Q3 2022 Asana Inc Earnings Call

[music].

Speaker 1: Ladies and gentlemen, thank you for standing by. My name is Brent and I will be your conference operator today. At this time, I would like to welcome everyone to the Asana third quarter and fiscal year 2022 earnings call.

Ladies and gentlemen, thank you for standing by.

My name is Brent and I will your conference operator today.

At this time I would like to welcome everyone to <unk> third quarter and fiscal year, 'twenty, two and eat too.

Earnings call.

Speaker 1: At this time, all lines have been placed on mute to prevent any background noise.

At this time all lines have been placed on mute to prevent any background noise.

Speaker 1: After the speaker's remarks, there will be a question and answer session.

After the Speakers' remarks, there will be a question and answer session.

Speaker 1: If you would like to ask a question at that time, simply press star followed by the number one on your telephone keypad.

If you would like to ask a question at that time simply press star followed by the number one on your telephone keypad.

Speaker 1: If you would like to withdraw your question, again, press star 1.

I would like to withdraw your question again press Star one.

Speaker 1: At this time, I would like to turn the call over to Catherine Boine, Head of Investor Relations. Please go ahead.

At this time I would like to turn the call over to Kathryn one.

<unk> of Investor Relations. Please go ahead.

Speaker 2: Good afternoon and thank you for joining us on today's conference call to discuss the financial results for Asana's third quarter fiscal year 2022. With me on today's call are Dustin Moskovitz, Asana's co-founder and CEO , Tim Wan, our Chief Financial Officer, and Anne Raimondi, our Chief Operating Officer and Head of Business.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for <unk> third quarter fiscal year 2022 with me on today's call are Dustin moskovitz.

Co founder and CEO, Tim long, our Chief Financial Officer, and Anne Remondi, Our Chief operating officer and head of business.

Speaker 2: Today's call will include forward-looking statements, including statements regarding our financial outlook, market position, and growth opportunities. Forward-looking statements involve risks, uncertainties, and assumptions that may cause our actual results to be materially different from those expressed or implied by the forward-looking statement.

Today's call will include forward looking statements, including statements regarding our financial outlook market position and growth opportunities forward looking statements involve risks uncertainties and assumptions that may cause our actual results to be materially different from those expressed or implied by the forward looking statements.

Speaker 2: Please refer to our filings with the SEC, including our most recently quarterly report on Form 10-Q , for additional information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements.

Please refer to our filings with the SEC, including our most recently quarterly reports on Form 10-Q for additional information on risks uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

Speaker 2: In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

In addition, during today's call we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP.

Speaker 2: Reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations webpage at investors.asana.com. And with that, I'd like to turn the call over.

Reconciliation between GAAP, and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations webpage at investors <unk> com and with that I'd like to turn the call over to Dustin.

Speaker 3: Thank you, Catherine. We're very pleased to be reporting another quarter of strong top-line growth, large customer wins, and record-breaking adoption.

Thank you Catherine we're very pleased to be reporting another quarter of strong top line growth large customer wins and record breaking adoption.

Speaker 3: As you can see from our results, the momentum at Asana continued into Q3. We're now at an annualized quarterly revenue run rate of over $400 million.

As you can see from our results and momentum continued in Q3.

Now on an annualized quarterly revenue run rate of over $400 million.

Speaker 3: Quarterly revenue surpassed $100 million for the first time and grew 70% year-over-year, driven by new heights and paid customers to over 114,000. Our larger customers grew even faster, with 96% year-over-year revenue growth from customers spending $5,000 or more and considerable momentum in enterprises, with the number of customers spending $50,000 or more accelerating for the third consecutive quarter.

Quarterly revenue surpassed $100 million first time and grew 70% year over year, driven by new Heights, and paid customers to over 114000 or larger customers grew even faster with 96% year over year revenue growth from customer spending $5000 or more and considerable momentum in enterprises with the number of customers spending 50.

Dollars are more accelerating for the third consecutive quarter.

Speaker 3: Our dollar-based net retention rates increased across all cohorts, illustrating the larger expansions across the customer base. And finally, we're seeing continued record adoption, paying users topping $2 million this quarter, a new milestone.

Our dollar based net retention rates increased across all cohorts illustrating the larger expansions across the customer base and.

And finally, we are seeing continued record adoption paying users topping 2 million this quarter new milestone.

Speaker 3: Put simply, as our enterprise momentum continues, we're landing bigger and expanding faster.

Put simply as our enterprise momentum continues we're landing bigger and expanding faster.

Speaker 3: We've seen our investments in product-led growth and the enterprise succeed in the past, and we continue to see that they're paying off now.

Our investments in product led growth in the enterprise you've seen in the past and you can see that they are paying off now.

Speaker 3: The Asana WorkGraph is uniquely architected to give organizations cross-functional capabilities that deliver measurable business value, and according to IDC, an estimated 225% ROI in the first year.

The sign of Warcraft is uniquely architected to give organizations cross functional capabilities that deliver measurable business value and according to IDC and estimated 225% ROI in the first year.

Speaker 3: Today's reality is that we're more distributed than ever, and are frequently collaborating both cross-functionally and with people we've never met in person.

Today's reality that were more distributed than ever and are frequently collaborating both cross functionally and with people we've never met in person.

Speaker 3: This complexity compounds the larger and more dispersed a company is. Yet most enterprises still organize workers based on their location and function.

This complexity compounds larger and more dispersed accompany yes, yet most enterprises the organized workers based on their location and function.

Speaker 3: The Enterprise Workgraph solves this problem by coordinating the right people around the right work at a global scale.

The enterprise Warcraft solve this problem by coordinating the right people around the great work at global scale.

Speaker 3: It's why Asana is so powerful for large companies and why we're seeing such amazing growth.

So powerful for large companies and why we're seeing such amazing growth.

Speaker 3: Rather than micromanaging, leaders are free to macromanage their teams by aligning them around key objectives and the work needed to achieve them, no matter where they are in the world.

Rather than micromanaging leaders are free to macro manage our teams by aligning them around key objectives, and they're working to achieve them no matter, where they are in the world.

In the third quarter, we continued to invest in the enterprise grade infrastructure that supports our customers' needs.

Speaker 3: In the third quarter, we continue to invest in enterprise-grade infrastructure that supports our customers.

Speaker 3: At our launch event scale, we hosted thousands of attendees from all over the globe and generated significant pipelines.

At our launch event scale, we hosted thousands of attendees from all over the globe and generated significant pipeline.

Speaker 3: We showcased how two incredible companies, Okta and Xero, are better orchestrating work and achieving their growth goals with Asana.

We showcased how two incredible companies octane zero or better orchestrating work in achieving their growth goals with ESR.

Speaker 3: We also announced a new suite of enterprise-specific functionality in three key areas.

We also announced a new suite of enterprise specific functionality in three key areas.

Speaker 3: First, we released greater security and scalability features for IT, such as Enterprise Key Management, or EKM, SCIM functionality, which automates setup and syncs profile updates with Okta and Microsoft Azure AD, and better admin capabilities to deploy Asana with Audit Log API and Admin Announcements.

First we released greater security and scalability features.

Such as enterprise key management or Tam.

Skim functionality, which automated setup and sinks profile updates with okta, and Microsoft Azure, AE and better admin capabilities to deploy a sauna with audit log API and admin announcements.

