Asana, Inc. [ASAN] Filings

10-Q 1 asan-20240731.htm 10-Q asan-20240731

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, 2024


☐			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 Securities Exchange Act of 1934 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 27, 2024, the number of shares of the registrant’s Class A common stock outstanding was 142,677,666 and the number of shares of the registrant’s Class B common stock outstanding was 85,486,680.

TABLE OF CONTENTS


			Page
Part I - Financial Information			1
Item 1. Financial Statements (Unaudited)			1
Condensed Consolidated Balance Sheets			1
Condensed Consolidated Statements of Operations			2
Condensed Consolidated Statements of Comprehensive Loss			3
Condensed Consolidated Statements Stockholders’ Equity			4
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			10
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations			25
Item 3. Quantitative and Qualitative Disclosures About Market Risk			37
Item 4. Controls and Procedures			38
Part II - Other Information			40
Item 1. Legal Proceedings			40
Item 1A. Risk Factors			40
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			71
Item 3. Defaults Upon Senior Securities			71
Item 4. Mine Safety Disclosures			71
Item 5. Other Information			71
Item 6. Exhibits			71
Signatures			73

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, including the successful deployment of artificial intelligence (“AI”), 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 ongoing macroeconomic conditions, including volatile equity capital markets, on our business, results of operations, and financial condition; performance 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; 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; general economic conditions affecting domestic or international markets, and the rate of global information technology (“IT”) spending, including as a result of a downturn or recession, inflation and high interest rates, and instability in financial institutions and global financial markets; and geopolitical 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, restructurings, 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 logo, “Asana,” “Work Graph,” 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 Class A 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 prior periods, and our prior 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 we 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.

•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.

•We operate in a highly competitive industry, and competition presents an ongoing threat to the success of our business. Our ability to compete and ensure our success requires developments in our technology, including the successful deployment of artificial intelligence (“AI”) in our product.

•Failure to effectively develop and leverage 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.

•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.

•If our information technology systems, or those of third parties upon which we rely, or our data are compromised or operate in an unintended way, we could experience adverse consequences, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse consequences.

•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.

•The loss of one or more of our key personnel, in particular our co-founder, President, Chief Executive Officer (“CEO”), and Chair, Dustin Moskovitz, would harm our business.

•Our culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the 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.

•Sales to customers outside the United States and our international operations expose us to risks inherent in international sales and operations.

•We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, industry standards, policies and other obligations related to AI, privacy, data protection, and security. Our actual or perceived failure to comply with such obligations could lead to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; and other adverse business consequences.

•The trading price of our Class A common stock may be volatile and could decline significantly and rapidly.

•The dual class structure of our common stock has the effect of concentrating voting control with our founders, directors, executive officers, and their respective affiliates. This ownership will limit or preclude your ability to influence corporate matters, including the election of directors, amendments of our organizational documents, and any merger, consolidations, sale of all or substantially all of our assets, or other major corporate transaction requiring stockholder approval.

•Sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the trading 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, 2024		January 31, 2024
Assets
Current assets
Cash and cash equivalents	$	219,400	$	236,663
Marketable securities	302,224		282,801
Restricted cash	455		—
Accounts receivable, net	65,066		88,327
Prepaid expenses and other current assets	53,194		51,925
Total current assets	640,339		659,716
Property and equipment, net	95,742		96,543
Operating lease right-of-use assets	182,261		181,731

Other assets	27,034		23,970
Total assets	$	945,376	$	961,960
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	13,834	$	6,907
Accrued expenses and other current liabilities	72,598		75,821
Deferred revenue, current	285,508		265,306
Operating lease liabilities, current	21,200		19,179
Total current liabilities	393,140		367,213
Term loan, net	41,142		43,618
Deferred revenue, noncurrent	3,684		5,916
Operating lease liabilities, noncurrent	212,855		215,084
Other liabilities	2,638		3,733
Total liabilities	653,459		635,564
Commitments and contingencies (Note 7)
Stockholders' equity
Common stock	2		2
Additional paid-in capital	1,942,911		1,821,216
Accumulated other comprehensive loss	(778)		(236)
Accumulated deficit	(1,650,218)		(1,494,586)
Total stockholders’ equity	291,917		326,396
Total liabilities and stockholders’ equity	$	945,376	$	961,960

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Revenues	$	179,212	$	162,455	$	351,660	$	314,866
Cost of revenues	19,987		16,232		37,791		31,079
Gross profit	159,225		146,223		313,869		283,787
Operating expenses:
Research and development	91,151		84,371		173,942		160,687
Sales and marketing	108,649		96,448		212,981		189,685
General and administrative	36,222		38,787		69,912		72,043
Total operating expenses	236,022		219,606		456,835		422,415
Loss from operations	(76,797)		(73,383)		(142,966)		(138,628)
Interest income and other income (expense), net	6,760		4,165		11,120		9,831
Interest expense	(955)		(968)		(1,897)		(1,935)
Loss before provision for income taxes	(70,992)		(70,186)		(133,743)		(130,732)
Provision for income taxes	1,197		1,228		2,168		2,150
Net loss	$	(72,189)	$	(71,414)	$	(135,911)	$	(132,882)
Net loss per share:
Basic and diluted	$	(0.31)	$	(0.33)	$	(0.59)	$	(0.61)
Weighted-average shares used in calculating net loss per share:
Basic and diluted	229,760		219,004		228,430		217,730

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(in thousands)

(unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Net loss	$	(72,189)	$	(71,414)	$	(135,911)	$	(132,882)
Other comprehensive loss:
Net unrealized gains (losses) on marketable securities	1,413		(1,469)		38		(1,015)
Change in foreign currency translation adjustments	281		467		(580)		571
Comprehensive loss	$	(70,495)	$	(72,416)	$	(136,453)	$	(133,326)

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands)

(unaudited)


		Three Months Ended July 31, 2024
	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balances at April 30, 2024			228,036	$	2		$	1,880,675	$	(2,472)	$	(1,558,308)	$	319,897
Issuance of common stock upon the exercise of options			321	—			1,044		—		—		1,044


Repurchases and retirement of common stock			(1,446)	—			—		—		(19,721)		(19,721)
Issuance of common stock upon the vesting and settlement of restricted stock units			2,578	—			—		—		—		—


Stock-based compensation expense			—	—			61,192		—		—		61,192
Net unrealized gains on marketable securities			—	—			—		1,413		—		1,413
Foreign currency translation adjustments			—	—			—		281		—		281
Net loss			—	—			—		—		(72,189)		(72,189)
Balances at July 31, 2024			229,489	$	2		$	1,942,911	$	(778)	$	(1,650,218)	$	291,917

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - CONTINUED

(in thousands)

(unaudited)


