10-Q 1 asan-20220731.htm 10-Q asan-20220731
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________
FORM 10-Q
___________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2022

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-39495
___________________________________________________________________
Asana, Inc.
(Exact name of registrant as specified in its Charter)
___________________________________________________________________
Delaware
26-3912448
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
633 Folsom Street, Suite 100
San Francisco, California 94107
(Address of principal executive offices and Zip Code)
(415) 525-3888
(Registrant’s telephone number, including area code)
___________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.00001 par value per share
ASAN
New York Stock Exchange
Long-Term Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of August 31, 2022, the number of shares of the registrant’s Class A common stock outstanding was 106,271,490 and the number of shares of the registrant’s Class B common stock outstanding was 85,489,359.




TABLE OF CONTENTS
Page





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition; business strategy and plans; and objectives of management for future operations are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: our ability to grow or maintain our dollar-based net retention rate, expand usage of our platform within organizations, and sell subscriptions to our platform; our ability to convert individuals, teams, and organizations on our free and trial versions into paying customers; the timing and success of new features, integrations, capabilities, and enhancements by us, or by our competitors to their products, or any other changes in the competitive landscape of our market; our ability to achieve widespread acceptance and use of our platform; growth in the work management market; the amount and timing of operating expenses and capital expenditures, as well as entry into operating leases, that we may incur to maintain and expand our business and operations and to remain competitive; our focus on growth to drive long-term value; the timing of expenses and our expectations regarding our cost of revenues, gross margin, and operating expenses; the effect of uncertainties related to the global COVID-19 pandemic on our business, results of operations, and financial condition; expansion of our sales and marketing activities; our protections against security breaches, technical difficulties, or interruptions to our platform; our ability to successfully defend litigation brought against us, potential dispute-related settlement payments, or other litigation-related costs; our expectations about additional hiring; potential pricing pressure as a result of competition or otherwise; anticipated fluctuations in foreign currency exchange rates; potential costs and the anticipated timing of expenses related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; and general economic conditions in either domestic or international markets, including the societal and economic impact of the COVID-19 pandemic, including on the rate of global IT spending, and geopolitical uncertainty and instability.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.



You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

Additional Information

Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “our company,” and “Asana” refer to Asana, Inc. and its consolidated subsidiaries. The Asana design logo, “Asana,” and our other registered or common law trademarks, service marks, or trade names appearing in this Quarterly Report on Form 10-Q are the property of Asana, Inc. Other trade names, trademarks, and service marks used in this Quarterly Report on Form 10-Q are the property of their respective owners.



SELECT RISK FACTORS AFFECTING OUR BUSINESS
Investing in our common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.
We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our future growth.
We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
We have a history of losses and may not be able to achieve profitability or, if achieved, sustain profitability.
We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability in the near and medium term.
Our quarterly results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts.
The ongoing COVID-19 pandemic has affected how we and our customers operate and has adversely affected the global economy, and the duration and extent to which this will affect our business, future results of operations, and financial condition remains uncertain.
If we are unable to attract new customers, convert individuals, teams, and organizations using our free and trial versions into paying customers, and expand usage within organizations or develop new features, integrations, capabilities, and enhancements that achieve market acceptance, our revenue growth would be harmed.
If the market for work management solutions develops more slowly than we expect or declines, our business would be adversely affected, and the estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
We operate in a highly competitive industry, and competition presents an ongoing threat to the success of our business.
Failure to effectively develop and expand our direct sales capabilities would harm our ability to expand usage of our platform within our customer base and achieve broader market acceptance of our platform.
The loss of one or more of our key personnel, in particular our co-founder, President, Chief Executive Officer, and Chair, Dustin Moskovitz, would harm our business.
We must continue to attract and retain highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans.
Our failure to protect our sites, networks, and systems against security breaches, or otherwise to protect our confidential information or the confidential information of our users, customers, or other third parties, would damage our reputation and brand, and substantially harm our business and results of operations.
If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our platform, our results of operations may be harmed.
If we are unable to ensure that our platform interoperates with a variety of software applications that are developed by others, including our integration partners, we may become less competitive and our results of operations may be harmed.
Our culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the high employee engagement fostered by our culture, which could harm our business.



Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of customers may be impaired, and our business and results of operations will be harmed.
We rely on third parties maintaining open marketplaces to distribute our mobile application. If such third parties interfere with the distribution of our platform, our business would be adversely affected.
We receive, process, store, and use business and personal information, which subjects us to governmental regulation and other legal obligations related to privacy, data protection and data security, and our actual or perceived failure to comply with such obligations could harm our business and expose us to liability.
Sales to customers outside the United States and our international operations expose us to risks inherent in international sales and operations.
The trading price of our Class A common stock may be volatile and may decline regardless of our operating performance.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the listing of our Class A common stock on the New York Stock Exchange, or NYSE, including our founders, directors, executive officers, and their respective affiliates, limiting or precluding your ability to influence corporate matters.

Sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the market price of our Class A common stock to decline.
If we are unable to adequately address these and other risks we face, our business may be harmed.





PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ASANA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 31, 2022January 31, 2022
Assets
Current assets
Cash and cash equivalents$148,458 $240,403 
Marketable securities90,454 71,628 
Accounts receivable, net 52,505 59,085 
Prepaid expenses and other current assets60,342 40,278 
Total current assets351,759 411,394 
Property and equipment, net95,296 99,632 
Restricted cash, noncurrent1,499  
Operating lease right-of-use assets169,919 174,083 
Investments, noncurrent 2,760 
Other assets21,176 19,166 
Total assets$639,649 $707,035 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$9,545 $11,557 
Accrued expenses and other current liabilities75,307 60,915 
Deferred revenue, current207,148 170,143 
Operating lease liabilities, current13,133 12,573 
Total current liabilities305,133 255,188 
Term loan, net31,954 34,612 
Deferred revenue, noncurrent3,025 4,082 
Operating lease liabilities, noncurrent204,139 208,422 
Other liabilities3,277 891 
Total liabilities547,528 503,195 
Commitments and contingencies (Note 8)
Stockholders' equity
Common stock2 2 
Additional paid-in capital1,135,398 1,034,252 
Accumulated other comprehensive loss(1,654)(626)
Accumulated deficit (1,041,625)(829,788)
Total stockholders’ equity92,121 203,840 
Total liabilities and stockholders’ equity$639,649 $707,035 

See accompanying Notes to Condensed Consolidated Financial Statements.




1


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2022202120222021
Revenues$134,896 $89,478 $255,542 $166,151 
Cost of revenues 13,756 9,869 26,194 17,783 
Gross profit121,140 79,609 229,348 148,368 
Operating expenses:
Research and development 75,233 48,454 140,438 88,421 
Sales and marketing 110,392 63,930 206,515 120,714 
General and administrative 46,787 27,276 89,899 49,266 
Total operating expenses232,412 139,660 436,852 258,401 
Loss from operations(111,272)(60,051)(207,504)(110,033)
Interest income and other income (expense), net(164)(328)(1,510)(320)
Interest expense(311)(7,351)(668)(17,725)
Loss before provision for income taxes(111,747)(67,730)(209,682)(128,078)
Provision for income taxes1,222 625 2,155 935 
Net loss$(112,969)$(68,355)$(211,837)$(129,013)
Net loss per share:
Basic and diluted$(0.59)$(0.40)$(1.11)$(0.78)
Weighted-average shares used in calculating net loss per share:
Basic and diluted191,352170,600190,486166,412

See accompanying Notes to Condensed Consolidated Financial Statements.
2


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2022202120222021
Net loss$(112,969)$(68,355)$(211,837)$(129,013)
Other comprehensive loss:
Net unrealized gains (losses) on marketable securities(84)4 (205)(7)
Change in foreign currency translation adjustments(322)(130)(823)(95)
Comprehensive loss$(113,375)$(68,481)$(212,865)$(129,115)

See accompanying Notes to Condensed Consolidated Financial Statements.
3


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)