Speaker 3: Second, we've made cross-functional and cross-team coordination even easier with Workflow Builder. Now it's possible for anyone to build comprehensive and repeatable processes that connect teams, regardless of location or function, and move work forward.

Second we've made cross functional and cross team coordination, even easier with workflow builder.

Now it's possible for anyone to build comprehensive and repeatable processes that connect teams, regardless of location or function and move work forward.

Speaker 3: And third, we've improved alignment and visibility for execs, including a new Goals API for linking our natively built Goals product to data and insights for mission-critical tools, and the ability to report on data trends and workloads over time in universal reporting.

And third we've improved alignment and visibility for <unk>, including a new Coles API for linking our natively built product to data and insights are mission critical tools and the ability to report on data trends and workflows over time and universal reporting.

Speaker 3: Universal reporting is more and more viable as customer deployments scale, and we see our largest customers adopting faster than the overall customer.

Universal reporting as more and more valuable as customer deployment scale, and we see our largest customers dropping faster than the overall customer right.

Speaker 3: Our company values guide how we develop our products, how we serve our customers and their missions, and how we show up and work together.

Our company values guide, how we develop our products, how we serve our customers and their missions and how we show up and work together.

Speaker 3: During the third quarter, we were honored to be recognized for our investments in product innovation and customer experience across several more platforms.

During the third quarter, we are honored to be recognized for our investments in product innovation and customer experience across several more platforms.

Speaker 3: Asana was named as a leader in IDC Marketscape Worldwide Collaboration and Community Applications 2021 Vendor Assessment.

<unk> was named as a leader in the IDC markets gape worldwide collaboration and community applications 2021 vendor assessment.

Speaker 3: We recognize Fast Company's first annual list of brands that matter.

Recognize that SaaS companies first annual list of brands that matter.

Speaker 3: And also, we are on Inc. Magazine's inaugural list of best-led companies in 2021.

Also we are on Inc. Magazine's inaugural list of Best Web company in 2021.

Speaker 3: These recognitions are outcomes of our culture and diligent pursuits of our mission.

These recognitions are outcomes of our culture and diligent pursuit of our mission.

Speaker 3: Before I pass it on to Ann, I want to call out the addition of Amit Singh to Asana's Board of Directors.

Before I pass it on to and I want to copy edition of Amit Singh to <unk> Board of directors.

Speaker 3: Amit, who serves as the Chief Business Officer for Palo Alto Networks, has impressive go-to-market leadership experience, including founding and building Google's cloud business, and leading business and operations for Google's AR and DR efforts.

Amit who serves as the Chief business Officer for Palo Alto networks has impressive go to market leadership experience, including founding and building Google's cloud business, and leading business and operations for Googles AAR and Dr efforts.

Speaker 3: Prior to Google, Amit spent 20 years at Oracle in various product, engineering, sales, and strategy roles. He will be a tremendous resource for Asana as we continue expanding our enterprise footprint.

Prior to Google Ahmet spent 20 years at Oracle in various product engineering sales and strategy roles.

Will be a tremendous resource for us as we continue expanding our enterprise footprint.

And now I'll hand, it off to him.

Thank you Dustin and sales would be here and excited to experience my first end of quarter, leading Atlantis didn't team.

Many of you who have not yet had the pleasure of meeting our briefly introduce myself. During my career I've had the good fortune of scaling organizations, including ebay survey monkey and Dundas.

The former Atlanta customer I deeply understand our customers' pinpoint and the value we can deliver for them.

Speaker 4: And as a former member of our board of directors, I spent over two years working with the Asana leadership team as the company was growing, scaling, and creating the strategy that we now have in place.

And as a former member of our board of Directors has been over two years working with him on our leadership team as a company with growing scaling and creating the strategy that we now have in place.

Speaker 4: Much of my first 90 days as COO has been spent meeting with our customers. I've been struck first by how much people love Asana, how passionate users are about the product, and how strong our brand is in terms of customer satisfaction and employee engagement.

My first 90 days as CIO has been spent meeting with our customers and then Scott first by how much people lab lasagna, how passionate users are about the product and how strong our brand is in terms of customer satisfaction and employee engagement.

Speaker 4: It's gratifying to see how we are enabling enterprises across auto manufacturing, global consumer packaged goods, high-tech, and the non-profit sector to work more effortlessly across growing teams. Leading companies such as Amazon, Japan Airlines, Roche, and thousands of others are partnering with us to empower their teams.

Gratifying to see how we are enabling enterprises across auto manufacturing global consumer packaged goods high tech and the nonprofit sector to work more effortlessly across growing team.

Leading companies such as Amazon, Japan Airlines, Roche and thousands of others are partnering with us to empower their teams.

Speaker 4: I also find it remarkable hearing CEOs, COOs, and CIOs at these companies tell us about their cross-functional pain points and the huge challenge they're experiencing keeping their teams connected during this time.

I also find it remarkable hearing Ceos.

And CIO at these competencies talent about their cross functional paint line and the huge challenge theyre experiencing keeping their teams connected during this time.

Speaker 4: these themes translated into some really amazing large company deals in Q3.

These being translated into some really amazing large company deals in Q3.

Speaker 4: In North America, we're excited to welcome Warner Music Group as a new customer. They are one of the three largest multinational recording companies in the world. They chose Asana's Enterprise Solution in 2.3 to organize, manage, and track the end-to-end process of how they identify, evaluate, and bring new artists into its various labels faster and more effectively.

In North America, we're excited to welcome Warner Music group as a new customer. They are one of the three largest multinational recording companies in the world. They told US on is enterprise solution in Q3 to organize manage and track the end to end process and how they identify evaluate and bring new artists into its merit labels faster and more effectively.

Speaker 4: I think we all have a favorite artist or two under one of their many labels. Mine are Red Hot Chili Peppers and Bebe Rexha. This was a net new customer and a significant land for our team.

Right.

We all have a favorite artists to under one of their many labels mine are red Hot Chili peppers NPV racks there.

Net new customer and a significant land parking.

Speaker 4: In Japan, we signed a strategic deal with one of the largest automotive manufacturing companies in the world. They expanded their use of Asana's enterprise solution this quarter as they focus on improving operating efficiency so teams can spend more time developing innovations for their vehicles. These new teams will be managing software development for their mobile apps, product development for things like digital keys, and new hire onboarding for thousands of employees in the platform.

Japan, we signed a strategic deal with one of the largest automotive manufacturing companies in the world. They expanded their use of the kind of enterprise deliveries in this quarter as they focus on improving operating efficiency that teams can spend more time developing in basin, where their vehicles.

These new teams will be managing software development for their mobile App product development things like <unk> and new hire onboarding for thousands of employees in the platform.

Speaker 4: This reinforces the credibility we are getting across traditional industries.

This reinforces the credibility we are getting across traditional energy.

Speaker 4: We also closed yet another big global brand in North America. One of the largest chocolate manufacturers in the world chose Asana's Enterprise Solution. They were struggling with significant time and resource management challenges and painful project handoffs across departments that were slowing down campaigns. They knew they needed a better way to manage their work in order to hit deadlines and more quickly produce the iconic marketing campaigns the brand is known for, and they chose Asana.

We also closed yet another big global brand in North America, one of the largest chocolate manufacturers in the world chose us honest enterprise solution.

Struggling with significant time and resource management challenges and painful project cannot across departments that were slowing down campaign.

They needed a better way to manage their work in order to hit deadlines and more quickly produce the iconic marketing campaign. The brand is known for and they chose this honor.