		Three Months Ended July 31, 2023
	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balances at April 30, 2023			216,776	$	2		$	1,647,422	$	(315)	$	(1,299,024)	$	348,085
Issuance of common stock upon the exercise of options			578	—			1,275		—		—		1,275
Vesting of early exercised stock options			—	—			32		—		—		32

Issuance of common stock upon the vesting and settlement of restricted stock units			2,252	—			(7)		—		—		(7)


Stock-based compensation expense			—	—			57,284		—		—		57,284
Net unrealized losses on marketable securities			—	—			—		(1,469)		—		(1,469)
Foreign currency translation adjustments			—	—			—		467		—		467
Net loss			—	—			—		—		(71,414)		(71,414)
Balances at July 31, 2023			219,606	$	2		$	1,706,006	$	(1,317)	$	(1,370,438)	$	334,253

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - CONTINUED

(in thousands)

(unaudited)


		Six Months Ended July 31, 2024
	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balances at January 31, 2024			224,728	$	2		$	1,821,216	$	(236)	$	(1,494,586)	$	326,396
Issuance of common stock upon the exercise of options			673	—			2,129		—		—		2,129


Repurchases and retirement of common stock			(1,446)	—			—		—		(19,721)		(19,721)
Issuance of common stock upon the vesting and settlement of restricted stock units			4,880	—			(4)		—		—		(4)
Issuance of common stock under employee share purchase plan			654	—			8,866		—		—		8,866

Stock-based compensation expense			—	—			110,704		—		—		110,704
Net unrealized gains on marketable securities			—	—			—		38		—		38
Foreign currency translation adjustments			—	—			—		(580)		—		(580)
Net loss			—	—			—		—		(135,911)		(135,911)
Balances at July 31, 2024			229,489	$	2		$	1,942,911	$	(778)	$	(1,650,218)	$	291,917

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY - CONTINUED

(in thousands)

(unaudited)


		Six Months Ended July 31, 2023
	Common Stock			Additional Paid-In Capital			Accumulated Other Comprehensive Loss		Accumulated Deficit		Total Stockholders’ Equity
			Shares			Amount
Balances at January 31, 2023			214,293	$	2		$	1,595,001	$	(873)	$	(1,237,556)	$	356,574
Issuance of common stock upon the exercise of options			1,371	—			3,073		—		—		3,073
Vesting of early exercised stock options			—	—			106		—		—		106

Issuance of common stock upon the vesting and settlement of restricted stock units			3,484	—			(7)		—		—		(7)
Issuance of common stock under employee share purchase plan			458	—			8,558		—		—		8,558

Stock-based compensation expense			—	—			99,275		—		—		99,275
Net unrealized losses on marketable securities			—	—			—		(1,015)		—		(1,015)
Foreign currency translation adjustments			—	—			—		571		—		571
Net loss			—	—			—		—		(132,882)		(132,882)
Balances at July 31, 2023			219,606	$	2		$	1,706,006	$	(1,317)	$	(1,370,438)	$	334,253

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)


	Six Months Ended July 31,
	2024		2023
Cash flows from operating activities
Net loss	$	(135,911)	$	(132,882)
Adjustments to reconcile net loss to net cash provided by operating activities:
Allowance for expected credit losses	372		1,389
Depreciation and amortization	8,293		6,876
Amortization of deferred contract acquisition costs	12,493		10,303
Stock-based compensation expense	108,747		97,703
Net accretion of discount on marketable securities	(3,556)		(932)
Non-cash lease expense	8,888		10,044
Impairment of long-lived assets	—		5,009
Amortization of discount on revolving credit facility and term loan issuance costs	61		60
Changes in operating assets and liabilities:
Accounts receivable	22,914		14,658
Prepaid expenses and other current assets	(13,598)		(9,057)
Other assets	(3,081)		1,348
Accounts payable	6,369		(3,245)
Accrued expenses and other liabilities	(6,373)		(14,217)
Deferred revenue	17,970		27,536
Operating lease liabilities	(9,628)		(8,954)
Net cash provided by operating activities	13,960		5,639
Cash flows from investing activities
Purchases of marketable securities	(107,126)		(139,294)

Maturities of marketable securities	91,296		18,141
Purchases of property and equipment	(2,692)		(5,966)
Capitalized internal-use software costs	(2,783)		(2,348)
Net cash used in investing activities	(21,305)		(129,467)
Cash flows from financing activities

Repayment of term loan	(1,250)		(1,875)

Repurchases of common stock	(19,022)		—
Proceeds from exercise of stock options	2,129		3,073
Proceeds from employee stock purchase plan	8,866		8,558
Taxes paid related to net share settlement of equity awards	(4)		(7)
Net cash provided by (used in) financing activities	(9,281)		9,749
Effect of foreign exchange rates on cash, cash equivalents, and restricted cash	(182)		1,213
Net decrease in cash, cash equivalents, and restricted cash	(16,808)		(112,866)
Cash, cash equivalents, and restricted cash
Beginning of period	236,663		526,563
End of period	$	219,855	$	413,697

See accompanying Notes to Condensed Consolidated Financial Statements.

ASANA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED

(in thousands)

(unaudited)


	Six Months Ended July 31,
	2024		2023
Reconciliation of cash, cash equivalents, and restricted cash to the condensed consolidated balance sheets
Cash and cash equivalents	$	219,400	$	413,697
Restricted cash	455		—

Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	219,855	$	413,697

Supplemental cash flow data
Cash paid for income taxes	$	2,587	$	2,426
Supplemental non-cash investing and financing information
Purchase of property and equipment in accounts payable and accrued expenses	$	447	$	1,082
Stock-based compensation expense capitalized for software development	$	1,953	$	1,570

Repurchases of common stock in accrued liabilities	$	698	$	—

See accompanying Notes to Condensed Consolidated Financial Statements.

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 leading work management software platform with an enterprise focus that helps organizations 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, 2024 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, 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 14, 2024.

Use of Estimates

The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the condensed consolidated financial statements and accompanying notes. Estimates and assumptions reflected in the condensed 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 common stock for periods prior to the Company’s direct listing of its Class A common stock on the New York Stock Exchange (“NYSE”) (the “Direct Listing”), stock-based compensation expense, the period of benefit for deferred contract acquisition costs, income taxes, and the valuation of right-of-use assets. Actual results could differ from those estimates.

Risks and Uncertainties

Global macroeconomic events including inflation, elevated interest rates, bank failures, supply chain disruptions, fluctuations in currency exchange rates, and global armed conflicts, including between Ukraine and Russia and in the Middle East, have led to economic uncertainty. These macroeconomic conditions have and are likely to continue to have adverse effects on the rate of global IT spending, including the buying patterns of the Company’s customers and prospective customers.

The conditions caused by the aforementioned macroeconomic events have affected and could continue to 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, 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 the aforementioned macroeconomic events that would require it to update its estimates or judgments or adjust the 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.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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. The Company deposits its cash and cash equivalents with financial institutions that management believes are of high credit quality, although such deposits may, at times, exceed federally insured limits. The Company has not experienced any losses on its deposits of cash and cash equivalents to date. Cash equivalents are invested in highly rated securities.

