Asana, Inc.

Good afternoon, and thank you for attending the ASANA first quarter and fiscal year 2022 earnings call. My name is Amber, and I will be your moderator for today's call. All lines will be muted during the presentation portion of the call with a question and answer session at the end. If you would like to submit a question, please press star 1 on your telephone keypad at any time. I now have the pleasure of handing the conference over to our host, Catherine Blonde, Head of Investor Relations at Asana. Catherine, please proceed.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results of Asana's first quarter fiscal 2023. With me on today's call are Dustin Moskovitz, Asana's co-founder and CEO, Anne Rimondi, our Chief Operating Officer and Head of Business, and Tim Wan, our Chief Financial Officer. Today's call will include four booking statements. including statements regarding our financial outlook, market position, and growth opportunities.

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Forward-looking statements involve risks, uncertainties, and assumptions that may cause our actual results to be materially different from those expressed or implied by the forward-looking statements. Please refer to our filings with the SEC, including our most recent annual report on Form 10-K for additional information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations webpage at investors.asana.com. And with that, I'd like to turn the call over to Dustin.

Thank you, Catherine, and thank you to everyone on the call today. We're pleased to report another record first quarter led by strong growth across our major markets and significant traction in enterprise. Revenue grew 57% year over year, beating the top end of our guidance range. Importantly, we had record-breaking events on several fronts. Our largest customer scaled to a new high with now over 100,000 seats. We also set a new record with our largest land deal in company history. This leading payment service company is a net new customer with 3000 enterprise seats and an annual contract value or ACV of well over half a million dollars. I also want to note an important Asana milestone in Q1. For the first time, our ARR surpassed half a billion dollars. We're seeing bigger and faster expansions than our largest customers. Comparing the total ARR from our top 100 customers a year ago to the total ARR from our current top 100 customers, it grew 75% year over year. All of our top 100 customers have over 1,000 seats or more on Asana. Geographically, revenue in the U.S. grew faster than overall growth at 61% year over year, which we believe can be a leading indicator for demand worldwide. And our revenue mix of the business and enterprise tiers continues to climb, now representing over 64% of total revenue. While we acknowledge the overall macroeconomic environment today, and Tim will touch on our plans more in a moment, These metrics and customer wins are strong proof points for a durable Asana growth profile. The near constant change of the last two years underscored the need for more clarity and alignment in a platform that keeps teams focused and connected with each other and their goals. Asana's unique product strategy is the navigation system for cross-team coordination and clarity is meeting this demand. And as you can see from our Q1 results, companies are continuing to recognize Asana as an essential platform and partner for these modern work challenges. Further demonstrating Asana's value is the June 7th Employee Impact Suite product launch. This launch addresses one of the most important concerns of leaders everywhere. How do I bring my teams together and keep them focused and productive? Leaders across the enterprise love these capabilities because their distributed teams can connect to and focus on the most important work. For example, with my goals, managers are empowered to macro manage their teams by aligning them around key objectives and the work needed to achieve them in one interface, no matter where they are in the world. And the new automatic progress roll-ups give executives and teams a real-time look into the status of that work. They can identify roadblocks and make decisions more quickly with no manual workabout work needed from their teams. One remarkable trend that continued this quarter is the success of our Goals product. Asana Goals continues to drive an increasing amount of wall-to-wall deals in medium-sized enterprises. Customers such as Benevity and Lucid are great examples. Companies that care deeply about driving sustainable employee engagement, which translates to higher productivity, have made Asana their work platform of choice. Another thing to note is that Asana Partners is expanding our ecosystem in support of consolidated technology stack. Users do less contact switching and have more time for the work that matters. This expansion includes reimagined Google Drive integration, linking Google Docs, Sheets, and Slides to tasks with file comment notifications directly in Asana, minimizing tool switching. Asana for Google Chat and Spaces converts unstructured conversations or messages into actionable Asana tasks without leaving Google Chat. And a brand new Figma integration powers creative work by converting stickies into Asana tasks without leaving brainstorming sessions in FigJam boards. This launch continues the momentum of our strong fiscal year 2023 product cycle. Our Asana Flow launch in February democratized the power to build workflows. Workflow Builder is simple to use without requiring technical expertise, yet powerful enough to support end-to-end cross-team workflows for organizations of all sizes. Our customer base continues to be fanatical about this launch. In just 90 days, 145,000 rules have been created, with particularly high adoption across our top 100 domains. More than 40% of our $50,000 customers tried Workflow Builder within two weeks of the launch, leaving a large runway for expanding across the base. I also want to mention another launch in June. We're looking forward to the first Asana ESG report later this month. Our company was purpose-built for sustainability from day one, and we're excited to share our metrics broadly and how ESG will be further integrated into our operations going forward. Looking ahead, digital transformation will continue to be a priority for organizations. Asana helps drive meaningful and fast productivity gains, which we know leaders are seeking intently. With high inflation and rising capital costs, leaders say they have even more appreciation for the efficiency Asana achieves within their businesses. Asana is perfectly suited during times like these as we help customers better adapt and improve along the way.

Hello, everyone. I'm Tyler Crow. I work on the product team for Firebase, Google's app development platform. Our mission is to help developers succeed by making it easy to build and grow apps and games users love. Apps make our lives better. They keep us informed, connected, entertained, and they make it simple to do just about everything from ordering food to learning new skills. But app development can be complex and cumbersome. often requiring you to jump between multiple products to accomplish a wide range of tasks, from building core app functionality to deploying and monitoring an app release, and then keeping users happy. Firebase brings together Google technology and cloud services across your journey under one platform. Over 3 million developers from startups to enterprises use Firebase to reach and engage billions of users. Your trust is what motivates us to keep making Firebase a more comprehensive, powerful platform that suits your needs. This year at Google I.O., we're excited to show you how we're strengthening Firebase's integration with Google's most popular developer products and making our platform work better with the open ecosystem of tools so you can accelerate app development and run your app with confidence. Our goal is to give you a seamless and secure development experience that lets you focus on making your app the best it can be for your users and your business. Let's get started. Turning your idea into an app is a lot more complicated than it sounds. Before you can start building features, you'll need to set up your backend, and you'll probably need to integrate services from a few third-party tools as well. This involves learning new APIs, writing code, and figuring out how to make everything work together smoothly. Firebase helps you get your app up and running quickly by providing fully managed infrastructure. We also offer solutions like Firebase Extensions that make it easy to integrate and extend functionality from third-party services much faster. To tell you more about Extensions, I'm going to pass it over to Cara.

