Q3 2024 Asana Inc Earnings Call

Okay.

Speaker 1: Thank you for standing by and welcome to Asana's third quarter fiscal year 2024 earnings conference call. At this time, all participants are in a listen-only mode. For the first speaker presentation, there will be a question and answer session.

Thank you for standing by and welcome to Sonic third quarter fiscal year 2024 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation that will be a question and answer session to ask a <unk>.

Speaker 1: to ask a question during the session, you will need to press star 1 1 on your telephone.

Question during the session you will need to press star one one on your telephone.

Speaker 1: to remove yourself from the question queue, please press star 11 again.

Remove yourself from the question queue. Please press star one again I would now like to hand, the call over to Katherine blond <unk> head of Investor Relations. Please go ahead.

Speaker 1: I would now like to hand the call over to Catherine Buan, head of investor relations.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for us on the third quarter of fiscal 2024 with me on today's call are Duston Moskovitz, Sonic co founder and CEO and me Monday, our Chief operating officer, and head of business and Tim <unk>, Our Chief Financial Officer.

Speaker 2: Thank you for joining us on today's conference call to discuss the financial results for Asana's third quarter fiscal 2024. With me on today's call are Dustin Moskovitz, Asana's co-founder and CEO , Anne Rimande, our chief operating officer and head of business, and Tim Wan, our chief financial officer.

Sure.

Today's call will include forward looking statements, including statements regarding our expectations for free cash flow, our financial outlook of strategic plans market position and growth opportunities.

Speaker 2: Today's call will include forward-looking statements, including statements regarding our expectations for free cash flow, our financial outlook, strategic plans, market position, and growth opportunities.

Speaker 2: 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.

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 recent and report on Form 10K, and quarterly report on Form 10Q 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 recent annual report on Form 10-K, and 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.

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, prepare a dent accordance with gap. Reconciliation between gap and non- GAAP financial measures, and a discussion of limitations of using non- GAAP measures , versus their closest gap equivalents, are available in our earnings release, which is posted on our Investor Relations webpage at investors.assana.com. And with that, I'd like to turn the call over to Dustin.

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 reconciliations 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, though to Sarnia Dot com.

And with that I'd like to turn the call over to Dustin.

Thank you Catherine and thank you all for joining us on the call today.

Speaker 3: In Q3, we beat our top and bottom line expectations again and continue to build on our leadership in the enterprise.

In Q3, we beat our top and bottom line expectations again and continued to build on our leadership in the enterprise.

Speaker 3: Q3 revenues grew 18% year-over-year, and non-gap operating loss margins were 5.9%. An improvement of over 30 percentage points versus the year-ago period. Top line growth was led by our...

Q3 revenues grew 18% year over year and non-GAAP operating loss margins were five 9% an improvement of over 30 percentage points versus the year ago period.

Topline growth was led by our continued success in the enterprise.

Speaker 3: Revenues from our core customers, where those spending $5,000 or more on an annualized basis, grew 20%. Revenue from our enterprise customers grew at an even faster clip.

Revenues from our core customers, where those spending $5000 or more on an annualized basis grew 20%.

Revenue from our enterprise customers grew at an even faster clip.

Speaker 3: Dollar-based net retention rate from customers spending $100,000 or more on an annualized basis, which we view as an indicator of traction among enterprise customers, came in at over 120%. Greater than the dollar-based net retention rate for our overall customer base.

Dollar based net retention rate from customer is spending $100000 or more on an annualized basis, which we view as an indicator of traction among enterprise customers came in at over 120% greater than the dollar based net retention rate for our overall customer base.

Speaker 3: As you can see, our investments in the enterprise are beginning to pay off as we further our partnerships with some of the largest companies across major industries.

As you can see our investments in the enterprise are beginning to pay off as we further our partnerships with some of the largest companies across major industries.

Speaker 3: While the macroeconomic headwinds continue, especially impacting business in our renewal base, we're seeing signs of stabilization in new business.

While the macroeconomic headwinds continue, especially impacting business and our renewal base, we're seeing signs of stabilization in new business.

Yeah.

Overall awareness and demand for work management continues to expand across our total customer base were at over 3 million paid seats, showing increasing adoption of a sign of worldwide.

Speaker 3: Across our total customer base, we're at over 3 million paid seats, showing increasing adoption of a sauna worldwide.

Speaker 3: From an operational standpoint, we've made great progress in improving our non-GAAP operating march.

From an operational standpoint, we've made great progress on improving our non-GAAP operating margins.

Speaker 3: A nine month basis margins improved 34 percentage points year over year.

On nine month basis margins improved 34 percentage points year over year.

We expect improvement in non-GAAP operating margin year over year for the full year as we focus on operational efficiency and growth, which Tim will talk about more.

Speaker 3: We expect improvement in non-GAP operating margin year over year for the full year, as we focus on operational efficiency and growth, which Tim will talk about more.

This year is an important transition period for us in the past year, we've optimized our investments across our organization, making substantial year over year improvements in our margins each quarter.

Speaker 3: This year is an important transition period for us. In the past year, we've optimized our investment across our organization, making substantial year of year improvements in our margins each quarter.

Speaker 3: We've brought on board enterprise software veterans to lead our go-to-market strategy and execution. And we're embarking on a new product cycle of innovation on our industry leading platform, leveraging AI. With that, let me turn to our progress.

We've brought onboard enterprise software veterans to lead our go to market strategy and execution and we're embarking on a new product cycle of innovation on our industry leading platform leveraging AI.

Let me turn to our progress on the product side.

So what do we announced in early October we rolled out smart summaries to identify action items and highlights from conversations tasks and comments.

Speaker 3: So what will be announced? In early October , we rolled out smart summaries to identify action items and highlights from conversations, tasks, and common.

Speaker 3: Smart Editor, try clear, more compelling responses that strike the right tone.

Smart editor tried clear more compelling responses that strike the right tone and smart fields to organize projects with Autogenerated custom fields.

Speaker 3: Smart fields to organize projects with auto-generated custom fields. We also started rolling...

We also started rolling out to more features in November.

Speaker 3: First, smart answers to get timely answers and insights about projects, identify blockers, and determine next.

First smart answers to get timely answers and insights about projects identify blockers and determine next steps.

Speaker 3: And second, smart status to identify blind spots, open questions, and roadblocks with automatic status updates. We've had great early feedback from beta customers.

And second smart status to identify blind spots open questions and roadblocks with automatic status updates.

We've had great early feedback from beta customers tens of thousands of users or learning our AI powered features.

One of the most popular has been smart summaries that not only helps you identify action items and highlights from conversations tasks and comments, but also automatically generate subtasks.

Speaker 3: One of the most popular has been smart summaries that not only helps you identify action items and highlights from conversations, tasks, and comments, but also automatically generates uptask. This allows for more flexibility and much greater productivity. OK, everybody.

This allows for more flexibility and much greater productivity.

One of our beta customers, specifically like smart status. They told us that they currently spend two to two and a half hours every other week reading context do this manually.

Speaker 3: They told us that they currently spend two to two and a half hours every other week reading contacts to do this manual.

Speaker 3: I'm especially excited to see you roll this out at the portfolio.

I'm, especially excited to see roll this out at the portfolio level.

And I am excited about that too because it's gonna powerfully amplify the value you get from connecting work across levels, and Nissan and Warcraft without requiring any additional work from customers.

In contrast to some other approaches we focused on integrating AI into existing user workflows to maximize their value by creating a new project building out the details of a task, including suggesting Subtasks, we're writing a new status summary for our project.

And customers are really excited about some of our upcoming roadmap that uses all are warcraft context to intelligently orchestrate work like helping predict the time required for tasks. So that they can more easily plan and manage their work.

The interest and momentum when it comes to us on NII is growing.

As you know we had successful customer events in New York City in London last quarter with our work innovation summit.

Focused on AI and the future of work we.

We expect to continue the marketing momentum into next year.

Speaker 3: As we shared the work innovation summit in our investor day, the way we've engineered our products with AI is more than a co-pilot for individuals.

As we shared the work innovation summit in our Investor day, the way, we've engineered our products with AI is more than a co pilot for individuals.

Speaker 3: We see it as both co-pilot and air traffic control for entire organization.

We see it as both copilot and air traffic control for entire organizations.

Speaker 3: The work graph serves as a shared map, powering us on intelligence, helping to align human intention with AI guidance as they work together to achieve a customer's goal.

Aircraft serves as a shared Matt how are you.

On intelligence, helping to align human intention with AI guidance as they work together to achieve our customer's goals.

Speaker 3: On my tools that are narrowly focused on individuals or specific teams and use cases.

Unlike tools that are narrowly focused on individuals or specific teams and use cases.

Speaker 3: It's on a map for relationships across the entire company, between individuals, teams, and the work they're trying to achieve, ensuring you get reliable, accurate, and trusted generative output.

But our relationships across the entire company between individuals teams.

And the work, they're trying to achieve ensuring you get reliable accurate and trusted generative output.

Speaker 3: Simply asking open-ended questions about all of the training data used to train a foundation model yields results that aren't as useful, leading to hallucinations that decrease trust in adoption of AI.

Simply asking open ended questions about all of the training data used to train the foundation model yields results that aren't as useful leading to elimination that decreased trusts and adoption of AI.

Speaker 3: With Asana, AI amplifies the power of connecting our customers' work to their business goals, allowing them to accomplish things within the right time.

With the summer AI amplifies the power of connecting our customers work to their business goals, allowing them to accomplish things within the right context.

Speaker 3: This is a highly differentiated capability that customers are very excited about and the summit attendees reported an aha moment on the value of the work graph when seeing our AI demo.

This is a highly differentiated capability that customers are very excited about and the summit attendees reported an aha moment on the value of the Warcraft when seeing our AI demos.

Speaker 3: We also recently hosted an Asana Intelligence training event with over 1,500 people from leading organizations and industries such as media, transportation, education, food and beverage, and of course, tech, illustrating how broad interest in Asana Intelligence is growing.

We also recently hosted in a sauna intelligence training event with over 500 people from leading organizations in industries, such as media transportation education, food and beverage and of course Tac illustrating how broad interest in Nissan intelligence is growing.

Notably, we're also seeing adoption of Maisano within leading AI companies like Anthropic open AI and alignment Research Center.

Speaker 3: Notably, we're also seeing adoption of Asana within leading AI companies like Anthropic, OpenAI, and Alignment Research.

Our new packaging strategy introduced at our Investor Day in October and launched less than a month ago will further adoption of AI and help onramp customers through our advanced and enterprise tiers.

Speaker 3: Our new packaging strategy introduced at our investor day in October and launched less than a month ago will further adoption of AI and help on-ramp customers to our advanced and enterprise tier.

Speaker 3: Early feedback from the sales force was that customers are excited to learn about our multiple enterprise offering.