Three Months Ended July 31, 2022
Common Stock
Additional
Paid-In Capital
Accumulated
Other
Comprehensive Income (Loss)
Accumulated DeficitTotal
Stockholders’ Equity (Deficit)
SharesAmount
Balances at April 30, 2022190,109 $2 $1,085,875 $(1,248)$(928,656)$155,973 
Issuance of common stock upon the exercise of options453 — 1,413 — — 1,413 
Vesting of early exercised stock options— — 184 — — 184 
Issuance of common stock upon the vesting and settlement of restricted stock units1,104 — — — — — 
Issuance of common stock under employee share purchase plan —  — —  
Stock-based compensation expense— — 47,926 — — 47,926 
Net unrealized losses on marketable securities— — — (84)— (84)
Foreign currency translation adjustments— — — (322)— (322)
Net loss— — — — (112,969)(112,969)
Balances at July 31, 2022191,666 $2 $1,135,398 $(1,654)$(1,041,625)$92,121 

See accompanying Notes to Condensed Consolidated Financial Statements.








4


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - CONTINUED
(in thousands)
(unaudited)

Three Months Ended July 31, 2021
Common Stock
Additional
Paid-In Capital
Accumulated
Other
Comprehensive Income (Loss)
Accumulated Deficit
Total
Stockholders’ Equity (Deficit)
SharesAmount
Balances at April 30, 2021163,471 $2 $554,340 $63 $(602,104)$(47,699)
Issuance of common stock upon the exercise of options2,656 — 5,965 — — 5,965 
Vesting of early exercised stock options— — 663 — — 663 
Repurchases of common stock(4)— — — — — 
Issuance of common stock upon the vesting and settlement of restricted stock units589 — — — — — 
Issuance of common stock upon conversion of convertible notes—related party17,013 — 368,459 — — 368,459 
Stock-based compensation expense— — 20,357 — — 20,357 
Net unrealized gain on marketable securities— — — 4 — 4 
Foreign currency translation adjustments— — — (130)— (130)
Net loss— — — — (68,355)(68,355)
Balances at July 31, 2021183,725 $2 $949,784 $(63)$(670,459)$279,264 

See accompanying Notes to Condensed Consolidated Financial Statements.    






5


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - CONTINUED
(in thousands)
(unaudited)

Six Months Ended July 31, 2022
Common Stock
Additional
Paid-In Capital
Accumulated
Other
Comprehensive Income (Loss)
Accumulated DeficitTotal
Stockholders’ Equity (Deficit)
SharesAmount
Balances at January 31, 2022188,298 $2 $1,034,252 $(626)$(829,788)$203,840 
Issuance of common stock upon the exercise of options 1,278 — 3,629 — — 3,629 
Vesting of early exercised stock options — — 461 — — 461 
Issuance of common stock upon the vesting and settlement of restricted stock units1,737 — — — — — 
Issuance of common stock under employee share purchase plan353 — 9,156 — — 9,156 
Stock-based compensation expense — — 87,900 — — 87,900 
Net unrealized loss on marketable securities — — — (205)— (205)
Foreign currency translation adjustments — — — (823)— (823)
Net loss — — — — (211,837)(211,837)
Balances at July 31, 2022191,666 $2 $1,135,398 $(1,654)$(1,041,625)$92,121 

See accompanying Notes to Condensed Consolidated Financial Statements.    





6


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIT) - CONTINUED
(in thousands)
(unaudited)

Six Months Ended July 31, 2021
Common Stock
Additional
Paid-In Capital
Accumulated
Other
Comprehensive Income (Loss)
Accumulated Deficit
Total
Stockholders’ Equity (Deficit)
SharesAmount
Balances at January 31, 2021161,480 $2 $528,616 $39 $(541,446)$(12,789)
Issuance of common stock upon the exercise of options4,036 — 8,815 — — 8,815 
Vesting of early exercised stock options— — 1,305 — — 1,305 
Repurchases of common stock(10)— — — — — 
Issuance of common stock upon the vesting and settlement of restricted stock units956 — — — — — 
Issuance of common stock under employee share purchase plan250 — 6,127 — — 6,127 
Issuance of common stock upon conversion of convertible notes—related party17,013 — 368,459 — — 368,459 
Stock-based compensation expense— — 36,462 — — 36,462 
Net unrealized loss on marketable securities— — — (7)— (7)
Foreign currency translation adjustments— — — (95)— (95)
Net loss— — — — (129,013)(129,013)
Balances at July 31, 2021183,725 $2 $949,784 $(63)$(670,459)$279,264 

See accompanying Notes to Condensed Consolidated Financial Statements.    