Thanks, Tyler. When you're building your app, you often need to stitch together many different third-party APIs and services. That's a ton of time spent on integration and a lot of overhead for you to manage. We introduced Firebase extensions, which are prepackaged bundles of code to help you get your app up and running quickly. Extensions make it easy to integrate functionality from third-party services. They also help you stay up to date on these integrations without requiring you to do any additional work. Now, as your app grows from a handful of users to millions, sometimes you need to build custom logic to handle more complex situations. While extensions let you add core functionality with minimal code, they historically haven't been super extensible or given you the ability to build on top of them. Today, we're excited to introduce extensions events. Events allow you to plug into the runtime of an extension and extend its functionality with your own code. This way, the extension becomes a baseline for your integration, but you can still build on top of it to make it your own. This means you can use extensions and still support your custom use cases and business workflows, no matter how complex. Let me show you. Using extensions, I built Cara's Coffee, an online e-commerce website where I can sell my favorite coffee-related goods so others can enjoy them too. Like any e-commerce site, I needed to add key business functionality like marketing campaigns, a checkout flow, a way to process payments, and a method to ship and track product orders. Implementing all of this could take weeks or even months of development time. Thankfully, I was able to use over 15 e-commerce extensions to cut that time to a fraction. But despite the great progress I made with these extensions, there were some limitations to what I could do with Kara's Coffee. For example, I could process payments and sync customer subscription status automatically using the Stripe extension. But as a small business, I really wanted to handle customer cancellations my own way. When a customer cancels their subscription, I don't want to just stop shipping them coffee. I want to immediately send them an email with a photo of my puppy to try to win their business back. Because who can say no to Frida's adorable face? Without the ability to do this, I'd be losing customers unnecessarily with no chance to retain them. No small business owner wants that. Let's take a look at how I can set this up. Here I am updating the run payments with Stripe extension. There's a new section at the bottom where I can select the events I'm interested in. You'll notice that here I have many events I can choose from, but I'll choose the event most important to me, which is a customer subscription deleted event. Once updated, I can take a look at the details page for the extension and see the channel that's been automatically set up for me. Now to send the picture of Frida. I write a Cloud Function that triggers upon a custom event. I set the custom event to be customer subscription deleted and write the code for sending an email immediately. Now let's see what this looks like to my customer. Let's say a customer cancels their coffee subscription. I can see their account has been updated in both Cloud Firestore and Stripe. And here's the email with Frida With extensions events, I can customize extensions to fit my specific use case. Events are launching in the Stripe, Resize Images, and Revenue Cat extensions today. We're also excited to announce the release of new third-party extensions for marketing, search, and payment processing. For example, Snap is launching two extensions which allow your users to recommend your products to their friends through logging in with Snap and sharing to their Snap story. With new stream extensions, you can easily implement chat in your app so you can respond to your users in real time. TypeSense is an open source option for Firestore indexing and search. And Revenue Cat unlocks payment processing for in-app subscriptions so you can easily sell your digital goods on the app or Play Store. With these new extensions, you can add marketing, search, and more payment processing features to your app in just a few steps. You can install all these new extensions today by going to the Firebase website or visiting the extensions page on the Firebase console. Finally, we want to make sure you're comfortable with how an extension works before you bring it into your live app. That's why I'm also happy to announce that all the extensions I just showed you are available as part of the emulator suite. This way, you can test new extensions in a safe local environment, better understand their capabilities, and make adjustments without interfering with production data. And that wraps it up. Back to you, Tyler.

Thanks, Cara. By introducing events, adding emulator support, and releasing new extensions for marketing and payment processing with more partners, we're making Firebase work better with the tools and services in the open ecosystem so you can add features and functionality to your app faster. Once your app is built, it's time to deploy it. Usually, this is another slow and complicated process, especially for web developers, because it requires some manual orchestration between various clients and backend services. We wanted to improve this process and strengthen the integration between Firebase and your favorite web frameworks. You won't believe how fast you can deploy now. To show you, I'm going to welcome Karupa.

Thanks, Tyler. Hi, everyone. Modern web frameworks like React, Angular, Vue, Next.js, Nuxt, and more are great because they allow you to easily build the types of performant, scalable, and visually compelling web apps that people love. Behind the scenes, the frameworks pull this off by abstracting away the many messy details on client-side and server-side technologies, leaving you able to focus on just HTML, CSS, and JavaScript. But deploying such apps on Firebase requires some work on your part. We heard loud and clear from many of you that this experience needed to be better and simpler. So to save you time and headache, we made it possible to deploy modern web apps with a single command, Firebase deploy. That's it. We take care of everything else for you. Let me show you. What I'm showing you here is a Next.js app created using Create Next App. This is a multi-page app that renders some content on the client and some content on demand by the server. As we can see, the app works beautifully locally. Let's go ahead and see how it works live on a server. What I'm going to do is deploy this app to a preview channel to give my team a chance to do one final validation before pushing this live to production. I push my changes to the preview channel. In a few moments, our site is live for testing. Things look pretty good. Let's go ahead and push it live to prod. Now our site is live on a custom domain I have already configured through Firebase Hosting. Our global CDN and default SSL support ensures our content gets served worldwide as quickly as possible. Our goal here is simple. We want you to spend more time building a great UX for your web app and spend less time fiddling with the backend details. When you deploy your web app using Firebase, you get the full power of a global and fast CDN, great security out of the box, the performance and flexibility of Google Cloud, and the classic Firebase ease of use that defines our platform. We're starting with our developer preview for our modern web frameworks, Next.js and Angular Universal, with more frameworks to follow in the future. To try this out now, download the latest Firebase CLI and try running Firebase Deploy with your web app built using Next.js or Angular Universal. Back to you, Tyler.

