Asana

This company has not received much (any?) attention on this board. IPO’d recently, so there’s not much financial history to go on. But, here’s a rather positive article to introduce it:

Orchestration for the Agile Enterprise: Asana Named #1 in G2 2021 Grid® Report for Project Management

https://eresearch.fidelity.com/eresearch/evaluate/news/basic…

I am long with a small position.

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I own Asana mainly because the co-founders of Asana were also co-founders of Facebook.

ASAN reported its first quarter as a public company on December 2, 2020. Financial highlights were:

Q3 Revenues grew 55% year over year
Over 89,000 total paying customers
Revenues from customers who spend $5,000 or more on an annualized basis grew over 80% year over year
Fiscal year outlook raised

Link to full earnings release: https://investors.asana.com/news/news-details/2020/Asana-Ann…

For readers interested in Asana, I highly recommend their Investor Video: https://investors.asana.com/overview/default.aspx (19:26 minutes)

Bert wrote favorably about ASAN on SeekingAlpha in October: https://seekingalpha.com/article/4378169-asana-leader-in-wor… (paywall)

My main concern about the company is that the Work Management space appears crowded. Thank you, brittlerock, for posting the G2 review. At least they seem to think Asana has a well-regarded product.

Has anyone used Asana’s work management tools?

Long ASAN

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I have used Asana every day of the past 3 months, to help manage a software development team. As the product suite stands today, I’d say it’s good at some things and not good at others.

—positives—
Browser based, easy to start using quickly
Upbeat, fun training videos on Youtube
Good if you want to set specific day/time deadlines for each task
Good for complex 1-time projects (e.g. planning a wedding)
Good for repeated projects (e.g. you are a wedding planner)

—negatives—
Out of the box, it “sort of” supports agile/scrum but not well. Most engineering teams use some form of scrum methodology to deliver software, using epics and stories and sprints. Asana can sort of do that, but you really have to use it oddly, and it has certain limitations that make it challenging to use in that way, and also it’s not intuitive for that sort of work. So for this purpose I’d much prefer to be using JIRA or maybe Trello, not Asana.

Honestly I don’t think it would be hard for them to release an agile version or agile-friendly features, but for whatever reason they have not done so.

As for the investment, no idea. No position currently.

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We use Asana where I work for creative project management and the team loves it. Yes, the space is crowded but all these project management tools serve specific niche audiences, and there is minimal overlap. For example, Jira is a great project management tool for engineering teams, but it’s never worked well outside of that group. Workfront is the closest competitor to Asan that I am aware of.

I started a small position recently after their first earnings report. I think with WFH there will be more demand for quality project management tools like Asana. Even if people go back to the office, two or three days a week from home will mean more reliance on tracking tools. I also like that once Asana is setup the switching costs are relatively high, much higher than Zoom for example.

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FWIW, Adobe agreed to acquire Workfront in November.

https://news.adobe.com/news/news-details/2020/Adobe-to-Acqui…

I wanted to add some numbers for ASANA that stands out. I am long with a 3.6% position. For largely 2 reasons, 1st, a 50% grower with 87% margins at a 19 EV/S is a standout when comparatively, you have DDOG with worse growth and worse margins at 2x the valuation. I like the upside.

Concerns:

  • Revenue Growth - is it decelerating or plateauing?

Sources:
https://www.meritechcapital.com/blog/2020-review-high-growth…
https://www.sec.gov/Archives/edgar/data/1477720/000119312520…
https://investors.asana.com/financials/quarterly-results/def…

Market Cap: 4.5B

Revenue Growth:
Q4 63.0 +4.1M +45% YoY (guide)</i)
Q321 58.9M +6.9M +13% QoQ +55% YoY (12% beat)
Q221 52.0M +4.3M +9% QoQ +57% YoY
Q121 47.7M +4.2M +10% QoQ +70% YoY
Q420 43.5M +5.4M +14% QoQ +78% YoY
Q320 38.1M +5.0M +15% QoQ +85% YoY
Q220 33.1M +5.1M +18% QoQ +87% YoY
Q120 28.0M +3.7M +15% QoQ
Q419 24.3M +3.7M +18% QoQ
Q319 20.6M +3.0M +17% QoQ
Q219 17.6M

Gross Margin: 86.6% → this is amongst the highest in all SaaS land, sans AYX

Dollar Based Retention Rate: 115% - Not stellar, implies growth is from new customers, and I suspect this is why we see deflated valuations - new customers = new competition = headwinds

Sales Efficiency - Implied Months to Payback: 15.7 months - top class

CEO Ownership: 36.2% → stellar

Current EV/S: 19.4

Total Customers:
89,400 +7400
82,000 +5000
77,000 +2000
75,000

Customers Spending >5,000:
8,938 (58% YoY growth, 125% Dollar based net retention rate)
7,933
7,345
6,555

Customers Spending >50,000:
318 (+35 QoQ, 104% growth, 140% Dollar based net retention rate)

Just a Fool’s snippet

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Just a Fool’s snippet

Nice post. The increase in customer count the past quarter was outstanding along with the growth in large customers as you have shown in the numbers.

Asana needs to continue fast paced growth. The past two quarters were beats by 5.7% and 10.6% (most recent). If we use 7.5%, revenue growth will be 56%, a slight uptick from last quarter.

Another 10.6% beat would mean growth of 60%.

Keep in mind they have continued to spend heavily on sales and marketing. With a best in class payback period, this makes good sense. Just a few more thoughts on my end…

A.J.

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