Speaker 4: Not only are we landing bigger, but we are also expanding faster. Benevity is a corporate purpose platform that helps companies like Nike, Coca-Cola, Google, Apple, and many of the Fortune 1000 empower their people to be the agents of social change through giving, volunteering, and grant making.

Not only are we landing bigger we are also expanding faster than <unk> as a corporate purpose platform that helps companies like Nike Coca Cola, Google Apple and many other fortune 1000, and empower their people to be the agent of social change.

<unk> voluntary and Grantmaking it.

Speaker 4: It is one of Western Canada's largest start-ups and another great impact company that went wall-to-wall on Asana as a net new customer this quarter. Now all departments at Benevity will use Asana to manage their work, from OKRs to revenue operations, roadmaps, and everything in between, so they can execute quickly and effectively to hit their aggressive growth goals.

It is one of western Canada's largest startup and another great impact company that went wall-to-wall honest on it as a net new customer this quarter.

Now all departments have been entity will use us on a to manage their work from <unk> to revenue operations Roadmaps and everything in between so they can execute quickly and effectively to hit their aggressive growth goals.

Speaker 4: We did another strategic multi-year deal with an important impact organization called Team Rubicon that unites the skills and experiences of military veterans with first responders to rapidly deploy emergency response teams. They chose to go wall-to-wall with Asana's enterprise solution. They deploy thousands of volunteers around the world.

We did another strategic multiyear deal with an important impact organization car team Rubicon that unites the skills and experiences of military veterans with first responders to rapidly deploy emergency response team.

They tend to go wall to wall, because one is enterprise solution. They deploy thousands of volunteers around the world.

Speaker 4: In Asana, they get critical information to their large volunteer base in the field and will be able to increase their operational agility and help people prepare, respond, and recover from disasters and crises faster.

And it's on us they get critical information to their large volunteer base in the field and we will be able to increase their operational agility and help people prepare respond and recover from disasters and crises factor.

Speaker 4: In fact, we have great momentum as an important brand that supports impact organizations everywhere, including Allbirds, The Citizenry, Chapters of the United Way, and many others. We have believed from the beginning that it's critical to have a mission that guides our work and core values.

In fact, we have great momentum as an important brand at the port impact organizations everywhere, including Albert the citizenry chapters of the United way and many others. We have believed from the beginning that it's critical to have a mission that guys are work and core values.

Speaker 4: This mission underlies Asana's foundational commitment to support impact organizations to empower their teams to pursue world-changing work more effectively.

This mission underlies our scientists foundational commitment to support impact organizations empower their teams to pursue world changing work more effectively.

Speaker 4: Whether it's with large impact organizations, the most modern, fast-growing innovators, or increasingly traditional industries, we're simply landing bigger and expanding faster. As a result, my top priorities over the next several quarters are the

There is with large impact organizations and most modern fast growing innovators are increasingly traditional industries, we're simply landing bigger and expanding faster.

As a result, my top priorities over the next several quarters.

Speaker 4: First, scaling our global enterprise go-to-market sales organization.

First scaling our global enterprise go to market sales organization. It's.

Speaker 4: where we are quickly ramping to capture the enormous enterprise opportunity. In fact, it's worth mentioning with the tremendous momentum in the enterprise over the last few quarters, we have been closing seven and eight figure deals and we're still early.

Clearly are quickly ramping to capture the enormous enterprise opportunity in fact, it's worth mentioning that the tremendous momentum in the enterprise over the last eight quarters, we have been closing seven and eight figure deals and we are still early.

Speaker 4: Second, helping our largest customers succeed and grow adoption. Our strong net expansion rates are evidence of our ability to win and expand in large enterprises, where work is by nature.

Second, helping our largest customer succeed and grow adoption. Our strong net expansion rates are evidence of our ability to win and expand in large enterprises, where work is by nature Cross functional.

Speaker 4: Third, continue our international momentum by meeting customers where they are with local language support and cultural localization, as well as leveraging partners to expand our.

Third continue our international momentum by meeting customers, where they are with local language support and cultural localization as well as leveraging partners to expand our reach.

Speaker 4: and I will continue to spend considerable time further nurturing our strategic customers and our partner relationships. We expect to further expand our partner ecosystem over the coming quarter.

And I will continue to spend considerable time further nurturing our strategic customers and our partner relationship.

We expect to further expand our partner ecosystem over the coming quarters.

Speaker 4: As you can see, we're investing to win and grow with our product-led strategy and go-to-market motion focused on customer success. With that, I will hand it over to Tim to go through our financial.

As you can see we're investing to win and grow with our product led strategy and go to market motion focused on customer success with that I will hand, it over to Tim to go through our financial results.

Speaker 5: Thank you, Anne. Q3 revenue growth represented continued momentum in the business. Revenues were 100.3 million, up 70% year over year.

Thank you Ann Q3 revenue growth represented continued momentum in the business revenues were $103 million up 70% year over year.

Speaker 5: Revenue from customers spending $5,000 or more annualized grew 96% year-over-year.

Revenue from customer spending 5000, or more annualized grew 96% year over year.

Speaker 5: This segment represented 68% of our revenues in Q3, up from 59% in the year ago quarter.

This segment represented 68% of our revenues in Q3 up from 59% in the year ago quarter.

Speaker 5: We now have over 114,000 paying customers at the end of Q3, up 7,000 in the quarter.

We now have over 114000 paying customers at the end of Q3 up 7000 in the quarter.

Speaker 5: This represents a 28% year-over-year increase. We have 14,143 customers spending $5,000 or more on an annualized basis, up 58% year-over-year. And growth in our larger customers is even stronger. We now have 739 customers spending $50,000 or more on an annualized basis, up 132% year-over-year, our third consecutive quarter of accelerating year-over-year increase.

This represents a 28% year over year increase we have 14143 customers spending 5000 or more on an annualized basis up 58% year over year and growth in our larger customers is even stronger we now have 739 customers spending 50000 or more on an annualized basis.

132% year over year.

Third consecutive quarter of accelerating year over year increase.

Speaker 5: As a reminder, we define customers spending $5,000 or more and $50,000 or more based on annualized GAAP revenues in a given quarter.

As a reminder, we define customer spending 5000 or more than 50000 or more based on annualized GAAP revenues in a given quarter.

Speaker 5: Dollar-based net retention rates increased across every cohort. Our overall dollar-based net retention rate increased to over 120%.

Based on our retention rates increased across every cohort our overall dollar based net retention rate increased to over 120%.

Speaker 5: Among customers spending $5,000 or more, our dollar-based net retention rate increased to 130%.

And when customers spending 5000 or more our dollar based net retention rate increased to 130%.

Speaker 5: And among customers spending $50,000 or more, our dollar-based net retention rate was well over 145%.

And among customer spending 50000 or more our dollar based net retention rate was well over 145%.

Speaker 5: As a reminder, our dollar-based net retention rate is a trailing four-quarter average calculation.

As a reminder, our dollar based net retention rate is a trailing four quarter average calculation.

Speaker 5: Before turning to expense items and profitability, I would like to point out that I will be discussing non-GAAP results and the balance of my remarks.

Before turning to expense items and profitability I would like to point out that I will be discussing non-GAAP results and the balance of my remarks.

Speaker 5: Gross margins came in at 90.7%, improved from 87.7% in the year ago quarter.

Gross margins came in at 97% improved from 87, 7% in the year ago quarter.

