Asana's (NYSE:ASAN) Q4 Sales Beat Estimates

Full Report / March 11, 2024

Work management software maker Asana (NYSE: ASAN) beat analysts' expectations in Q4 FY2024, with revenue up 13.9% year on year to $171.1 million. The company expects next quarter's revenue to be around $168.5 million, in line with analysts' estimates. It made a non-GAAP loss of $0.04 per share, improving from its loss of $0.15 per share in the same quarter last year.

Asana (ASAN) Q4 FY2024 Highlights:

  • Revenue: $171.1 million vs analyst estimates of $168 million (1.9% beat)
  • EPS (non-GAAP): -$0.04 vs analyst estimates of -$0.10
  • Revenue Guidance for Q1 2025 is $168.5 million at the midpoint, roughly in line with what analysts were expecting (however, operating loss for this period was guided worse than expectations)
  • Management's revenue guidance for the upcoming financial year 2025 is $719 million at the midpoint, in line with analyst expectations and implying 10.2% growth (vs 19.6% in FY2024) (however, operating loss for this period was guided worse than expectations)
  • Gross Margin (GAAP): 89.8%, in line with the same quarter last year
  • Free Cash Flow was -$16.95 million compared to -$11.47 million in the previous quarter
  • Net Revenue Retention Rate: 100%, in line with the previous quarter
  • Market Capitalization: $4.22 billion

Founded in 2008 by Facebook’s co-founder Dustin Moskovitz, Asana (NYSE:ASAN) is a cloud-based project management software, where you can plan and assign tasks to employees and monitor and discuss progress of work.

A lot of project planning and management work is still done with a mixture of emails, spreadsheets that only exist on one person’s computer, hand written notes and in-person meetings. As a result, a lot of time is lost tracking down who does what, when, and how, with team managers organizing multiple meetings to get accurate updates on the progress of a project.

Asana aims to reduce the amount of this "work about work" by integrating with a large number of other services like Dropbox, Slack or email and creating a centralised dashboard with a system of record for all information related to work planning.

For example, using Asana, editors can assign tasks to reporters and writers and in real time check progress on how different articles are coming together. Articles are linked and tracked from text documents directly into the dashboard, where editors provide writers with feedback. Asana also provides reporting features to visualize the status of the project and help the teams spot potential problems and keep work on track.

Project Management Software

The future of work requires teams to collaborate across departments and remote offices. Project management software is both driving this change and benefiting from it. While the trend of collaborative work management has been strong for a while, the Covid pandemic has definitively accelerated the demand for tools that allow work to be done remotely.

It is a crowded market and Asana is competing with companies like Atlassian (NASDAQ:TEAM), SmartSheet (NYSE:SMAR), Monday.com (NASDAQ:MNDY) and Productboard.

Sales Growth

As you can see below, Asana's revenue growth has been impressive over the last three years, growing from $68.37 million in Q4 2021 to $171.1 million this quarter.

Asana Total Revenue

This quarter, Asana's quarterly revenue was once again up 13.9% year on year. We can see that Asana's revenue increased by $4.63 million in Q4, up from $4.05 million in Q3 2024. While we've no doubt some investors were looking for higher growth, it's good to see that quarterly revenue is accelerating.

Next quarter's guidance suggests that Asana is expecting revenue to grow 10.6% year on year to $168.5 million, slowing down from the 26.3% year-on-year increase it recorded in the same quarter last year. For the upcoming financial year, management expects revenue to be $719 million at the midpoint, growing 10.2% year on year compared to the 19.2% increase in FY2024.

Large Customers Growth

This quarter, Asana reported 21,646 enterprise customers paying more than $5,000 annually, an increase of 300 from the previous quarter. That's a bit fewer contract wins than last quarter and quite a bit below what we've typically observed over the past four quarters, suggesting that its sales momentum with large customers is slowing.

Asana customers paying more than $5,000 annually

Product Success

One of the best parts about the software-as-a-service business model (and a reason why SaaS companies trade at such high valuation multiples) is that customers typically spend more on a company's products and services over time.

Asana Net Revenue Retention Rate

Asana's net revenue retention rate, a key performance metric measuring how much money existing customers from a year ago are spending today, was 100% in Q4. This means that even if Asana didn't win any new customers over the last 12 months, it would've grown its revenue by 0%.

Despite falling over the last year, Asana still has an adequate net retention rate, showing us that it generally keeps customers but lags behind the best SaaS businesses, which routinely post net retention rates of 120%+.


What makes the software as a service business so attractive is that once the software is developed, it typically shouldn't cost much to provide it as an ongoing service to customers. Asana's gross profit margin, an important metric measuring how much money there's left after paying for servers, licenses, technical support, and other necessary running expenses, was 89.8% in Q4.

Asana Gross Margin (GAAP)

That means that for every $1 in revenue the company had $0.90 left to spend on developing new products, sales and marketing, and general administrative overhead. Asana's excellent gross margin allows it to fund large investments in product and sales during periods of rapid growth and achieve profitability when reaching maturity. It's also comforting to see its gross margin remain stable, indicating that Asana is controlling its costs and not under pressure from its competitors to lower prices.

Cash Is King

If you've followed StockStory for a while, you know that we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills. Asana burned through $16.95 million of cash in Q4 , increasing its cash burn by 36% year on year.

Asana Free Cash Flow

Asana has burned through $30.39 million of cash over the last 12 months, resulting in a negative 4.7% free cash flow margin. This low FCF margin stems from Asana's constant need to reinvest in its business to stay competitive.

Key Takeaways from Asana's Q4 Results

We were impressed by how strongly Asana blew past analysts' billings expectations this quarter, which led to the company narrowly outperforming Wall Street's estimates on the reported revenue line. On the other hand, while revenue guidance for next quarter the the full year was in line with expectations, Asana's guidance for operating loss for those periods was worse than expectations. Additionally, its revenue guidance for next year suggests a meaningful slowdown in growth. Overall, this quarter's results seemed fairly positive and shareholders should feel optimistic. The market was likely expecting more, however, and the stock is down 3.1% after reporting, trading at $18.2 per share.

Is Now The Time?

When considering an investment in Asana, investors should take into account its valuation and business qualities as well as what's happened in the latest quarter.

We think Asana is a solid business. We'd expect growth rates to moderate from here, but its revenue growth has been exceptional over the last three years. And while its customer acquisition is less efficient than many comparable companies, the good news is its impressive gross margins indicate excellent business economics. On top of that, its customers are spending noticeably more each year, which is great to see.

Given its price-to-sales ratio of 5.8x based on the next 12 months, the market is certainly expecting long-term growth from Asana. There are definitely things to like about Asana, and there's no doubt it's a bit of a market darling, at least for some. But when comparing the company against the broader tech landscape, it seems there's a lot of good news already priced in.

Wall Street analysts covering the company had a one-year price target of $20.11 right before these results (compared to the current share price of $18.20).

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