Thanks, Karupa. Dynamic hosting support means Firebase works better with your favorite web frameworks, so you can orchestrate deployment of your modern web app stack with a single command. Another tedious part of app development is ensuring your app works across platforms and devices. People expect a fast and stable experience as they move from their mobile device to the web to their smart TV. Over the past few years, a rapidly growing community of developers, like you, has been using Flutter to create beautiful, natively compiled, multi-platform apps from a single code base. Flutter and Firebase together give you the tools you need to accelerate app development across platforms. We're pleased to announce that all of the Firebase plugins for Flutter have moved to general availability. And we've added official Flutter documentation, snippets, and customer support, ensuring you have the resources you need to confidently use Firebase and Flutter together. Now, a particularly tricky element of cross-platform development is managing all of the crashes and stability issues that are sure to pop up. Well, we've made three big updates to improve Crashlytics support for Flutter apps so you can track, monitor, and fix stability issues faster. First, we heard your feedback that Crashlytics is difficult to set up in a Flutter app. So we've drastically reduced the number of steps it takes to get started. And you no longer need to open any platform-specific IDEs. Now, to set up Crashlytics in your Flutter app, all you need to do is add the Crashlytics plugin and initialize it in your Dart code. And that's it. It only takes two steps, and then Crashlytics will start capturing and reporting your crashes. Previously, certain Crashlytics features were only available for natively built iOS and Android apps, like our crash-free user metrics and velocity alerts. So if you were a Flutter developer, it was hard to get a clear picture of your app's stability. Now, it's possible to log fatal errors in a Flutter app and send them to Crashlytics in real time. This means Crashlytics can notify you when critical issues arise so you can quickly resolve them before they impact a large number of users. Lastly, we revamped our backend crash analyzer so it groups Flutter crashes more intuitively by common underlying characteristics. This will help your team better understand the types of crashes affecting your app and prioritize which ones to fix first. You could take advantage of these updates by adding the latest version of the Crashlytics for Flutter plugin to your app. And you can visit our updated documentation on using Crashlytics with Flutter to learn how today. Now you can use Firebase more seamlessly with Flutter to build high-quality apps that reach users across platforms with the least amount of hassle and code. We've also got exciting news for Apple developers. We know many of you love building your apps using the Swift programming language because it's safe by design, easy to learn, and extremely powerful. And we know that SwiftUI is the modern way of building apps across Apple devices. However, the Firebase Apple SDKs were mostly written in Objective-C for compatibility reasons, and we had relied on the generated Swift bindings to create our API surface. As a result, we weren't taking advantage of some of the powerful Swift language features like codable or adding APIs that integrate with Swift UI views. We're excited to share that we're updating Firebase to fully embrace the modern Swift language. Now, if you're an Apple developer, you can easily use the latest Swift features along with Firebase. For example, you can use Codable and Firestore, Realtime Database, or Remote Config to take advantage of type safety and delete all of your code that manually parses dictionaries. Or use Firebase's async await APIs to flatten those error-prone nested callback blocks, like in this example that replaces 20 lines of code with only four lines. If you're using SwiftUI, you can use our custom view modifier to identify views for analytics or easily bind your views to data in Firestore with live updates using the Firestore query property wrapper. Thanks to some great community contributions, we've already begun rolling out better Swift support in the Firebase 8 SDK releases. And we'll continue to broaden the support with Firebase 9 SDK releases throughout the rest of the year. To take advantage of these great new APIs, check out our GitHub repo for instructions on how to install the libraries you'll need to include in your project. These libraries have now exited beta and are generally available for use in your products. Alright, so far we've talked about how Firebase can help you add functionality and deploy web apps with minimal code through extensions and dynamic hosting. We've also covered how enhanced support for Flutter and Swift will make it easy to deliver a great experience across multiple platforms and devices. But what good is rapid development and deployment if your app isn't secure? When you're building an app, you'll need to connect it to various APIs to get all of the services you need, which can come with some risk. Billing fraud, phishing, app impersonation, and data theft and poisoning are all risks you shouldn't have to worry about. We wanna help you safeguard your data, protect your users, and control who has access to your resources and infrastructure. That's where App Check comes in. App Check protects your APIs by attesting that incoming traffic is coming from your app on a legitimate device. Using the combination of app identity and device integrity, you can rest easy knowing your app is the only one talking to your APIs. You can use these App Check protections with Firebase, Cloud, and even API endpoints on your own custom servers. We're thrilled to announce that App Check now integrates with the Play Integrity API, which is a new app attestation provider for Android. Play Integrity API is the latest and most advanced app attestation for Android devices that enable you to take advantage of more anti-abuse signals. Additionally, we're pleased to announce that AppCheck has graduated from beta to general availability and is certified under major compliance and security standards. Check out the AppCheck overview in our Firebase documentation to learn more and get started securing your API resources today. Now that App Check has graduated to general availability, you can have even more assurance that not only will Firebase accelerate your app development, we will also help you keep your app and data secure right from the start. And we'll continue to strengthen our app security between Firebase and other Google products and APIs in the future. Let's talk about how Firebase can help you run your app with confidence. Once your app is built, it's important to ensure it's working as designed. With Firebase, you can validate your app through performance testing, collect feedback and get insight into how you can resolve quality issues to deliver the best possible experience. The best time to start testing your app is before you release it to the public. You don't want your users to find bugs that you missed and leave negative reviews, like on your Google Play Store listing, as soon as you launch your app. Firebase App Distribution helps you distribute pre-release versions of your app to trusted testers so you can get valuable feedback before launch. Today, we're excited to announce that Firebase App Distribution has graduated from beta into general availability. To get here, we worked hard to simplify your beta testing workflow and give you the power to customize it to suit your needs. We heard from you that it's tedious to manage testers and releases, so we've introduced powerful features like simplified group access, release auto deletion, and bulk tester management in both the console and our new public API, so you can focus on getting your builds to testers quickly. And speaking of your testers, isn't it frustrating to get a tester bug report for an old test version of your app? You spend a bunch of time investigating the bug, only to realize that the bug was already fixed. That's why within our new Android SDK, you can notify testers that a new version is available directly inside the app. This means your testers can stay up to date on your latest release and give you feedback on the version you care about the most. Along with our iOS SDK, this completes our SDK offering for both platforms. To start collecting valuable pre-release feedback on your apps, check out our Firebase app distribution documentation. App distribution will help you test your app and get feedback before launch. But it's just as important to make sure your app is still running great every day after that. That's where Firebase Performance Monitoring comes in. Firebase Performance Monitoring helps you collect and organize your app's performance metrics so you can see performance trends and identify opportunities to improve the app experience from your user's point of view. This is important because no matter how thoroughly you test your app on your local machine, your users will access it on different devices, in different countries, and on different networks. This means your app may still run into latency issues once it's out in the world. And having issues is bad, but not knowing about them is even worse. That's why we're excited to announce that performance monitoring alerts have graduated from beta into general availability. Performance alerts will send you an email when performance metrics cross a specific threshold. Now you can investigate and fix latency and speed issues as soon as they appear. In beta, we launched alerts for app start time, but now you can also create alerts for custom code traces, network requests, screen renderings, or web traces for the most critical parts of your app. Alerts are customizable, too. You can set your own thresholds so you get more signal and less noise. With performance alerts, you can release your app with confidence, knowing that now, when your users are experiencing issues, you'll be the first to know. To get started, check out the instructions on setting up your own alerts in our performance monitoring docs. Another major component of an app's experience is its stability. Few people want to use a slow app, but even less want to use an app that constantly crashes. As we mentioned earlier, Firebase Crashlytics gives you a complete view into your app's stability, helping you track, prioritize and fix critical crashes before they impact a large number of users. However, even with detailed and real-time crash reports, troubleshooting usually requires you to jump between the Crashlytics console and your code base to locate the error. Well, we've got good news. We're streamlining this workflow and giving you more filtering capabilities with new integrations between Crashlytics and Android. To tell you more, I'd like to welcome Adarsh.

Thanks, Tyler. The global Android ecosystem is rich in its diversity of device shapes, sizes, experiences, and OEMs. And while this diversity is a big part of what makes Android great, it can also be a challenge for developers who want to deliver an amazing app experience to their users, no matter what Android device they use. That's why Android developers all across the world rely on Firebase Crashlytics to surface detailed insights and context into the events leading to a crash. But often, when you need to reproduce, debug, and resolve those issues, you jump into your IDE, like Android Studio. Looking at stack traces in a browser and then having to navigate through your source code to find the right place to set your breakpoints can be frustrating. And it's easy to miss new reports if you're not regularly checking the Firebase console. That's why we're excited to share the Android Studio's new App Quality Insights window, which helps you discover, investigate, and reproduce issues reported by Crashlytics all in one place and within the context of your local Android Studio project. Let me show you. Imagine I've just released a new version of my app to production and want to see how it's performing. I just open the project and navigate to the App Quality Insights window in Android Studio. The IDE then downloads the latest crash data for my app, sorted by those that occur more frequently and affect the most users. While I'm interested in these top issues, I want to focus on the version of the app we just released to production. I can filter for just those issues by selecting that version from the app version dropdown. These other settings look good, so I'll leave them as is. Uh-oh, I see that there's a new issue that's affecting a number of users. Given the location of this issue, it could be affecting our new onboarding flow, potentially driving users away before they even get started. When I select the crash, I can see the stack trace right in the IDE. And because Android Studio has access to my source code, I can navigate directly to the lines of code that may be causing the crash. OK, now I want to try to reproduce the issue locally. So I want to use a similar device configuration as users encountering this issue. In the Details panel, I see that this is mostly affecting devices running Android 11. So I'll just set my breakpoint in the code and deploy to a similar device I have around. And if I need to see even more information, such as custom logs or tags, I can see the full issue report in the Firebase console with just a single click. Now, we don't expect you to constantly check this window. As you're building features and working in the code editor, we'll help you identify potential issues by highlighting lines of code that have appeared in crash reports so you can investigate and fix issues along the way. The App Quality Insights window is the first important step on our journey to bring the Firebase experience directly into the hands of Android Studio users. When we gave a sneak peek to our friends at Adobe, they felt that this is a must-have integration that directly solves the headaches of navigating from Crash to code. And we can't wait for you to try out this feature today and provide feedback by heading to this link to download the latest Canary version of Android Studio Electric Eel. But that's not the only integration with Crashlytics we're excited to talk to you about. Google Play is more than just an app store. The Play Console provides tools for various stages of your app rollout. For example, it gives you the power to set up and manage your release through different stages called tracks. If you're using Crashlytics with your app on the Play Store, it's difficult to distinguish which crash events are from internal testing versus open beta versus in production. now you can simply filter crashlytics reports based on play tracks let's take a look say i'm getting ready to promote my app from open beta to production i want to prioritize issues that beta users have reported so users in production don't run into them Previously, to find only the issues my beta testers are seeing, I had to select app versions from a very long list to accurately match versions in the open test track. Now, I can just select the play track I care about. We'll go ahead and select the open beta test track, and voila. We see there are a number of issues my team should look into before promoting to production. This filter is available today in the Firebase console. Go to the Crashlytics dashboard to get started.