Speaker 5: Research and development was $39.1 million, or 39% of revenue. We continue to invest heavily to fuel innovation.

Research and development was $39 1 million or <unk>, 39% of revenue, we continue to invest heavily to fuel innovation.

Speaker 5: Sales and marketing was $65.8 million, or 66% of revenue, reflecting the investments and growth in both our self-serve and direct sales motion.

Sales and marketing was $65 8 million or 66% of revenue, reflecting the investments in growth in both our self serve and direct sales motion.

Speaker 5: GNA was $27.3 million or 27% of revenue.

G&A was $27 3 million or 27% of revenue.

Speaker 5: Operating loss was $41.3 million, and the operating loss margin was 41%.

Operating loss was $41 3 million in operating loss margin was 41%.

Speaker 5: Net loss was $42.5 million and our net loss per share was $0.23.

Net loss was $42 5 million and our net loss per share was <unk> 23.

Speaker 5: Moving on to the balance sheet and cash flow. Cash and marketable securities, including long-term investments at the end of Q3, were approximately $353.6 million.

Moving onto the balance sheet and cash flow cash and marketable securities, including long term investments at the end of Q3 were approximately $353 6 million.

Speaker 5: Our RPO is $190 million, up 87% from prior year.

Our RP O is $190 million up 87% from prior year.

Speaker 5: Our free cash flow is defined as net cash from operating activities, less cash used in property and equipment, and capitalized software costs, excluding non-recurrent items such as the build-out of our San Francisco office.

Our free cash flow is defined as net cash from operating activities less cash used in property and equipment and capitalized software costs, excluding nonrecurring items, such as the build out of our San Francisco office.

Speaker 5: In Q3, free cash flow was negative $29.5 million, reflecting our investment in growth and rapid onboarding of new headcount during the quarter.

In Q3 free cash flow was a negative $29 5 million, reflecting our investment in growth and rapid onboarding of new head count during the quarter.

Speaker 5: Now, moving on to our Q4 and fiscal year 2022 outlook.

Now moving onto our Q4 and fiscal year 2022 outlook for.

Speaker 5: For Q4 fiscal 2022, we expect revenues of $104.5 million to $105.5 million, representing growth rates of 53% to 54% year over year.

For Q4 fiscal 2022, we expect revenues of $104 5 million to $105 5 million representing growth rates of 53% to 54% year over year.

Speaker 5: We expect non-gap loss from operations of 53 million to 51 million.

We expect non-GAAP loss from operations of 53 million to $51 million.

And we expect net loss per share of <unk> 28 to 27.

Assuming basic and diluted weighted average shares outstanding of approximately $187 million.

Speaker 5: Looking out to the full fiscal year 2022, we are raising our previous outlook and now expect revenue to be in the range of $371 million to $372 million, representing a growth rate of 63% to 64% year-over-year. We expect non-GAAP loss from operations of $166 million to $164 million.

Looking out to the full fiscal year 2022, we are raising our previous outlook and now expect revenue to be in the range of 371 million to $372 million, representing a growth rate of 63% to 64% year over year, we expect non-GAAP loss from operations of $166 million to 164.

$4 million.

Speaker 5: And we expect net loss per share of $0.96 to $0.95, assuming basic and diluted weighted average shares outstanding of approximately $176 million.

And we expect net loss per share of <unk> 96 to 95, assuming basic and diluted weighted average shares outstanding of approximately $176 million.

Speaker 5: With an addressable market of over 1.2 billion knowledge workers, the industry has tremendous growth ahead and our success with some of the most valuable companies in the world demonstrates our early leadership position.

With an addressable market of over $1 2 billion knowledge workers. The industry has tremendous growth ahead, and our success with some of the most valuable companies in the world demonstrates our early leadership position as.

Speaker 5: As you can see from our outlook, we're investing to grow rapidly and win through industry-leading innovation and operational execution. And with that, I'll turn it back to the

As you can see from our outlook, we're investing to grow rapidly and win through industry, leading innovation and operational execution.

And with that I'll turn it back to the operator for questions.

Great. Thanks. This is Katherine I'm, just going to jump in we have a couple of analysts who are on airplanes that are kind enough to still.

Put out some questions so I'm going to read them aloud. So as a reminder for those of you on the phone if you do on the queue for questions feel free to hit Star followed by the number one and we will get you in the queue.

But for the first question, we have a question from Rob Oliver of Baird.

I'm going to read his question because he had E mail it in from the plane.

The question is this.

Speaker 2: Large deal deployments. You guys have called out a few 50K and 25K seat deployments in the past, and I think you cited a very large deal that helped the billings last quarter. Are those size deployments still outliers, or are you starting to see deals approach that size? Can you give us a sense for how large enterprise deployments are trending, and if you are seeing those grow, given the recent enterprise enhancements you rolled out, such as security features at the scale event?

Large deal deployments you guys have called out a few 50, K and 25 K seat deployments in the past and I think you cited a very large deal that helped billings last quarter are those sized deployments still outliers or are you starting to see deals approach that size can you give us a sense for how large enterprise deployments are trending and if you are.

Seeing those grow given the recent enterprise enhancements you rolled out such as security features at the scale event.

Catherine I'm happy to take that.

Speaker 4: So we are seeing strong growth in both landing larger and expanding faster as we shared our 50K customers accelerated for the third quarter in a row. And I feel like we're really seeing it because work management is a business imperative now. Definitely our enterprise enhancements are resulting in customers choosing to partner with us to help them solve their most strategic mission critical cross functional initiatives. For example, Warner, which I mentioned, it's one of their kind of most important initiatives across the company to identify and onboard new artists.

So we are seeing strong growth in both landing larger and expanding faster as we shared our fifth U K customers accelerated for the third quarter in a row.

And I feel like we're really seeing it because work management is a business imperative now definitely our enterprise enhancements are resulting in customers choosing to partner with us to help them solve their most strategic mission critical cross functional initiatives for example, Warner which I mentioned its one of their most important <unk>.

<unk> across the company and to identify and onboard new artists.

Speaker 2: Great. I'm going to queue up the next question, too. The next question will be from Steve Enders, and following that will be Itay Kidron from Oppenheimer. So next question from Steve Enders, please.

Great I'm going to keep the next question to the next question will be from Steve vendors and following that we'll be <unk> Kidron from Oppenheimer. So next question from Steve Enders. Please.

Speaker 6: about the scale event. You guys recently had a lot of exciting announcements from enterprise, you know, automation, security, etc. What's been the early customer feedback on that and traction? And I have a follow-up.

Thanks, Beth scale event, you guys recently had a lot of exciting announcements around enterprise automation security et cetera.

What's been the early customer feedback on that and traction and.

A follow up.

Speaker 4: Yeah, thanks for that question. The early customer feedback has been incredibly positive. Many of the features we announced were based on customer feedback. So we're excited to deliver features that our customers want. And we're excited to see it help net retention as more customers expand with us because of their ability to scale. If there's additional product questions, I'll have Dustin also chime in.

Now that early thanks for that question and the early customer feedback has been incredibly positive. Many of the features we announced were based on customer feedback. So we're excited to deliver features that our customers want and we're excited to see it help net retention as more customers expand with us because of their ability.

To scale.

There is additional product questions I'll have dusted off the chime in.

Yes, I think you said you had a follow up.