The Company grants credit to customers in the normal course of business. For the three and six months ended July 31, 2024 and 2023, there were no individual customers 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, 2024 or January 31, 2024.

Fair Value of Financial Instruments

Fair value is defined as the exit price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the reporting date. 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. Fair value is estimated by utilizing a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:

Level 1—Observable inputs comprised of quoted prices for identical assets or liabilities 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, a financial instrument’s classification within the three-tier fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. 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.

The carrying amount of certain financial instruments, including accounts receivable, accounts payable, and accrued liabilities approximates their fair values due to their short-term nature.

Cash, Cash Equivalents, and Restricted Cash

The Company considers all highly liquid investments with original maturities at the date of purchase of three months or less to be cash equivalents. Cash and cash equivalents are stated at cost, which approximates fair value.

The Company holds restricted cash for the future payment of voluntary disability insurance claims. The Company had $0.5 million of restricted cash as of July 31, 2024 and no restricted cash as of January 31, 2024.

Available-for-sale Investments

The Company’s marketable securities are primarily comprised of U.S. government securities, commercial paper, corporate bonds, and agency bonds. The Company classifies its securities as available-for-sale at the time of purchase and reevaluates such classification at each balance sheet date. The Company may sell these securities at any time for use in current operations even if they have not yet reached maturity. As a result, the Company classifies its marketable securities, including securities with stated maturities beyond twelve months, within current assets in the condensed consolidated balance sheets.

Available-for-sale securities are carried at fair value with unrealized gains and losses reported in accumulated other comprehensive income (loss) as a separate component of stockholders’ equity until realized. Unrealized gains and losses for any marketable securities that management intends to sell or is more likely than not that management will be required to sell prior to their anticipated recovery are recorded in other income (expense), net.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Impairment of Long-Lived Assets

The Company evaluates its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of such asset groups may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset group to future undiscounted cash flows expected to be generated by the asset group. If such assets are considered to be impaired, the impairment recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. The Company recorded no impairment charge during the three and six months ended July 31, 2024. The Company recorded an impairment charge of $5.0 million during the three and six months ended July 31, 2023, related to the right-of-use (“ROU”) assets and underlying property and equipment associated with its subleased office spaces, which is further described in Note 8. Leases to the condensed consolidated financial statements.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The amendments improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The new standard will be effective for the Company for the annual periods beginning February 1, 2024, and for interim periods beginning February 1, 2025. Upon adoption, the guidance should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently evaluating the impact of adoption of the standard on disclosures within its consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The guidance is effective for the Company’s fiscal years beginning after February 1, 2025, with early adoption permitted. The Company is currently evaluating the impact of adoption of the standard on its consolidated financial statements.

Note 3. Revenues

Deferred Revenue and Remaining Performance Obligations

The Company recognized $76.7 million and $65.6 million of revenues during the three months ended July 31, 2024 and 2023, respectively, that were included in the deferred revenue balances at January 31, 2024 and 2023, respectively. The Company recognized $194.1 million and $166.1 million of revenues during the six months ended July 31, 2024 and 2023, respectively, that were included in the deferred revenue balances at January 31, 2024 and 2023, 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, 2024, the Company's remaining performance obligations from contracts with customers was $394.5 million, of which the Company expects to recognize approximately 83% 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.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table summarizes the activity of deferred contract acquisition costs (in thousands):


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Beginning balance	$	38,940	$	37,338	$	39,381	$	36,583
Capitalization of contract acquisition costs	6,865		6,430		12,511		12,056
Amortization of deferred contract acquisition costs	(6,406)		(5,432)		(12,493)		(10,303)
Ending balance	$	39,399	$	38,336	$	39,399	$	38,336

Deferred contract acquisition costs, current	$	22,150	$	20,110	$	22,150	$	20,110
Deferred contract acquisition costs, noncurrent	17,249		18,226		17,249		18,226
Total deferred contract acquisition costs	$	39,399	$	38,336	$	39,399	$	38,336

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.

Note 4. Fair Value Measurements

The following table summarizes, for assets measured at fair value, the respective fair value and classification by level of input within the fair value hierarchy (in thousands):


	July 31, 2024
	Level 1		Level 2		Level 3		Total
Current Assets
Cash equivalents
Money market funds	$	84,278	$	—	$	—	$	84,278


Total cash equivalents	$	84,278	$	—	$	—	$	84,278
Marketable securities
U.S. Treasury securities	$	168,520	$	—	$	—	$	168,520
Commercial paper	—		5,956		—		5,956
Corporate bonds	—		101,549		—		101,549
U.S. agency bonds	—		26,199		—		26,199
Total marketable securities	$	168,520	$	133,704	$	—	$	302,224




Total assets	$	252,798	$	133,704	$	—	$	386,502

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	January 31, 2024
	Level 1		Level 2		Level 3		Total
Current Assets
Cash equivalents
Money market funds	$	89,561	$	—	$	—	$	89,561
Commercial paper	—		4,991		—		4,991

Total cash equivalents	$	89,561	$	4,991	$	—	$	94,552
Marketable securities
U.S. Treasury securities	$	162,328	$	—	$	—	$	162,328
Commercial paper	—		11,670		—		11,670
Corporate bonds	—		72,608		—		72,608
U.S. agency bonds	—		36,195		—		36,195
Total marketable securities	$	162,328	$	120,473	$	—	$	282,801



Total assets	$	251,889	$	125,464	$	—	$	377,353

The following table summarizes the Company's investments in marketable securities on the condensed consolidated balance sheets (in thousands):


	July 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Current Assets
U.S. Treasury securities	$	168,607	$	213	$	(300)	$	168,520
Commercial paper	5,955		1		—		5,956
Corporate bonds	100,811		756		(18)		101,549
U.S. agency bonds	26,139		60		—		26,199
Total marketable securities	$	301,512	$	1,030	$	(318)	$	302,224


	January 31, 2024
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Estimated Fair Value
Current Assets
U.S. Treasury securities	$	162,485	$	85	$	(242)	$	162,328
Commercial paper	11,645		25		—		11,670
Corporate bonds	71,930		695		(17)		72,608
U.S. agency bonds	36,067		128		—		36,195
Total marketable securities	$	282,127	$	933	$	(259)	$	282,801

The following table presents the contractual maturities of the Company’s marketable securities as of July 31, 2024 (in thousands):


	July 31, 2024
	Amortized Cost		Estimated Fair Value
Due within one year	$	165,787	$	165,733
Due within one to three years	135,725		136,491
Total	$	301,512	$	302,224

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The Company periodically evaluates its investments for expected credit losses. The Company had certain available-for-sale investment securities in a gross unrealized loss position, substantially all of which had been in such position for less than 12 months. 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. 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, 2024 or January 31, 2024 to represent credit losses.