7


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended July 31,
20222021
Cash flows from operating activities
Net loss$(211,837)$(129,013)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for expected credit losses1,360 766 
Depreciation and amortization6,303 2,372 
Amortization of deferred contract acquisition costs6,572 3,622 
Stock-based compensation expense87,843 36,412 
Net amortization of premium on marketable securities57 586 
Non-cash lease expense7,368 8,780 
Amortization of discount on convertible notes and term loan issuance costs8 10,636 
Non-cash interest expense 6,670 
Changes in operating assets and liabilities:
Accounts receivable5,203 (1,000)
Prepaid expenses and other current assets(27,702)(5,571)
Other assets(2,023)(3,473)
Accounts payable(1,469)1,692 
Accrued expenses and other liabilities16,483 13,350 
Deferred revenue35,949 33,670 
Operating lease liabilities(6,896)4,541 
Net cash used in operating activities(82,781)(15,960)
Cash flows from investing activities
Purchases of marketable securities(72,218)(48,470)
Sales of marketable securities 371 
Maturities of marketable securities55,890 81,039 
Purchases of property and equipment(1,683)(29,557)
Capitalized internal-use software costs(70)(296)
Net cash provided by (used in) investing activities(18,081)3,087 
Cash flows from financing activities
Proceeds from term loan, net of issuance costs 9,000 
Repayment of term loan(1,667)(667)
Repurchases of common stock(2)(36)
Proceeds from exercise of stock options3,647 8,968 
Proceeds from employee stock purchase plan9,156 6,127 
Net cash provided by financing activities11,134 23,392 
Effect of foreign exchange rates on cash, cash equivalents, and restricted cash(718)(82)
Net increase (decrease) in cash, cash equivalents, and restricted cash(90,446)10,437 
Cash, cash equivalents, and restricted cash
Beginning of period240,403 259,878 
End of period$149,957 $270,315 

See accompanying Notes to Condensed Consolidated Financial Statements.
8


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(in thousands)
(unaudited)
Six Months Ended July 31,
20222021
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents$148,458 $270,315 
Restricted cash1,499  
Total cash, cash equivalents, and restricted cash $149,957 $270,315 
Supplemental cash flow data
Cash paid for income taxes$2,517 $686 
Cash paid for interest$496 $386 
Supplemental non-cash investing and financing information
Purchase of property and equipment in accounts payable and accrued expenses$826 $9,477 
Vesting of early exercised stock options$461 $1,305 
Issuance of common stock upon conversion of convertible notes—related party$ $368,459 

See accompanying Notes to Condensed Consolidated Financial Statements.
9

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1.    Organization
Organization and Description of Business
Asana, Inc. (“Asana” or the “Company”) was incorporated in the state of Delaware on December 16, 2008. Asana is a work management platform that helps teams orchestrate work, from daily tasks to cross-functional strategic initiatives. The Company is headquartered in San Francisco, California.
Note 2.    Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of the Company’s wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.
The unaudited condensed consolidated balance sheet as of January 31, 2022 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the balance sheet, statements of comprehensive loss, and stockholders' equity (deficit), and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 24, 2022.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, revenue recognition, the useful lives and carrying values of long-lived assets, the fair value of the Convertible Notes (as defined in Note 6), the fair value of common stock for periods prior to the Company’s direct listing of its Class A common stock on the NYSE (the “Direct Listing”), stock-based compensation expense, the period of benefit for deferred contract acquisition costs, and income taxes. Actual results could differ from those estimates.
Risks and Uncertainties
At the onset of the COVID-19 pandemic, the Company temporarily closed its headquarters and other physical offices, required its employees and contractors to work remotely, and implemented travel restrictions, all of which represented a significant disruption in how the Company operates its business. While the Company’s headquarters and certain other physical offices have since reopened and business travel has resumed, due to ongoing variants of COVID-19 and other public health concerns, we anticipate that operations may continue to be affected by the COVID-19 pandemic. The operations of the Company’s partners and customers have likewise been disrupted. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment and mitigation actions, the emergence of variant strains of the virus, and the availability and widespread use of effective vaccines, it has already had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the conditions caused by this pandemic could affect the rate of global IT spending and could adversely affect demand for the Company’s platform, lengthen the Company’s sales cycles, reduce the value or duration of subscriptions, negatively impact collections of accounts receivable, reduce expected spending from new customers, cause some of the Company’s paying customers to go out of business, limit the ability of the Company’s direct sales force to travel to customers and potential customers, and affect contraction or attrition rates of the Company’s customers, all of which could adversely affect the Company’s business, results of operations, and financial condition. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance related to COVID-19 that would require it to update its estimates or judgments or adjust the
10