Early feedback from the sales force was that customers are excited to learn about our multiple enterprise offerings.

Speaker 3: In closing, I'm more excited than ever about the potential of Asana, and where we can go with the platform and capability.

In closing I'm more excited than ever about the potential of a sauna and where we can go with the platform and capabilities.

Speaker 3: For example, it's even more amazing to work with our own R&D team right now. I'll have an idea for something LLMs might do in a product, and very often a couple weeks later, they'll come back and say they've got a working version, it was easier to build than they expected, and the output is more impressive than they predicted it would be.

For example, it's even more amazing to work with our own R&D team right now.

You'll have an idea for something alums might do in the product and very often a couple of weeks later, we'll come back and say they've got a working version.

Year to build than they expected and the output is more impressive than they predicted it would be.

Everything we're focused on today is in service of enterprise growth building pipeline retention and C level customer engagement.

And now I will turn it over to Anne.

Thanks, Dustin in Q3, we continued to be impacted by macroeconomic headwinds.

Deal cycles continue to be longer and budgets continue to be a significant factor.

Speaker 2: However, as Destin mentioned, we are beginning to see signs of stabilization, especially for new business, which includes expansion.

However, as Duston mentioned, we're beginning to see signs of stabilization, especially for new business, which includes expansion we.

Speaker 2: we still need to work through some of the original headwinds that are impacting larger

We still need to work through some of the original headwinds that are impacting larger customers.

Speaker 2: Geographically, we saw bright spots in Asia, especially Japan, and Europe this quarter. As an example, Asana was particularly strong with high-profile retail and consumer product goods companies this quarter.

Geographically, we saw bright spots in Asia, especially Japan and Europe. This quarter as an example, autonomous particularly strong with high profile retail and consumer product goods companies this quarter.

Speaker 2: Our pipeline continues to build, especially with the success of events such as our Work Innovation Summit in New York City and London in October .

Our pipeline continues to build especially with the success of events such as art work Innovation Summit in New York City in London in October.

Speaker 2: Revenue from our top two product tiers grew over 25% in.

Revenue from our top two product tiers grew over 25% in Q3.

As we continue to rollout new packaging that was shared at Investor day, we expect to see new customers in particular accelerate their journey into our premium tiers to utilize our most unique enterprise capabilities.

Speaker 2: Enterprise customers representing organizations with over 2,000 employees continue to be our fastest growing customer cohort.

Enterprise customers representing organizations with over 2000 employees continue to be our fastest growing customer cohort.

Speaker 2: executives are planning long-term and looking to partner with one strategic partner. And we believe this is driving multi-year commitments for us.

Executives are planning long term and looking to partner with one strategic partner and we believe this is driving multiyear commitments for us.

Speaker 2: Our enterprise customers are asking us about AI and automations in a...

Our enterprise customers are asking us about AI and automation and Hassan App for example, customers. We're meeting with our executive briefing program are excited about the roll up of stature parts using us honest AI features.

Speaker 2: For example, customers we're meeting with through our Executive Briefing Program are excited about the roll-up of stats reports using Asana's AI feature.

Speaker 2: Currently, writing project status might take hours, but with AI, each report can be written in just a few minutes, while never missing an important detail.

Currently writing project status might take hours, but with AI. Each report can be written in just a few minutes, we will never missing an important detail.

Speaker 2: leaving employees and executives with more time for more valuable work.

Employees and executives with more time for more valuable work.

Speaker 2: Also, Asana Plus AI helps organizations ramp usage where change management may otherwise be a factor.

<unk> plus AI helps organizations ramp usage, where change management may otherwise be a factor.

Speaker 2: we believe our AI roadmap and our new packaging will help to further drive adoption.

We believe our AI roadmap and our new packaging will help to further drive adoption.

Speaker 2: We're seeing new business broadly across several diverse industries, healthcare, financial services, media, transportation, manufacturing, among many others.

We're seeing new business broadly across several diverse industries healthcare financial services media chance rotation manufacturing among many others.

Speaker 2: Within media, customers rely on Asana to manage their core business processes such as developing on-air creative, managing production workflows, and sourcing new talent on our platform.

Within media customers rely on us on it to manage their core business processes, such as developing on air created managing production workflows and sourcing new talent on our platform.

Speaker 2: Paramount Global, a leading global media and entertainment company, has been a customer of ours for a few years now and expanded their use of Asana to all their employees.

Paramount Global a leading global media and Entertainment company has been a customer of ours for a few years now and expanded their use of assign it to all their employees this quarter.

Speaker 2: And we had another large media conglomerate, DirecTV, that had a significant expansion this quarter.

And we had another large media conglomerate Directv that had a significant expansion this quarter.

Speaker 2: We're seeing continued growth within the healthcare and biotech vertical this quarter. For example, Norton Healthcare, who we have talked about in the past, increased their commitment with Asana this quarter. They use Asana to onboard hundreds of new physician providers to their vast hospital and healthcare.

We're seeing continued growth within the health care and biotech vertical this quarter for example, Norton healthcare, who we have talked about in the past increase their commitment with us on it this quarter. They use us on it onboard hundreds of new physician providers to their vast hospital and healthcare system.

Speaker 2: Additionally, another healthcare provider that serves over 100 million people around the world expanded their use of a son.

Additionally, another health care provider that serves over 100 million people around the world expanded their use of us on them.

Speaker 2: Departments that serve their clinical programs as well as marketing and financial operations rely on ASAN to automate work, manage strategic projects, enable seamless collaboration across teams, and facilitate executive reporting so they can increase operating efficiency to drive better patient outcomes. And we can

Departments that serve their clinical programs as well as marketing and financial operations rely on us to automate work managed strategic projects enables seamless collaboration across teams and facilitate executive reporting so they can increase operating efficiency to drive better patient outcomes.

And we continue to expand in other industries.

Speaker 2: A global transportation and food delivery marketplace company expanded their use of a sauna in a multi-year early renewal deal.

Our global transportation and food delivery marketplace company expanded their use of us on it in a multiyear early renewal deal.

Our robust analytics capabilities, Jarrod data integration and product roadmap, including AI capabilities were key factors for this win.

Speaker 2: Our robust analytics capabilities, JIRA DataSync integration, and product roadmap, including AI capabilities, were key factors for this win.

Speaker 2: Our enterprise solution is a strategic application for the company and is used cross-functionally by many departments for everything from business strategy planning to product development to account management.

Our enterprise solution as a strategic application for the company and is used cross functionally by many departments for everything from business strategy planning to product development to account management.

Speaker 2: One of the largest hospitality companies in the world, headquartered in France, chose Asana in a multi-year land deal for their global marketing, communications, and e-commerce department.

One of the largest hospitality companies in the world headquartered in France chose us honour and a multiyear land deal for their global marketing Communications and E Commerce Department.

Speaker 2: A global 2,000 retail company with over 1,000 store locations expanded their use of Asana and upgraded to our enterprise solution to manage the openings and maintenance of their metro stores, as well as their quarterly planning work.

Our global 2000 retail company with over 1000 store locations expanded their use of <unk> and upgraded to our enterprise solution to manage the openings and maintenance of their metro stores as well as their quarterly planning workflow.

Speaker 2: and some of the most influential leaders in tech are expanding. Following the momentum from Q2, we expanded significantly with a large high-profile enterprise software company.

And some of the most influential leaders in tech are expanding following the momentum from Q2, we expanded significantly with a large high profile enterprise software company.

Speaker 2: This is a good leading indicator that when tech recovers, it could be a tailwind for us.

This is a good leading indicator that when tech recovers it could be a tailwind for us.

Speaker 2: In summary, we are seeing more multi-year deals up both sequentially and year over year, winning on vendor consolidation decisions, and are continuing to diversify our enterprise success across more industries.

In summary, we are seeing more multiyear deals up both sequentially and year over year, winning on vendor consolidation decisions and are continuing to diversify our enterprise success across more industries.

But we still have more work to do.

Speaker 2: Looking to Q4 and the beginning of next year, we continue to focus on building pipeline for new enterprise ARR with targeted events and executive meetings around the world.

Looking to Q4 and the beginning of next year, we continue to focus on building pipeline for new enterprise with targeted events and executive meetings around the world.

Speaker 2: improving expansion rates through customer success programs and strategic initiatives such as the introduction of AI in our new product tier.

Improving expansion rates through customer success programs and strategic initiatives, such as the introduction of AI and our new product tiers.

Speaker 2: Enhancing our professional services offerings, which will deepen our partnerships with our most strategic accounts, and increasing adoption of our differentiated enterprise capabilities. And with that.

Enhancing our professional services offerings, which will deepen our partnerships with our most strategic accounts and increasing adoption of our differentiated enterprise capabilities.

And with that I'll hand, it over to Tim.

Thank you Ann while I'm pleased with our high level results. Some of the underlying drivers were not as strong as we had hoped.

Speaker 4: Thank you, Ann. While I'm pleased with our high-level results, some of the underlying drivers were not as strong as we had hoped.

Speaker 4: As Ann mentioned, we continue to see headwinds from a macro standpoint, which continues to impact our dollar base net retention.

As I mentioned, we continue to see headwinds from a macro standpoint, which continues to impact our dollar based net retention rates.

Speaker 4: We also have more work to do as we develop our enterprise go-to-market muscle and continue transitioning up market.

We also have more work to do as we develop our enterprise go to market muscle and continued transitioning upmarket.

Speaker 4: By the same token, I am proud of the efforts the team has put in to manage costs and improve efficiency. We continue to make substantial progress.

By the same token I am proud of the efforts the team has put in to manage costs and improve efficiency.

We continue to make substantial progress on improving our operating margins.

Speaker 4: Onto our Q3 results. Q3 revenues came in at $166.5 million, up 18% year-over-year.

Onto our Q3 results Q3 revenues came in at $166 5 million up 18% year over year.

Speaker 4: We have 21,346 core customers or customers spending $5,000 or more on an annualized basis.

We have 21346 core customers or customer spending 5000 or more on an annualized basis.

Speaker 4: Revenue from core customers grew 20% year over year. This cohort represented 74% of our revenues in Q3, up from 73% in the year ago quarter.

Revenue from core customers grew 20% year over year. This cohort represented 74% of our revenues in Q3 up from 73% in the year ago quarter.

Speaker 4: We have 580 customers spending $100,000 or more on an annualized basis and this customer cohort grew 18% year over year.

We have 580 customer spending 100000 or more on an annualized basis and this customer cohort grew 18% year over year.

Speaker 4: As a reminder, we define these customer cohorts based on annualized gap revenues in a given quarter.

As a reminder, we define these customer cohort based on annualized GAAP revenues in a given quarter.

Our dollar based net retention rates were lower mainly driven by adjustments.

Our overall dollar based net retention rate was over 100%.

Speaker 4: Our dollar-based net retention rate for our core customer was over 105%.

