately harm the business. No single customer accounts for more than 1% of revenues, and top 100 customers were approximately 11% and 10% of revenues for the three and nine months ended October 31, 2020.
The company issued $450.0 million principal amount of senior mandatory convertible notes to a trust affiliated with its CEO. Interest expense increased $25.7 million for the nine months ended October 31, 2020 due to the notes, and $13.0 million was drawn under a $40.0 million term loan as of October 31, 2020.
The dual-class structure and CEO Dustin Moskovitz's significant beneficial ownership concentrate voting control. Conversion of the 2020 Notes could increase his shares and voting power, and no stockholders are subject to contractual lock-up agreements.
SaaS KPIs
All quarters →Free cash flow
Non-GAAP operating margin
Net Revenue Retention
Non-GAAP Operating Loss
Summary, forecast, risks and KPIs are extracted from Asana, Inc.'s SEC filings for Q3 FY2021 (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.