Speaker 6: Yeah, so follow-up maybe for Tim on billings. A little bit of a slowdown. You know, I think the previous question mentioned, you know, maybe large deal impacts in the last quarter. Anything to note for this quarter's billings and what does the pipeline look like? Thank you.

Yes, a follow up maybe for Tim on billings.

David slowdown.

The previous question you mentioned.

Maybe large deal impacts in the last quarter anything of note this quarter's billings.

What does the pipeline alright. Thank you.

Speaker 5: Yeah, I would say there's nothing to note. You know, I do want to remind, you know, the investors on the call that about a third of our customer base are still on monthly. So Billings isn't really a perfect guide or a perfect barometer for our growth rate. So, but really nothing to note from a Q4 standpoint.

Yeah, I would say, there's nothing to note I do want to remind.

The investors on the call that about a third of our customer base are still on monthly so billings isn't really a perfect guy or a perfect barometer for our growth rate.

So, but really nothing to note from a from a Q4 standpoint.

Speaker 6: Okay, thanks, congrats on the $100 million and have a great rest of the quarter.

Okay, great and congrats on the $100 million.

Thanks, David.

Speaker 2: Thank you. The next question is going to be from Itay Kidron from Oppenheimer, and after that will be Stan Vlasky from Morgan Stanley . Itay, please.

Thank you. The next question is going to be from <unk> Kidron from Oppenheimer and after that we'll be stands lasky from Morgan Stanley. Please.

Speaker 7: Thanks. Hey guys, a great quarter team. I wanted to dig into the numbers a little bit and get a little bit more color behind the

Thanks, Hey, guys, great quarter, Steve I wanted to dig into the numbers, a little bit and get a little bit more color behind.

Speaker 7: net dollar expansion, the improvement over there. Can you give us a little bit more qualitative, perhaps, breakdown of what's been driving that, how much of that is seat-driven versus shifting pricing plans more towards the business side from premium?

Net dollar expansion.

Improvement over there can you give us a little bit more qualitative perhaps a breakdown of what's been driving that how much of that is driven versus shift in pricing plans more towards the business from from premium.

Yes.

Great question, Hey, tight so I would say our net expansion rate.

Ross all segment increased.

Particularly in the <unk> 10 above they went from 125 to 130 and that that segment of revenue grew 96% year over year and I would say the.

Speaker 5: And that segment of revenue grew 96% year-over-year. And I would say it's really a combination of both seed growth and customers moving up the value chain from business to enterprise. So we just recently today announced that we ended the quarter with over 2 million seeds, and we're incredibly proud of the way we're growing the business through new logos and more seed deployment. Okay, very good.

It's really a combination of both seat growth and customers moving up the value chain from from business to enterprise.

So we just recently today announce that we ended the quarter with over 2 million seats and we're incredibly proud of the way we are growing the business through new logos and more seat deployment.

Okay very good and then maybe a follow Fran.

Speaker 7: Great to hear you're a Red Hot Chili Pepper fan. So that's great to hear. So maybe on that tone, what are some of the dark necessities you will have to employ over there internally in order to drive the company scale-wise to a $2 billion, $3 billion, $4 billion in revenue over the next few years?

Great to hear your Red Hot Chili Pepper fan, so thats great to hear so maybe on that.

Maybe on that John what are some of the darker necessities youll have to.

Employ over there internally in order to drive the company scale wise to a 2 billion 3 billion $4 billion in revenue over the next few years.

Speaker 4: I like the reference. So, really, my priorities as I dived in over the last 90 days have been meeting with executives at some of the largest organizations in the world. And the cross-functional pain points are so clear and particularly acute as organizations are thinking about the future of work. So, based on these interactions with customers, really, my priorities are to continue to grow our customer-facing teams around the world and, in particular, continue to invest in supporting faster adoption and expansion. As we shared, as we're landing bigger, the deployments are bigger and they're really focused on ensuring that we're delivering value as fast as possible. So, really excited to invest in our post-sales teams, in particular.

I like the reference so really my priorities as I dive down over the last 90 days I've been meeting with executives at one of the largest organizations in the world and the cross functional pain points are so clear and particularly acute as organizations are thinking about the future of work so based on that.

Interactions with customers really my priorities are to continue to grow our customer facing teams around the world and in particular continuing to invest in supporting faster adoption and expansion as we shared is we're landing bigger the deployments are bigger and there.

Really focused on ensuring that we're delivering value as fast as possible. So really excited to invest in our post sales teams in particular.

Speaker 7: Got it. Maybe I can just push on this a little bit. And if you're landing bigger, can you also...

Got it maybe I can just push on that a little bit.

And you if you are lending bigger can you also.

Speaker 7: talk on whether you're also landing in multiple spots within an organization when you land bigger or is it still you're landing within one group perhaps more people within one group so how much of this is landing in multiple places versus just landing big within a single group?

Talk on whether Youre also lending in multiple spots within organization when you land bigger or is it still.

Atlantic within one group, perhaps more people within one group. So how much of this is lending in multiple places versus just landing big within a single group.

Speaker 4: Yeah, that's a great question. We are seeing that we're landing in multiple teams at the same time. We mentioned a couple of great customer examples, including Benevity, where we landed wall-to-wall. So we're being adopted not only by every department, but in particular, to really tackle those cross-department initiatives. So that's where we're really excited to see is that at the C-level, we're being chosen for those really strategic cross-departmental initiatives that everybody in the company has to have clarity around.

Yeah. That's a great question, we are seeing that we're landing in multiple teams at the same time, we mentioned a couple of great customer examples, including the inevitable, where we landed wall to wall. So we're being adopted not only by every department, but in particular at.

To really tackle those cross Department initiative.

That's where we're really excited to see is that at the C level were being chosen for those really strategic cross departmental initiative that everybody in the company has to have clarity around very good alright. Good luck. Thank you. Thank you. Thanks <unk>. The next question is from Stan <unk> from Morgan Stanley and just.

Speaker 2: All right. Good luck. Thank you. Thank you. Thanks, Itay. The next question is from Stan Zlotsky from Morgan Stanley , and just up next after that will be Andrew Kudzig-Asfari from Barenberg. But the mic is open for you, Stan.

Up next after that will be Andrew can take as far away from their enberg, but the mic is open for you Stan.

Speaker 8: Excellent. This is actually Keith Weiss sitting in for Stan Slotsky this evening. Very nice quarter, guys, and a pleasure to meet you. It's great how you could really know your audience just throughout Red Hot Chili Peppers, and now we're all like, Dustin who? We've got Anna. Way to win over the crowd there. That was pretty impressive.

Excellent. This is actually Keith Weiss sitting in for Stanislawski. This evening.

Very nice quarter guys.

And a pleasure to meet you.

It's great.

Really no your audience just threw out Red Hot Chili peppers, and now are all like Duston, who we've got Anna.

Uh huh.

Sure way to win over the crowd.

Reimbursement.

Speaker 8: I wanted to ask a question about engagement. You guys have had an outstanding couple of quarters here, new customer adoption, really ramping up, hitting that 7,000 a quarter mark and hitting that pretty consistently. And you mentioned customer support. When you look at the customer base and as you've

I wanted to ask a question about engagement you guys have had a outstanding.

Outstanding.

A couple of quarters here, new customer adoption really ramping up hitting that 7000 quarter, mark and hitting that pretty consistently.

You mentioned sort of customer support when you look at the customer base and as you.