Our dollar based net retention rate for our core customer was over 105%.

Speaker 4: and customer spending a hundred thousand or more our dollar-based net retention rate was over 120.

And customer spending 100000 or more our dollar based net retention rate was over 120%.

Speaker 4: As a reminder, our dollar-based net retention rate is a trailing four-quarter average calculation and thus lagging indicators.

As a reminder, our dollar based net retention rate is a trailing four quarter average calculation and as us lagging indicator.

Speaker 4: We continue to see stable local churn rates overall and low churn in our largest account.

We continue to see stable logo churn rates overall and low churn in our largest accounts.

Speaker 4: However, companies remain mindful of the near-term economic challenges.

However companies remain mindful of the near term economic challenges.

I'll speak specifically to our outlook regarding this in a moment.

Speaker 4: As I turn to expense items and profitability, I would like to point out that I'll be discussing non-gap results in the balance of my remarks. Gross margins came.

As I turn to expense items and profitability I would like to point out that I'll be discussing non-GAAP results and the balance of my remarks.

Gross margins came in at 96%.

Speaker 4: Research and development was $51.2 million, or 31% of revenue, an improvement from 36% a year ago.

Research and development was $51 2 million or 31% of revenue an improvement from 36% a year ago.

Speaker 4: Sales and marketing was 82.6 million or 50% of revenue and improvement from 70% a year.

Sales and marketing was $82 6 million or 50% of revenue an improvement from 70% a year ago.

Speaker 4: The GNA was $26.9 million, or 16% of revenues, and improving from 22% a year ago.

G&A was $26 9 million or 16% of revenues.

An improvement from 22% a year ago.

Speaker 4: Operating loss was 9.8 million, and our operating loss margin was 6 percent, representing a 31 percentage point margin improvement versus a year ago.

Operating loss was $9 8 million and our operating loss margin was 6%.

Presenting a 31 percentage point margin improvement versus a year ago.

Speaker 4: The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability.

The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability.

Net loss was $8 2 million and a net loss per share was four cents.

Speaker 4: Net loss was 8.2 million and our net loss per share was 4 cents.

Moving onto our balance sheet and cash flow.

Speaker 4: Cash and marketable securities at the end of Q3 were approximately $530 million.

Cash and marketable securities at the end of Q3 were approximately 5% to $30 million.

Speaker 4: Our remaining performance obligations, or RPO, was $335.1 million, up 23% from the year-ago quarter.

Our remaining performance obligations or <unk> was $335 1 million up 23% from the year ago quarter.

Speaker 4: We expect 85% of our RPO will be recognized over the next 12 months.

We expect 85% of our appeal will be recognized over the next 12 months.

Speaker 4: The current portion of RPO grew 21% from a year ago quarter.

The current portion of <unk> grew 21% from a year ago quarter.

Our total ending Q3 deferred revenue was $255 4 million up 19% year over year.

Speaker 4: Our total ending Q3 deferred revenue was $255.4 million, up 19% year-over-year.

Our free cash flow is defined as net cash from operating activities less cash used in property and equipment and capitalized software costs.

Speaker 4: Our free cash flow is defined as net cash from operating activities, less cash use in property and equipment and capitalized software costs, excluding non-recurrent items such as cost.

Excluding nonrecurring items, such as costs related to restructuring.

Speaker 4: Q3 free cash flow was negative 11.5 million, or negative 7% on a margin basis, an improvement from negative 34%.

Q3 free cash flow was negative $11 5 million or negative 7% on a margin basis.

An improvement from negative 34% from the year ago quarter.

Speaker 4: On a year-to-date basis, our free cash flow was negative 13.4 million.

On a year to date basis, our free cash flow was negative $13 4 million.

Speaker 4: Approximately 120 million improvement from the Yusain-Yargo period.

Approximately $120 million improvement from the same year ago period.

Speaker 4: Moving to guidance for Q4FISCO 2024, we expect revenues of 167 million, 268 million representing growth of 11 to 12% year over year.

Moving to guidance for Q4 fiscal 2024, we expect revenues of 100.

$67 million to $168 million, representing growth of 11% to 12% year over year.

Speaker 4: We expect nine gap loss from operations of 23 million to 21 million, representing an operating margin of negative 13 percent at the midpoint of guidance. A measurable improvement from the same.

We expect non-GAAP loss from operations of 23 million to $21 million, representing an operating margin of negative 13% at the midpoint of guidance.

Measurable improvement from the same year ago period.

Speaker 4: And we expect net loss per share of 10 cents to 9 cents, assuming basic and diluted weighted average shares outstanding of approximately 223 mil.

And we expect net loss per share of <unk> to <unk> <unk>, assuming basic and diluted weighted average shares outstanding of approximately $223 million.

Speaker 4: For the full fiscal year 2024, we expect revenue to be in the range of 648.5 million.

For the full fiscal year 2024, we expect revenue to be in the range of $648 5 million to $649 5 million, representing a growth rate of 19% year over year.

Speaker 4: representing a growth rate of 19% year over year.

Speaker 4: We expect non-gabbloss from operations of 66 million to 64 million.

We expect non-GAAP loss from operations was 66 million to $64 million.

Speaker 4: representing an operative margin of negative 10% at the midpoint of guidance, an improvement from negative 38% in Fiscal 2023.

Representing an operating margin of negative 10% at the midpoint of guidance and an improvement from negative 38% in fiscal 2023.

Speaker 4: and we expect net loss per share of 27 cents to 26.

And we expect net loss per share of 27 to 26.

Speaker 4: assuming basic and diluted weighted average shares outstanding of approximately 219 million.

Assuming basic and diluted weighted average shares outstanding of approximately $219 million.

Our guidance assume that there is no change in the current macroeconomic environment. We expect our overall dollar based net retention rate to remain above 100% for the year.

Speaker 4: Are guidance assumed that there is no change in the current macro economic environment? We expect our overall dollar-based net retention rate to remain above 100% for the year.

Speaker 4: We continue to believe dollar-based net retention rate should bottom in Q1 at plus or minus 100%. When a number of large deals from the previous year renewals.

We continue to believe dollar base net retention rates should bottom in Q1, plus or minus 100%.

When a number of large deals from the previous year renewal.

Speaker 4: In addition, the leadership changes we have made in our sales organization will take time to manifest.

In addition, the leadership changes we have made in our sales organization will take time to manifest.

Speaker 4: We are committed to maintaining a discipline and balance approach to optimizing costs and improving efficiency and profitability.

We are committed to maintaining a disciplined and balanced approach to optimizing costs and improving efficiency and profitability.

Speaker 4: We will continue to invest in the future growth opportunities like AI, which we expect will drive long-term value.

We will continue to invest in our future growth opportunities like AI, which we expect will drive long term value.

Speaker 4: We remain committed to delivering positive free cash flow by the end of calendar 2024. As we work towards reaching free cash flow, we are encouraged by the progress we've made, and I'm optimistic about our future.

We remain committed to delivering positive free cash flow by the end of calendar 2024 as.

As we work towards reaching free cash flow. We are encouraged by the progress we've made and I'm optimistic about our future.

Speaker 4: Over the next 18 to 24 months, we anticipate incremental growth we be driven by expansion from our core customers, which will be a tailwind to our NRR.

Over the next 18 to 24 months, we anticipate incremental growth will be driven by expansion from our core customers, which.

Which will be a tailwind to our NR.

Speaker 4: are focused on moving up market, so moving more of our customers to the 100,000 spend level.

Our focus on moving up market, so moving more of our customers to the 100000 and spend levels.

Speaker 4: and our new packaging, which will help with more lands, improve adoption and new expansion. And with that, I'll turn it back to...

And our new packaging, which will help with more lands improve adoption and new expansion.

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

Great.

Speaker 1: As a reminder to ask a question, you will need to press star 11 on your telephone. To remove yourself from the question queue, please press star 11 again. Please stand by while we compile.

As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. Please press star one again.

Please standby, while we compile the Q&A roster.

Our next question comes from the line of Josh Baer of Morgan Stanley.

Speaker 1: Our next question comes from the line of Josh Baer of Morgan Stanley .

Great. Thank you very much for the question.

Speaker 5: Great, thank you very much for the question. I wanted to talk about the shift market and focus on the enterprise. I'm just wondering where you think you are, what inning as far as the investments in product, go to market just thinking through the packaging strategy, leadership changes, tend to just reference in anything else as far as the initiative and focus there.

Wanted to talk about the shift.

And focus on the enterprise.

Just wondering like where you think you are.

What inning as far as the investments in product go to market just thinking through the packaging strategy leadership changes.

And then you just referenced.

And anything else as far as initiatives and focus there.

Speaker 2: Josh, this is Anne, thanks for your question. Yeah, I think we're feeling good about the investments that we've been making to go up market. You called out a couple of different things, so I'll address those. We're really excited that all of our key leadership roles across GoToMarket are now filled. And these leaders have been adding great talent to the team where we've needed additional enterprise expertise.

Hey, Josh This is Ann Thanks for your question, Yeah, I think we're feeling good about the investments that we've been making to go upmarket.

You called out a couple of different things. So I'll address those we're really excited that all of our key leadership roles across go to market are now filled and these leaders have been adding great talent to the team where we've needed additional enterprise expertise.

We have more ramped reps and reps with greater tenure debt than this time last year. So we're feeling good about that as well and.

And we will continue to invest appropriately to support growth in priority markets. So we can reach and serve customers well on packaging, we're seeing really early positive feedback and interest from customers in particular, our customers really appreciate our approach to providing AI in every paid plan and that's <unk>.

Speaker 2: We're seeing really early positive feedback and interest from customers. In particular, customers really appreciate our approach to providing AI in every paid plan. That's clearly tied to value and supported by our guiding principles for AI. We've only been fully rolled out now for a few weeks, but with two enterprise plans now available, we're already seeing dozens of customer migrations up to those packages that include additional investment in a fauna. So we're excited about that. Excited about the quality of the sales conversations with executive.

Clearly tied to value and supported by our guiding principles for AI.

We've only been fully rolled out now for a few weeks, but with two enterprise plans now available we're already seeing dozens of customer migrations up to those packages that include additional investment in <unk>. So we're excited about that I'm excited about the quality of the sales conversations with executives.

Speaker 2: and greater velocity in helping these customers choose the right strategic plans for both value and growth. So more to do, but excited that the investments that we've been making both in go-to-market, the team and product and our plans are starting to have good traction.

And greater velocity in helping these customers choose the right strategic plans for both value and growth so more to do but excited that the investments that we've been making false and go to market the team and product and our plans are starting to have good traction.

Speaker 5: Great, thank you. And a quick one for Tim, just on the target for positive free cash flow. I just wanted to confirm, is that...

Great. Thank you and a quick one for Tim just on the target for positive free cash flow just wanted to confirm is that.

