ASAN - Welcome to the Party

Asana (ASAN) is the newest and smallest position in my portfolio. As the ASAN stock price is up 16% today (after their acceleration in revenue growth to 72% this q/q that was announced in their earnings call yesterday) and the stock price is up over 100% in just the past three months since my initial investment, they have earned a write up; although ASAN currently occupies only a 3.5% position in my portfolio of 9 companies.

What: For anyone not familiar with what the company does, Asana is a SaaS company based in San Francisco that helps teams around the world orchestrate their work, from small projects to strategic initiatives using a work management platform that was rolled out in 2012 (and which now also integrates with hundreds of named partners’ software). The co-founder, Dustin Moskovitz, also co-founded another little company called Facebook with some guy name Zuck, and the software was created by one of Google’s original engineers. The founders and the management team certainly have the experience and “chops” and are doing a great job of accelerating growth and adoption of a software that has become far more critical in the remote and work from home environment during and subsequent to Covid-19.

The Call: First, the brutal honesty…I admit I was actually HOPING to see the growth accelerate even more this quarter…like one of Elon’s rocket ships, and perhaps I was getting too greedy hoping to catch a ride…possibly even into the low 80’s. Alas, THAT did not happen, but this was their Q2 and I still begrudgingly have to admit that they absolutely did not disappoint, announcing 72% revenue growth y/y (a very nice increase sequentially from the 60.7% y/y growth announced last quarter). That is incredible acceleration either way you analyze it, even if they won’t quite make it to Mars, the moon is an always an option! Revenues from customers spending over $5k grew by 97%! Revenue from customers spending over $50k grew 111%!! And the growth of the existing customers is exemplified by a dollar-based net retention rate of 118%, 125% and 145% respectively in those three customer sizes. This is exactly what I love to see combined with strong overall customer base and growth, of which they now have an incredible 107,000 paying customers. They announced a new 50k seat customer last quarter and another 25k seat customer this quarter.

Net, net, the overall earnings call was extremely positive punctuated by nearly every analyst congratulating them on a great quarter. Just a few of the many highlights (if you didn’t listen to the call):

  1. Expanded into 3 new languages for a total of 13 languages globally
  2. Partnered with Zoom (who is also a quickly growing customer)
  3. Announced new product suite for Enterprise (large) customers
  4. Raised their full year guidance (again) by 6%
  5. New listing on the LTSE (Long Term Stock Exchange)
  6. Many new large enterprise customers including CVS, Viacom
  7. 89% gross margins!!
  8. Announced new very experienced, industry leading COO, Anne Raimondi (served on board past 2 yrs)
  9. Best growth in 6 quarters
    10)Opened new offices including Chicago and growing sales and h/c quickly
    11)Channel partners across 75 countries internationally.

I do not see any red flags with this company. ASAN has plenty of green field opportunities and an incredible TAM as they continue their rapid growth in the US and internationally, announce new products, large customer growth, strong partnerships, and fantastic margins. I like their proven and evolving experienced management team and they are executing well. I could ding them on profitability (or lack thereof), but that is simply not their goal this year, as they strive to deliver the best platform, and maximize growth and customer penetration by reinvesting into R&D and S&M.

I will not cover it here, but I am currently looking at Monday (MNDY) in a similar space, who just put up screaming 92% revenue growth a few weeks ago (though they may have a very hard time maintaining it next quarter); they seem like a great company also and show incredible promise as well. I have not yet ascertained all their similarities and differences or if one is better than the other to own right now and that is not the purpose of this post. I just came across a few other great posts comparing the two companies the past couple days that are very interesting and helpful and I’d recommend you also read. MNDY has a higher valuation and is therefore “more expensive”, but no doubt it is deserved with their higher 92% growth. That said, I’m certainly not disappointed with ASAN’s well deserved 16% stock surge higher today and feel it is well deserved as they accelerate their growth.

Maintaining my 3.5% position in ASAN (a bit larger after todays surge higher) and looking for opportunities to buy more and or possibly diversify into MNDY if their thesis proves stronger as I look at them and their management team. Regardless, ASAN at 72% growth is still one of my top 5 fastest growing companies…even passing CRWD on its way down and only behind a handful of others, including SNOW.

Cheers! -Poleeko