Speaker 8: sort of built it out so quickly. Have the engagement metrics kept pace, meaning like the daily active users, monthly active users of the solution, has that been kind of keeping pace with the rapid expansion of the customer count? Then I have a follow-up for Kim.

Sort of built it out so quickly have the engagement metrics kept pace, meaning like the daily active users monthly active users. The solution has that been kind of keeping pace with the rapid expansion of the customer count and then I have a follow up for Tim.

Okay.

Speaker 3: I guess I'll start with that. Thanks for the question, Keith. I do think it depends on the metric, but when I think through the types of things you named, they all seem pretty strong. In fact, we talked a lot in the last earnings call about seeing sort of record metrics across the funnel in terms of conversion, adoption, retention. Those all tie back to those types of engagement metrics. So the accounts seem really healthy.

I guess I'll start with that thanks for the question Keith.

I do think.

It depends on the metric, but when I think through the types of things you name it.

All seem pretty strong in fact, we talked a lot in the last earnings call about seeing.

Sort of record metrics across the funnel in terms of.

Conversion adoption retention those are those all tie back to those types of engagement metrics. So that the accounts seem really healthy.

Speaker 3: And I think that's even more true when you look at those larger customers who are landing bigger and expanding faster, but we don't get to expand unless the engagement is there. That's pretty clear, so I think you should see that as a direct indicator of the success of the employees within those organizations engaging well.

And I think that's even more true when you look at those larger customers, we're landing bigger in expanding faster, but we don't get to expand unless the engagement is there.

That's pretty clear so I think you should see that as a direct indicator of the success of the <unk>.

Floyd within those organizations engaged well.

Speaker 8: Got it. That's super helpful. And then for Tim, when we look at the

Got it.

And then for Tim when we look at the.

Speaker 8: profitability curve. And not that you sort of didn't tell us this was going to be happening, you're going through the investment cycle, but the operating losses are expanding into the back half of the year. You expect a bigger operating loss.

Profitability curve.

And not that you sort of didn't tell us this is going to be happening youre going through the investment cycle, but the operating losses are extending into the back half of the year you expect a bigger operating loss in Q4, as we think about FY 'twenty three and the forward year.

Speaker 8: in Q4. As we think about FY23 in the forward year,

Speaker 8: Are we still thinking about kind of Q4 being the peak in terms of operating losses, and then we'll be sort of more on the trajectory towards improving profitability into FY23, and are we still kind of aligned to the schedule towards the approaching break-even that we had talked about around Q4?

Still thinking about kind of Q4 being the peak in terms of operating losses, and then will it be sort of more on the trajectory towards improving profitability into FY 'twenty three and are we still kind of aligned to that schedule towards the approaching breakeven that we had talked about.

Around the IPO.

Speaker 5: Yeah, what I would say is we'll provide a more updated view kind of on both the growth rate and profitability on the earnings call. But, you know, we fundamentally believe that this is a huge market opportunity and that we'll continue to invest into the opportunity.

Yes, what I would say is we will provide a more.

A more updated view kind of on both the growth rate and profitability on the next earnings call, but we fundamentally believe that this is a huge market opportunity and that will continue to invest into the opportunity.

Speaker 5: But on a full year basis, Keith, I think if you kind of look at the numbers on a free cash flow margin, we did improve on a full year basis, year over year.

On a full year basis, Keith I think if you kind of look at the numbers on a free cash flow margin.

We did improve on a full year basis year over year.

Speaker 5: And there is some timing just related to quarterly fluctuations even within cash flows.

And there was some timing just related to quarterly fluctuations even within cash flows.

Got it okay. Thank you.

Speaker 2: Great. Our next question is going to come from Andrew DeCaspari from Barenburg, and behind that will be Brent Braceland from Piper Sandler. So, Andrew, the mic is yours.

Great. Our next question is going to come from.

Andrew sorry from Aaron Berg and behind that will be Brent <unk> from Piper Sandler So Andrew the Mic is yours.

Speaker 9: Thanks, Catherine. Maybe one question that you probably get a lot on competition. I'm just wondering if you've seen any changes this quarter relative to what you've seen in the past. And in particular, I know Microsoft has introduced a new product. They're making changes to Teams. And just wondering if that at all has an impact on what you see in the market right now?

Thanks Catherine.

Maybe one question that you probably get a lot on competition I'm just wondering if you've seen any changes last quarter relative to what you've seen in the past and in particular.

Microsoft has introduced a new product they are making changes to change and just wondering if that is that it all has an impact to what you see in the market right now.

Speaker 4: Yeah, hey, thanks for that question. We're not really seeing a material change in the competitive environment overall. But there's definitely increased awareness and faster adoption of work management across companies of all sizes. And so because of that acceleration and the need to manage distributed work, the topic of work management is moving higher up the strategic chain in companies. So we're really excited that we're talking to CIOs and C-level executives about how Asana can help them solve their most strategic and complex cross-functional needs. So I'd say what's really changing is more greater awareness of the pain points and then greater desire to partner with someone who can scale really rapidly with them.

Yeah, Hey, Thanks for that question, we're not really seeing a material change in the competitive environment overall, but theres definitely increased awareness and faster adoption of work management across companies of all sizes, and so because of that acceleration and the need to manage distributed work the topic of work management has moved.

The higher up the strategic change <unk> companies. So we're really excited that we're talking to CIO C level executives about how <unk> can help them solve their most strategic and complex cross functional needs. So I would say whats really changing is more greater awareness of the pain points and then greater desire to partner with someone who can scale really rapidly with.

Speaker 3: And just to address the sort of direct part of your question too, we do see that Microsoft has a few different ways of thinking about work management. So they have Microsoft Planner, Microsoft Project, Lists, Flow. The thing that we compete with most often is actually Microsoft Excel, because it's part of the status quo of emails, documents, and meetings. So a vast majority of teams are still not using any form of work management solution in the space. And then, yeah, so you mentioned they introduced a new product loop. I think that is a little more about sort of document centric collaboration. So that's always been something that we've sort of competed with a little bit less. We're all about.

And just a.

The address the sort of direct part of your question too.

We do see that Microsoft has a few different ways of thinking about work management. So.

They have Microsoft planner makes our project list flow the thing that we compete with most often is actually micros, Microsoft Excel because it's part of the status quo of emails documents and meetings. So vast majority of teams are still not using any form of work management solution in the space.

And then so you mentioned the <unk> introduced a new product look I think that is a little more about sort of documents centric collaboration. So that's always been something that we've sort of continued with a little bit less we're all about.

Speaker 3: the coordination part of collaboration. So really helping teams get clarity about the plan and who's doing what by when and coordinating strategic imperatives.

The coordination part of collaborations are really helping teams get clarity about the plan and who is doing what by when and coordinating strategic imperatives.

Thank you.

Speaker 2: Great. Our next question is going to be from Brent Braceland at Piper Sandler, and following that will be Brent Phil from Jeffries. But for now, Brent Braceland, you have the mic.

Great. Our next question is going to be from Brent bracelet Piper Sandler and following that will be.

Brent Thill from Jefferies pronounced Brent baseline you have the mic.

Speaker 10: Thank you and good afternoon. Maybe one for Dustin and Ann and a follow-up for Tim.

Thank you and good afternoon.

And maybe one for <unk> and a follow up for Tim.

Speaker 10: If I look at the 2 million page subscriber milestone that you reported, one thanks for that, but it looks like by my math, it took about 11 years to add the first million page subs. You've added the next million in the last three years.

