Summary
Asana reported $141.4 million of revenue in the third quarter of fiscal 2023, up 41% from $100.3 million in the prior-year quarter. Revenue for the first nine months of fiscal 2023 was $397.0 million, up 49% from $266.5 million. Growth came from new paying customers, a sales mix shift toward Enterprise and Business plans, and expansion inside the existing base. Paying customers totaled over 135,000 at October 31, 2022, up from over 114,000 a year earlier. Customers spending $5,000 or more on an annualized basis reached 18,700, an increase of 32%, and they produced about 73% of quarterly revenue. Customers spending $100,000 or more grew to 493, an increase of 78%. Dollar-based net retention was over 120% overall, over 128% for the $5,000 cohort, and over 140% for the $100,000 cohort. Management said the largest deployment now exceeds 150,000 seats.
Margins slipped. Gross margin was 89.3% for the quarter, down from 90.5% a year earlier, and gross profit was $126.3 million, up 39.1%. Hosting costs, personnel costs, and credit card processing fees drove the decline. GAAP operating loss was $101.1 million, compared with an operating loss of $68.1 million in the third quarter of fiscal 2022, and the operating margin was negative 71.5%, down from negative 67.9%. GAAP net loss was $100.9 million, compared with $69.3 million, and GAAP net loss per diluted share was $0.49, compared with $0.37. Non-GAAP operating loss was $52.6 million, or 37% of revenue, against $41.3 million, or 41% of revenue, a year earlier. Non-GAAP net loss was $52.4 million, against $42.5 million.
Cash burn deepened. Operating cash flow was negative $46.2 million, compared with negative $28.5 million in the prior-year quarter, and negative $129.0 million for the first nine months, compared with negative $44.5 million. Free cash flow was negative $48.5 million, compared with negative $29.5 million. Capital expenditures were $1.46 million, down from $10.75 million, and $3.1 million for the nine months, down from $40.3 million. Deferred revenue, current, was $212.2 million, up 40.9% from $150.6 million. In September 2022 the chief executive bought 19,273,127 Class A shares at $18.16 per share, for aggregate proceeds of $350 million. Management said cash, cash equivalents, marketable securities, and amounts available under the term loan facility should cover working capital and capital expenditure needs for at least the next 12 months.
Guidance for the fourth quarter of fiscal 2023 points to year-over-year revenue growth of 30% at the midpoint, a non-GAAP operating loss of $60.0 million to $57.0 million, and non-GAAP net loss per share of $0.28 to $0.27 on roughly 215 million basic and diluted weighted average shares. For the full fiscal year 2023, the company guided to revenue growth of 43%, a non-GAAP operating loss of $230.0 million to $227.0 million, and non-GAAP net loss per share of $1.15 to $1.14 on roughly 200 million shares. A reconciliation of the non-GAAP outlook to GAAP is not available without unreasonable effort. Risks named in the filing include macroeconomic cross currents, elevated inflation, interest rate increases by the U.S. Federal Reserve, supply chain disruptions, currency exchange fluctuations, the Russian invasion of Ukraine, the COVID-19 pandemic, competition, the ability to attract and retain customers, and international expansion.
Forecast
Reported figures
GAAP, from SEC filings| Metric | Q3 FY2023 | Q2 FY2023 | QoQ | Q3 FY2022 | YoY |
|---|---|---|---|---|---|
| Revenue | $141.4M | $134.9M | +4.9% | $100.3M | +41.0% |
| Gross profit | $126.3M | $121.1M | +4.2% | $90.8M | +39.1% |
| Gross margin | 89.3% | 89.8% | -0.5 pp | 90.5% | -1.2 pp |
| Research & development | $75.5M | $75.2M | +0.4% | $53.8M | +40.4% |
| Sales & marketing | $113.7M | $110.4M | +3.0% | $73.3M | +55.1% |
| General & administrative | $38.2M | $46.8M | -18.4% | $31.8M | +20.2% |
| Total operating expenses | $227.4M | $232.4M | -2.2% | $158.8M | +43.2% |
| Operating income (loss) | -$101.1M | -$111.3M | +9.1% | -$68.1M | -48.5% |
| Operating margin | -71.5% | -82.5% | +11.0 pp | -67.9% | -3.6 pp |
| Net income (loss) | -$100.9M | -$113.0M | +10.7% | -$69.3M | -45.6% |
| Net margin | -71.3% | -83.8% | +12.4 pp | -69.0% | -2.3 pp |
| Diluted EPS | -$0.49 | -$0.59 | +$0.10 | -$0.37 | -$0.12 |
| Net retention rate | 120.0% | 120.0% | ±0.0 pp | 120.0% | ±0.0 pp |
Risks
MD&A cites elevated inflation, U.S. Federal Reserve interest rate increases, supply chain disruptions, currency exchange rate fluctuations, and the Russian invasion of Ukraine as creating economic uncertainty. These conditions may reduce customer spending, pressure renewal rates, lengthen sales cycles, and lower demand for the platform.
On November 15, 2022, the company authorized a plan to reduce global headcount by approximately 9% to improve operational efficiencies and align the workforce with strategic priorities. The filing states the restructuring may not achieve anticipated savings, could cause unplanned attrition and reduced morale, and may make it harder to attract or retain qualified personnel.
The filing states the company expects its revenue growth rate to decline in future periods and expects operating expenses to increase. For the nine months ended October 31, 2022, net loss widened to $312.7 million from $198.3 million in the prior-year period, and operating expenses increased to $664.2 million from $417.2 million.
The market for work management solutions is described as increasingly competitive, fragmented, and with relatively low barriers to entry. Larger competitors may have more resources, engage in more extensive marketing, and adopt more aggressive pricing, which could pressure revenue, gross margin, and market share.
The company derives, and expects to continue to derive, substantially all revenues from a single solution, its work management platform. Changes in customer preferences or demand for that platform could have a disproportionately greater impact than if the company offered multiple products.
The company is focusing sales efforts on larger organizations, which requires sophisticated and costly sales efforts and typically involves longer sales cycles, greater competition, and less predictability. Sales and marketing expenses increased 55% for the three months ended October 31, 2022 compared to the prior-year quarter, per MD&A.
Customers are not obligated to renew subscriptions and may renew on less favorable terms, with fewer users, or downgrade. The dollar-based net retention rate for customers spending over $5,000 was over 128% as of October 31, 2022 versus over 130% as of October 31, 2021, while the broader dollar-based net retention rate remained over 120%.
Competition for executive officers, software engineers, sales personnel, and other key personnel is intense, especially in the San Francisco Bay Area, and inflation has increased labor and benefit costs. The recent reduction in force and any future restructuring may further adversely affect the ability to attract and retain employees.
For the nine months ended October 31, 2022, 40% of revenues were generated from customers outside the United States. International operations expose the company to regulatory, economic, and political risks, including sanctions and economic fallout from Russia's invasion of Ukraine.
For the nine months ended October 31, 2022, operating cash flow was negative $129.0 million, down $84.5 million from negative $44.5 million in the prior-year period. The company had an accumulated deficit of $1,142.5 million as of October 31, 2022 and free cash flow was negative $133.0 million for the nine-month period.
SaaS KPIs
All quarters →Free cash flow
Non-GAAP operating margin
Net Revenue Retention
Paying Customers
Customers Spending $100,000+ on an annualized basis
Customers spending $5,000+ on an annualized basis
Summary, forecast, risks and KPIs are extracted from Asana, Inc.'s SEC filings for Q3 FY2023 (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.