Asana Inc (ASAN) Q1 2026 Earnings Call Highlights: Strong Revenue Growth and AI Innovations ...
Non-GAAP Operating Margin: Improved by more than 1,300 basis points year-over-year, reaching 4%.
Adjusted Free Cash Flow Margin: Improved by more than 700 basis points year-over-year, reaching 5%.
Core Customers: 24,297 customers spending $5,000 or more annually, with revenue growth of 10% year-over-year.
Customers Spending $100,000 or More: 728 customers, growing 20% year-over-year.
Gross Margin: Approximately 90%.
Net Income: $12 million or $0.05 per share.
Cash and Cash Equivalents: Approximately $470.8 million.
Share Repurchase: $15.6 million of Class A common stock repurchased.
Q2 Revenue Guidance: $192 million to $194 million, representing 7% to 8% growth year-over-year.
Full Year Revenue Guidance: $775 million to $790 million, representing 7% to 9% growth year-over-year.
Warning! GuruFocus has detected 4 Warning Signs with ASAN.
Release Date: June 03, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Asana Inc (NYSE:ASAN) achieved non-GAAP profitability for the first time in Q1 fiscal year 2026, marking a significant milestone.
AI Studio reached general availability and surpassed $1 million in ARR, demonstrating strong early momentum.
Total revenues increased by 9% year-over-year, exceeding the top end of guidance.
Non-tech verticals grew faster than overall growth, with manufacturing, energy, media, entertainment, and financial services showing strong performance.
A landmark $100 million-plus contract renewal with one of the largest employers in the world highlights Asana's enterprise capabilities.
The $100 million-plus renewal, while significant, resulted in a modest ACV downgrade, impacting net retention rates.
There is increased buyer scrutiny and elongation in decision-making processes, particularly in enterprise and tech verticals.
Net retention rate (NRR) is expected to be pressured in Q2 due to downgrade pressures in enterprise and middle market segments.
The macroeconomic environment presents risks, with potential for elongated sales cycles and increased budget scrutiny.
Despite strong new business momentum, downgrade pressures and macroeconomic risks may limit the reflection of growth in overall revenue.
Q: Can you provide more details on the $1 million ARR achieved by AI Studio and potential growth scenarios for fiscal '26? A: Dustin Moskovitz, CEO, explained that the $1 million ARR from AI Studio reflects a diverse customer base across regions and industries. The growth is driven by AI Studio Pro platform fees, with potential future upside from incremental consumption. The launch of the smart workflow gallery and the introduction of a more affordable Plus SKU and AI mates are expected to drive further growth in the second half of fiscal '26.
Q: Could you elaborate on the $100 million contract renewal in the tech vertical and its impact on ACV and AI Studio? A: Sonalee Parekh, CFO, noted that the renewal was the largest deal in Asana's history, with a $100 million TCV over three years. Although there was a modest ACV downgrade, the deal provides greater visibility into fiscal years '27 and '28. AI Studio is not yet factored into this renewal, presenting potential upside.
Q: How does AI Studio compare to other AI agents in the market, and what are the prospects for large-scale adoption? A: Dustin Moskovitz highlighted that Asana's AI Studio is more successful because it integrates AI into existing workflows, allowing for partial automation and collaboration with human teams. This approach contrasts with standalone agents that require complete workflow automation. While large-scale adoption is still developing, Asana is optimistic about future growth, especially with the introduction of AI mates.
Q: What are the macroeconomic pressures affecting enterprise and mid-market segments, and how is Asana addressing them? A: Anne Raimondi, COO, mentioned early signs of budget pressures, workforce reductions, and tool consolidation in the enterprise and Americas regions. Asana is mitigating these challenges through customer success management, flexible pricing, and AI Studio, which enhances business workflows and adoption.
Q: How is Asana planning to manage potential revenue slowdowns due to macroeconomic uncertainties? A: Sonalee Parekh stated that the lower end of Asana's revenue guidance reflects potential macroeconomic pressures. The company is prepared to leverage cost efficiencies and productivity improvements to maintain profitability, with a focus on optimizing marketing spend, vendor rationalization, and workforce geographic mix.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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