If I look at the $2 million.

Paid subscriber milestone that you reported one thanks for that but it looks like by my math. It took about 11 years to add the first million paid subs you've added the next $1 billion in the last three years.

Speaker 10: Uh, which is, you know, obviously a testament to the expand motion that's happening here. But if I look at it on a seat basis, it's only about.

Which is obviously a testament to the expand motion that's happening here, but if I look at on a seat basis. It's only about 18 used paid users per customer that is up from 16.

Speaker 10: 18 paid users per customer. That is up from 16. Is that just a function of how early we are? Is there kind of more opportunity to accelerate the expands? We'd love to get just your overall view as you think about the opportunity and potentially even the expand opportunity to accelerate further relative to just 18 paid users on average per customer.

Is that just a function of how early we are is that is there more opportunity to accelerate the expands we'd love to get just your overall view as you think about the opportunity in <unk>.

And potentially even the expand opportunity to accelerate further relative to just 18 paid users on average per customer.

Speaker 3: Yeah, I think that's a it's a great question. I think it's

Yes, I think thats great.

Great question I think it's think about primarily as a function of the fact that we have a hybrid business. So it's composed of everything from very small businesses, including one and two person companies to the largest enterprises in the world literally fortune five companies.

Speaker 3: think of that primarily as a function of the fact that we have a hybrid business. So it's composed of everything from very small businesses, including one- and two-person companies, to the largest enterprises in the world, literally Fortune 5 companies.

Speaker 3: And so when you think about 114,000 customers, the vast majority of them are going to be the S&Bs or the.

And so when you think about 114000 customers. The vast majority of them are going to be.

Smbs are the B b.

Speaker 3: the very small SMBs, and so that just sort of drags down the average. But we are seeing a lot of the growth happen in those larger customers. And so a lot of the revenue growth is gonna come from there, but you may still see a lot of the sort of raw logos in the customer accounts coming from the SMBs, so I wouldn't necessarily expect the average count to change all that much, even though we can clearly see that the revenue is coming more upmarket.

It's a very small smbs.

And so that just sort of that just sort of drags down the average.

But we are seeing a lot of the growth happen in those larger customers.

So a lot of the revenue growth is going to come from there, but you may still see a lot of the sort of.

Railroad goes into customer accounts coming from the SMB. So I wouldn't necessarily expect the average balance to change all that much even though we clearly see.

But the revenue is coming more up market.

Speaker 10: Totally makes sense there. And then, Tim, just a follow-up for you.

Totally makes sense, there and then Tim just a follow up for you really strong acceleration in the 50 K customer cohort.

Speaker 10: really strong acceleration in the 50k customer cohort.

Speaker 10: that customer count accelerating again this quarter, but the implied is that we are seeing deceleration in the SMB, the smaller customer cohort. Were there any anomalies this quarter relative to churn or?

That customer count accelerating again this quarter, but the implied is that we are seeing deceleration in the SMB. The smaller customer cohort was there any anomalies this quarter relative to churn or or monthly.

Speaker 10: or monthly, you know, the monthly subscribers causing a little bit of a de-sell there. It's still growing nicely, but it did de-sell from last quarter. So any sort of color commentary on what happened.

<unk> subscribers, causing a little bit of a DSL there, it's still growing nicely, but it did DSL from last quarter. So any sort of color commentary on what happened in in the smaller customer cohort this quarter that caused the slight diesel.

Speaker 10: in the smaller customer cohort this quarter that caused a slight decel.

Speaker 5: Yeah, there's nothing really directly to point to. I mean, I think where a lot of the investments that we've been making has been really around moving up market, both on the 5K and the 50K, and you now kind of see that the 5K and above customer base is about 68% of our revenue and growing 96%. And I think, obviously, on the smaller teams, you'll have some fluctuations here and there, but it's still growing at a very healthy clip.

Yes.

Theres nothing really directly to point to I mean, I think where a lot of the investments that we've been making has been really around moving up market. Both on the 510 to 50 K and you now see that the <unk> 10 above customer base is about 68% of our revenue and growing 96% and I think obviously on the.

The smaller teams do youll have some fluctuations here and there, but it's still growing at a very healthy clip.

Speaker 2: Got a helpful color there. Thank you. Great, thanks, Brent. And the next question is from the other Brent. Brent Thill from Jeffries, and after that will be Mark Murphy from JP Morgan. Brent Thill.

Got it helpful color there. Thank you.

Great. Thanks, Brent and the next question is from the other Brent Thill from Jefferies and after that we'll be Mark Murphy from J P. Morgan Grenfell.

Speaker 11: Thanks, Katherine. Tim, just curious, kind of underneath the surface, you know, there's a lot of surface level metrics, decelerating revenue, RPO and, and billings down, realizing you have tough comps, but I think many are asking, is there anything you're seeing behind the scenes? Other than just the tough comps? Can you give us any color of, I know you've said don't look at billings, but yeah, curious if there's anything else that we should point out.

Thanks, Catherine Tim.

Just curious kind of underneath the surface.

There's a lot of surface level metrics decelerating revenue.

And billings down realizing you have tough comps, but I think many are asking is there anything you're seeing behind the scenes.

Other than just the tough comps.

Can you give us any color.

I know you've said don't look at billings, but.

Yes, curious if theres anything else that we should point out.

Speaker 5: Yeah, I mean, I don't, I don't think like, if I step back, and you know, obviously,

I don't think like if I step back and obviously.

<unk>.

Speaker 5: how we kind of tend to look at the health of the business obviously one is revenue growth the other is

How do we kind of tend to look at the health of the business. Obviously, one is revenue growth. The other is the way we want to grow our business right and we want to grow our business through adding more new logos and having those logos continue to adopt and expand and I think you see that with our seats and then over time the marginal cost of the marginal cost to have them increase our grow becomes less.

Speaker 5: The way we want to grow our business, right? And we want to grow our business through adding more new logos and having those logos continue to adopt and expand. And I think you see that with our seats. And then over time, the marginal cost or the marginal cost to have them increase or grow becomes less.

Speaker 5: because based on our net expansion rate, for both our 5K and our 50K, you see that they've improved to pre-pandemic levels now, 130% on the 5K and above, and then over 145K on the 50K and above.

Because based on our net expansion rate for both our five K and a 50 K youll see that.

They've improved to pre pandemic levels now, 130% on the 510 above and then over 145 K on a 50 K and above.

Speaker 5: But, you know, your question is really about the billings and RPO. And, you know, I think we've always said, because a third of our base is still on monthly, that billings isn't the best indicator for how we grow our business over time.

But.

Your question is really about the billings in our I think we've always said because a third of our base is still on monthly that billings isn't.

Indicator for how we grow our business over time.

Speaker 3: And I'll just add, I think that, you know, part of your question is, is that a harbinger of doom or something like that? And so I'll just reiterate, we're really excited about the enterprise momentum and we raised guidance for next quarter by 12 million.

And I'll, just add I think that.

To your question is that a harbinger of doom or something like that and so I'll just reiterate we're really excited about the enterprise momentum and we raised guidance for next quarter by $12 million.

Yes.

Great. Thank you thanks for the color and clearly for Anne on International if you kind of frame the.

Speaker 11: Great, thank you. Thanks for the color. And quickly for Anne, on international, if you kind of frame the top one or two priorities, I know you mentioned your third priority is continue that momentum, but if you had to drill in, what is the focus there? How would you characterize the one, two as it relates to the top one priority?