In April 2020 and November 2022, the Company entered into credit agreements (the “April 2020 Senior Secured Term Loan” and “November 2022 Senior Secured Credit Facility” as defined in Note 6. Debt) with Silicon Valley Bank (“SVB”). The credit facilities are carried at amortized cost, which approximated their fair values as of July 31, 2024 and January 31, 2024. If the credit facilities were measured at fair value in the financial statements, they would be classified as Level 2 in the fair value hierarchy. The April 2020 Senior Secured Term Loan was repaid in full and terminated in November 2022. On March 27, 2023, First Citizens BancShares, Inc. announced that it entered into an agreement to purchase assets and liabilities of SVB, inclusive of the November 2022 Senior Secured Credit Facility.

Note 5. Balance Sheet Components

Property and Equipment, Net

Property and equipment, net, consisted of the following (in thousands):


	July 31, 2024		January 31, 2024
Leasehold improvements	$	102,820	$	100,795
Capitalized internal-use software	28,578		24,061
Furniture and fixtures	11,964		11,732
Desktop and other computer equipment	2,452		2,122
Construction in progress	313		326
Total gross property and equipment	146,127		139,036
Less: Accumulated depreciation and amortization	(50,385)		(42,493)
Total property and equipment, net	$	95,742	$	96,543

Depreciation and amortization expense was $4.3 million and $3.6 million for the three months ended July 31, 2024 and 2023, respectively, and $8.3 million and $6.9 million for the six months ended July 31, 2024 and 2023, respectively.

Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following (in thousands):


	July 31, 2024		January 31, 2024
Prepaid expenses	$	22,525	$	25,029
Deferred contract acquisition costs, current	22,150		21,594
Other current assets	8,519		5,302
Total prepaid expenses and other current assets	$	53,194	$	51,925

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	July 31, 2024		January 31, 2024
Accrued payroll liabilities	$	16,377	$	19,219
Accrued taxes for fringe benefits	11,445		9,452
Accrued sales and value-added taxes	11,246		10,770
Accrued advertising expenses	5,850		9,276
Accrued consulting expenses	4,661		4,287
Other liabilities	23,019		22,817
Total accrued expenses and other current liabilities	$	72,598	$	75,821

Note 6. Debt

In April 2020, the Company entered into a five-year $40.0 million term loan agreement with SVB (the “April 2020 Senior Secured Term Loan”) which provided for a senior secured term loan facility, in an aggregate principal amount of up to $40.0 million to be used for the construction of the Company’s corporate headquarters. Interest accrued and was payable monthly based on a floating rate per annum equal to the prime rate (per the Wall Street Journal) plus an applicable margin ranging from 0% to (1.0)% based on the Company’s unrestricted cash balance at the lender. The April 2020 Senior Secured Term Loan was repaid in full and terminated in November 2022.

In November 2022, the Company entered into an agreement for a four-year credit facility (as amended on April 13, 2023 and June 18, 2024, the “November 2022 Senior Secured Credit Facility”) with SVB, which refinanced the April 2020 Senior Secured Term Loan. The November 2022 Senior Secured Credit Facility provides for senior secured credit facilities in the aggregate principal amount of $150.0 million, including a senior secured term loan facility in an aggregate principal amount of $50.0 million and a revolving loan facility in an aggregate principal amount of up to $100.0 million, including a $30.0 million letter of credit sub-facility, maturing on November 7, 2026. On March 27, 2023, First Citizens BancShares, Inc. announced that it entered into an agreement to purchase assets and liabilities of SVB, inclusive of the November 2022 Senior Secured Credit Facility.

Borrowings under the November 2022 Senior Secured Credit Facility may be designated as ABR Loans or SOFR Loans, subject to certain terms and conditions under the agreement. ABR Loans accrue interest at a rate per annum equal to the ABR plus an applicable margin of 1.25%. Term SOFR Loans accrue interest at a rate per annum equal to the applicable adjusted term SOFR rate, which is equal to the applicable term SOFR rate plus a term SOFR adjustment of 10 basis points, provided such adjusted term SOFR rate shall not be less than zero, plus an applicable margin of 2.25%. Interest accrues and is payable on a monthly basis.

The November 2022 Senior Secured Credit Facility contains customary conditions to borrowing, events of default, and covenants, including covenants that restrict the Company’s ability to incur indebtedness, make or hold investments, execute certain change of control transactions, business combinations or other fundamental changes to the business, dispose of assets, make certain types of restricted payments or enter into certain related party transactions, subject to customary exceptions. In addition, the November 2022 Senior Secured Credit Facility contains financial covenants, including a consolidated adjusted quick ratio of 1.25 to 1.00, as well as a minimum cash adjusted EBITDA, each tested on a quarterly basis.

Pursuant to the terms of the November 2022 Senior Secured Credit Facility, the Company may issue letters of credit which may reduce the total amount available for borrowing under the revolving credit facility. Additionally, the Company is required to pay an annual commitment fee that accrues at a rate of 0.15% per annum on the unused portion of the borrowing commitments under the revolving credit facility. The Company had an aggregate of $21.6 million of letters of credit outstanding under the revolving credit facility as of July 31, 2024, and the Company’s total available borrowing capacity under the revolving credit facility was $78.4 million as of July 31, 2024.

As of July 31, 2024, $50.0 million was drawn and $45.6 million was outstanding under the November 2022 Senior Secured Credit Facility. As of July 31, 2024, the Company was in compliance with all financial covenants.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

In conjunction with the close of the November 2022 Senior Secured Credit Facility, the Company paid upfront issuance fees of $0.4 million. The upfront fees are amortized over the remaining term of the agreement. As of July 31, 2024, the Company had $0.2 million remaining of upfront issuance fees allocated to the revolving credit facility presented in the Company’s condensed consolidated balance sheet within other assets.

The net carrying amounts of the November 2022 Senior Secured Credit Facility were as follows (in thousands):


	July 31, 2024		January 31, 2024
Principal	$	45,625	$	46,875
Accrued interest	282		297
Unamortized loan issuance costs	(108)		(132)
Net carrying amount	$	45,799	$	47,040


Term loan, current	$	4,657	$	3,422
Term loan, noncurrent	$	41,142	$	43,618

The net carrying amount of the current portion of the term loan is presented within accrued expenses and other current liabilities in the condensed consolidated balance sheets.

The expected future principal payments for all borrowings as of July 31, 2024 is as follows (in thousands):


Fiscal year ending January 31,	Expected Principal Payments
Remainder of fiscal year 2025	$	1,875
2026	5,000
2027	38,750
Total expected future principal payments	$	45,625

Note 7. Commitments and Contingencies

Standby Letters of Credit

As of July 31, 2024, the Company had several letters of credit outstanding related to its operating leases totaling $21.6 million. The letters of credit expire at various dates between 2025 and 2034.

