Asana, Inc. — Q3 FY2022 Form 10-Q
Reporting period: Three and nine months ended October 31, 2021. Asana provides a cloud-based work management platform. Financial statements are unaudited and prepared under U.S. GAAP.
Key financial results
| Metric | Q3 FY2022 | Q3 FY2021 | Nine months FY2022 | Nine months FY2021 |
|---|---|---|---|---|
| Revenue | $100.3 million | $58.9 million | $266.5 million | $158.6 million |
| Gross profit / margin | $90.8 million / 90% | $51.6 million / 88% | $239.1 million / 90% | $138.1 million / 87% |
| Operating expenses | $158.8 million | $113.5 million | $417.2 million | $262.7 million |
| Operating loss | $(68.1) million | $(61.9) million | $(178.1) million | $(124.6) million |
| Net loss | $(69.3) million | $(73.3) million | $(198.3) million | $(150.2) million |
| Net loss per share, diluted | $(0.37) | $(0.65) | $(1.15) | $(1.70) |
Cash flow, nine months: Operating cash use was $44.5 million, versus $74.7 million a year earlier. Investing activities provided $22.2 million, principally reflecting marketable-security maturities; financing activities provided $34.0 million. Capital expenditures for property and equipment were $40.3 million. Company-defined free cash flow was negative $46.4 million, compared with negative $58.5 million.
Liquidity and debt, October 31, 2021: Cash and cash equivalents were $271.8 million; marketable securities and noncurrent investments totaled $81.8 million. Management reported $353.6 million of cash, cash equivalents, and investments as principal liquidity. Current assets were $418.6 million and current liabilities $223.7 million. The term loan had $38.8 million outstanding principal (net carrying amount approximately $38.9 million); the balance sheet presents $35.6 million as noncurrent term debt, with current principal also classified in current liabilities. The company reported compliance with loan covenants.
Business performance and changes
- Revenue increased 70% year over year in Q3 and 68% for the nine-month period. Management attributed growth to new paying customers, larger customer contracts, and expansion among existing customers.
- As of October 31, 2021, Asana reported more than 114,000 paying customers, up from more than 89,000 a year earlier, and more than 2.0 million paid users. Dollar-based net retention was over 120%; it was 130% for customers spending over $5,000 annually and over 145% for those spending over $50,000.
- Customers spending over $5,000 numbered 14,143, contributing approximately 68% of Q3 revenue; customers spending over $50,000 numbered 739, versus 318 a year earlier.
- Operating expenses grew 40% in Q3 and 59% for the nine months, with higher headcount, infrastructure, and sales and marketing investment. Stock-based compensation was $25.9 million in Q3 and $62.3 million for nine months.
- Gross margin improved year over year, which management attributed to hosting-cost efficiency and infrastructure scale. G&A was nearly flat in Q3 partly because the prior-year quarter included direct-listing expenses.
Outlook, risks, and notable items
- No specific revenue, earnings, or cash-flow guidance is provided in the supplied filing text. Management expects operating expenses to continue increasing in dollars, while R&D and sales and marketing are expected to decline as a percentage of revenue over time. It expects subscription gross margin to remain relatively consistent over the long term and believes available liquidity and loan capacity will meet working-capital and capital-expenditure needs for at least 12 months.
- Management says it is prioritizing long-term growth, which may sustain near- and medium-term losses. The filing notes a history of losses and an accumulated deficit of $739.7 million.
- COVID-19 effects remain uncertain. Management reported that overall net retention had recovered to pre-pandemic levels, while warning of possible impacts on customer demand, sales cycles, collections, renewals, and spending, particularly among smaller customers.
- On July 1, 2021, Asana converted $450 million principal of 3.5% convertible notes held by a trust affiliated with CEO Dustin Moskovitz into approximately 17.0 million Class B shares. This eliminated the notes and reduced interest expense; it also increased the CEO-affiliated trust’s voting power.
- Significant commitments include approximately $383.6 million of future minimum payments and capital commitments related to the San Francisco headquarters, and $86.1 million of remaining payments under a five-year AWS hosting contract. Operating lease liabilities totaled $219.5 million.
- Principal disclosed risks include intense competition, reliance on a single platform, security and service reliability, privacy and regulatory compliance, international operations and foreign exchange, customer retention and conversion, continued losses, and the potential effects of COVID-19. The company reported no material pending legal proceedings. Disclosure controls were deemed effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether customer additions, larger-contract growth, and retention rates remain strong, particularly among smaller customers.
- How quickly operating expenses and stock-based compensation grow relative to revenue, and whether losses and operating cash use narrow.
- Liquidity calculations and cash needs against headquarters lease commitments, capital spending, AWS commitments, and term-loan obligations.
- The dilution and voting-control implications of equity awards and the CEO-affiliated note conversion under Asana’s dual-class share structure.
- Any subsequent guidance or updates to COVID-19, cybersecurity, privacy, competition, and customer-spending risks.