Now, back to Tyler. Thanks, Adarsh. Throughout Google I.O., you can earn developer profile badges as you learn more about our latest technology, including play release tracks in Crashlytics. You've earned your first badge by watching this session on the I.O. website. A second can be earned by reading the feature documentation, and a third for linking your Firebase and Play accounts in the Firebase console. You'll need to be signed in and registered for I.O. to earn each badge, and you can learn more by visiting g.co forward slash learn to earn. As you just saw, we're taking important steps to integrate Crashlytics with Android and Play to give you a more streamlined troubleshooting workflow. Now, Crashlytics will provide context and insight into your crashes right in Android Studio, so you can easily locate errors and resolve issues while you code. And when you link Crashlytics to your Play account, you can filter crashes based on play tracks, so you can make more informed decisions on what to tackle first. Throughout this session, we shared the many ways we're making Firebase work better with both Google Developer products and the broader ecosystem of third-party tools so you can accelerate app development and run your app with confidence. We want to give you a seamless and secure end-to-end development experience that provides the fastest path to success. No matter what stage you're at, we're here to take care of the hard part of app development so you can focus on making your app the best it can be. Thank you for joining us, and be sure to check out the other Firebase technical sessions we have lined up at Google I.O.

We remain committed to building a comprehensive work management platform capable of serving organizations of all sizes around the world. We believe in our long-term strategy and are confident in the fundamentals of our business. Our investment is paying off with strong momentum in the enterprise. And we'll continue to invest strategically in this growth while balancing our commitment to making significant progress towards free cash flow in the coming year. And now I'll turn it over to Anne.

Thanks, Dustin. As we've already heard from Dustin, it was a great first quarter. Our investments in the enterprise segment are paying off as we set new records with bigger lands and faster expansions. We now have 390 customers spending over $100,000, and these larger deals represent our fastest-growing customer cohort, up 127%. We're also consistently closing strong winds in the mid-market, where I would note in particular we are seeing an uptick in wall-to-wall deals. Across medium-sized companies and divisions of enterprise organizations, our differentiated goals product, which seamlessly ladders individual tasks team projects, and cross-functional portfolios up to company goals with automated status reports is helping us close more strategic opportunities. Looking at our performance by geography, revenue from the U.S. grew 61% year-over-year, accounting for 59% of our total revenue, while international grew 52%, accounting for 41% of revenue. If it wasn't for our exposure in Ukraine and Russia and foreign exchange impact, the growth rate of our international business would be one to two percentage points higher. We saw strength in our core markets, and our channel strategy, which is still in its early stages of growth, is seeing some notable large wins as we build our presence in new countries. Lastly, we have a healthy pipeline and strong engagement with our large customers. As I look across our customer base, I see three major trends. Bigger expansions, often driven by strategic cross-functional use cases, larger lands, and broad cross-industry adoption. The first and most pronounced trend is our larger, faster expansions within our largest customers. A number of big global brands are seeing steep user adoption curves of up to 2% week-over-week growth in some cases. As you know, we have some of the largest deployments in the category, and we are just getting started. Our largest deployment has grown again and is now over 100,000 seats. Asana is used heavily across several operational units including managing their most strategic global accounts and designing and scaling some of their fast-growing cloud businesses. Another example from Q1 is a company called Octopus Energy which is using transformative technology to make renewable energy the norm and end global reliance on fossil fuels. They are wall-to-wall with Asana and use our platform to streamline all of their strategic workflows across teams. Our success across various impact organizations is very important to our mission. which brings me to yet another important organization called Jobs for the Future. They went wall-to-wall with Asana in a multi-year contract. Jobs for the Future helps to provide a stronger supply of qualified prospects to fill jobs and develop more equitable advancement for people. It's an important effort as employers across the nation struggle to find people with the right skills, and Asana will help them scale quickly and effectively. Lastly, this quarter, one of the world's largest telecommunications companies continues to expand rapidly and virally, as demand across users to pass their previous contract.

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One of the major drivers of these expansions is another trend we're seeing. More and more customers have scaled complex, strategic, and cross-functional workflows. They need high impact and high return on investment fast, and Asana can help them with this. As these organizations shift and accommodate the ever-changing market environment, they need even more agility. Zoom and Okta are great examples where Asana is the company-approved platform for work management. It's how they work every day. As a corporate-approved vendor, Asana is growing across their operations and business teams and is the way most employees manage their most important work. The second trend we're seeing is larger net new land deals. where the companies are realizing the strategic benefit of the capabilities enabled by the work graph. As Justin mentioned, a large high-profile financial payments company represented the largest land in Asana's company history. Importantly, Asana's workflow builder was a key contributor in closing the strategic net new deal. The CEO of this firm called Asana exceptionally well implemented and broadly useful. It's always great to see customers give us a shout out in a public forum. Everbridge, the global leader in critical event management and national public safety software solutions, was another exciting net new land deal. They saw the value of Asana and initiated a multi-year contract to help them automate operational workflows and increase visibility into projects. And the third trend we're seeing is broad cross-industry demand in the enterprise. We continue to see significant expansions across financial services, telecommunications, automotive, manufacturing, consumer retail, technology, and professional services, amongst others. On the topic of strategic partners, it's clear that our progress with HIPAA compliance opens exciting new opportunities. I'm proud to announce our partnership with Align Technology, a global medical device company and distributor to tens of thousands of doctors' offices. Real-time patient information and high-touch practice communication is an enormous opportunity for maximizing volume and revenue. This solution, Asana Smiles for Align, marks an important development in Asana's history as we look to bring a broader HIPAA-compliant offering to other customers later this year. Asana not only helps teams work together effortlessly, it also helps companies work together with their partners and customers effortlessly. It's still early to see how the current environment will ultimately impact our customers, but in the current dynamic, leaders are reconsidering how they're allocating resources. And more than ever, they need increased productivity across the organization no matter what people are working on. These times shine a brighter light on the value Asana has always delivered and the pain points we solve. A work management platform that shows who's doing what, by when, and visibility into how this work is connected to larger goals. Organizations will lean into our category because they need more clarity, agility, and efficiency. We are well positioned in a market like this as companies look to do more with less. Looking ahead, my top areas of focus include value-based selling. As the IDC study revealed, customers realized 225% return on investment in the first year they use Asana through increased productivity and faster workflows. Account-based marketing, repeating our successful playbook in North America and doing it at scale around the globe. Our account-based selling enablement is starting to pick up and our value-based selling is getting stronger. and raising industry awareness. We saw a tremendous pickup of our third onomatopoeia of work report. We reached a global audience of over a billion people with stories in the major business and consumer media. We believe we can win this category as the awareness grows and our unique capabilities meet customer needs, providing time to value in weeks, not years, and high ongoing return on investment. With that, I'll hand it over to Tim.