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the condensed consolidated financial statements. 
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and marketable securities. Substantially all the Company’s cash and cash equivalents are held with financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. Cash equivalents are invested in highly rated money market funds.
A large portion of the Company’s customers authorize the Company to bill their credit card accounts through the Company’s third-party payment processing partners, presenting additional credit risk. For the three and six months ended July 31, 2022 and July 31, 2021, there was no individual customer that accounted for 10% or more of the Company’s revenues. No customer accounted for more than 10% of accounts receivable as of July 31, 2022 and January 31, 2022.
Fair Value of Financial Instruments
The carrying amounts reflected in the condensed consolidated balance sheets for cash equivalents, accounts receivable, and accounts payable approximate their respective fair values due to the short maturities of those instruments. Available-for-sale marketable securities are recorded at fair value on the condensed consolidated balance sheets.
The Company accounts for certain of its financial assets at fair value. In determining and disclosing fair value, the Company uses a fair value hierarchy established by U.S. GAAP. The guidance defines fair value as an exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs such as quoted prices in active markets.
Level 2—Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3—Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
Reclassifications
The Company reclassified $4.1 million of deferred revenue, noncurrent from other liabilities, noncurrent for the comparative condensed consolidated balance sheets to conform to the current year presentation.
Recently Issued Accounting Pronouncements Not Yet Adopted
In October 2021, the FASB issued ASU No. 2021-08, Business Combinations - Accounting for Contract Liabilities from Contracts with Customers, which requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities from acquired contracts using the revenue recognition guidance under Accounting Standards Codification Topic 606 in order to align the recognition of a contract liability with the definition of a performance obligation. The guidance is effective for acquisitions completed during the Company’s fiscal years beginning after February 1, 2023. Adoption of the ASU should be applied prospectively. Early adoption is also permitted, including adoption in an interim period. If early adopted, the amendments are applied retrospectively to all business combinations for which the acquisition date occurred during the fiscal year of adoption. The Company is currently evaluating the impact of adopting ASU 2021-08.
11

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Recently Adopted Accounting Pronouncements
On February 1, 2022, the Company adopted ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. The adoption of the guidance did not have an impact on the Company’s condensed consolidated financial statements.
Note 3.    Revenues
Deferred Revenue and Remaining Performance Obligations
The Company recognized $50.2 million and $30.7 million of revenues during the three months ended July 31, 2022 and 2021, respectively, that were included in the deferred revenue balances at January 31, 2022 and 2021, respectively. The Company recognized $124.2 million and $75.8 million of revenues during the six months ended July 31, 2022 and 2021, respectively, that were included in the deferred revenue balances at January 31, 2022 and 2021, respectively.
Deferred revenue that will be recognized within the next twelve months is recorded as current deferred revenue, and the remaining portion is recorded as noncurrent. As of July 31, 2022, the Company's remaining performance obligations from subscription contracts was $261.6 million, of which the Company expects to recognize approximately 87% as revenues over the next 12 months and the remainder thereafter.
Deferred Contract Acquisition Costs
Deferred contract acquisition costs are amortized over a period of benefit of three years. The period of benefit was estimated by considering factors such as historical customer attrition rates, the useful life of the Company’s technology, and the impact of competition in the software-as-a-service industry.
The following table summarizes the activity of deferred contract acquisition costs (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2022202120222021
Beginning balance$25,807 $14,586 $22,771 $12,093 
Capitalization of contract acquisition costs5,947 4,381 12,028 8,503
Amortization of deferred contract acquisition costs(3,527)(1,993)(6,572)(3,622)
Ending balance$28,227 $16,974 $28,227 $16,974 
Deferred contract acquisition costs, current$13,724 $8,055 $13,724 $8,055 
Deferred contract acquisition costs, noncurrent14,503 8,919 14,503 8,919 
Total deferred contract acquisition costs$28,227 $16,974 $28,227 $16,974 
Deferred contract acquisition costs, current is presented within prepaid expenses and other current assets in the condensed consolidated balance sheets. Deferred contract acquisition costs, noncurrent is presented within other assets in the condensed consolidated balance sheets.
12

