ASAN notes

Competitive Landscape:

On February 16, 2021, Atlassian announced a “refresh” of ASAN competitor, Trello. From the Trello blog: https://blog.trello.com/a-whole-new-trello. (7 minute read)

My take: This is an unfavorable but somewhat predictable competitive development. I knew the Work Management space was highly-competitive and highly-fragmented as I began to accumulate ASAN.

March 1, 2021, the CEO presented at Morgan Stanley:

https://morganstanley.webcasts.com/viewer/event.jsp?ei=14299… (30 minutes, login required)

My take: Where are information workers spending their time? A survey said 60% work about work…a common theme in ASAN presentations. CEO claims their Work Graph concept differentiates ASAN…not sure I buy this 100%. I think it was BroadwayDan that commented he was put off by the Zen-like philosophy spouted by the CEO; I am too. Nevertheless, I like the numbers.

ASAN reports earnings March 10, 2021:

JAFbrblev did an excellent summary of ASAN’s financials here on this board:

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

My take: Revenue growth for the last reported quarter was 55% YoY. In my opinion, however, the key to ASAN is its very-high gross margin (86.6% for the last quarter). When ASAN reports earnings, I will be looking for signs that competitive pressure is eroding gross margin.

Your thoughts on the competitive pressures or anything else? I have asked ASAN investor relations to comment on their competitive environment. I will post their reply when I get one.

Long ASAN

Other notes:
This long thread from December 9, 2021, provides an informative discussion:

https://discussion.fool.com/asana-q3-2020-results-34689550.aspx?..

A shorter thread from December 23, 2021: https://discussion.fool.com/asana-34703407.aspx

From Bear’s February portfolio review:

Asana (ASAN) 6.5%, up from 4.4%
12/31/2020: $29.55 Market Cap Approx: $4.7b
01/29/2021: $35.37 Market Cap Approx: $5.6b
02/26/2021: $34.63 Market Cap Approx: $5.5b

I thought ASAN had gotten away from me as it hit $40+ earlier this month. When I got another opportunity to add around $35, I added a bunch. Still not ready to make this a large position, but I am eagerly awaiting their report in a couple weeks. Hopefully that gives me the confidence to add even more.

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