Thank you, Anne. Q1 revenue growth showed continued strength in the business. Revenues came in at $120.6 million, up 57% year-over-year. This puts us at an annualized quarterly revenue run rate of $483 million. As Dustin mentioned earlier, we reached a key milestone, surpassing $500 million ARR, with year-to-year growth rate similar to our GAAP revenue. This is not a metric we regularly disclose, but it's such an important milestone. Revenue from customers spending $5,000 or more annualized grew 73% year-over-year. This cohort represented 70% of our revenues in Q1, up from 64% in the year-ago quarter. We now have over 126,000 paying customers at the end of Q1, up 7,000 in the quarter. This represents a 26% year-over-year increase. We have 16,689 customers spending $5,000 or more on an annualized basis, up 48% year-over-year. And growth in the larger customers is even stronger. We now have 979 customers spending 50,000 or more on an annualized basis, up 102% year-over-year. And as Ann mentioned, we have 390 customers spending 100,000 or more on an annualized basis, growing at 127% year-over-year. Our largest customers are our fastest-growing cohort. As a reminder, we define these customer cohorts based on our annualized gap revenues in a given quarter. Our dollar-based net retention rates remain strong across every cohort. Our overall dollar-based net retention rate was over 120%. Among customers spending $5,000 or more, our dollar-based net retention rate was over 130%. And among customers spending $50,000 or more, our dollar-based net retention rate was over 145%. As a reminder, our dollar-based net retention rate is a trailing four-quarter average calculation. Before turning to expense items and profitability, I would like to point out that I will be discussing non-GAAP results in the balance of my remarks. Gross margins came in at 90%, the same as a year-ago quarter. Research and development was 43.1 million, or 36% of revenue. We continue to invest to fuel innovation on our proprietary technology and deliver on our vision. Sales and marketing was 83.3 million, or 69% of revenue. We're investing in our enterprise go-to-market motion as well as building our sales infrastructure. We front-loaded many of our customer-facing roles this year to build sales capacity for the second half and beyond. The unit economics for those investments remain unchanged. The payback period for the last 12 months is less than 15 months, consistent with last quarter and slightly better than a year-ago quarter. GMA was $36.9 million, or 31% of revenue. G&A expenses quarter included a one-time 3.6 million tax accrual. Without the one-time expense, G&A would be 28% of revenue, consistent with last quarter. We are actively working to find more leverage in our cost structure and expect to see improvement in our operating margins in the back half of this year and the coming year. Operating loss was $54.7 million, and operating loss margin was 45%. Net loss was $57.4 million, and our net loss per share was $0.30. Moving on to the balance sheet and cash flow. Cash and marketable securities, including long-term investments at the end of Q1, were approximately $283 million. Our remaining performance obligations, or RPO, was $250.4 million, up 72% from a year ago quarter. 87% of our RPO will be recognized over the next 12 months. That current portion of RPO grew 68% from the year-ago quarter. Our free cash flow is defined as net cash used for operating activities, less cash used in property and equipment, and capitalized software costs, excluding non-recurrent items such as the build-out of our San Francisco office. In Q1, free cash flow was negative 42.2 million, reflecting our investments in growth and rapid onboarding of new headcount during the quarter. Looking forward, we are actively managing our cash burn and we're pacing our investments in a more measured way given the macro economic backdrop. We are proud of the business momentum, especially our success with very large deployment at great iconic brands and the velocity innovation this year. Now moving to our fiscal 2023 outlook. For Q2 fiscal 2023, we expect revenues of $127 million to $128 million, representing growth rates of 42% to 43% year-over-year. We expect non-GAAP loss from operations of $74 million to $72 million. We front-loaded our hiring for the customer-facing teams in the first half of this year. We expect net loss per share of 39 cents to 38 cents, assuming basic and diluted weighted average shares outstanding of approximately 191 million. For the full fiscal year 2023, we expect revenues to be 536 million to 540 million, representing a growth rate of 42 to 43% for the full year. In terms of the shape of the quarterly progression, we expect to see more traditional enterprise sales seasonality with our sales capacity ramping towards the second half of the year as our mix continues to evolve towards a sales-led motion. We continue to expect our operating loss margin to be in the mid-40s for the full fiscal year. We also recognize that there are significant dynamics in the macroeconomic environment. At the same time, you see from our record-setting events in the first quarter and strong growth in enterprise we are very excited about our growth opportunities. Our core strategy is unchanged, and we have a plan in place to manage our investments and prioritize our highest ROI initiatives. We are front-loading our investments in the first half of the year, and you should expect our operating margins in the second half to improve versus the first half of this year. And we expect improvement in free cash flow margin in the coming year. But any upside to our revenue growth will be upside to this plan. And with that, I'll turn it back to the operator for questions.

Thank you. We will now begin the Q&A session. If you would like to ask a question, please press star followed by one on your telephone keypad. If for any reason you would like to remove that question, please press star followed by two. Again, to ask a question, that's star one. Also, please limit questions to no more than two. And as a reminder, if you are using a speakerphone, please remember to pick up your handset before asking your question. We will pause here briefly as questions are registered. Our first question comes from Andrew Degaspary with Brenberg. Andrew, your line is now open.

Thanks for taking my question. I guess just on the guide, I know you previously mentioned that effects could have an impact and also that the macro environment, you know, you previously saw during COVID that it did interrupt some expansion deals. I was just wondering if you're first of all seeing anything from that perspective and then maybe could you elaborate a little more on the impact from FX or if you're also baking in some conservatism based on what's going on.

Yeah. Hey, Andrew. This is Tim. Maybe I'll talk about guidance first and how we thought about FX and then have Anne share with you her perspective on kind of the current demand environment. From an FX perspective, from the guidance perspective, we essentially assume that there's, you know, that FX doesn't change from this point forward. Obviously, you know, if FX continues to degrade, there's going to be some more, there could be additional risk. But at this point, we're essentially looking at, we built the guidance essentially kind of off the existing FX rate and kind of the data that we have today.