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 4.    Fair Value Measurements
The following table summarizes, for assets and liabilities measured at fair value, the respective fair value and classification by level of input within the fair value hierarchy (in thousands):
July 31, 2022
Level 1Level 2Level 3Total
Current Assets
Cash equivalents
Money market funds$77,626 $ $ $77,626 
Commercial paper 5,291  5,291 
Total cash equivalents$77,626 $5,291 $ $82,917 
Marketable securities
U.S. government agency securities$51,576 $ $ $51,576 
Commercial paper 15,361  15,361 
Corporate bonds 21,666  21,666 
Certificates of deposit 1,851  1,851 
Total marketable securities$51,576 $38,878 $ $90,454 
Total assets$129,202 $44,169 $ $173,371 
January 31, 2022
Level 1Level 2Level 3Total
Current Assets
Cash equivalents
Money market funds$176,855 $ $ $176,855 
Total cash equivalents$176,855 $ $ $176,855 
Marketable securities
Commercial paper$ $44,943 $ $44,943 
Corporate bonds 26,685 26,685 
Total marketable securities$ $71,628 $ $71,628 
Non-current Assets
Corporate bonds$ $2,760 $ $2,760 
Total assets$176,855 $74,388 $ $251,243 
13

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table summarizes the Company's investments in marketable securities on the condensed consolidated balance sheets (in thousands):
July 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross Unrealized LossesEstimated
Fair Value
Current Assets
U.S. government agency securities$51,719 $ $(143)$51,576 
Commercial paper15,371  (10)15,361 
Corporate bonds21,782  (116)21,666 
Certificates of deposit1,852  (1)1,851 
Total marketable securities$90,724 $ $(270)$90,454 
Total assets$90,724 $ $(270)$90,454 

January 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross Unrealized Losses
Estimated
Fair Value
Current Assets
Commercial paper$44,951 $ $(8)$44,943 
Corporate bonds26,730 3 (48)26,685 
Total marketable securities$71,681 $3 $(56)$71,628 
Non-current Assets
Corporate bonds$2,774 $ $(14)$2,760 
Total assets$74,455 $3 $(70)$74,388 
The Company periodically evaluates its investments for expected credit losses. The unrealized losses on the available-for-sale securities were primarily due to unfavorable changes in interest rates subsequent to the initial purchase of these securities. Gross unrealized losses of the Company’s available-for-sale securities that have been in a continuous unrealized loss position for 12 months or longer were immaterial as of July 31, 2022 and January 31, 2022. The Company expects to recover the full carrying value of its available-for-sale securities in an unrealized loss position as it does not intend or anticipate a need to sell these securities prior to recovering the associated unrealized losses. The Company also expects any credit losses would be immaterial based on the high-grade credit rating for each of such available-for-sale securities. As a result, the Company does not consider any portion of the unrealized losses as of July 31, 2022 or January 31, 2022 to represent credit losses.
In April 2020, the Company entered into a five-year $40.0 million term loan agreement with Silicon Valley Bank. As of July 31, 2022, $40.0 million was drawn and $36.7 million was outstanding under this term loan. The fair value of the term loan approximates its carrying value since the interest rate is at market.
In January 2020 and June 2020, the Company issued convertible notes to a trust affiliated with the Company’s Chief Executive Officer (“CEO”). The fair value of the convertible notes at issuance on January 30, 2020 and June 26, 2020 was $203.0 million and $112.0 million, respectively. The Company considers the fair values of the convertible notes to be a Level 3 measurement as the fair value is estimated using significant unobservable inputs. The fair value of the convertible notes was measured using a binomial lattice model. Inputs used to determine the estimated fair value of the convertible notes include the equity volatility of comparable companies, the risk-free interest rate, and the estimated fair value of the Company’s common stock.
14

