Asana, Inc.

Good afternoon, and thank you for attending today's Asana fourth quarter and fiscal year 2023 earnings call. My name is Donyell, and 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 followed by one on your telephone keypad. It is now my pleasure to pass the conference over to our host, Catherine Buon, head of investor relations. Catherine, you may proceed.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana's fourth quarter and fiscal year 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 for 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 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. Reconciliations 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 all for joining us on the call today. Despite a challenging year, we finished our fiscal 2023 with strong growth driven by our continued success serving enterprise customers and meaningful progress towards profitability. Q4 revenues grew 34% year over year and fiscal year revenue grew 45% year over year. This growth was fueled by some of the largest companies in the world who are Asana customers and represent industries such as media, automotive, professional services, manufacturing, healthcare, transportation, logistics, telecommunications, and financial services. During the fiscal year, we closed deals with three of the world's largest automotive manufacturers, four of the largest telecommunications and internet service providers, several large professional services companies, five of the largest media conglomerates, a top five shipping and logistics company, and six financial services firms. Overall, eight of the top 10 tech companies are Asana customers, and 80% of the Fortune 100 use Asana. And in a moment, Anne will share more of our specific Q4 wins. When you segment our customer base by those with more than 2,000 employees, an even more precise look at our enterprise penetration, we have well over 1,500 enterprise customers. Our seat penetration in most of these accounts is significant, but still in the single-digit percentages on average, so there's a large opportunity for future growth. Some of the most strategic companies in the world are partnering with Asana to define what work management at scale looks like. We have several Asana customers who have over 10,000 paying seats. We now have more than 139,000 paying customers as demand for our work management solution continues to increase. Customers with over $100,000 annualized spends grew 49% year over year. As these customers continue to grow with Asana, their dollar net retention rate continues at a very strong pace at over 135%. Revenue from this cohort grew 80% for the fiscal year and represents about a quarter of our total revenue. Despite more budget scrutiny and enterprises, our win rates remain strong. We're winning more consolidation deals and are seeing an increase in large multi-year commitments as customers grow their investment in Asana. In Q4, the momentum in our non-GAAP operating margins turned the corner, and we expect to continue positive momentum over the next several quarters. We expect to drive significant improvement in non-GAAP operating margins coming year as we focus on operational efficiency and growth, which Tim will talk about more. As we look towards fiscal 2024, we're focusing even more on our go-to-market strategies. We'll be scaling our winning playbook across the entire sales organization, increasing operational excellence and discipline, and ensuring we have proven enterprise talent to lead. While we expect the current challenging macroeconomic environment to continue for the near term, We're encouraged by the way the longer-term trends are playing out. The need for digital transformation isn't going anywhere. Customers are making multi-year commitments with Asana as they look to disrupt the status quo and get measurable ROI and time to value for their investments. And when companies want to consolidate their spend on work management, we're winning. We're fortunate to serve and learn from some of the most innovative organizations in the world. Working with companies across major sports leagues, financial services, media, multinational consumer goods, and manufacturing has also given us unique insights into potential growth opportunities and the areas where we need to evolve in the coming years. I'm excited that Asana has reached the stage where these investments can be leveraged to create value across many more large enterprise customers. Core to serving these customers is the way our product has evolved as well. We believe Asana has the most scalable architecture and data model and can support the most users, the largest volume of work, and incredibly complex workflows. The Asana platform is quickly becoming the work management solution of choice for large organizations looking to transform the way they work. There are four areas where we've seen recent traction in the enterprise. Goals, cross-functional collaboration, compliance, and integrations. Asana Goals was already the number one goal product, according to the G2 Enterprise Objectives and Key Results Software Market. The vast majority of our $100,000 or more customers use goals, and over 90% of the ones that do connect them to work. Companies are moving goal management from standalone OKR vendors into Asana, and CIOs are recognizing our product as a consolidation opportunity. Our customers continue to realize value from Asana's cross-functional capabilities, which allow people from multiple teams to work together seamlessly. In order to run their business processes, cross-functional collaboration is not a thing businesses do, it's everything they do. Asana is a critical platform that allows companies to work the way things get done. As we've mentioned before, virtually