Asana Announces Record Second Quarter Revenue

Asana, Inc., a leading work management platform for teams, today reported financial results for its second quarter ended July 31, 2020.

"In the second quarter, strong execution and expanding adoption of Asana's platform drove total revenue growth of 57% year over year. We're pleased with the momentum in our business and believe we are well positioned to be a long-term leader in a multi-billion dollar market opportunity," said Dustin Moskovitz, co-founder and chief executive officer, Asana. "Teams are at the center of everything we do. Now more than ever it's important for teams to operate with clarity, alignment and accountability. By making collaboration easier and by powering teams to be more effective, Asana helps organizations move forward. These are extraordinary times but we remain focused on our mission, which is to help the world's teams work together effortlessly, whether that's in an office or in our homes."

Second Quarter Fiscal 2021 Financial Highlights

• Revenues: Revenues were $52.0 million, an increase of 57% year over year.
• Operating Loss: GAAP operating loss was $33.6 million, or 64.6% of revenues, compared to GAAP operating loss of $15.9 million, or 48.0% of revenues, in the second quarter of fiscal 2020. Non-GAAP operating loss was $27.2 million, or 52.2% of revenues, compared to non-GAAP operating loss of $14.0 million, or 42.2% of revenues, in the second quarter of fiscal 2020.
• Net Loss: GAAP net loss was $41.1 million, compared to GAAP net loss of $15.6 million in the second quarter of fiscal 2020. GAAP net loss per share was $0.54, compared to GAAP net loss per share of $0.23 in the second quarter of fiscal 2020. Non-GAAP net loss was $26.3 million, compared to non-GAAP net loss of $13.7 million in the second quarter of fiscal 2020. Non-GAAP net loss per share was $0.34, compared to non-GAAP net loss per share of $0.20, recorded in the second quarter of fiscal 2020.
• Cash Flow: Cash flows from operating activities were negative $22.1 million, compared to cash flows from operating activities of negative $6.1 million in the second quarter of fiscal 2020. Free cash flow was negative $21.9 million, compared to negative $6.5 million in the second quarter of fiscal 2020.

Second Quarter Fiscal 2021 Business Highlights

• Ended the quarter with over 82,000 paying customers.
• The number of customers spending $5,000 or more with us on an annualized basis grew to 7,933, an increase of 65% year over year.
• The number of customers spending $50,000 or more with us on an annualized basis grew to 283, an increase of 160% year over year.
• Overall dollar-based net retention rate was over 115%.
• Dollar-based net retention rate for customers with $5,000 or more in annualized spend was over 125%.
• Dollar-based net retention rate for customers with $50,000 or more in annualized spend was over 140%.
• Launched Asana Goals which allows teams to connect company goals with OKRs and the work to support them in one place.
• Announced the Future of Asana and long term product vision in July with over 23,000 viewers around the world.
• Announced Asana for Microsoft Teams integration which enables conversations in Teams to be linked directly to Asana projects.

The section titled "Use of Non-GAAP Financial Measures" below contains a description of the non-GAAP financial measures with a reconciliation between GAAP and non-GAAP information. The section titled "Definitions of Business Metrics" contains definitions of certain non-financial metrics provided within this earnings release.

Financial Outlook

For the third quarter of fiscal 2021, the Company currently expects:

• Revenues of $53.5 million to $54.5 million, representing year-over-year growth of 40% to 43%
• Non-GAAP operating loss of $42.0 million to $40.0 million
• Non-GAAP net loss per share of $0.38 to $0.36, assuming basic and diluted weighted average shares outstanding of approximately 112 million

For the full fiscal year 2021, the Company currently expects:

• Revenues of $210.0 million to $213.0 million, representing year-over-year growth of 47% to 49%
• Non-GAAP operating loss of $140.0 million to $136.0 million
• Non-GAAP net loss per share of $1.33 to $1.30, assuming basic and diluted weighted average shares outstanding of approximately 105 million

These statements are forward-looking and actual results may materially differ. Refer to the "Forward-Looking Statements" section below for information on the factors that could cause our actual results to materially differ from these forward-looking statements.

A reconciliation of non-GAAP guidance measures to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty regarding, and the potential variability of, many of these costs and expenses that may be incurred in the future. The Company has provided a reconciliation of GAAP to non-GAAP financial measures in the financial statement tables for its second quarter of fiscal 2021 non-GAAP results included in this press release.

Conference Call Information

Asana will host a conference call and live webcast for analysts and investors at 10:00 a.m. Pacific Time on September 22, 2020. A live webcast and accompanying presentation can be accessed on the Investor Relations section of the Company's website at: https://investors.asana.com. The conference call can also be accessed by dialing 833-529-0220, or +1 236-389-2147 (outside of the US). The conference ID is 8979235. A replay of the call via webcast will be available at https://investors.asana.com.