Speaker 5: And without regard to the macro, meaning if it gets better, worse, stays the same, no matter what the growth trajectory is, we're still looking for positive free cash flow by the end of 24.

Without regard to the macro meaning if it gets better or worse stays the same.

No matter what the growth trajectory is still looking for positive free cash flow by the end of 'twenty four.

Speaker 4: Yeah, I mean, I think we kind of said, you know, our outlook hasn't really changed. Things haven't gotten noticeably better nor noticeably worse. So we're still committed to delivering free cash flow by the end of calendar 24. Thank you.

I mean, I think we I think we kind of said.

Outlook hasn't really changed things havent gotten noticeably better nor noticeably worse. So we're still committed to delivering free cash flow by the end of calendar 'twenty four.

Great. Thank you. Thanks.

Thanks, Josh.

Thank you.

Our next question.

Speaker 1: comes from the line of Alex Zukin of Wolf Research.

Comes from the line of Alex Zukin uplift research.

Hey, guys. Thanks for taking the question. So maybe just two for me one on.

Speaker 4: Hey guys, thanks for taking the question. So maybe just two for me. One on

Thus far in the renewals that you are seeing in some of your largest customers. It seems like youre pretty confident about that NR crossing.

Speaker 4: The thus far in the renewals that you're seeing in some of your largest customers, it seems like you're pretty confident about that NRA cropping at 100 plus or minus. So what has kind of been some of that dynamic reactivity or maybe just give us a sense for the visibility that you have there, what you've seen play out today. You mentioned some of the larger deals, but what's happening on renewal with a competitive environment and then just a quick follow up.

At a 100 plus or minus so what has kind of been some of that dynamic or activity or maybe just give us a sense for the visibility that you have there what you've seen play out today, you mentioned some of the larger deals, but what's happening on a renewal with the competitive environment and then just a quick follow up for Tim.

Yeah.

Speaker 4: Alex, it's Tim. So I think what we're seeing is obviously we have pretty good line of sight in terms of the utilization of many of our large accounts.

Hey, Alex it's Tim So I think what we're seeing is obviously, we have pretty good line of sight in terms of the utilization of many of our large accounts what I would say is similar to what we shared at the Investor day. Most of the most of the the net retention rate is impacted by seat adjustment or <unk>.

Speaker 4: What I would say is, similar to what we shared on the Investor Day, most of the net retention rate is impacted by seat adjustment or seat reductions, primarily from companies that either had a layoff at this time last year and their renewal is up and they're just readjusting their own footprint. So I feel like we have.

<unk>, primarily from companies that either had a layoff at this time last year and their renewal is up and Theyre just readjusting their their own footprint. So I feel like we have we know which companies are likely going to renew we know their utilization. So we have a pretty good handle.

Speaker 4: We know which companies are likely going to renew. We know their utilization. So we have a pretty good handle in terms of what the outlook will look like. Obviously, there can always be surprises, but I think we feel pretty confident about the current.

In terms of what the outlook will look like obviously theres there can always be surprises, but I think we feel pretty confident about the current line of sight.

Speaker 3: Perfect, and then just maybe on the balance, it was down sequentially. Was that again a result of that heightened downselling pressure and any way to think about for for Q4 and kind of how to tie that with with where where we are, you know, at a high level for growth next year.

Perfect and then just maybe on the <unk> balance it was down sequentially.

Was that again as a result of that heightened down selling pressure in any way to think about.

<unk> for for Q4, and kind of how to tie that with.

With where where we are.

At a high level for growth next year.

Yes, I mean I think we.

Speaker 4: You know, I think from an RPO perspective, it did grow, I want to say 21% on a year-over-year basis. And there's suddenly some lumpiness in terms of, you know, some of the shape of the deals. I would say the RPO number is also impacted kind of by the renewals, and that's kind of what we've been seeing pressure on in terms of the business.

I think from a from an <unk> perspective, it to grow I want to say, 21% on a year over year basis, and Theres. Some theres certainly some lumpy lumpiness in terms of some of the shape of the deals.

I would say the RPI number is also impacted by the renewals and that's kind of what we've been seeing pressure on in terms of the business.

Okay, great. Thanks, guys.

Thank you.

Please standby for our next question.

Speaker 1: Our next question comes from the line of Taylor McGinnis of UBS. Please go ahead, Taylor.

Our next question comes from the line of Taylor Mcginnis of UBS. Please go ahead Taylor.

Speaker 6: Yeah, hi. Thanks so much for taking my question. So maybe first, did you give us a sense of the growth or NRR expansion activity outside of the impacted verticals like tech and where you're seeing the most rationalization or optimization activity? Just perhaps it could help give some visibility to the growth we could see coming on the other side of the developmental activity.

Yeah, hi, thanks, so much for taking my question. So maybe first could you give us a sense of the growth our IRR expansion activity outside of the impacted verticals like tacking.

Youre seeing the most rationalization or optimization activity.

Perhaps you could give it could help give some visibility to the growth we could see coming on the other side of the tougher renewal activity.

Speaker 4: Yeah, I don't know if we share this on a call on this call or the call earlier, but I think we did make a comment in the past that.

Yes.

Okay.

I don't know if we shared this on the call on this call or the call earlier, but I think we did make a comment in the past that.

Speaker 4: What we've seen is that, like, if you segment our business across tech versus non-tech, that the non-tech sector is actually growing faster than our tech business, and most of the pressure that we've seen on both the renewals and expansion is coming from the tech. Many of the customer logos and stories that Ann highlighted, such as healthcare and media, those are non-tech businesses, and I think we're really encouraged by the footprint. Now...

What we've seen is that like if you segment, our business across tech versus non tech that the non tech sector is actually growing.

Faster than our tech business and most of the pressure that we've seen on both renewals and expansion is coming from the tech.

Many of the customer logos and stories out and highlight it.

Such as healthcare and media.

Our non tech businesses and I think we're really encouraged by the footprint now the other thing Thats.

Speaker 4: The other thing that's also, you know, the other positive that I would wanna point out is that where we've had new leaders for about a year, you know, in regions in about, for about a year, we've seen better performance out of those reps than out of those geography. So I'm really encouraged by what we see in Asia and some early science from Europe as well. So I think we're encouraged both by the regions and the non-tech sectors that we've gained foothold in.

That's also the other positive that I wouldn't want to point out is that where we've had new leaders for about a year and regions and about for about a year.

We've seen better performance out of those reps and out of those geographies. So I'm really encouraged by what we see in Asia and some early.

Early signs from Europe as well so I think were encouraged both by the regions in the.

The non tech sectors that we've gained foothold in.

Speaker 6: Perfect. And then my second question is going off of Alex's question that he asked earlier. So if you look at buildings and bookings growth, the last like two quarters, I think it's been in the low teen. So how should we think about those metrics being leading indicators as we think about growth going forward. And then as we look into for you in one queue, is there any additional color you can provide on what the renewal basis look like in in those quarters and if there's anything to keep in mind from, you know, once in the next and how that might compare to what we've seen more recently.

Perfect and then my second question is going up without question that he asked earlier. So if you look at billings and bookings growth. The last two quarters I think it's been in the low teens. So how should we think about those metrics being leading indicators as we think about growth going forward and then as we look into <unk> and <unk> is there any additional color you can provide on what.

The renewal basis looked like in in those quarters, and if theres anything to keep in mind from one to the next and how that might compare to what we've seen more recently.

Speaker 4: Yeah, I mean, I think at this point, we're not giving fiscal year 25 guidance, but what I would encourage you all to think about is just like we want to be, you know, stay as conservative as possible until we have more line of sight into the new year and how the year will shape up. So, but we'll provide an update, you know, on our Q4 earnings call. Thank you.

I mean I.

I think at this point, we're not giving fiscal year 'twenty guidance, but what I would encourage you all to think about it is just like we want to be.

Just as conservative as possible until we have more line of sight into the new year and how the how the year will shape up so, but we will provide an update.

On our Q4 earnings call.

Thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of Pat Wall-Ravens of JMT Securities. Your question, please, Pat.

Comes from the line of Pat Walraven of JMP Securities. Your question. Please Pat.

Speaker 7: Oh great, thank you very much. Dustin, I'm going to go really big picture here.

Oh, great. Thank you very much.

Dustin I'm going to go really big picture here.

Speaker 7: Do you think the changes in the governance of OpenAI is bad for the future of humanity?

Got it.

Do you think that changes in the governance at open AI is bad for the future of humanity.

Speaker 7: uh... yet is really big picture i know i have one for him after but i can start with that

Yes that is really big picture.

I have one for Tim after but I'm going to start with that.

I mean honestly I.

Speaker 8: sort of don't feel like we know what the change is to the governance of open AIR. They, uh, my understanding is they have a temporary board whose goal is to create a new governance structure and elect a new board and, um, you know, I think lots of judge it based on that. Um, I, I do want to maybe just like echo some of the comments that I've seen from smarter pundits though, like,

I sort of don't feel like we know what the changes to the governance of opening IR. They my understanding is they have a temporary board whose goal is to create a new governance structure and elected a new board and.

I think well have to judge it based on that.

I do want to maybe just like Echo some of the comments I've seen from smarter pundant so like.

Speaker 8: you know i i don't think uh... i ever really thought that trying to govern the private companies to act differently was going to be you know the thing that that most the rest

I don't I don't think I ever really thought that trying to govern the private company needs to act differently it was going to be.

Thing that that most derisked.

Speaker 8: problems with AI and so I really think it just underscores the need to solve it with you know higher level regulation rather than government structures

With AI and so I really think it just.

Your scores the need to solve it with higher level of regulation.

Rather than governance structures.

Yeah agreed.

Speaker 7: And then Tim, much more practically. In your script, you commented that some of the underlying drivers were not as strong as we'd hoped. I mean, I think he touched on some of that, but can you just sort of summarize what you're referring to there?

And then Tim much more practically in your script you commented that some of the underlying drivers were not as strong as we'd hoped I mean, I think you've touched on some of that but but can you just sort of summarize what you were referring to there.

Speaker 4: Yeah, I would say two things. I think like we're still seeing pressure on renewals. So I think there's compression kind of in our net expansion rates. That's one. And I do think we'll lap those by the end of Q1 primarily because we do, like if you kind of look back at layoff and tech.

Yes, I would say two things I think like we're still seeing pressure on renewals. So I think there is compression kind of in our net expansion rates that's one.

I do think we'll lap those by the end of Q1, primarily because we do like if you kind of look back at layoffs in tech.

Speaker 4: There were a number of large companies that were still doing layoffs at the beginning of Q1. And I think once we kind of get through that period, I think, you know, we'll have some more tailwinds in our NRR. The other piece, obviously, is I think like the regions that I spoke about that are performing, you know, EMEA and APAC, those have been nice surprises. But I think we still have more work to do in America.

