Asana, Inc.

Thank you for attending today's Asana Q3 fiscal year 2023 earnings call. My name is Bethany. I will be the moderator for today's call. All lines will be muted during the presentation portion of the call, with an opportunity for questions and answers at the end. If you would like to ask a question, please press star 1 on your telephone keypad. I would now like to pass the conference over to our host, Catherine Buon. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results of Asana's third quarter fiscal 2023. With me on today's call are Dustin Moskowitz, Asana's co-founder and CEO, Anne Raimondi, our chief operating officer and head of business, and Tim Wan, our chief financial officer. Today's call will include forward-looking statements, including statements regarding our expectations regarding free cash flow, our financial outlook, strategic plans, our market position, and growth opportunities. 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 and quarterly report on Form 10-Q 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 be discussing 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 for joining us on the call today. As you saw in the earnings release, Asana reported strong Q3 revenue growth and notable operating margin improvement in the quarter. Revenue in the quarter grew 41% year-over-year, or 43% when adjusted for foreign currency. Operating income was over $11 million better than expectations, a credit to our revenue outperformance as well as our continuing focus on managing our expenses. We had 493 customers spending $100,000 or more in annualized gap revenue, up 78% year over year, and continue to be the work management solution of choice at some of the world's leading enterprises. In addition, our largest deployment has now reached over 150,000 paying seats, further widening our significant lead in enterprise deployments. Our enterprise business is growing more rapidly than our overall growth rate, continuing to become a larger portion of our business over time. And the net retention rate of our customers spending $100,000 or more continues to be very strong at over 140%. And we'll talk more in a moment about some of these large customers who represent some of the world's leading companies and best known brands. Looking back to fiscal 21, we'd accelerated revenue growth year over year. So we ramped up heavily in the second half of fiscal year 22 to increase capacity for what we believed could potentially be an even bigger year in fiscal 23. The last spring, the macroeconomic environment started to turn on our international business. So in Q2, we slowed headcount growth, started pacing investments in lower ROI geographies, and started taking significant measures to manage spend. By September, those conditions became even more challenging, including for our US business. Based on all of these factors, we made the difficult decision last month to reduce the size of our overall organization by 9%. We also adjusted our full year outlook to capture these impacts. Our current expectation is that these factors will persist through the fourth quarter and into the next fiscal year. While the macroeconomic trends have been dynamic, what hasn't changed is the size of our market opportunity and our product strategy. Asana's work management platform is now a strategic choice as organizations look to successfully navigate these uncertain times. I've been on the road recently meeting with customers. We're fortunate to work with some of the most innovative companies in the world, companies that have successfully deployed Asana to tens of thousands of users. This scale and their perspective has given us unique insights into how enterprise organizations are thinking about their current and future software needs. With that, there's three things to note. First, while buying decisions are being considered carefully by the C-suite during this macroeconomic cycle, they're still investing in solutions that help them do more with their tech stack, offer time to value, and focus employees on work that matters. This is a long-term tailwind that will likely continue in the years to come. Second, we're seeing a similar strategy in more traditional industries where there's real urgency to digitally transform and disrupt the old ways of working. Companies in automotive, financial services, professional services, healthcare, manufacturing, and shipping and transportation are automating their workflows with Asana. We're even seeing cross-pollination from organization to organization as Asana advocates take on roles at new companies. A few years ago, the term work management didn't even exist, and today it's approaching the mainstream. And third, especially in this macroeconomic climate and during the season of annual planning, we're repeatedly hearing how critical it is for leaders to have visibility and accountability. This helps to ensure that the work delivers on business priorities. When work is connected to goals in Asana, it creates a dynamic constellation of where things are successfully aligned and where the hotspots are. With this bird's eye view, leaders can take action, pivot quickly, and be more competitive. Asana is honored to be recently recognized for our goal-oriented approach that drives greater enterprise adoption. The Forrester WAVE Collaboration Work Management Tools Q4 2022 evaluation has named Asana a leader in its assessment of the top 13 vendors in the market. The new report specifically calls out our strategic differentiation in two areas. First, for how our work graph data model connects information, people, and objectives that drive work through the organization. And second, for how our goal management structure helps organizations connect disparate teams with a common focus. Asana's recognition as a leader in the Forrester wave follows its number one ranking in the G2 Grid report for objectives and key results, providing strong customer review-based validation of product and competitive differentiation. Early data from our recent Q3 enterprise product announcements has been strong. We're seeing higher quality leads with larger customers at later stages in the funnel. Companies are moving goal management from standalone OKR vendors into Asana, and CIOs are recognizing our product as a consolidation opportunity of key goals and work management. One of our customers has been celebrated for its rapid growth after quickly and successfully shifting strategies. The need for this kind of agility is why they made a Q3 move from their standalone OKR solution to Asana, where they can connect the work that matters to company goals. Some of the big enhancements to goals that we introduced this year have been driving adoption. For example, since launching Goals for the Universal Reporting last quarter, we've seen goal creation has almost doubled in each customer year over year across our $100,000 or more cohort. Our newly HIPAA compliant offering opened new doors this past quarter with companies that store, consume, and transmit personal health information. And even though it was just released, we've already closed multiple deals across healthcare and insurance around the world. Our HIPAA offering will enable them to bring more of their patient care management workflows into Asana. And we've seen large customers in Australia and Japan migrate their work data into our new regional data centers, a testament to their continued usage of and investment in Asana. As we look to fiscal year 24, we'll continue to build out Asana's work graph as a critical navigation system for companies. I'm excited, alongside customers, to share much more on how the power of collective intelligence will accelerate organizations during our next marketing event in Q1. This means our customers get data-backed insights as well as turn-by-turn directions that help them address real business challenges. In the shorter term, we're specifically focused on helping leaders across operations move faster and continue to build for the enterprise at scale. Asana gives strategy and ops a single source of truth to track requests across email, chat, documents, and other frequently used applications. They're able to maximize efficiency and pivot work to achieve critical organizational goals. We're also giving IT the needed roles-based guardrails to scale up onboarding and manage faster and more successful deployments. Before I hand it over to Anne, I want to again acknowledge that we're making decisive moves to improve our margin profile. With over $545 million in cash, we believe we're fully funded to execute on the current strategy and achieve free cash flow positive by the end of calendar 2024. We're not satisfied with our performance and will be focused on driving growth and enhancing our global go-to-market execution. I believe Asana is uniquely positioned to help companies through these current challenges and will continue to invest conscientiously while maintaining our leadership and product innovation. Now I'll turn it over to Anne.