The top one or two priorities I know you mentioned that.

Your third priorities continue that momentum, but if you had to drill in.

Where does the focus there how would you characterize the.

The <unk> as it relates to the top topline priority.

Speaker 4: Yeah, we're really excited about the opportunity in an international. So we're continuing to invest in expanding language support, localizing content and resources to support customers. We had opened a new office in Singapore, so we're growing that rapidly. And then really, it's increasing sales and marketing capacity across all of these new offices and regions. So lots of hiring to support our customers. And then last but not least, leveraging partners. We're excited about our channel partners internationally to help us expand our.

We're really excited about the opportunity.

International So we're continuing to invest in expanding language support.

<unk> content and resources to support customers. We had opened a new office in Singapore are growing that rapidly and then really it's increasing sales and marketing capacity across all of these new offices and regions. So lots of hiring.

Our customers and then last but not least leveraging partners are excited about our channel partners internationally to help us expand our reach.

Speaker 12: Thank you.

Thank you.

Speaker 13: That's fantastic. And the next question comes from Mark Murphy at J.P. Morgan. Yes. Thank you very much, Justin.

Fantastic and the next question comes from Mark Murphy of Jpmorgan.

Yes, thank you very much Justin.

Speaker 14: I am interested in what you view as your highest priority R&D kind of innovation vectors heading into next fiscal year. For instance, is there anything bubbling up that is very highly requested in terms of features from customers or premium features you're building in that could kind of drive ongoing uplifts?

I am interested in what you view as your highest priority R&D kind of innovation vectors heading into next fiscal year. For instance is there anything bubbling up that is very highly requested in terms of features for customers or <unk>.

Premium features Youre building and that could kind of drive ongoing uplift.

Yeah. That's a great question. So I'll just reiterate that we have the scale events about a month ago and that was a combination of announcing some new things and also previewing within our future.

Speaker 3: Yeah, that's a great question. So I'll just reiterate, we had the scale event about a month ago, and that was a combination of announcing some new things and also previewing what's in our future.

Speaker 3: And so there are three big categories. The first was more security and scalability features for IT. So we announced enterprise key management, SCIM functionality, integrations with Okta, Microsoft Azure, AD, admin capabilities. Honestly, there's just a lot more of that coming. There are plenty more requests in that vein of things.

And so there are three big categories. The first was more security and scalability features for it.

We announced enterprise key management skin functionality integrations, with Okta, and Microsoft Azure EDI admin capabilities.

Honestly, there's just a lot more of that coming there are plenty more requests in that vein of things. Additionally, we announced we're making cross functional and cross team coordination easier with the workflow store and the workflow builder. So those are not yet released that's something I've talked about across a few earnings calls as we've been working towards throughout the entire year. So we're really excited about.

Speaker 3: Additionally, we announced we're making cross-functional and cross-team coordination easier with the Workflow Store and the Workflow Builder, so those...

Speaker 3: are not yet released. That's something I've talked about across a few earnings calls as we've been working towards.

Speaker 3: throughout the entire year. So we're really excited about that launch at the end of the fiscal year. And even there, there's a lot we've been building and there will be a lot more to do after that to really go deeper with the most important workflows to our customers. So a lot of how we think about the roadmap is what integrations they need to make those end to end workflows work really well and just what we're hearing from customers as they adopt, helping them get the next.

That launch at the end of the fiscal year.

And even there there is a lot we've been building and there will be a lot more to do after that to really.

Go deeper with the most important workflows to our customers. So a lot of how we think about the road map is what integrations they need to make those internal workflows worked really well and just what we're hearing from customers as they adopt helping them get the next the next important functionality in the margin.

Speaker 15: the next important function not in the margin. And then finally, we also talked about improved alignment and visibility for execs. We talked about our new goals API, bringing data in from other sources to help you report on goals in real time. Improvements to universal reporting. There's a lot more we're doing in those areas to improve goals and reporting and portfolios and give those really great high level views for executives.

And then finally, we also talked about improved alignment and visibility for exact as we talked about our new golf API, bringing data in from other sources to help you report on goals and real time improvements Universal reporting there is a lot more we're doing in those areas to improve goals and reporting and portfolios and get those really great high level views for executive.

Speaker 15: And then additionally, another huge pillar for us is just helping make customers really successful throughout their life cycle. So helping them adopt really quickly, adopt into those workflows and adopt into the product in general. And all of that together levels up to contributing to helping us, again, land bigger and expand faster with those larger enterprises. So that's really the big theme for our roadmap next year.

<unk>.

And then additionally, the another huge pillar for US is just helping make customers will be successful throughout their lifecycle, so helping them adopt really quickly.

Opt into those workflows and adapting to the product in general and all of that together levels after contributing to helping us again land land bigger and expand faster with those larger enterprises, that's really the big theme for our roadmap next year.

Speaker 14: Okay. Thank you. That's very helpful. And then, Tim, as a quick follow-up, do any of your ultra-large deployments cross the threshold of 1 percent of revenue yet? Because you had landed some very large ones, especially over the summer. Or do you see that kind of potential developing in the next couple of years? Or does it feel like the rest of the business is growing so rapidly that it wouldn't quite get there?

Okay. Thank you that's very helpful.

And then Tim as a quick follow up do any of you are ultra large deployments cross the threshold of 1% of revenue.

Yet because you had landed some very large ones, especially over the summer.

Or do you see that kind of potential developing in the next couple of years or is it does it feel like the rest of the business is growing so rapidly that it.

Wouldn't quite get there.

Speaker 5: Yeah, I would say not at 1%, but getting very close to, we do have probably a large employment that will get close to 1%.

Yes, I would say not at 1%, but we're getting very close that we do have probably a large deployment that will get close to 1%.

Okay. Thank you very much.

Speaker 2: Great. Thank you. And we have for our last but not least, we have Pat Wall-Ravens from JMP. Pat.

Great.

And we have for our last last but not least we have Pat walraven from JMP Pat.

Speaker 1: Thanks so much. This is Joe Marincic. I'm for Pat. Just a quick one here for Tim. Is there anything you'd call out on the gross margin outperformance? And then how should we think about that, the trajectory of that metric going forward? Thanks so much.

Thanks. So much this is John Ramsay counter Pat I, just had a quick one here for Tim is there anything you'd call out on the gross margin outperformance and then how should we think about that the trajectory of that metric going forward. Thanks. So much.

Speaker 5: Yeah, I think the gross margin of performance generally has really been a factor of our architecture and how we built the product. And we're really benefiting from the investments we've made in R&D. I would expect that to kind of continue to be in the high 80s and right at 90, so somewhere around there over time, yeah. No real change.

Yes.

I think the gross margin outperformance generally has really been a.

A factor of our architecture and how we built the product and we're really benefiting from the investments we've made in R&D.

I would expect that to kind of continue to be in the high eighties and right at 90, so somewhere around there overtime.

No real change.

Thank you so much.

Speaker 2: Thank you, and that's our last question for today. Thanks very much for joining our call today. I know it's a really busy earnings week, and we appreciate your time and dedication to following Asana as usual. Look forward to seeing you guys either virtually or on the road sometime soon, and thank you again.

Thank you and that's our last question for for today, Thanks, very much for joining our call today I know, it's a really busy earnings week and we appreciate your.

Your time and dedication to following a sona as usual look forward to seeing you guys either virtually or on the road sometime soon and thank you again.