There were a number of large companies that were still doing layoffs at the beginning of Q1.

Once we kind of get through that period.

Well, we'll have some more tailwind in our N R. R.

The other piece, obviously is I think like the regions that I spoke about that are performing you know EMEA and APAC those have been nice surprise us, but I think we still have more work to do and Americas.

Speaker 8: I just want to add, too, since layoffs have been in the news again recently, but just by the numbers, I think it's just important to put them in context of the proportion. So like the cycle we're seeing now from some of the recent announcements, if you just add it up, all up, it's about one-tenth or less than what we saw a year ago. So those are still headwinds with those specific customers, but it's not nearly the same as what we're sort of, you know, trying to lap and cycle out of the numbers.

I just want to add too since late layoffs have been in the news again recently, but just by the numbers I think it's just important to put them in context. The proportion so like the cycle. We're seeing now from some of the recent announcements if you just add it up all up it's about 110th or less than what we saw a year ago. So those are still headwinds with those specific customer.

<unk>.

But it's not nearly the same as what we're sort of trying to lap and cycle out of the numbers.

Okay, great. Thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of George Kurosawa, a city. Please go ahead, George.

Comes from the line of George <unk> of Citi. Please go ahead George.

Speaker 9: Thanks for taking the question. I'm on for Steve. You talked about stabilization in new business. I'm wondering if you just double click a little bit into know what you're seeing there if any color on what metrics seem to be improving.

Thanks for taking my question I'm on for Steve you talked about stabilization in new business I'm wondering if you could just double click a little bit into what youre seeing there any any color on what metrics seem to be improving.

Yes, just in terms of new bookings that we're seeing and the consistency that we've seen over the last two or three quarters.

Speaker 4: Yeah, just in terms of new bookings that we're seeing and the consistency that we've seen over the last two, three quarters.

Speaker 4: I feel like, especially in some of the geographies that I mentioned, both from a predictable standpoint, from a pipeline standpoint, and from a closed standpoint. I think those have been really encouraging. You know, I would say if we were sitting here last year...

Feel like especially in some of the geographies that I mentioned, both from a predictable standpoint from a pipeline standpoint and from a close standpoint.

Those have been really encouraging you know I would say if we were sitting here last year, we were seeing deceleration in bookings, but sitting here today, it's much more stable and I think that that's a sign that we're optimistic that we built our bookings our new bookings up from this level.

Speaker 4: we were seeing deceleration in bookings, but sitting here today, it's much more stable. Um, and I think that that's a sign and that we're optimistic that we build our bookings, you know, our new bookings up from this level.

Yeah.

Speaker 9: Got it. Super helpful. And I think during the analyst day, Ed talked a lot about some of the execution improvements in the media and then trying to replicate that success in US. Sounds like a me is still doing pretty well, but maybe just an update on how those changes to the US, go to market organization or going and when you expect to see some improvements. Thank you.

Got it.

Super helpful. I think during the analyst day talked a lot about.

Some of the execution improvements in EMEA, and then trying to replicate that success in the U S. It sounds like EMEA is still doing pretty well, but maybe just an update on how those changes to the U S.

Go to market organization are going and when do you expect to see some improvements. Thank you.

Speaker 2: Yeah, George, it's Ann, I'll answer that. It's been great to have Ed on board a full quarter. Things that we're seeing him do, both in America and around the world, are continuing to create a really strong culture of winning, especially upmarket, driving a lot of operational rigor across the team. He's also been instilling a culture and a discipline of building strong executive relationships with customers. So that's been great to see. And then just a tight partnership with our global marketing organization. So the executive events we mentioned, getting our customers together with one another to share innovative work management practices, all of that, I think, is improving performance and we'll see that payoff in the coming quarters. But it's been, and then we'll have more to share, but as he's been working really close with the Amer team, I think we're also seeing some great momentum there.

Yeah, George it's Anna.

Ill answer that and it's been great to have add on board a full quarter and things that we're seeing him do both in America and around the world are continuing to create a really strong culture of winning especially up market driving a lot of operational rigor across the team.

He has also been in Sterling.

Culture, and a discipline of building strong executive relationships with customers. So that's been great to see and then just a tight partnership with our global marketing organization. So the executive events, we mentioned getting our customers together with one another to share innovative work management practices at all of that.

I think is improving performance and we'll see that path.

In the coming quarters, but it's been you know and then we'll have more to share but as he has been working really close with the aim of our team I think we're also seeing some great momentum there.

Speaker 10: Awesome. Thanks for taking the questions.

Awesome, Thanks for taking the questions.

Thank you.

Our next question.

It comes from the line of receipts.

Speaker 1: Jolaria of RBC Capital Markets. Your question please.

Jewelry of RBC capital markets. Your question. Please rishi.

Speaker 11: Hi, this is Chris found on for Rishi Julia. Thanks for taking the question. So, I realized the new packaging strategy only went into effect back in November , but just wondering if you could expand a little bit more on the feedback you've heard so far.

Hi, This is Chris found on for Richard you, Larry Thanks for taking the question.

So I realize the new packaging strategy only went into effect back in November but just wondering if you could expand a little bit more on the feedback you've heard so far.

Sure, Hey, Chris and I think the feedback that we're hearing both from our field, who are having conversations with our customers our renewals team our customer success team and from customers directly themselves as they do really appreciate how we've made AI very accessible in the product in <unk>.

Speaker 2: Hey Chris, I think the feedback that we're hearing both from our field to our having conversations with our customers, our renewals team, our customer success team, and from customers directly themselves is...

Paid plan I think that is something that differentiates our approach to AI.

Speaker 2: designed directly into the workflows that employees and leaders are using. So that's actually brought forward some renewal conversations. In some cases, we've been, as I mentioned earlier, just pleasantly surprised to see, you know, just the level of engagement, even though we're only a couple of weeks out in terms of customers choosing to move to our enterprise package. And now that we've got two of those choices, I think there's also, you know, more robust conversations that we can have with customers who are interested in those features and functionality.

<unk> designed directly into the workflows that employees and leaders are using so that actually brought forward some renewal conversations in some cases.

We've been as I mentioned earlier just pleasantly.

Surprised to see you know just the level of engagement, even though we're only a couple of weeks out in terms of customers choosing to move to our enterprise package and now that we've got two of those choices I think Theres also you know more robust conversations that we can have with customers who are interested in those features and things.

Speaker 2: package and now that we've got two of those choices, I think there's also more robust conversations that we can have with customers who are interested in those features and functionality. But we anticipate we'll continue to share more with you and have more updates in the next quarter, but the first few weeks have been really positive. Great, thank you.

Analogy, but we anticipate we'll continue to share more with you and have more updates in the next quarter, but the first few weeks have been really positive.

Great. Thank you.

Thank you please standby for our next question.

Speaker 1: Next question comes from the line of Brent Theo of Jeffries. Your question, please, Brent.

Our next question comes from the line of Brent Thill of Jefferies. Your question. Please Brent.

Dustin you put together this public plan to buy 30 million shares by the end of December I think the last filing had close to $9 million. So a long way to go can you just talk at a high levels.

Speaker 12: Dustin, you put together this public plan to buy 30 million shares by the end of December . I think the last filing had you close to nine million. So a long way to go, can you just talk at a high level of how you're thinking about this? Kind of, the plan's only 30% filled. How do you think about that trajectory and the shape of that plan?

How youre thinking about this kind of.

The plan is only 30% filled how do you think about that trajectory and in the shape of that plan.

Speaker 8: Yeah, so I'll just confirm the 10d51 is still filed and

Yes, so I'll just confirm that the <unk> five one is still filed and.

Speaker 8: Gosh, when did, when did we originally file it? March? Okay. So, um, all I can say is like the way I thought about that trajectory was, was locked in, in March. Um, and I had to try and forecast the future and really volatile market. Uh, and so I did the best I could. Um, and now, now things are playing out. Uh, but yeah, that's basically all I can say about it at this point.

Gosh when did when did we originally filed that March.

So.

All I can say is like the way I thought about that trajectory was locked in in March and I had to try and forecast the future at a really volatile market.

And so did the best I could.

And now things are playing out but.

But yeah, that's basically all I can say about it at this point.

Speaker 12: Okay, that's great. And Tim, just to follow up on the renewal, kind of, when you expect that to get more, more base underneath it. I mean, is there in the next couple quarters, is there an event or something that happens that you think you'll, you'll get a better basing on the renewals? Or how do you, how do you think about that specifically?

Okay, that's great and Tim just to follow up on.

The renewal kind of when you expect that to get more more base underneath that I mean is there in the next couple of quarters is there an event or something that happens that you think you'll you'll get a better basing on the renewals or how do you. How do you think about that specifically.

Speaker 4: Yeah, I mean, I think when we look at the renewals that we have coming up and the companies that were impacted, you know, at some point this year, due to layoff and looking after utilization, we feel like we have a pretty good handle and plan and understand what that renewal will look like. Um, um

Yes, I mean, I think when we look at the renewals that we have coming up.

And the companies that were impacted at some point this year due to lay off and looking at their utilization, we feel like we have a pretty good handle and plan and understand what that renewal will look like.

Speaker 4: So, you know, I think we have line of sight. You know, there's always surprises, but I feel like we have a pretty good handle in terms of lapping the difficult comps that we'll have probably by the end of Q1.

So I.

I think we have line of sight, there's always surprises, but I feel like we have a pretty good handle in terms of lapping the difficult comps that we'll have probably by the end of Q1.

Great. Thank you.

Yes.

Thank you.

Our next question.

Speaker 1: comes from the line of Jason Salina of KeyBank Capital Markets.

Comes from the line of Jason Salina of Keybanc capital markets.

Speaker 9: Great, thanks for taking our question. This is actually Devon on for Jason today. I wanted to ask about the early renewal deal that you called out. I believe this is the second quarter. You're seeing this trend. I'm assuming this is customer driven, but any other details you can share, you know, what the reasons are from the customer side and are you expecting more of these early renewals happening in the coming quarters.

Great. Thanks for taking our question this is actually Devin on for Jason today.

Wanted to ask about the early renewal deal that you called out I believe this is the second quarter Youre seeing this trend I'm, assuming this is customer driven but any other details you can share what the reasons are from the customer side and are you expecting more of these early renewals happening.

The coming quarters.

Okay.

Speaker 2: Yeah, hey, Devin. So in that case that we mentioned, it's a global transportation and food delivery company, which I actually happen to be a very loyal customer of, but we'd been talking to them about just strategically all the use cases where they wanted to expand. And so what we really saw is both the combination of our AI features, the investments that we had made in scalability and security, and their business priorities and needs really just resulted in early renewal so that they could, again, roll out much more quickly. We anticipate seeing more of those. I think it's still early, but I do think with the conversations our teams are having with customers with our new plans, those could create opportunities for customers to early renew. But again, we'll have more of that to share as we have more traction with the new plans. But again, early conversations are driving good velocity in helping customers choose the right options for them as they plan for growth over the next year.