Purchase Commitments

In January 2021, the Company entered into a 60-month contract with Amazon Web Services for hosting-related services. Pursuant to the terms of the contract, the Company is required to spend a minimum of $103.5 million over the term of the agreement. The commitment may be offset by up to $7.3 million in additional credits subject to the Company meeting certain conditions of the agreement, which have been earned as of July 31, 2024. As of July 31, 2024, the Company had purchase commitments remaining of $29.6 million under this contract, which are not reflected on the Company’s condensed consolidated balance sheet as of July 31, 2024.

During the six months ended July 31, 2024, other than certain non-cancelable operating leases described in Note 8. Leases and the commitment for hosting-related services described above, there have been no other material changes outside the ordinary course of business to the Company's contractual obligations and commitments from those disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2024.

Indemnification Agreements

The Company has entered into indemnification agreements with its directors and officers that may require the Company to indemnify its directors and officers against any liabilities that may arise by reason of their status or service as directors or officers, other than liabilities arising from willful misconduct of the individual.

Additionally, in the ordinary course of business, the Company enters into agreements of varying scope and terms pursuant to which it agrees to indemnify customers, vendors, lessors, business partners, and other parties with

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

respect to certain matters, including, but not limited to, losses arising out of the breach of such agreements, services to be provided by the Company, or from intellectual property infringement claims made by third parties. For the six months ended July 31, 2024 and 2023, no demands have been made upon the Company to provide indemnification under such agreements, and there are no claims that the Company is aware of that could have a material adverse effect on its financial position, results of operations, or cash flows.

Contingencies

From time to time in the normal course of business, the Company may be subject to various claims and other legal matters arising in the ordinary course of business. As of July 31, 2024, the Company believes that none of its current legal proceedings would have a material adverse effect on its financial position, results of operations, or cash flows.

Note 8. Leases

The Company leases real estate facilities under non-cancelable operating leases with various expiration dates through fiscal 2034. The Company has no lease agreements that are classified as finance leases.

Future minimum lease payments (net of tenant improvement receivables) under non-cancelable operating leases with initial lease terms in excess of one year included in the Company’s total operating lease liabilities as of July 31, 2024 are as follows (in thousands):


Fiscal year ending January 31,	Operating Lease Payments (Net)
Remainder of fiscal year 2025	$	20,806
2026	41,715
2027	41,486
2028	39,813
2029 and thereafter	199,642
Total undiscounted operating lease payments	$	343,462
Less: imputed interest	(109,407)
Total operating lease liabilities	$	234,055

During the three and six months ended July 31, 2023, the Company executed a sublease for a portion of its corporate office space in San Francisco, California. The Company evaluated the associated asset group for impairment, which included the ROU assets and underlying property and equipment for the lease. The Company compared the expected future undiscounted cash flows to the carrying value and determined the respective asset group was not recoverable. The Company calculated the fair value based on the present value of the estimated cash flows from the sublease for the remaining lease term and compared the estimated fair value to its carrying value, which resulted in a $5.0 million consolidated impairment charge. The fair value of the operating lease ROU assets and associated property and equipment was estimated as of the sublease execution date using Level 3 inputs based on an income approach by converting future sublease cash inflows and outflows to a single present value. Estimated cash flows were discounted at a rate commensurate with the inherent risks associated with the asset group to arrive at an estimate of fair value. The impairment charge was included in general and administrative expenses in the condensed consolidated statements of operations. The Company recorded no impairment charge during the three and six months ended July 31, 2024.

The sublease has a lease term of five years and has been classified as an operating lease by the Company. Sublease income was $0.5 million and $0.9 million for the three and six months ended July 31, 2024, respectively. There was no sublease income for the three and six months ended July 31, 2023. The Company recognizes sublease income as a reduction of lease expense in the Company’s condensed consolidated statements of operations.

As of July 31, 2024, the Company has commitments of $2.4 million for an operating lease that has not yet commenced, and therefore is not included in the ROU asset or operating lease liabilities. The foregoing operating lease will commence in the fourth quarter of fiscal 2026, with a lease term of seven years.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Operating lease amounts in the table above do not include sublease income payments of $8.1 million. As of July 31, 2024, the future total minimum sublease payments to be received were as follows (in thousands):


Fiscal year ending January 31,	Sublease Payments to be Received
Remainder of fiscal year 2025	$	943
2026	1,919
2027	1,976
2028	2,036
2029 and thereafter	1,208
Total sublease income to be received	$	8,082

Note 9. Net Loss Per Share

The Company computes net loss per share using the two-class method required for multiple classes of common stock and participating securities. The rights, including the liquidation and dividend rights, of the Class A common stock and Class B common stock are substantially identical, other than voting and conversion rights. Accordingly, the Class A common stock and Class B common stock share equally in the Company’s net income and losses.

The following table presents the calculation of basic and diluted net loss per share (in thousands, except per share data):


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Numerator:
Net loss	$	(72,189)	$	(71,414)	$	(135,911)	$	(132,882)
Denominator:
Weighted-average shares used in calculating net loss per share, basic and diluted	229,760		219,004		228,430		217,730
Net loss per share, basic and diluted	$	(0.31)	$	(0.33)	$	(0.59)	$	(0.61)

The potential shares of common stock that were excluded from the computation of diluted net loss per share for the period presented because including them would have been anti-dilutive are as follows (in thousands):


	Three Months Ended July 31,		Six Months Ended July 31,
	2024	2023	2024	2023
Stock options	9,114	10,541	9,114	10,541
Restricted stock units	24,138	19,312	24,138	19,312

Shares issuable pursuant to the 2020 Employee Stock Purchase Plan	362	310	362	310
Total	33,614	30,163	33,614	30,163

Note 10. Stockholders’ Equity

Common Stock

There are two classes of common stock that total 1,500,000,000 authorized shares: 1,000,000,000 authorized shares of Class A common stock and 500,000,000 authorized shares of Class B common stock. The rights of the holders of Class A common stock and Class B common stock are identical, except with respect to voting and conversion. Each share of Class A common stock is entitled to one vote per share. Each share of Class B common stock is entitled to 10 votes per share and is convertible into one share of Class A common stock. Prior to the Direct Listing, which was completed on September 30, 2020, all 73,577,455 outstanding shares of redeemable convertible preferred stock were converted into an equivalent number of shares of Class B common stock. There are 144,002,324 shares of Class A common stock and 85,486,680 shares of Class B common stock issued and

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

outstanding as of July 31, 2024. There were 139,238,565 shares of Class A common stock and 85,489,359 shares of Class B common stock outstanding as of January 31, 2024.

All changes in the number of shares of common stock outstanding for the three and six months ended July 31, 2024 and 2023, were related to changes in Class A common stock, other than conversions of Class B common stock into an equivalent number of shares of Class A common stock.