Yeah, and I'll just follow up on that. So in terms of demand, we continue to see healthy demand. And in particular, we're seeing strong expansion as our customers are really focused on how they can do more with less, increase productivity and engagement in this current environment. And so our ability to deliver fast, measurable value, especially for senior leaders, most strategic initiatives, whether that's digital transformation, agile strategic planning, operationalizing their complex repeated workflows, that all continues to position as well as a priority investment. And we definitely see that reflected in our customers 100,000 and over, which grew at 127% year-over-year.

Thanks. And as a follow-up, in terms of the sales investments you're making, you mentioned the second half should show some better margin. Just curious to know if you have changed your plans in terms of the hiring levels that you were planning at the beginning of the year. maybe tied to the tighter labor markets, or is this essentially according to the plans you had set a few months ago?

So this is Dustin responding. So Tim mentioned we are being really thoughtful about how we make investments this year, and we have moderated the pace of our hiring, but that's coming off of really fast hiring so far this year. And so we had front-loaded quite a bit of the hiring, especially for those customer-facing roles. with the plan that they would be ramping across the year. And so that part of the plan is still pretty much the case. And it's even the case that we have quite a few pending starts from people that we've already hired. And so that's part of why you don't necessarily see the improvement in free cash flow and operating margins in the next quarter, but we're expecting it later in the year. So we have moderated the hiring pace relative to the beginning of the year, but it still represents really fast growth for headcount overall.

Thank you.

Thank you, Andrew. Our next question comes from Rob Oliver with Baird. Rob, your line is now open.

Great. Thank you, operator. Thank you guys for taking my question. I appreciate it. This is for Ann or Dustin. the first question. Late last year at the scale event, you guys laid out a bunch of the enterprise focus, initiatives, goal. Dustin, you mentioned a few of them, goals, workflow builder, and I know you mentioned that workflow builder, I think, was key towards the largest land with the payments company. Could you walk through the impact those have had on some of the enterprises? It certainly seems like You guys have tremendous momentum with large enterprises. I wanted to talk about some of the early reads on adoption and what they mean in terms of expansion with those customers, and then I just had a quick follow-up as well. Thanks.

Sure. Thanks, Rob. Yeah, so definitely the investments that we announced at scale and the continued investments in Workflow Builder are really impacting our ability to move up market. So in our conversations repeatedly with CIOs, with Chief Digital Transformation Officers, You know, what we're hearing that they care a lot about are a number of things. They continue to care about ease of use and strong adoption, which we've always been really focused on. Now they're also really focused on the ability to scale quickly to thousands of employees across different teams and complex cross-functional use cases. And they see us standing out on that front. And then exec level visibility and reporting. So all those investments now are making it possible for us to have that exec-level engagement. And so these pair well with where we're strong and continuing to invest on your point on Workflow Builder. What we are seeing is that conversion on that large land, but we're also seeing healthy expansion in the existing base because of Workflow Builder, and then also tier upgrades as a result. He said you had a follow-up, so would love to hear that.

Yeah, that's super helpful. I appreciate the call, Rhiannon, and the follow-up is for you. And you twice on the call, you've mentioned doing more with less. And in previous software cycles, we've seen some vendor rationalization that has certainly hurt some vendors but favored others. And you guys are in an early stage of a high-growth market, but just You know, investors are always concerned about competition, but at the same time, that could certainly benefit those that are aggressive. I just wanted to get a sense for when you look at within your customer base, if you're seeing, you know, some of your competitors in there and whether some of the opportunities you're seeing for expansion are coming as folks start to consolidate around one vendor. Thank you guys very much.

Yeah, I would say overall we still feel like it's early in work management. But some things that we are particularly excited about with our customers is these early indicators that we are their platform of choice. whether that's Okta and Zoom, right? They're essentially, you know, if there's pockets of other technology in the organizations, they're moving off of those and onto Asana. And probably more importantly, they're choosing Asana for all their employees and their most important cross-functional use cases. So I think we overall feel that that's early, but it's really positive signs for us that when those decisions are being made, they are moving onto Asana.

And I'll just add, like Anne said, we don't see this a whole lot, but the product strategy is designed to help us succeed when it does happen because we do think that's somewhere in the future and maybe will be hastened by the economic conditions. But Asana was designed to be from the bottoms up to serve individuals, teams, and executives across the entire organization and especially to work well for cross-functional workflows. So often when you're in a consolidation conversation, they're evaluating tools that were more specialized for particular departments or particular use cases or workflows. And so the teams that are from that department might prefer that tool, but Asana is the only one that can kind of be the crowd favorite across multiple teams. And then especially when they're working together, so if it's an operations team or a product organization or a go-to-market organization and they're working across departments, then Asana really shines. So we feel really well set up for that future.

Okay, that makes great sense. Thank you guys very much. Appreciate it.

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Thank you, Rob. Our next question comes from Alex Zukin with Wolf Research. Alex, your line is now open.

Hey, guys. Thanks for the question. Maybe first on just for you, Tim or Dustin, I mean, given the headlines, maybe just remind us of your exposure into software-based industries or tech. Given all the headlines with layoffs or hiring pauses, What's the right way to think about the growth headwind from that on your business over the course of the year? And then, look, I appreciate the construct and the context of improving efficiency, but I think over the last two quarters, the free cash flow burn is pretty high at $40 million. So how do we think about, I know you're not guiding to it, but at least at a high level, what's the right way to think about cash flow progression this year, just given the construct of the balance sheet. You clearly have enough money to go for a long time, but it would appear if you were to operate at these levels, you'd have to contemplate a capital raise at some point in the future. So just level set those two elements for us, if you will.

Yeah, so I'll start with the question about software exposure, and then Kim can talk about cash flows. So we do have a lot of great customers in the software industry, but we also have really broad-based customers both regionally and across industries. And I think as with these cases, there's maybe a plurality in software, but it doesn't represent an enormous part of the revenue pie. And then when you look at who those accounts are individually, they're among the very strongest of the software companies. A lot of them literally have billions on their cash balance sheets. And so they may, like us, decide to moderate their spend in various ways, but the expansion opportunity within those accounts is so enormous that it outweighs anything that might happen in terms of slowing headcount on the margins. We just still have so much room to grow within the existing employee bases that we still feel pretty good about it. That doesn't apply to everybody, so as you get down into more of the SMB part of the market, there may be a little more exposure there. But as we've been talking about, more and more of our business is coming from the larger accounts, coming from the business and enterprise tiers over time, and so that becomes less of a problem for us in terms of how it affects the overall accounting as we go further.

Yeah, and Alex, just on the cash flow and operating margins, I think what you'll see from us is that, you know, one, we care deeply about profitability and we have a plan to manage both the burn and improve the operating margins. And I would, you know, kind of the comment earlier I made around looking at the business as first half and second half, that the measure that we'll put in place, the efficiency metrics that we're going to be looking at, that you should expect to see improvement in the second half of this year and then probably more measurable improvement next year. You know, I think we're trying to do everything we can. We do have a strong balance sheet with over almost $300 million on the balance sheet, but we want to extend our runway and create as much optionality as possible.

Thank you, Alex. Our next question comes from George Iwanek with Oppenheimer. George, your line is now open.

Thank you for taking my question. Dustin, following up on your software exposure answer, can you give us a sense if there's been any change in churn rates with either SMB customers, mid-market, or the larger customers?