Forward-Looking Statements

This press release contains "forward-looking" statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are based on management's beliefs and assumptions and on information currently available to management. Forward-looking statements include, but are not limited to, statements about Asana's outlook for the third fiscal quarter ending October 31, 2020 and the full fiscal year ending January 31, 2021, Asana's market position, and potential market opportunities, including its positioning in the market. Forward-looking statements generally relate to future events or our future financial or operating performance. Forward-looking statements include all statements that are not historical facts and in some cases can be identified by terms such as "anticipate," "expect," "intend," "plan," "believe," "continue," "could," "potential," "remain," "may," "might," "will," "would" or similar expressions and the negatives of those terms. However, not all forward-looking statements contain these identifying words. Forward-looking statements involve known and unknown risks, uncertainties and other factors, including factors beyond our control, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These risks include, but are not limited to, risks and uncertainties related to: our ability to achieve future growth and sustain our growth rate, our ability to attract and retain customers and increase sales to our customers, our ability to develop and release new products and services and to scale our platform, our ability to increase adoption of our platform through our self-service model, our ability to maintain and grow our relationships with strategic partners, the highly competitive and rapidly evolving market in which we participate, our international expansion strategies, and the impact of the COVID-19 pandemic. Further information on risks that could cause actual results to differ materially from forecasted results are included in our filings with the SEC, including our Form S-1/A filed on September 18, 2020 with the SEC. Any forward-looking statements contained in this press release are based on assumptions that we believe to be reasonable as of this date. Except as required by law, we assume no obligation to update these forward-looking statements, or to update the reasons if actual results differ materially from those anticipated in the forward-looking statements.

Use of Non-GAAP Financial Measures

To supplement our consolidated financial statements, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core operating performance. These non-GAAP financial measures, which may be different from similarly titled measures used by other companies, are presented to enhance investors' overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP measures to their most directly comparable GAAP financial measures. A reconciliation of the non-GAAP financial measures to such GAAP measures can be found in the accompanying financial statements included with this press release.

We believe that these non-GAAP financial measures provide useful information about our financial performance, enhance the overall understanding of our past performance and future prospects, facilitate period-to-period comparisons of operations, and allow for greater transparency with respect to important metrics used by our management for financial and operational decision-making. We are presenting these non-GAAP financial metrics to assist investors in seeing our financial performance through the eyes of management, and because we believe that these measures provide an additional tool for investors to use in comparing our core financial performance over multiple periods with other companies in our industry.

We define non-GAAP operating loss as GAAP loss from operations plus stock-based compensation expense and non-recurring costs such as direct listing expenses. We define non-GAAP net loss as GAAP net loss plus stock-based compensation expense, amortization of discount and non-cash contractual interest expense related to our senior mandatory convertible promissory note, and non-recurring costs such as direct listing expenses. There are a number of limitations related to the use of these non-GAAP measures as compared to GAAP operating loss and net loss, including that the non-GAAP measures exclude stock-based compensation expense, which has been, and will continue to be for the foreseeable future, a significant recurring expense in our business and an important part of our compensation strategy.

We use the non-GAAP financial measure of free cash flow, which is defined as net cash used in operating activities less cash used for purchases of property and equipment and capitalized internal-use software costs, plus non-recurring expenditures such as capital expenditures from the purchases of property and equipment associated with the build-out of our corporate headquarters in San Francisco and direct listing expenses. We believe free cash flow is an important liquidity measure of the cash that is available, after capital expenditures and operational expenses, for investment in our business and to make acquisitions. Free cash flow is useful to investors as a liquidity measure because it measures our ability to generate or use cash. There are a number of limitations related to the use of net free cash flow as compared to net cash from operating activities, including that net free cash flow includes capital expenditures, the benefits of which are realized in periods subsequent to those when expenditures are made.

Definitions of Business Metrics

Dollar-based net retention rate

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 in future periods due to a number of factors, including the expected growth of our revenue base, the level of penetration within our customer base, and our ability to retain our customers.

About Asana

Asana helps teams orchestrate their work, from small projects to strategic initiatives. Headquartered in San Francisco, CA, Asana has more than 82,000 paying customers and millions of free organizations across 190 countries. Global customers such as Allbirds, Sephora, Sky, Spotify, Viessmann and Woolworths rely on Asana to manage everything from company objectives to digital transformation to product launches and marketing campaigns.

Disclosure of Material Information

Asana announces material information to its investors using SEC filings, press releases, public conference calls, and on its investor relations page of the company's website at https://investors.asana.com. Asana uses these channels, as well as social media, including its Twitter account (@asana), its blog (blog.asana.com), its LinkedIn page (www.linkedin.com/company/asana), its Instagram account (@asana), and its Facebook page (www.facebook.com/asana/), to communicate with investors and the public about Asana, its products and services and other matters. Therefore, Asana encourages investors, the media and others interested in Asana to review the information it makes public in these locations, as such information could be deemed to be material information.