Stock Plans

The Company has a 2009 Stock Plan (the “2009 Plan”), a 2012 Amended and Restated Stock Plan (the “2012 Plan”), and a 2020 Equity Incentive Plan (the “2020 Plan”). Each plan was initially established to grant equity awards to employees and consultants of the Company to assist in attracting, retaining, and motivating employees and consultants and to provide incentives to promote the success of the Company’s business. The number of shares reserved for issuance under the 2020 Plan increased by 9,414,923 shares of Class A common stock on February 1, 2022, by 10,714,637 shares of Class A common stock on February 1, 2023, and by 11,236,396 shares of Class A common stock on February 1, 2024, all pursuant to the evergreen provisions of the 2020 Plan.

There are no outstanding awards under the 2009 Plan, and new issuances under the 2012 Plan terminated upon completion of the Direct Listing. Awards outstanding under the 2012 Plan continue to be outstanding and are governed by the provisions of the 2012 Plan. The 2020 Plan provides for the grant of incentive stock options (“ISOs”), within the meaning of Section 422 of the Code, nonstatutory stock options (“NSOs”), stock appreciation rights, restricted stock awards (“RSUs”), performance-based stock awards, and other forms of equity compensation.

ISOs may be granted only to Company employees (including officers and directors who are also employees). NSOs may be granted to Company employees and consultants. Options under the 2020 Plan may be granted for periods of up to 10 years. The exercise price of ISOs and NSOs shall not be less than 100% of the estimated fair value of the shares on the date of grant as determined by the Company’s board of directors. Options granted generally vest over four years and vest at a rate of 25% upon the first anniversary of the vesting commencement date and 1/48 per month thereafter.

The Company has outstanding RSU awards issued pursuant to the 2012 Plan and 2020 Plan. RSUs granted generally vest on a predefined rate over a period of four years contingent upon continuous service.

Shares of common stock purchased under the 2012 Plan are subject to certain restrictions and repurchase rights.

Stock Options

Option activity under the Company’s combined stock plans is set forth below (in thousands, except years and per share data):


	Number of Shares	Weighted- Average Exercise Price		Weighted- Average Remaining Contractual Term (in years)	Aggregate Intrinsic Value
Balances at January 31, 2024	9,788	$	3.09	4.2	$	140,292
Options granted	—	—
Options exercised	(673)	3.16
Options cancelled	(1)	7.49
Balances at July 31, 2024	9,114	$	3.08	3.7	$	104,526
Vested and exercisable at July 31, 2024	8,938	$	3.10	3.7	$	102,366
Vested and expected to vest at July 31, 2024	9,114	$	3.08	3.7	$	104,526

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The total intrinsic value of options exercised during the periods presented was as follows:


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Aggregate intrinsic value of options exercised (in thousands)	$	3,285	$	12,186	$	7,795	$	26,293

Early Exercise of Employee Options

The 2009 Plan and 2012 Plan allow for the early exercise of stock options. The consideration received for an early exercise of an option is considered to be a deposit of the exercise price, and the related dollar amount is recorded as a liability and reflected in accrued expenses and other current liabilities and other liabilities in the condensed consolidated balance sheets. This liability is reclassified to additional paid-in capital as the awards vest. If a stock option is early exercised, the unvested shares may be repurchased by the Company in case of employment termination at the price paid by the purchaser for such shares. There were no shares that were subject to repurchase at July 31, 2024 and 384 shares subject to repurchase at July 31, 2023.

Restricted Stock Units

The Company’s RSU activity is set forth below (in thousands, except per share data):


	Number of Shares	Weighted- Average Grant Date Fair Value		Aggregate Intrinsic Value
Unvested RSUs at January 31, 2024	17,190	$	23.04	$	299,450
RSUs granted	13,220	15.13
RSUs vested	(4,825)	22.44
RSUs cancelled/forfeited	(1,447)	21.70
Unvested RSUs at July 31, 2024	24,138	$	18.91	$	351,208
RSUs vested, not yet released at July 31, 2024	751	$	32.18

Stock-Based Compensation Expense

Stock-based compensation expense for stock-based awards to employees and non-employees in the Company’s condensed consolidated statements of operations for the periods below were as follows (in thousands):


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Cost of revenues	$	393	$	442	$	676	$	764
Research and development	34,045		31,047		60,785		54,544
Sales and marketing	17,249		16,321		32,497		27,854
General and administrative	8,420		8,395		14,789		14,541
Total stock-based compensation expense	$	60,107	$	56,205	$	108,747	$	97,703

The stock-based compensation expense related to options granted to non-employees for the three and six months ended July 31, 2024 and 2023 were not material.

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Total unrecognized stock-based compensation expense related to unvested awards not yet recognized under all equity compensation plans was as follows:


	July 31, 2024
	Unrecognized Expense (in thousands)		Weighted-Average Expected Recognition Period (in years)
Stock options	$	205	3.5
RSUs	421,977		3.0
Total unrecognized stock-based compensation expense	$	422,182	3.0

2020 Employee Stock Purchase Plan

In September 2020, the board of directors adopted and approved the 2020 Employee Stock Purchase Plan (“ESPP”), which became effective on the effective date of the Company's registration statement on Form S-1 filed with the SEC in connection with the Direct Listing. The ESPP initially reserved and authorized the issuance of up to a total of 2,000,000 shares of Class A common stock to participating employees. The number of shares reserved under the ESPP was automatically increased on February 1, 2021 to 3,614,801 shares of Class A common stock, to 5,497,785 on February 1, 2022, to 7,640,712 on February 1, 2023, and to 9,887,991 on February 1, 2024, all pursuant to the evergreen provisions of the ESPP.

Subject to any limitations contained therein, the ESPP allows eligible participants to contribute, through payroll deductions, up to 15% of their eligible compensation to purchase shares of the Company’s Class A common stock at a purchase price equal to 85% of the fair market value of the Class A common stock on either the first day of the offering period or the purchase date, whichever fair market value is lower. The ESPP generally provides for consecutive 24-month offering periods, each consisting of four separate consecutive purchase periods of approximately six months in length. The ESPP also includes a two year look back in purchase price, including a reset feature. The reset feature is triggered if the price on the date of purchase is less than the price on the first day of the offering period.

The Company recognized stock-based compensation expense related to the ESPP of $2.9 million and $2.8 million during the three months ended July 31, 2024 and 2023, respectively, and $5.8 million and $3.3 million during the six months ended July 31, 2024 and 2023, respectively. As of July 31, 2024 and January 31, 2024, $4.5 million and $7.2 million, respectively, have been withheld in contributions from employees. As of July 31, 2024, total unrecognized compensation cost related to the ESPP was $8.1 million, which will be amortized over a weighted-average vesting term of 1.1 years.