I don't think we're seeing anything particularly material just yet. We're certainly cautious about the future given the macroeconomic situation. But just as a comparison, in March 2020, I mean, things dropped off a cliff. I think there was a few weeks where the revenue actually moved backwards. So that was pretty bad. But I do want to call attention to, again, to the sort of currency headwinds and the war that does affect retention revenue just in a mathematical way. So even if the seats are there and the customers are there, they're going to renew with fewer dollars just because of the currency exchange rate. So we do see a little bit of that, and we've quantified it a little bit in the prepared remarks. But so far, haven't really seen customers shutting down yet or just choosing to cut costs by cutting us on out of their software stack and don't really have the early indicators that would make us think that would happen. But again, we're paying attention to the macro situation.

Thank you. And following up on your comments about the value-based selling and the success you're having in the mid-market with large customers, can you give us a sense of the pricing leverage that you have right now and kind of whether there's a lot of discounting going on when you're having these larger deals and your ability to maybe get stronger pricing.

Yeah, I think what we tend to do with mid-market and larger accounts is definitely create structures where there's predictable billing for them and total cost of ownership. And making sure that from, as Destin mentioned earlier, our priority really is on expansion of paid seats in these accounts because we really see that the stronger the adoption and the more employees that are using Asana, the faster that companies are realizing value. So we tend to, depending on if it's a multi-year deal, we'll structure it primarily to make sure that customers have predictability in budget. But it's really focused on adoption, expansion, and growth. Thank you.

Thank you.

Our next question comes from Pendulum and Laura with JP Morgan. Pendulum, your line is now open.

Hey, thanks for taking my question. Dustin, one question kind of caught my attention on your comment about adoption curves. I think you're saying it's growing at about 2% week over week. I want to ask you from a product standpoint, would you say you have kind of reached an inflection point at this time in terms of satisfying kind of the major enterprise IT checklist around security governance and other requirements that's allowing these customers to kind of expand with Asana, you know, wall-to-wall up to 100,000 seats at this point.

Yeah, we're certainly seeing – thanks for your question. We're certainly seeing that all the investments we've made over the last year and a half on partnering with CIOs and heads of IT on what is required from a security and scalability standpoint is paying off. And that is allowing for that faster expansion. We continue to work really closely with our customers to make sure we're meeting their needs. And in particular now with these larger accounts, what we're partnering with customers on is actually managing the complex workflows at scale, being able to do things faster, making sure provisioning and security continue to be there across these complex global companies. But I do think the investments from the last year and a half have unlocked opportunities to partner much more closely at the VPIT CIO level.

Understood. One quick follow-up. It seems like you're seeing a good amount of demand, but if I have to play the devil's advocate, I guess, given the macro drumbeat of potential slowdown, are you not seeing any strains in the sales cycles in terms of deal pushouts or increasing level of customer scrutiny or any change in the top of funnel in the various theaters globally?

Currently we have not seen changes there. As Dustin and Tim both mentioned, we pay close attention to that. I think the good news for us is in our existing customer base, in the vast majority of our mid-market and enterprise accounts, there continues to be a lot of room for growth. And what we find is as adoption increases and customers are seeing value, that that is not preventing them from growing with us, right? They're actually seeing that it helps them with productivity and doing more with less in this environment. So I think that's where we see a lot of potential and continued growth is also in our expansion opportunities.

And just to tie those questions together a little bit, what Anne had said was that we see 2% week-over-week growth in some of our very best and that's effectively a situation where, yes, we've satisfied the needs of IT at that customer, not necessarily for all possible customers, and they're sort of letting the organic growth of the product go sort of unfettered. We're also, of course, helping and helping them use workflows and adopt new use cases. But when employees are actually kind of provisioning the product for themselves and finding use cases for it, It's a pretty different thing for IT to come in and sort of take that out of their hands. And even when they're sort of thinking about budgets, I think it's a pretty strong signal to them that the employees are getting something very useful out of this. And then we have our own research and the case studies from those organizations and others that can kind of prove it for them mathematically. So in an environment like this, you know, we switched to a little more value selling of Asana as a way to get more productivity, get more engagement from your employees, and be able to leverage your capital to greater impact. And so that's still a message that resonates with customers.

Understood. Thank you very much.

Thank you, Benjamin. Our next question comes from Pat Walravens with JMT Group. Pat, your line is now open.

Oh, great. Thank you. Tim, I think this one's for you, which is, if I remember right, last quarter you guided to fiscal 23 operating margins in the mid-40s, negative. And then if you look at 24, the consensus, I think, is negative 32. So let's just say the low 30s. I mean, is that still the right way for investors to think about the operating model? And if not, how would you like us to think about it?

Yeah, I mean, I think you should 100% expect us to improve our operating margin and keep free cash flow margin in fiscal year 24. I think, you know, I think it will take some time for us, like as we measure the investments that we're making this year, as the headcount that we added in the first half of this year come in line with added capacity towards the end of the year. I think all those things will come into play. But I think what you're seeing from us is we're putting a plan together We have a plan to manage our cash burn, to pace our investments. Really what I would say is we're really focused on those areas where we've seen success and that we're confident about the ROI and pulling back on those areas where we're less confident or it's been more speculative. So I think that's a fine way to think about it, but obviously we want to be in a position where we're beating consensus, Pat, quite honestly, and hopefully we'll deliver the kind of results that's going to make everybody happy.

And as a follow-up, is sort of the tightening, you know, financing environment for private companies helping you in any ways? I mean, are you seeing more interesting private companies running low on cash and calling you to sell to you? Are you seeing less crazy behavior maybe from private competitors? I'm just wondering if there's a positive side to any of this.

This is Dustin. You know, I think that stuff can happen. Everything's happened so quickly in the market that I don't necessarily think you'd see those changes right away. I did get an email this morning about a company interested in being acquired, so I expect to see more of that. But I think it's still early days to see how the cycle really plays out. But I do think in an environment like this, it's good to have a lot of cash on the balance sheet. We talk a lot about our sort of public comps, but there is a long tail of other smaller private competitors. And so, yeah, there may be a future where they're less competitive and that leaves more of a market for the larger players.

Thank you. Our next question comes from Josh Bayer with Morgan Stanley. Josh, your line is now open.

Great. Thanks for the question. I just wanted to ask the kind of growth investment macro question a different way. Previously, some of the commentary around the investment philosophy was that it might take diminishing returns on investments to pull back and see more leverage. So my question is just, is the moderation in hiring and commentary on back half improvement and margins, is that reflecting any diminishing returns on investments, or is it just a prudent and maybe welcome reaction to the market's focus on path to profitability given the macro environment?

Yeah. Hey, Josh. This is Tim. I would say it's certainly the uncertainty in the macroeconomic environment that's causing us to pause and just kind of reassess the hurdle rates that we want to have around the kinds of investments that's going to have a longer payback. And, you know, we have such amazing runways across a lot of different opportunities. And I think we just really want to be thoughtful around ensuring that the payback is there and the payback is there on a timely basis.

I just want to add, I'll reiterate, a lot of it is about the uncertainty. So I think there's just a wider range of possibilities for what kind of payback we'll get in the second half. We don't know what will happen, but it's not definitely negative. But also I'll just point again at the currency headwinds. they don't create diminishing returns, but they create less returns in a sort of mathematical way. And so that's just something we have to acknowledge, even if we're not on a different part of the curve, we still have to think about LTV and paybacks and sort of make a new decision based on that. And then you have the additional heightened focus on cash flows and operating margins. So those all sort of point in the same direction.