Yeah, Hey, Devin so in that case that we mentioned, it's a global transportation and food delivery company, which I actually happened to be a very loyal customer.

But we had been talking to them about just strategically all the use cases, where they wanted to expand and so what we really saw is both the combination of our AI features the investments that we had made in scalability and security and their business priorities and needs and really just resulted in.

Early renewal also that they could again roll out much more quickly.

We anticipate seeing more of those I think it's still early but I do think with the conversations our teams are having with customers with our new plans those could create opportunities for our customers to early renew but again, we'll have more of that to share you know as we have more traction.

With the new plants, but again early conversations are driving you know good velocity in helping customers choose the right options for them as they plan for growth over the next year.

Speaker 13: Got it, that's helpful. And then maybe just one quick one. Just want to ask about the 4Q revenue guide. I think at the midpoint, you're sort of assuming a decel in sequential growth. Is that just mainly conservatism, or any other reasons there would be helpful? Thanks. Yeah, I mean, I.

Got it that's helpful. And then maybe just one quick one just wanted to ask about the <unk> revenue guide I think at the midpoint.

Assuming T cell and sequential growth is that just mainly conservatism or any other.

Ladies as there would be helpful. Thanks.

Yes, I mean I think it's the.

Our forecast is kind of based on what we're seeing in the business right now and hopefully you know over the last probably since we've been public hopefully we.

And in a position where we've over delivered and.

We are we try to do the best that we can on the forecast.

Speaker 1: Thank you. I would now like to turn the conference back to Katherine Bwan for closing remarks. Madam.

Thank you I would now like to turn the conference back to Catherine O'brien for closing remarks Madam.

Speaker 14: Thank you, and we just want to thank you again for joining us today. We know that earnings is a very busy season for you. We appreciate your time, and we look forward to seeing you on the road this month and in January . Thank you.

Thank you and we just wanted to thank you again for joining US today, we know that earnings is a very busy season for you. We appreciate your time and we look forward to seeing you on the road this month and in January Thank you.

Speaker 1: And this concludes today's conference call. Thank you for participating. You may now disconnect.

And this concludes today's conference call. Thank you for participating you may now disconnect.

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Speaker 1: Thank you for standing by and welcome to us on a third quarter fiscal year 2024 earnings conference call. At this time, all participants are in a list in the only mode after the speaker presentation. That will be a question and answer.

Thank you for standing by and welcome to <unk> third quarter fiscal year 2024 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation that will be a question and answer session to ask.

Speaker 1: To ask a question during the session, you will need to press star one, one on your telephone.

Question during the session you will need to press star one one on your telephone to remove yourself from the question queue. Please press star one again.

Speaker 1: To remove yourself from the question queue, please press star one one again.

Speaker 1: I would now like to hand the call over to Catherine Blonde, Head of Investor Relations. Please.

I'd now like to hand, the call over to Catherine <unk> head of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for us on the third quarter of fiscal 2024 with me on today's call are Duston Moskovitz, <unk> co founder and CEO, Andrew Monday, Our Chief operating officer, and head of business and Tim <unk>, Our Chief Financial Officer.

Speaker 14: Good evening, and thank you for joining us on today's conference call to discuss the financial results for a Sanice third quarter fiscal 2024. With me on today's call are Dustin Moskovitz, a Sanice co-founder and CEO . Anne Ramonde, our chief operating officer and head of business. And Tim Wan, our chief financial officer.

Speaker 14: Today's call will include forward-looking statements, including statements regarding our expectations for free cash flow, our financial outlook, strategic plans, market position, and growth opportunities.

Today's call will include forward looking statements, including statements regarding our expectations for free cash flow, our financial outlook of strategic plans market position and growth opportunities.

Speaker 14: 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.

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 14: Please refer to our filings with the SEC, including our most recent annual report on Form 10-K and 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 recent annual report on Form 10-K, and 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.

Speaker 14: 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 gap. Reconciliation between gap and non- GAAP financial measures and a discussion of limitations of using non- GAAP measures versus their closest gap 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 to Dustin.

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 reconciliations 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 <unk>.

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.

Thank you Catherine and thank you all for joining us on the call today.

Speaker 8: In Q3, we beat our top and bottom line expectations again and continue to build on our leadership in the enterprise.

In Q3, we beat our top and bottom line expectations again and continue to build on our leadership in the enterprise.

Speaker 8: Q3 revenues grew 18% year-over-year, and non-GAAP operating loss margins were 5.9%, an improvement of over 30 percentage points versus the year-ago period. Top-line growth was led by our

Q3 revenues grew 18% year over year and non-GAAP operating loss margins were five 9% an improvement of over 30 percentage points versus the year ago period.

Topline growth was led by our continued success in the enterprise.

Speaker 8: Revenues from our core customers, or those spending $5,000 or more on an annualized basis, grew 20%. Revenue from our enterprise customers grew at an even faster clip.

Revenues from our core customers, where those spending $5000 or more on an annualized basis grew 20% and revenue from our enterprise customers grew at an even faster clip.

Speaker 8: Dollar-based net retention rate from customers spending $100,000 or more on an annualized basis, which we view as an indicator of traction among enterprise customers, came in at over 120%. Greater than the dollar-based net retention rate for our overall customer base.

Dollar based net retention rate from customer is spending $100000 or more on an annualized basis, which we view as an indicator of traction among enterprise customers came in at over 120% greater than the dollar based net retention rate for our overall customer base.

Speaker 8: As you can see, our investments in the enterprise are beginning to pay off as we further our partnerships with some of the largest companies across major industries.

As you can see our investments in the enterprise are beginning to pay off as we further our partnerships with some of the largest companies across major industries.

Speaker 8: While the macroeconomic headwinds continue, especially impacting business in our renewal base, we're seeing signs of stabilization in new business.

While the macroeconomic headwinds continue, especially impacting business and our renewal base, we're seeing signs of stabilization in new business.

Speaker 8: Overall, awareness and demand for work management continues to expand.

Overall awareness and demand for work management continues to expand across our total customer base. We're at over 3 million paid seats, showing increasing adoption of Astana worldwide.

Speaker 8: Across our total customer base, we're at over 3 million paid seats, showing increasing adoption of Asana worldwide.

Speaker 8: From an operational standpoint, we've made great progress on improving our non-gap operating margin.

From an operational standpoint, we've made great progress on improving our non-GAAP operating margins on a nine month basis margins improved 34 percentage points year over year.

Speaker 8: On a nine-month basis, margins improve 34 percentage points year over year.

Speaker 8: We expect improvement in non-GAP operating margin year over year for the full year, as we focus on operational efficiency and growth, which Tim will talk about more.

We expect improvement in non-GAAP operating margin year over year for the full year as we focus on operational efficiency and growth, which Tim will talk about more.

Speaker 8: This year is an important transition period for us. In the past year, we've optimized our investments across our organization, making substantial year-over-year improvements in our margins each quarter.

This year is an important transition period for us in the past year, we've optimized our investments across our organization, making substantial year over year improvements in our margins each quarter.

Speaker 8: We've brought on board enterprise software veterans to lead our go-to-market strategy and execution. And we're embarking on a new product cycle of innovation on our industry-leading platform, Leveraging AI. With that, let me turn to our progress.

We've brought onboard enterprise software veterans to lead our go to market strategy and execution and we're embarking on a new product cycle of innovation on our industry leading platform leveraging AI.

With that let me turn to our progress on the product side.

Speaker 8: So what have we announced? In early October , we rolled out smart summaries to identify action items and highlights from conversations, tasks, and comments.

So what are we announced in early October.

<unk>, we rolled out smart summaries to identify action items and highlights from conversations tasks and comments.

Speaker 8: smart editor to write clear, more compelling responses that strike the right tone.

<unk> editor tried clear more compelling responses that strike the right tone.

Speaker 8: Smart fields to organize projects with auto-generated custom fields. We also started rolling...

And smart fields to organize projects with Autogenerated custom fields.

We also started rolling out to more features in November.

Speaker 8: First, smart answers to get timely answers and insights about projects, identify blockers, and determine next steps.

First smart answers to get timely answers and insights about projects identify blockers and determine next steps in.

Speaker 3: In second, smart status to identify blind spots, open questions, and roadblocks with automatic status updates. We've had great early feedback from beta customers.

Second smart status to identify blind spots open questions and roadblocks with automatic status updates.

We've had great early feedback from beta customers.

Tens of thousands of users or learning our AI powered features.

Speaker 3: One of the most popular has been smart summaries that not only helps you identify action items and highlights from conversations, tasks and comments, but also automatically generates subtasks. This allows for more flexibility and much greater productivity.

One of the most popular has been smart summaries that not only helps you identify action items and highlights from conversations task and comments, but also automatically generate sub tasks.

This allows for more flexibility and much greater productivity.

One of our beta customers, specifically like smart status. They told us that they currently spend two to two and a half hours every other week reading context to do this manually.

Speaker 8: They told us that they currently spend two to two and a half hours every other week reading context to do this manually.

Speaker 3: Dadd I'm especially excited to see you roll this out at the portfolio.

They added I'm, especially excited to see roll this out at the portfolio level.

Speaker 3: And I'm excited about that too, because it's going to powerfully amplify the value you get from connecting work across levels in the Asana work graph. Without requiring any additional...

And I am excited about that too because it's going to powerfully amplify the value you get from connecting worker cross levels and Nissan of Warcraft without requiring any additional work from customers.

Speaker 3: In contrast to some other approaches we focus on integrating AI into existing user workflows to maximize their value like creating a new project building out the details of a task, including suggesting subtasks or writing a new.

Contrast to some other approaches we focused on integrating AI into existing user workflows to maximize their value by creating a new project building out the details of a task, including suggesting Subtask, we're writing a new status summary for our project.

Speaker 8: And customers are really excited about some of our upcoming road map that uses all our work graph context to intelligently orchestrate work like helping predict the time required for tasks so that they can more easily plan and manage their work. The interest and momentum.

And customers are really excited about some of our upcoming roadmap that uses all are warcraft context to intelligently orchestrate work like helping predict the time required for tasks. So that they can more easily plan and manage their work.

The interest and momentum when it comes to us on on AI is growing.

Speaker 3: As you know, we had successful customer events in New York City and London last quarter with our work innovation summit focused on AI in the future of work. We expect to continue the marketing.

As you know we had successful customer events in New York City in London last quarter with our work innovation summit.

Focused on AI and the future of work we.

We expect to continue the marketing momentum into next year.

Speaker 8: As we shared at the Work Innovation Summit and our Investor Day, the way we've engineered our products with AI is more than a co-pilot for individuals.