Stock Repurchase Program

In June 2024, the Company’s board of directors authorized a stock repurchase program of up to $150.0 million of its outstanding Class A common stock. Under the program, which is designed to return value to the Company’s stockholders and reduce share count over time, the Company may repurchase shares in the open market, through privately negotiated transactions, by entering into structured repurchase agreements with third parties, by making block purchases, and/or pursuant to Rule 10b5-1 trading plans. The timing, manner, price, and amount of any repurchases under the program will be determined by the Company in its discretion. The program does not obligate the Company to acquire any particular amount of Class A common stock, and the repurchase program may be suspended or discontinued at any time at the Company’s discretion. The stock repurchase program will be funded using the Company’s working capital and is expected to continue through June 30, 2025, unless extended or shortened by the board of directors.

The following table summarizes the stock repurchase activity under the Company’s stock repurchase program (in thousands, except per share data):

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Number of shares repurchased	1,446		—		1,446		—
Weighted-average price per share	$	13.64	$	—	$	13.64	$	—
Aggregate purchase price	$	19,721	$	—	$	19,721	$	—

As of July 31, 2024, $130.3 million remained available for future stock repurchases under the stock repurchase program. All shares of Class A common stock subsequently repurchased were retired. Upon retirement, the par value of the common stock repurchased was deducted from common stock and any excess of repurchase price over par value was recorded entirely to accumulated deficit in the condensed consolidated balance sheets.

Note 11. Interest Income and Other Income (Expense), Net

Interest income and other income (expense), net consist of the following (in thousands):


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
Interest income	$	5,409	$	4,623	$	10,785	$	9,615
Unrealized gains (losses) on foreign currency transactions	1,407		(283)		882		416
Other non-operating expense	(56)		(175)		(547)		(200)
Total interest income and other income (expense), net	$	6,760	$	4,165	$	11,120	$	9,831

Other non-operating expense consists primarily of realized foreign currency gains and losses on transactions in the periods presented.

Note 12. Income Taxes

The Company's income tax expense was $1.2 million and $1.2 million for the three months ended July 31, 2024 and 2023, respectively, and $2.2 million and $2.1 million for the six months ended July 31, 2024 and 2023, respectively, primarily due to income taxes in foreign jurisdictions.

Note 13. Geographic Information

The following tables set forth revenues and long-lived assets, including operating lease ROU assets, by geographic area for the periods presented below (in thousands):

Revenues


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
United States	$	108,232	$	99,222	$	212,658	$	192,215
International	70,980		63,233		139,002		122,651
Total Revenues	$	179,212	$	162,455	$	351,660	$	314,866

Revenues by geography are based on the shipping address of the customer.

Long-Lived Assets


	July 31, 2024		January 31, 2024
United States	$	264,272	$	271,844
International	13,731		6,430
Total long-lived assets	$	278,003	$	278,274

ASANA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Note 14. Restructuring

On November 15, 2022, the Company authorized a plan to reduce its global headcount by approximately 9%. This plan was adopted as part of a restructuring intended to improve operational efficiencies and operating costs and better align the Company’s workforce with current business needs, top strategic priorities, and key growth opportunities.

The Company has completed payments associated with these restructuring charges in the six months ended July 31, 2023 and did not incur any additional restructuring costs during the three and six months ended July 31, 2024 and 2023. The following table summarizes the Company’s restructuring liabilities (in thousands):


	Restructuring Liability
Beginning balance as of February 1, 2023	$	873
Charges (benefit)	(147)
Payments	(707)
Foreign currency translation adjustment	(19)
Ending balance as of July 31, 2023	$	—

Note 15. Related Party Transactions

During the fiscal year ended January 31, 2020, the Company began leasing certain office facilities from a company affiliated with Board members of the Company. Rent expenses under these leases totaled $0.4 million and $0.4 million during the three months ended July 31, 2024 and 2023, respectively, and $0.9 million and $0.8 million during the six months ended July 31, 2024 and 2023, respectively.

The Company has entered into an advertising agreement with a company affiliated with a Board member of the Company. Expenses under this agreement totaled $0.4 million and $0.5 million during the three months ended July 31, 2024 and 2023, respectively, and $1.0 million and $1.0 million during the six months ended July 31, 2024 and 2023, respectively.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and related notes appearing elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on March 14, 2024. As described in the section titled “Special Note Regarding Forward-Looking Statements,” the following discussion and analysis contains forward-looking statements that involve risks and uncertainties, as well as assumptions that, if they never materialize or prove correct, could cause our results to differ materially from those expressed or implied by such forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and those discussed in the section titled “Risk Factors” included under Part II, Item 1A below.

Overview

Asana is a leading work management software platform with an enterprise focus that helps organizations drive strategic initiatives and automate work in one place. Customers use Asana to automate complex operational workflows like product launches and employee onboarding, resource planning, tracking company-wide strategic initiatives and more. Our secure and scalable platform with AI-powered features adds structure to unstructured work, creating clarity, accountability, and impact for everyone within an organization—executives, department heads, team leads, and individuals—so everyone understands exactly who is doing what, by when, and why.

Asana is flexible and applicable to virtually any use case across departments and organizations of all sizes. We designed our platform to be easy to use and intuitive to all users, regardless of role or technical proficiency. Our platform allows users to work the way they want with the interface that is right for them, using lists, calendars, boards, timelines, and workload, all while providing trusted scalability and reliability.

Key Business Metrics

We believe that our growth and financial performance are dependent upon many factors, including the key factors described below.

Paying Customers

We are focused on continuing to grow the number of customers that use our platform, and specifically on growing the number of customers spending over $5,000 on an annualized basis (“Core customers”), and those spending over $100,000 on an annualized basis. Our operating results and growth opportunity depend, in part, on our ability to attract new customers and expand within those same organizations. We believe we have significant greenfield opportunities among addressable customers worldwide and we will continue to invest in our research and development and our sales and marketing organizations to address this opportunity.

We define a customer as a distinct account, which could include a team, company, educational or government institution, organization, or distinct business unit of a company, that is on a paid subscription plan, a free version, or a free trial of one of our paid subscription plans. A single organization may have multiple customers. We define a paying customer as a customer on a paid subscription plan.

We define customers spending over $5,000 and $100,000 as those organizations on a paid subscription plan that had $5,000 or more or $100,000 or more in annualized GAAP revenues in a given quarter, respectively, inclusive of discounts. As customers realize the productivity benefits we provide, our platform often becomes critical to managing their work and achieving their objectives, which drives further adoption and expansion opportunities, and results in higher annualized contract values. We believe that our ability to increase the number of these customers is an important indicator of the components of our business, including: the continued acquisition of new customers, retaining and expanding our user base within existing customers, our continued investment in product development and functionality required by larger organizations, and the strategic expansion of our direct sales force.

As of July 31, 2024, we had 22,948 Core customers contributing approximately 75% and 75% of revenues for the three and six months then ended, respectively. As of July 31, 2023, we had 20,782 Core customers who contributed approximately 74% and 73% of revenues for the three and six months then ended, respectively.

