September 28, 2022

Robotic Notes

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Asana shows solid growth, but its stock sinks on profit warning

3 min read

Shares of the work collaboration software firm Asana Inc. fell sharply in after-hours trading today after the company beat fourth-quarter earnings expectations but followed up with disappointing guidance for the current quarter.

The company reported a net loss in the fourth quarter of $ 90 million, or 25 cents a share. Revenue for the period jumped 64% from a year ago, to $ 111.9 million. The impressive revenue growth helped Asana beat Wall Street’s expectations of a 28-cent-per-share loss of $ 105.2 million in sales.

Asana also posted its fiscal 2022 results, saying it delivered total revenue of $ 378.4 million, up 67% from a year ago.

The results were impressive, but investors were more concerned about Asana’s immediate prospects, which don’t look nearly as good. For the first quarter, the company forecast a net loss of 35 to 36 cents a share, well below Wall Street’s estimated of a 27-cent loss. In terms of revenue, Asana is guiding for between $ 114.5 million and $ 115.5 million, ahead of Wall Street’s forecast of $ 110.9 million in sales.

The market reacted with horror at the prospect of widening losses, with Asana’s stock falling more than 20% in after-hours trading, more than wiping out a 9% gain prior to the report.

Asana co-founder and Chief Executive Dustin Moskovitz (pictured) said the company’s revenue growth accelerated versus the previous year, a result of strength in the enterprise and strong demand across its customer base.

“Many of the most recognized companies in the world are choosing Asana as their platform for cross team work,” the CEO said. “Our product strategy is resonating and the addressable market is large, representing over 1.25 billion knowledge workers.”

Asana sells a popular work management platform that’s used by teams to organize tasks in a centralized visual dashboard to improve coordination among workers. Toward the end of last year, Asana emerged as a darling of the COVID-19 pandemic as workforces around the globe shifted to a work-from-home environment. The software is available as a freemium service, where the most basic features are free to use, but more advanced tools must be paid for.

Asana’s software notably integrates with Zoom, allowing distributed teams to drive meeting workflows and collaborate.

The software has proved to be a big hit, with Asana reporting strong growth in its customer base. It said it ended the year with 119,000 paying customers, with those that pay $ 5,000 or more on its software each year rising to 15,437 at the end of the fourth quarter, up 52% ​​from a year ago. Customers spending at least $ 50,000 per year grew to 894, up 125%.

Constellation Research Inc. analyst Holger Mueller said enterprises are flocking to Asana as they redefine what the future of work means in a post-pandemic world.

“Asana had a tremendous year on the growth side, with its revenue up more than 60%. It’s a very impressive performance that documents the underlying mega trend, ”Mueller said. “The problem for Asana is it lost more money than it made, and while some investment in R&D and sales and marketing are reasonable for a growth company, it may be spending too much on that. Asana’s general and administrative costs were just $ 1 for every $ 4 spent on S&M and R&D. Investors will be watching this spending carefully in the new fiscal year. ”

Photo: Asana

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