As we shared the work innovation summit in our Investor day, the way, we've engineered our products AI is more than a co pilot for individuals.

Speaker 3: We see it as both co-pilot and air traffic control for entire organization.

We see it as both copilot and air traffic control for entire organizations.

Speaker 3: The work graph serves as a shared map, powering us on intelligence, helping to align human intention with AI guidance as they work together to achieve a customer's goal.

<unk> serves as a shared Matt how are you.

On intelligence, helping to align human intention with AI guidance as they work together to achieve our customer's goals.

Speaker 8: Unlike tools that are narrowly focused on individuals or specific teams in this case.

Unlike tools that are narrowly focused on individuals or specific teams and use cases, it's an amount of relationships across the entire company between individuals.

Speaker 8: It's on a map to the relationships across the entire company, between individuals, teams, and the work they're trying to achieve, ensuring you get reliable, accurate, and trusted generative output.

And the work they are trying to achieve ensuring you get reliable accurate and trusted generative output.

Speaker 8: Simply asking open-ended questions about all of the training data used to train a foundation model yield results that aren't as useful, leading to hallucinations that decrease trust in adoption of AI.

Simply asking open ended questions about all of the training data used to train the foundation model yields results that aren't as useful leading to the elimination that decreased trusts and adoption of AI.

Speaker 8: With Asana, AI amplifies the power of connecting our customers' work to their business goals, allowing them to accomplish things within the right time.

With the Tata AIA amplifies the power of connecting our customers work to their business goals, allowing them to accomplish things within the right context.

Speaker 8: This is a highly differentiated capability that customers are very excited about and the summit attendees reported an aha moment on the value of the work graph when seeing our AI demo.

This is a highly differentiated capability that customers are very excited about and the summit attendees reported an aha moment on the value of the work graph when seeing our AI demos.

Speaker 8: We also recently hosted an Asana Intelligence training event with over 1,500 people from leading organizations and industries such as media, transportation, education, food and beverage, and of course tech, illustrating how broad interest in Asana Intelligence is growing.

We also recently hosted an Osama intelligence training event with over 500 people from leading organizations in industries, such as media transportation education, food and beverage and of course Tac illustrating how broad interest in Tucson intelligence is growing.

Speaker 8: Notably, we're also seeing adoption of Asano within leading AI companies like Anthropic, OpenAI, and alignment research.

Notably, we're also seeing adoption of Astana within leading AI companies like Anthropic open AI and alignment Research Center.

Speaker 8: Our new packaging strategy introduced at our Investor Day in October and launched less than a month ago will further adoption of AI and help on-ramp customers to our advanced and enterprise tiers.

Our new packaging strategy introduced at our Investor Day in October and launched less than a month ago will further adoption of AI and help onramp customers for advanced and enterprise tiers.

Speaker 3: Early feedback from the sales force was that customers are excited to learn about our multiple enterprise offering.

The feedback from the sales force was that customers are excited to learn about our multiple enterprise offerings.

Yes.

Speaker 3: In closing, I'm more excited than ever about the potential of Asana, and where we can go with the platform and capabilities.

In closing I'm more excited than ever about the potential of a sauna and where we can go with the platform and capabilities for.

Speaker 3: For example, it's even more amazing to work with our own R&D team right now. I'll have an idea for something LLMs might do in the product, and very often, a couple weeks later, they'll come back and say they've got a working version, it was easier to build than they expected, and the output is more impressive than they predicted it would be.

For example, it's even more amazing to work with our own R&D team right now.

You'll have an idea for something om's might do in the product and very often a couple of weeks later, but come back and say they've got a working version.

Year to build than they expected and the output is more impressive than they predicted it would be.

Speaker 8: Everything we're focused on today is in service of the enterprise growth. Building pipeline, retention, and sea level cost for engagement. And now I'll turn it over to Anne.

Everything we're focused on today is in service of enterprise growth building pipeline retention and C level customer engagement.

And now I'll turn it over to Anne.

Speaker 2: Thanks, Dustin. In Q3, we continue to be impacted by macroeconomic headwind. Deal cycles continue to be longer, and budgets continue to be a significant factor.

Thanks, Dustin in Q3, we continued to be impacted by macroeconomic headwinds.

Sales cycles continue to be longer and budgets continue to be a significant factor.

Speaker 2: However, as Dustin mentioned, we are beginning to see signs of stabilization, especially for new business, which includes expansion.

However, as Duston mentioned, we are beginning to see signs of stabilization, especially for new business, which includes expansion we.

Speaker 2: we still need to work through some of the original headwinds that are impacting larger

We still need to work through some of the original headwinds that are impacting larger customers.

Speaker 2: Geographically, we saw bright spots in Asia, especially Japan, and Europe this quarter. As an example, Asana was particularly strong with high profile retail and consumer product goods companies this quarter.

Geographically, we saw bright spots in Asia, especially Japan and Europe. This quarter as an example, autonomous particularly strong with high profile retail and consumer product goods companies this quarter our.

Speaker 2: Our pipeline continues to build, especially with the success of events such as our Work Innovation Summit in New York City and London in October .

Our pipeline continues to build especially with the success of events such as our work innovation Summit in New York City and London in October.

Speaker 2: Revenue from our top two product tiers grew over 25% in T.

Revenue from our top two product tiers grew over 25% in Q3 as.

Speaker 2: As we continue to roll out new packaging that was shared at investor day, we expect to see new customers in particular accelerate their journey into our premium tiers. To utilize our most unique and...

As we continue to rollout new packaging that was shared at Investor day, we expect to see new customers in particular accelerate their journey into our premium tiers to utilize our most unique enterprise capabilities.

Speaker 2: Enterprise customers representing organizations with over 2,000 employees continue to be our fastest growing customer cohort.

Enterprise customers representing organizations with over 2000 employees continue to be our fastest growing customer cohort.

Speaker 2: Executives are planning long-term and looking to partner with one strategic partner, and we believe this is driving multi-year commitments for us.

Executives are planning long term and looking to partner with one strategic partner and we believe this is driving multiyear commitments for us.

Speaker 2: Our enterprise customers are asking us about AI and automations in a...

Our enterprise customers are asking us about AI and automation and Hassan up for.

Speaker 2: For example, customers we're meeting with through our Executive Briefing Program are excited about the roll-up of stats reports using Asana's AI feature.

For example, customers we're meeting with our executive briefing program are excited about the rollout of stature parts using <unk>. AI features currently writing project status might take hours, but with AI. Each report can be written in just a few minutes, we will never missing an important detail.

Speaker 2: Currently, writing project status might take hours, but with AI, each report can be written in just a few minutes, while never missing an important date.

Speaker 2: leaving employees and executives with more time for more valuable work.

Leaving employees and executives with more time for more valuable work.

Speaker 2: Also, Athonoplus AI helps organizations ramp usage where change management may otherwise be a fact.

Also Astana plus AI helps organizations ramp usage, where change management may otherwise be a factor.

Speaker 2: We believe our AI roadmap and our new packaging will help to further drive adoption.

We believe our AI roadmap and our new packaging will help to further drive adoption.

Speaker 2: We're seeing new business broadly across several diverse industries, healthcare, financial services, media, transportation, manufacturing among many of us.

We're seeing new business broadly across several diverse industries healthcare financial services media channel Cretaceous manufacturing among many others.

Speaker 2: Within media, customers rely on Asana to manage their core business processes such as developing on-air creative, managing production workflows, and sourcing new talent on our platform.

Within media customers rely on Astana to manage their core business processes, such as developing on air created managing production workflows and sourcing new talent on our platform.

Speaker 2: Paramount Global, a leading global media and entertainment company, has been a customer of ours for a few years now and expanded their use of Asana to all their employees.

Paramount Global a leading global media and Entertainment company has been a customer of ours for a few years now and expanded their use of Hassan it to all their employees this quarter.

Speaker 2: And we had another large media conglomerate direct TV that had a significant expansion this quarter.

And we had another large media conglomerate Directv that had a significant expansion this quarter.

Speaker 2: We're seeing continued growth within the healthcare and biotech vertical this quarter. For example, Norton Healthcare, who we have talked about in the past, increased their commitment with Asana this quarter. They use Asana to onboard hundreds of new physician providers to their vast hospital and healthcare.

We're seeing continued growth within the healthcare and biotech vertical this quarter for example, Norton healthcare, who we have talked about in the past increase their commitment with us on it this quarter.

Use of sonat onboard hundreds of new physician providers to their vast hospital and healthcare system.

Speaker 2: Additionally, another healthcare provider that serves over 100 million people around the world expanded their use of Asana.

Additionally, another health care provider that serves over 100 million people around the world expanded their use of <unk>.

Speaker 2: Departments that serve their clinical programs as well as marketing and financial operations rely on ASAN to automate work, manage strategic projects, enable seamless collaboration across teams, and facilitate executive reporting so they can increase operating efficiency to drive better patient outcomes.

Departments that serve their clinical program as well as marketing and financial operations rely on <unk> to automate work managed strategic projects enables seamless collaboration across teams and facilitate executive reporting so they can increase operating efficiency to drive better patient outcome.

And we continue to expand in other industries, a global transportation and food delivery marketplace company expanded their use of Astana in a multiyear early renewal deal.

Speaker 2: A global transportation and food delivery marketplace company expanded their use of Asana in a multi-year early renewal deal.

Speaker 2: Our robust analytics capabilities, JIRA data sync integration, and product roadmap, including AI capabilities, were key factors for this win.

Our robust analytics capabilities, Jarrod data think integration and product roadmap, including AI capabilities were key factors for this win.

Speaker 2: Our enterprise solution is a strategic application for the company and is used cross-functionally by many departments for everything from business strategy planning to product development to account management.

Our enterprise solution is a strategic application for the company and is used cross functionally by many departments for everything from business strategy planning to product development to account management.

Speaker 2: One of the largest hospitality companies in the world, headquartered in France, chose Asana in a multi-year land deal for their global marketing, communications, and e-commerce department.

One of the largest hospitality companies in the world headquartered in France chose us honour and a multiyear land deal for their global marketing Communications and E Commerce Department.

Speaker 2: A global 2,000 retail company with over 1,000 store locations expanded their use of Asana and upgraded to our enterprise solution to manage the openings and maintenance of their metro stores, as well as their quarterly planning work.

Our global 2000 retail company with over 1000 store locations expanded their use of a sona and upgraded to our enterprise solution to manage the openings and maintenance of their metro stores as well as their quarterly planning workflow.

Speaker 2: and some of the most influential leaders in tech are expanding. Following the momentum from Q2, we expanded significantly with a large high-profile enterprise software company.

And some of the most influential leaders in tech are expanding.

Following the momentum from Q2, we expanded significantly with a large high profile enterprise software company.

Speaker 2: This is a good leading indicator that when tech recovers, it could be a tailwind for us.