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
On July 1, 2021, pursuant to the terms of the Convertible Notes (as defined in Note 6), upon meeting the closing trading price criteria for optional conversion by the Company, the Company elected to convert the Convertible Notes into the Company’s Class B Common Stock. Refer to Note 6. Convertible Notes—Related Party for additional information.
Note 5.    Balance Sheet Components
Property and Equipment, Net
Property and equipment, net, consisted of the following (in thousands):
July 31, 2022January 31, 2022
Desktop and other computer equipment$1,716 $2,217 
Furniture and fixtures9,512 8,788 
Leasehold improvements95,829 94,458 
Capitalized internal-use software12,362 12,249 
Construction in progress1
422 1,327 
Total gross property and equipment119,841 119,039 
Less: Accumulated depreciation and amortization(24,545)(19,407)
Total property and equipment, net$95,296 $99,632 
__________________
1 Construction in progress is primarily related to the build-out and improvements across the Company’s global offices. Refer to Note 9. Leases for additional information.
Depreciation and amortization expense was $3.2 million and $1.4 million for the three months ended July 31, 2022 and 2021, respectively and $6.3 million and $2.4 million for the six months ended July 31, 2022 and 2021, respectively.
Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
July 31, 2022January 31, 2022
Prepaid expenses$35,915 $22,970 
Deferred contract acquisition costs, current13,724 10,797 
Other current assets10,703 6,511 
Total prepaid expenses and other current assets$60,342 $40,278 
Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consisted of the following (in thousands):
July 31, 2022January 31, 2022
Accrued payroll liabilities$18,649 $16,906 
Accrued taxes for fringe benefits4,879 3,953 
Accrued advertising expenses11,886 9,359 
Accrued property and equipment797 465 
Accrued consulting expenses6,661 4,303 
Accrued sales and value-added taxes11,795 7,219 
Other liabilities20,640 18,710 
Total accrued expenses and other current liabilities$75,307 $60,915 
15

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 6.    Convertible Notes—Related Party
The Company issued two 3.5% unsecured senior mandatory convertible promissory notes in January 2020 (“January 2020 Convertible Note”) and June 2020 (“June 2020 Convertible Note”) (collectively, the “Convertible Notes”) in principal amounts of $300.0 million and $150.0 million, respectively. The Convertible Notes were not transferable except to affiliates, contained no financial or restrictive covenants, and were expressly subordinated in right of payment to any of the Company’s existing or future secured indebtedness. Consistent with the terms of the Convertible Notes, in April and June 2020, the Dustin Moskovitz Trust entered into subordination agreements with Silicon Valley Bank to confirm the parties’ agreement that the Convertible Notes are subordinated to the five-year $40.0 million secured term loan facility.
On July 1, 2021, upon meeting the closing trading price criteria for optional conversion by the Company (based on the Company’s Class A common stock closing trading price during the last 30 trading days of the previous calendar quarter as stated in the original terms of the Convertible Notes), the Company elected to convert both of the Convertible Notes into an aggregate of 17,012,822 shares of the Company’s Class B Common Stock pursuant to the original terms of the embedded, substantive conversion features in the Convertible Notes. The Company accounted for the conversion by adjusting its additional paid-in capital for the net carrying amount of the Convertible Notes as of July 1, 2021 of $368.5 million (including accrued interest of $20.4 million and the unamortized debt discount of $101.9 million).
Interest expense related to the Convertible Notes recorded prior to the conversion was as follows (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2022202120222021
Amortization of debt discount$ $4,382 $ $10,628 
Contractual interest expense 2,740  6,670 
Total interest expense$ $7,122 $ $17,298 
Note 7.     Debt
In April 2020, the Company entered into a five-year $40.0 million term loan agreement with Silicon Valley Bank that matures in April 2025. As of July 31, 2022, $40.0 million was drawn and $36.7 million was outstanding under this term loan. As of July 31, 2022, the Company was in compliance with all financial covenants related to the term loan.
The net carrying amount of the term loan was as follows (in thousands):
July 31, 2022January 31, 2022
Principal$36,667 $38,333 
Accrued interest