all of our customers use Asana cross-functionally. If you look at the nature of the work within each customer, the majority of their work in Asana is cross-functional cooperation, in contrast to other applications that track single projects for single teams. This number is even higher for customers spending more than $100,000. We see an even higher proportion of this cross-functional collaboration in the features we've built as we've moved up market, including goals and portfolios. For compliance, our newly launched HIPAA offering is enabling customers to bring more of their patient care management workflows into Asana. We have dozens of customers using our HIPAA solution just four months after its release, and we continue to see opportunities open up in healthcare and healthcare insurance-related deals. We're also seeing traction as more and more companies build integrations with Asana. Integrations help customers make better use of existing investments and improve the productivity and quality of work across their applications. These include HubSpot, rules integrations with Gmail, PagerDuty, and Twilio. Salesforce for Goals is our first out-of-the-box integration for Asana Goals and was just rolled out to customers this quarter. We're already seeing an over 50% increase in Salesforce integration from our top 100 customers. When work happens in Salesforce, the progress of linked goals in Asana is automatically updated, making it easier to monitor impact and make informed decisions. On March 28th, we'll be hosting our first event of the year, Asana Forward. This virtual program will feature cutting edge research and real life insights from Asana customers, Amazon Web Services, Zoom, T-Mobile, Live Nation, and Morningstar. Attendees will hear why these companies chose work management software and how they're doing change management supporting new revenue streams, and using IT to drive process excellence. Those attending will also learn firsthand about collaborative intelligence, the next phase of Asana's proprietary technology, the work graph. Just as Asana led the way in defining the work management category, we're taking the next step to shape the future of work. Before I close, I want to mention some of the industry recognition Asana has recently been given. In Okta's most recent Business at Work report for 2022, Asana is the fastest growing app in our category among the top 50 most popular apps on the Okta platform. Also, Asana was named as a leader in the Forrester Wave Collaborative Work Management Tools Q4 2022 report. The report specifically differentiated Asana for how our work graph data model connects information, people, and objectives that drive work through the organization, and how our goal management structure helps organizations connect disparate teams with a common focus. Asana was also recognized as the top 100 in Glassdoor's Best Places to Work Award for the fourth time. And by Newsweek in cooperation with Plant A Insights Group, Asana was awarded one of America's Greatest Workplaces for Diversity 2023. I also want to highlight the release today of our fourth annual Anatomy of Work Global Index, an in-depth analysis into how work has evolved during this time of rapid volatility. Conducted by Global Web Index, On behalf of Asana, the 2023 Anatomy of Work Global Index surveyed the behaviors and attitudes of more than 9,000 knowledge workers across the United States, the UK, Australia, France, Germany, and Japan to understand the impact of cross-functional collaboration, including what's working and what's not. The report highlights that successful cross-functional collaboration helps organizations tackle challenges more effectively, leading to more revenue growth and adaptability for business, and how clear goals contribute to business success by boosting collaboration, innovation, and employee engagement. This report is another example of how Asana continues to serve as a thought partner to our customers on the future of work. There are three things I want to reiterate before handing it over to Anne. First, we're building a long-term sustainable business focused on both growth and profitability. In Q4, we improved our non-GAAP operating margin by over 14 percentage points year over year. And as you can see from our guidance, we're expecting to improve our non-GAAP operating margin by 19 percentage points for the full fiscal year in 2024. This would be a 50% improvement versus fiscal year 23 through a combination of efficient investment and growth. Second, we're planning for pricing and packaging opportunities in the future to better match price to value for our enterprise customers. This is another area where larger deployments help us understand where we can evolve and add more value. We also expect this work to generate better leads for seed expansion, and new opportunities in the future to upsell using add-ons. And third, as I mentioned before, we're launching Collaborative Intelligence, the next phase of Asana's proprietary technology, the WorkGraph. Our virtual event will be on March 28th, featuring Amazon Web Services, Zoom, T-Mobile, Live Nation, and Morningstar. In fiscal 2024, we're aligning our actions to optimize for serving enterprises well, which will be our key driver of growth. New use cases within existing customers and use cases that drive new lands. We've already been making progress in this direction and are now well positioned to become the category leader with consistently high reviews from users and analysts and the largest existing deployments in enterprise. The future of work is every organization working from a shared system of clarity and accountability built on the Asana work graph. Our strategy is focused on bringing that future to life. Now I'll turn it over to Anne.