Asana Releases Third Quarter Results, Reflects Adobe’s Impact on Work Management in Business
Labor management provider Asana yesterday released its first quarterly results after going public in September. Its 55% growth rate pleased Wall St, which initially marked stocks up about 11% this morning (before retreating later in the day), although losses outpaced earnings as the company was increasing its investment in expanding sales.
The fastest growth has occurred among larger customers, a market the company has targeted in recent product announcements. Those who spend at a rate of $ 50,000 or more per year have more than doubled in the past year to reach 318, and as Chris Farinacci, COO and CEO has pointed out in reviews. prepared remarks:
Four of our largest customer expansions in the quarter were with Fortune 50 companies. This included expanding one of our largest customers to tens of thousands of seats.
Meanwhile, the larger cohort of those who spend at a rate of $ 5,000 or more now represents 10% of total paying customers and 59% of income. Yet it still barely scratches the surface of the full potential of these accounts, as co-founder and CEO Dustin Moskovitz explains:
We are only 3% penetrated into employees for existing customers. It is therefore an opportunity to extend the seat by 97%. And then we also think that there are still a lot of opportunities to pilot the ARPU [average revenue per user] also.
Q3 results at a glance
This market, of course, is one that many others are targeting as well, including the big guns of Adobe and Salesforce after their announced acquisitions of the work management player Workfront and the messaging platform Slack, respectively. these last weeks. Moskovitz and Farinacci explained Asana’s strategy to maintain itself in this market during a call with analysts at Wall St last night – more on that below. First, here’s a quick rundown of the results:
- Third quarter revenue of $ 58.9 million, up 55% from the same quarter a year ago.
- The third quarter GAAP operating loss was $ 61.9 million, or 105.1% of revenue, compared to $ 63.1 million and 165.7% of revenue a year ago. The non-GAAP equivalent was $ 37.3 million (63.3%), up from 21.5 (56.3%) a year ago.
- Cash flow for the quarter was negative at $ 34.4 million, compared to $ 10.9 million a year ago. Free cash flow also deteriorated, from $ 11.6 million less to $ 19.5 million a year ago. Cash is approximately $ 424 million.
- More than 89,000 paying customers, an increase of approximately 7,000 from the previous quarter (almost as much as the first and second quarters combined, in part due to lower churn rate), with a retention rate overall dollar net of more than 115%.
- Customers spending $ 5,000 or more on an annualized basis rose to 8,938, an increase of 58% from a year ago. Revenue growth for these clients increased 80% from a year ago, and the net dollar retention rate for this cohort was over 125%. These customers represented 59% of third-quarter revenue, up from 51% of revenue a year ago.
- The number of customers spending $ 50,000 or more on an annualized basis doubled to 318, up 104% year-over-year. Here, the net dollar retention rate was over 140%.
- The company has raised its forecast for the full year. It now forecasts revenues of $ 220.6 million to $ 221.6 million, up 55% year-over-year, with a non-GAAP operating loss of about $ 130 million.
So what about Adobe and Salesforce’s foray into Asana’s field? First and foremost, it’s confirmation that Asana is on the right track, says Farinacci:
We see it as category validation, that large-cap tech companies take note of the business imperative, the problem we’re solving, and hear it from their customers.
Moskovitz was happy to congratulate Salesforce and Slack on their agreement, pointing out that not only Asana uses Salesforce and Slack, but both companies use Asana. There are three broad categories of collaboration according to Asana’s worldview: content, communication and coordination. Asana focuses on coordination and therefore works happily alongside the communication role of Slack.
Adobe and the marketing function
Workfront, on the other hand, is also focused on coordination and therefore competes directly with Asana. Like Workfront, Asana often comes first in an organization’s marketing function – “the plurality of landings, not the majority,” says Moskovitz. But that’s largely because marketers are in desperate need of digital help to coordinate teamwork. As Farinacci explains:
Unlike some other functions, marketing teams do not have systems of record for these business processes. So for events and campaigns and product launches and that sort of thing – until we did with labor management – there weren’t any standard tools for that. So it’s just great greenfield.
Asana is already an Adobe partner and plans to continue to focus on marketing and creative use cases even after the acquisition of Workfront closes. But it’s also focused on expanding its reach to other business functions, including sales, operations, product design, human resources, and IT. Several capabilities play into this expansion, including the ability to “multi-host” tasks in different workflows in which various participants may be involved, a feature which Moskovitz says helps ensure “a cycle of chaos is avoided.” in the vast majority of its larger customers when processes transcend functional boundaries.
Asana’s ambition is to coordinate teamwork within the company and believes that the market for its offers remains wide open. Farinacci specifies:
The vast, vast, north of 90% of the world’s information workers do not yet have solutions. They do it manually. So, the way they try to get clarity for their teams and align their teams is by using spreadsheets, meetings, sticky notes, and email discussion threads. That’s why the business imperative, the need for clarity and real-time alignment of who’s doing what, when, is only growing at a time when no one has really had it before except manually. I think that’s overall what drives the opportunity and what made us so excited.
As I said before, you can’t fault Asana for having ambition. Can this $ 200 million-per-year company really stand up to Adobe, Salesforce, Microsoft, Google, ServiceNow, Atlassian, Zoom and so many other players in the burgeoning digital teamwork landscape?
One factor in its favor is the emphasis on coordinating teamwork rather than just being content or communication actor. In diginomica’s collaborative digital teamwork canvas, we identify four models of teamwork rather than three, but the model is very similar to Asana’s worldview: what Asana sees as coordination, we separate into workflow and application integration. We also place great importance on smart measurement of digital teamwork against goals, which Asana sees as a priority for product development. This goal is shared by Workfront and Atlassian, but few others today.
Adobe’s acquisition of Workfront could take place in two ways. Adobe may very well decide that there is enough potential in the marketing arena without thinking about expanding into other functions, paving the way for Asana to expand further. Or he may see great potential in Workfront’s ability to extend its reach beyond the marketing function and become a direct rival to Asana across the enterprise. The direction taken by this decision will clearly have a direct impact on Asana’s corporate ambitions – the Workfront deal was reached on Monday, so we’ll find out soon.