Asana reported an excellent quarter. I’ll be increasing my position over the near term.
In general, here is the thesis. Revenue growth is accelerating and there are good reasons to believe that will continue. Customer growth was great in both the top of funnel and within enterprise. Gross margins are best in class rivaled by very few. Albeit in a competitive field, the solutions Asana offers are extremely well reviewed and look to be providing great value to their customers with an enormous runway. The pace of innovation is considerably picking up steam. Tech partners are growing fast as well as channel partners. International expansion is taking place as the platform expands to new languages. The valuation today is downright cheap for their growth rate.
Revenue
Q1 Q2 Q3 Q4
FY ‘20 28.0 33.1 38.1 43.5
FY ‘21 47.7 52.0 58.9 68.4
FY ‘22 76.7 89.7e
QoQ Growth
Q1 Q2 Q3 Q4
FY ‘20 18% 15% 14%
FY ‘21 10% 9% 13% 16%
FY ‘22 12% 17%e
YoY Growth
Q1 Q2 Q3 Q4
FY ‘21 70% 57% 55% 57%
FY ‘22 61% 73%e
For the estimate next quarter, I’m assuming the same beat on a percentage basis of about 8%. That has been steady over the past four quarters. It seems like a good assumption. Another very bullish point is that the guidance for the next quarter increased significantly on a sequential basis. Previous guidance suggested 3% to 4% sequential growth. Next quarter suggests over 8% which will be beaten handily as we know.
Full year guidance was increased over 8% to $340M
Gross margins increased to 89.8% from 87.1% YoY
The company offers total NRR and NRR based on cohorts:
Total NRR - Over 115%
$5K NRR - 123%
$50k NRR - Over 140%
Revenues from the >$5k cohort grew 82% and now make up 64% of total sales versus 56% last year. From this, we can calculate growth of the less than $5k cohort of 7.9%. Revenues from the larger cohort will continue to dominate and grow very fast.
Some may scoff at Asana’s spending habits that at first glance have been more closely aligned with a drunken sailor than a competent business operator. The first glance doesn’t always tell the full picture.
Asana’s solution is sticky. It can be used throughout an entire organization and once it becomes embedded, there is little chance it will become unseated. The payback period on investment is top quality. It currently stands around 16 to 17 months which is quite good. The company should be spending all it can right now to hire sales professionals to drive growth and embed themselves in the operating flow of a company.
Revenues from the >$5k cohort grew 82% and now make up 64% of total sales versus 56% last year. From this, we can calculate growth of the less than $5k cohort of 7.9%. Revenues from the larger cohort will continue to dominate and grow very fast.
Growth in customers for the quarter was great. The top of funnel grew by 7,000 to over 100,000 paying customers - a nice acceleration from last quarter’s 4,000. More importantly, their largest cohort of over $50k customers grew 92%!
Customers greater than $5k grew at 53%.
Given the NRR of the larger cohorts along with the growth in those cohorts, this points to a very bullish narrative over the coming quarters and well into the future.
Asana has introduced their offering in 4 new languages recently with 3 more planned later this year. New products are being announced in the coming days along with new offerings anticipated in both Q3 and Q4. Their spending in R&D coupled with a short payback period on S&M spend portend good things to come.
Overall, I can’t say enough about the quarter. It is exactly what I had expected/hoped for with my initial investment dollars and warrants a larger position in my portfolio. It currently stands around 4% and I plan on increasing that significantly.
I’d be interested in questions and comments from others.
A.J.