As of July 31, 2024 and 2023, we had 649 and 553 customers spending over $100,000, on an annualized basis, respectively.

Dollar-based Net Retention Rate

We expect to derive a portion of our revenue growth from expansion within our existing customer base, where we have an opportunity to expand adoption of Asana across teams, departments, and organizations. We believe that our dollar-based net retention rate demonstrates our opportunity to further expand within our existing customer base, particularly those that generate higher levels of annual revenues.

Our reported dollar-based net retention rate equals the simple arithmetic average of our quarterly dollar-based net retention rate for the four quarters ending with the most recent fiscal quarter. We calculate our dollar-based net retention rate by comparing our revenues from the same set of customers in a given quarter, relative to the comparable prior-year period. To calculate our dollar-based net retention rate for a given quarter, we start with the revenues in that quarter from customers that generated revenues in the same quarter of the prior year. We then divide that amount by the revenues attributable to that same group of customers in the prior-year quarter. Current period revenues include any upsells and are net of contraction or attrition over the trailing 12 months, but exclude revenues from new customers in the current period. We expect our dollar-based net retention rate to fluctuate due to a number of factors, including the expected growth of our revenue base, the level of penetration within our customer base, our ability to retain our customers, and the macroeconomic environment. For example, macroeconomic conditions have affected customers’ renewal decisions, which has impacted our dollar-based net retention rate in recent periods.

As of July 31, 2024 and 2023, our dollar-based net retention rate was 98% and over 105%, respectively.

As of July 31, 2024 and 2023, our dollar-based net retention rate for our Core customers was 99% and over 110%, respectively. Our dollar-based net retention rate for customers spending over $100,000 on an annualized basis for the same periods was 103% and over 125%, respectively.

Current Economic Conditions

Global macroeconomic events including inflation, elevated interest rates, bank failures, supply chain disruptions, fluctuations in currency exchange rates, and geopolitical unrest have led to economic uncertainty. These macroeconomic conditions have and are likely to continue to have adverse effects on the rate of global IT spending, including the buying patterns of our customers and prospective customers, and the length of our sales cycles. While the current macroenvironment is challenging and may continue for the near term, we are encouraged by the future of work that we are building at Asana, where every organization can work from a shared system driving clarity and accountability powered by the Asana platform.

Components of Results of Operations

Revenues

We generate subscription revenues from paying customers accessing our cloud-based platform. Subscription revenues are driven primarily by the number of paying customers, the number of paying users within the customer base, and the level of subscription plan. We recognize revenues ratably over the related contractual term beginning on the date that the platform is made available to a customer.

Due to the ease of implementation of our platform, revenues from professional services have been immaterial to date.

Cost of Revenues

Cost of revenues consists primarily of the cost of providing our platform to free users and paying customers and is comprised of third-party hosting fees, personnel-related expenses for our operations and support personnel including allocated overhead costs for facilities and shared IT-related expenses, third-party implementation services partner fees, credit card processing fees, and amortization of our capitalized internal-use software costs.

As we acquire new customers and existing customers increase their use of our cloud-based platform, we expect that our cost of revenues will continue to increase.

Gross Profit and Gross Margin

Gross profit, or revenues less cost of revenues, and gross margin, or gross profit as a percentage of revenues, has been and will continue to be affected by various factors, including the timing of our acquisition of new customers, renewals of and follow-on sales to existing customers, costs associated with operating our cloud-based platform, and the extent to which we expand our operations and customer support organizations. We expect our gross profit to increase in dollar amount and our subscription gross margin to remain relatively consistent over the long term.

Operating Expenses

Our operating expenses consist of research and development, sales and marketing, and general and administrative expenses. Personnel-related expenses are the most significant component of operating expenses and consist of salaries, employer payroll taxes, benefits, stock-based compensation expense, and, in the case of sales and marketing expenses, sales commissions. Operating expenses also include an allocation of overhead costs for facilities and shared IT-related expenses, including depreciation expense.

Research and Development

Research and development expenses consist primarily of personnel-related expenses. These expenses also include product design costs, third-party services and consulting expenses, software subscriptions and computer equipment used in research and development activities, and allocated overhead costs. A substantial portion of our research and development efforts are focused on enhancing our software architecture and adding new features and functionality to our platform. We anticipate continuing to invest in innovation and technology development, including the integration of AI in our product, and as a result, we expect research and development expenses to continue to increase in dollar amount, but to decrease as a percentage of revenues over time.

Sales and Marketing

Sales and marketing expenses consist primarily of personnel-related expenses and expenses for performance marketing, brand marketing, pipeline generation, and sponsorship activities. These expenses also include allocated overhead costs and travel-related expenses. Sales commissions earned by our sales force that are considered incremental and recoverable costs of obtaining a subscription with a customer are deferred and amortized on a straight-line basis over the expected period of benefit of three years.

We continue to make strategic investments in our sales and marketing organization, and we expect sales and marketing expenses to remain our largest operating expense in dollar amount. We expect our sales and marketing expenses to continue to increase in dollar amount but to decrease as a percentage of revenues over time, although the percentage may fluctuate from period to period depending on the extent and timing of our initiatives.

General and Administrative

General and administrative expenses consist primarily of personnel-related expenses for our finance, human resources, information technology, and legal organizations. These expenses also include non-personnel costs, such as outside legal, accounting, and other professional fees, software subscriptions and expensed computer equipment, certain tax, license, and insurance-related expenses, and allocated overhead costs.

We have recognized and will continue to recognize certain expenses as part of being a publicly traded company, consisting of professional fees and other expenses. As a public company, we incur additional costs associated with accounting, compliance, insurance, and investor relations. We expect our general and administrative expenses to continue to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenues, although the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses.

Interest Income and Other Income (Expense), Net and Interest Expense

Interest income and other income (expense), net consists of income earned on our marketable securities and investments, in addition to foreign currency transaction gains and losses.

Interest expense consists of interest expense from our credit facilities.

Provision for Income Taxes

Provision for income taxes consists primarily of income taxes in certain foreign jurisdictions in which we conduct business. To date, we have not recorded a material provision for income taxes for any of the periods presented other than for foreign income tax. We have recorded deferred tax assets for which we provide a full valuation allowance, which primarily include net operating loss carryforwards and research and development tax credit carryforwards. We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not the deferred tax assets will not be realized based on our history of losses.

Results of Operations

The following tables set forth our results of operations for the periods presented and as a percentage of our revenues for those periods. The period-to-period comparison of financial results is not necessarily indicative of financial results to be achieved in future periods.


	Three Months Ended July 31,				Six Months Ended July 31,
	2024		2023		2024		2023
	(in thousands)
Revenues	$	179,212	$	162,455	$	351,660	$	314,866
Cost of revenues (1)	19,987		16,232		37,791		31,079
Gross profit	159,225		146,223		313,869		283,787