How Asana Makes the breakthrough?

With the recent flurry of software growth stock earnings reports, many of which jumped after the results were announced, and most of which have lost half or more of their highs in market capitalization over the past two years in a high interest rate environment, there may be several reasons for the reversal in market sentiment:

1. Earnings reversal.The main commonality is AI's improvement in company efficiency, especially those where AI can directly lead to revenue improvement, as evidenced by earnings growth rebound, guidance improvement, etc., and often these are also the ones with the biggest Surprise, and investors will be more likely to buy into them;

2. Pricing in anticipation of rate cuts.Growth stocks are more sensitive to interest rates, and now that we're entering a cycle of rate cuts, these once-popular names from the low-interest-rate era are back in favor with risk capital;

3. AI transitions.Because the chip industry headline stocks have risen quite high, the market is also starting to look for the next target sector (concept), software is the important window of realization.

4. Accumulated short positions have basically been closed and bottoming has been completed, and institutional investors are coming back to re-establish their positions.

$Asana, Inc.(ASAN)$ Financials in line with market expectations

Total revenue for Q3 FY2025 was $183.9 million, up 10% year-over-year and in line with market expectations, with analysts generally expecting revenue to be in the range of $183 million to $184 million.GAAP operating loss was $60.2 million, or 33% of total revenue, an improvement from $63.4 million in the year-ago quarter.Non-GAAP operating loss was $7.6 million, also showing some improvement.

In terms of net loss, GAAP net loss was $57.3 million compared to $61.8 million in the same period last year.Loss per share was $0.25, down from $0.28 a year ago.

Business Segments

Asana's business can be divided into the following main segments:

• Core Customers (Core Customers): as of the third quarter, the company's core customers numbered 23,609, an increase of 11% year-over-year.These customers have annual spending in excess of $5,000, providing a stable base for revenue growth.

• High-Value Customers (HVCs): the number of customers spending more than $100,000 per year increased to 683, an 18% increase year-over-year.The growth in this customer segment demonstrates Asana's competitiveness in the large enterprise market.

• AI Studio Launched: Asana launched AI Studio during the quarter, a no-code build platform that enables teams to design and deploy AI-powered workflows.This new product is seen as a key driver of future growth for the company.

Analysis of Results

Asana did not fully exceed expectations in the quarter for the following reasons:

1. Uncertainty in the economic environment: The volatility of the global economy may cause organizations to be cautious in their technology and software spending, which could affect Asana's sales.

2. Increased competition: The eWork management space is becoming increasingly competitive, with other competitors introducing new products and features, putting some pressure on Asana.

3. Challenges during the product transition period: Although AI Studio shows good prospects, as a new product, its rollout and customer education will take time, which may affect revenue growth in the short term.

For investors, the following focuses should be kept in mind:

• AI Studio's growth potential: whether AI Studio can continue to attract customers and drive revenue growth will be important to watch going forward.

• Customer retention and net retention rates: High retention and net retention rates will provide a stable revenue base for the company.The overall dollar base net retention rate is 96% and the core customer net retention rate is 98%.

• Competitive Market Dynamics and Strategies to Address Them: How Asana responds to competitors' challenges and its ability to innovate will have a direct impact on the company's long-term growth.

Outlook

Looking ahead, Asana's management expects overall revenue to continue to grow steadily in fiscal 2025, with fourth quarter revenue expected to be in the range of $187.5 million to $188.5 million, an increase of approximately 10% year-over-year.Management emphasized that the Company will continue to focus on product innovation and market expansion to drive long-term growth.Meanwhile, the Company plans to further promote AI Studio and strengthen cooperation with partners (e.g. Microsoft, SAP, etc.) to increase market penetration.