Thank you. Our next question comes from Rishi Jalohari with RBC. Rishi, your line is now open.

Wonderful, thank you. This is Rishi Jalohari. Two questions I wanted to ask, I think both macro in nature. But number one, I just want to understand, I know you are not seeing any real slowdown or changes in customer behavior. But I think, you know, uncertain environment and seems to be consensus at this point that we'll hit some sort of a recession in the near term. Just how do you think about, you know, maybe what will happen, right, with, you know, sales cycles and everything? Because this is a very low touch, you know, sales process, easy to implement. You know, you saw a lot of those customers put it on pause early during COVID when there was a lot of uncertainty out there. Is there any reason to think, in other words, history won't repeat itself here and what we saw, you know, in the early stages of COVID won't happen, you know, if there is, in fact, a slowdown and I've got to follow up.

What, you know, again, I think we do want to acknowledge there's some uncertainty in general. And so we don't really know what will happen. I think there's a possible world where the uncertainty itself is looming large at the beginning of the cycle, but even if things trend negatively, if there's definitiveness around it and people can make models that they believe in, then I still think that they can move forward with confidence on software purchases, especially, again, if they're going to help improve productivity and help improve efficiency. That's something they may even be more interested in. That was part of what happened with COVID is there was a sort of shock element in March, April, and then we saw very strong demand at the top of the funnel. Part of that was the move to distributed work as well, but I think part of it was just the need to do digital transformation faster. And I think that we're still part of that long arc trend.

Yeah, the other thing I would add is our investments over the last couple of years have been moving up markets. are also helping tremendously because the investment in our account teams, customer success, partnering with more senior level executives within these customers ensures that we continue to be a priority. So more and more in the conversations, it is driven by the top level strategic initiative that C-level execs have for their organization, which in this current environment really does focus on productivity and employee engagement.

And I just want to add one more thing, just lessons from COVID. You know, again, the positive growth for us was still very strong, but we got hurt on retention because our customers were going out of business. And so even though tech is very volatile right now, I think that's more a reflection of the uncertainty, you know, including among investors. But in a recession, I think I would still expect tech to be pretty strong, and the real problem is how the recession impacts all the other industries. And so the thing that I think about more with macro is what happens if customers literally shut down across industries if we have a recession or especially a lengthy economic downturn. And the demand part, the positive growth, is the part that I still feel pretty confident about.

All right, great. Thank you. I think we may have lost you.

Our next question comes from Brent Braceland with Piper Sandler. Brent, your line is now open.

Thanks for taking the question here. Dustin, maybe I'll start with you. You've over the last couple of years have invested in Asana both through a convertible node and then acquiring shares on the open market. I guess, what is your own appetite to invest in Asana, maybe long-term, near-term? I'd love to better understand your views on the business relative to what you've done in the past couple of years. Thanks.

Yeah, thanks for the question, Brent. So I'm not able to really say in advance whether I'll make more purchases on the open market, but I do want to take the opportunity just to talk about the process that I use when that does happen. So I always make purchases through a 10b-5-1 that would be put in place during an open trading window. And then I additionally go through a multi-month cooling off period. You may have noticed not every public company CEO does that, but generally think it's good practice and something that I would consistently do to buy stock on the open market. And so that means that the process is by nature sort of a slower process, more deliberative, more deliberate. And so I make those decisions more about what I want to do over the long term and what I want my ownership stake to be. So whenever you see me buy or not buy on the open market, there's sometimes some speculation that that's a reflection of maybe what I think about the business or the current stock price. But it's always a much slower decision than that. And it's also, frankly, hard for me to anticipate the kind of volatility we've seen over the past two years. And so I just want to send the message that that's always really about me deciding to take a long-term position in the future long-term growth of the company rather than a reaction to what's happening in the market that day.

Helpful color. And then maybe, Tim, just could you help me a little bit around the optics of revenue? Because if I look at the U.S. reported revenue, you actually added more revenue sequentially in Q1 of last year than you did this year, which at first glance made me a little nervous that there might be some softness in the U.S., but then if I look at deferred revenue, really strong in Q1 CRPO backlog build here, well above what we were looking for you. So is there a disconnect between the timing or linearity in the quarter, or did you see some softness in the transactional side of the business in the U.S.? Just trying to understand the optics relative to U.S. reported revenue, which looked a little weak, but really strong deferred in CRPO.

Yeah, I think the one thing that I think you'll continue to kind of see from us as we continue to make progress and momentum on the enterprise side, that you'll see kind of the RPO, you'll see a little bit of lumpiness in the RPO number. We did close our largest transaction in the history of the company with this expansion to 100,000 seats. That was approximately $20 million on our deferred. So that certainly helped with the total RPO number. But I think what it really points to is the progress that we're making on the enterprise side and the movement that we're seeing with some of our larger customers and how they're expanding and continuing to do multi-year deals with us, especially in the RPO numbers.

Thank you. Our next question comes from Robert Simmons with DA Davidson. Robert, your line is now open.

Hey, thanks for taking the question. So it looks like you had pretty good cost control in most areas, but looking at G&A, it nearly doubled year over year and it's over 30% of revenue. Other than the tax control, what's driving that? And then how long will take, how will you drive leverage in that line over time?

Yeah, no, great question. Obviously, I think you want to net out the tax accrual. And I think if you net that out, then it's about 28% of revenue. And I would say we staffed up a G&A infrastructure to support a very large business. We've been growing headcount fairly aggressively over the last couple of years. So we have a pretty large team to support that. And I think what you're seeing now is you should expect G&A to moderate. and that we'll see a lot more leverage as we continue to grow the top line, really focus our efforts around building sales capacity, sales enablement, customer-facing teams, and that the infrastructure we put in place now can support a very large business.

Got it. And then I think you guys really haven't overturned much the office yet, but I think your customers are. Can you talk to me kind of what you're seeing there in terms of how that's helping or hurting customers your sales and your extensions, and then also what your internal plans are for return to office.

Yeah, thanks. We're actually doing the call from the office right now, and we have pretty decent attendance right now. We're sort of in a ramp-up period as we head to a full return to office in September, at least in the Americas. And in terms of how that affects the business, This has come up across a few quarters, but our view is really that Asana is an essential tool for any teams, whether they're working together in an office or distributed or remote first. And even when you have a company like Asana that is planning to be office-centric, we still work across more than a dozen offices all around the world. So even though sort of the atomic teams can be in a room together, inevitably they're working cross-functionally in a sort of remote first way a lot of the time. And so you really, everybody's kind of a little bit hybrid and there's really a spectrum there. But again, Asana was built for companies long before remote work became such a massive trend long before COVID. And we really think that it's an essential tool for teams working in all sorts of environments So we haven't really seen any change in demand based on that.

Thank you. And that concludes today's question and answer session. I'll now have the conference back over to Catherine for any closing remarks.

Great. Thank you, Amber. Just want to say thank you to everyone for joining us today and making the time for the Asana earnings call. If you have any follow-up questions, as always, please feel free to reach out. And we look forward to seeing you on the road and at the conferences. Thanks a lot.

That concludes today's ASANA first quarter and fiscal year 2022 earnings call. Thank you for your participation.