It is a good leading indicator that when tech recovers it could be a tailwind for us.

Speaker 2: In summary, we are seeing more multi-year deals up both sequentially and year over year, winning on vendor consolidation decisions, and are continuing to diversify our enterprise success across more industries.

In summary, we are seeing more multiyear deals up both sequentially and year over year, winning on vendor consolidation decisions and are continuing to diversify our enterprise success across more industries.

But we still have more work to do.

Speaker 2: Looking to Q4 and the beginning of next year, we continue to focus on building pipeline for new enterprise ARR with targeted events and executive meetings around the world.

Looking to Q4 and the beginning of next year, we continue to focus on building pipeline for new enterprise AAR with targeted events and executive meetings around the world.

Speaker 2: Improving expansion rates through customer success programs and strategic initiatives such as the introduction of AI in our new product years.

Improving expansion rates through customer success programs and strategic initiatives, such as the introduction of AI and our new product tiers.

Speaker 2: Enhancing our professional services offerings, which will deepen our partnerships with our most strategic accounts, and increasing adoption of our differentiated enterprise capabilities. And with that.

Enhancing our professional services offerings, which will deepen our partnerships with our most strategic accounts and increasing adoption of our differentiated enterprise capabilities.

With that I'll hand, it over to Tim.

Speaker 4: Thank you, Anne. While I'm pleased with our high-level results, some of the underlying drivers were not as strong as we had hoped.

Thank you Ann while I'm pleased with our high level results. Some of the underlying drivers were not as strong as we had hoped.

Speaker 4: As Anne mentioned, we continue to see headwinds from a macro standpoint, which continues to impact our dollar-based net retention.

As Ann mentioned, we continue to see headwinds from a macro standpoint, which continues to impact our dollar based net retention rates.

Speaker 4: We also have more work to do as we develop our enterprise go-to-market muscle and continue transitioning up market.

We also have more work to do as we develop our enterprise go to market muscle and continued transitioning upmarket.

Speaker 4: By the same token, I am proud of the efforts the team has put in to manage costs and improve efficiency. We continue to make substantial progress.

By the same token I am proud of the efforts the team has put in to manage costs and improve efficiency.

We continue to make substantial progress on improving our operating margins.

Speaker 4: Onto our Q3 results. Q3 revenues came in at $166.5 million, up 18% year-over-year.

Onto our Q3 results Q3 revenues came in at $166 5 million up 18% year over year.

Speaker 4: We have 21,346 core customers or customers spending $5,000 or more on an annualized basis.

We have 21346 core customers or customer spending 5000 or more on an annualized basis.

Speaker 4: Revenue from core customers grew 20% year-over-year. This cohort represented 74% of our revenues in Q3, up from 73% in the year-ago quarter.

Revenue from core customers grew 20% year over year. This cohort represented 74% of our revenues in Q3 up from 73% in the year ago quarter.

Speaker 4: We have 580 customers spending $100,000 or more on an annualized basis and this customer cohort grew 18% year over year.

We have 580 customers spending 100000 or more on an annualized basis and this customer cohort grew 18% year over year.

Speaker 4: As a reminder, we define these customer cohorts based on annualized gap revenues in a given quarter.

As a reminder, we define these customer cohort based on annualized GAAP revenues in a given quarter.

Speaker 4: Our dollar base net retention rates were lower, mainly driven by seat adjustments. Our overall dollar base net

Our dollar based net retention rates were lower mainly driven by seat adjustments.

Our overall dollar based net retention rate was over 100%.

Speaker 4: Our dollar-based net retention rate for our core customer was over 105%.

Our dollar based net retention rate for our core customer was over 105%.

Speaker 4: and customer spending 100,000 a more, our dollar-based net retention rate was over 120.

And customer spending 100000 or more our dollar based net retention rate was over 120%.

Speaker 4: As a reminder, a dollar-based net retention rate is a trailing 4-quarter average calculation and thus lagging and indicates...

As a reminder, our dollar based net retention rate there is a trailing four quarter average calculation and thus lagging indicator.

Speaker 4: We continue to see stable local churn rates overall and low churn in our largest account.

We continue to see stable logo churn rates overall and low churn in our largest accounts.

Speaker 4: However, companies remain mindful of the near-term economic challenges.

However companies remain mindful of the near term economic challenges.

I'll speak specifically to our outlook regarding this in a moment.

Speaker 4: As I turn to expense items and profitability, I would like to point out that I'll be discussing non-GAAP results in the balance of my remarks. Gross margins came

As I turn to expense items and profitability I would like to point out that I'll be discussing non-GAAP results and the balance of my remarks.

Gross margins came in at 96%.

Speaker 4: Research and development was $51.2 million, or 31% of revenue, an improvement from 36% a year ago.

Research and development was $51 2 million or 31% of revenue an improvement from 36% a year ago.

Speaker 4: Sales and marketing was $82.6 million, or 50% of revenue, an improvement from 70% a year ago.

Sales and marketing was $82 6 million or 50% of revenue an improvement from 70% a year ago.

Speaker 4: The GNA was $26.9 million, or 16% of revenues, an improvement from 22% a year ago.

G&A was $26 9 million or 16% of revenues an improvement from 22% a year ago.

Speaker 4: Operating loss was $9.8 million and our operating loss margin was 6%, representing a 31 percentage point margin improvement versus a year ago.

Operating loss was $9 8 million and our operating loss margin was 6%.

Representing a 31 percentage point margin improvement versus a year ago.

Speaker 4: The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability.

The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability.

Speaker 4: Net loss was $8.2 million and our net loss per share was $0.04.

Net loss was $8 2 million and our net loss per share was <unk> <unk>.

Moving onto our balance sheet and cash flow.

Speaker 4: Cash and marketable securities at the end of Q3 were approximately 530 million.

Cash and marketable securities at the end of Q3 were approximately $530 million.

Speaker 4: Our remaining performance obligations, or RPO, was $335.1 million, up 23% from the year-ago quarter.

Our remaining performance obligations or <unk> was $335 1 million up 23% from the year ago quarter.

Speaker 4: We expect 85% of our RPO will be recognized over the next 12 months.

We expect 85% of our appeal will be recognized over the next 12 months.

Speaker 4: The current portion of RPO grew 21% from a year ago quarter.

The current portion of our <unk> grew 21% from a year ago quarter.

Speaker 4: Our total ending Q3 deferred revenue was $255.4 million, up 19% year-over-year.

Our total ending Q3 deferred revenue was $255 4 million up 19% year over year.

Speaker 4: Our free cash flow is defined as net cash from operating activities, less cash use in property and equipment and capitalized software costs, excluding non-recurrent items such as costs.

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 costs related to restructuring.

Speaker 4: Q3 free cash flow was negative $11.5 million, or negative 7% on a margin basis, an improvement from negative 34%.

Q3 free cash flow was negative $11 5 million or negative 7% on a margin basis.

An improvement from negative 34% from the year ago quarter.

Speaker 4: On a year-to-date basis, our free cash flow was negative $13.4 million.

On a year to date basis, our free cash flow was negative $13 4 million.

Speaker 4: approximately 120 million improvement from the same year ago period.

Approximately $120 million improvement from the same year ago period.

Speaker 4: Moving to guidance for Q4 fiscal 2024, we expect revenues of $167 million to $168 million representing growth of 11 to 12% year over year.

Moving to guidance for Q4 fiscal 2024, we expect revenues of $167 million to $168 million representing growth of 11% to 12% year over year.

Speaker 4: We expect non-gap loss from operations of 23 million to 21 million, representing an operating margin of negative 13% at the midpoint of guidance, a measurable improvement from the same.

We expect non-GAAP loss from operations of $23 million to $21 million, representing an operating margin of negative 13% at the midpoint of guidance.

Measurable improvement from the same year ago period.

Speaker 4: And we expect net loss per share of $0.10 to $0.09, assuming basic and diluted weighted average shares outstanding of approximately $223 million.

And we expect net loss per share of <unk> 10 to <unk> <unk>, assuming basic and diluted weighted average shares outstanding of approximately $223 million.

Speaker 4: For the full fiscal year 2024, we expect revenue to be in the range of 648.5 million.

For the full fiscal year 2024, we expect revenue to be in the range of $648 5 million to $649 5 million, representing a growth rate of 19% year over year.

Speaker 4: $649.5 million, representing a growth rate of 19% year over year.

Speaker 4: We expect non-gabbloss from operations of 66 million to 64 million.

We expect non-GAAP loss from operations was 66 million to $64 million.

Speaker 4: Representing an operating margin of negative 10% at the midpoint of guidance and improvement from negative 38% in fiscal 2023

Representing an operating margin of negative 10% at the midpoint of guidance and an improvement from negative 38% in fiscal 2023.

Speaker 4: and we expect net loss per share of $0.27 to $0.26.

And we expect net loss per share of 27 to 26, assuming.

Speaker 4: Assuming basic and diluted weighted average shares outstanding of approximately $219 million.

Assuming basic and diluted weighted average shares outstanding of approximately $219 million.

Yeah.

Speaker 4: Our guidance assumes that there is no change in the current macroeconomic environment. We expect our overall dollar-based net retention rate to remain above 100 percent for the year.

Our guidance assumes that there is no change in the current macroeconomic environment. We expect our overall dollar based net retention rate to remain above 100% for the year.

Speaker 4: We continue to believe dollar-based net retention rate should bottom in Q1 at plus or minus 100%. When a number of large deals from the previous year renewals.

We continue to believe dollar base net retention rates should bottom in Q1 at plus or minus 100% when.

And when a number of large deals from the previous year renewal.

Speaker 4: In addition, the leadership changes we have made in our sales organization will take time to manifest.

In addition, the leadership changes we have made in our sales organization will take time to manifest.

Speaker 4: We are committed to maintaining a disciplined and balanced approach to optimizing costs and improving efficiency and profitability.

We are committed to maintaining a disciplined and balanced approach to optimizing costs and improving efficiency and profitability.

Speaker 4: We will continue to invest in the future growth opportunities like AI, which we expect will drive long term value.

We will continue to invest in our future growth opportunities like AI, which we expect will drive long term value.

Speaker 4: We remain committed to delivering positive free cash flow by the end of calendar 2024. As we work towards reaching free cash flow, we are encouraged by the progress we've made, and I'm optimistic about our future.

We remain committed to delivering positive free cash flow by the end of calendar 2024 as.

As we work towards reaching free cash flow. We are encouraged by the progress we've made and I'm optimistic about our future.

Speaker 4: Over the next 18 to 24 months, we anticipate incremental growth will be driven by expansion from our core customers, which will be a tailwind to our NRR.

Over the next 18 to 24 months, we anticipate incremental growth will be driven by expansion from our core customers, which will be a tailwind to our NR.

Speaker 4: Our focus on moving upmarket, so moving more of our customers to the 100,000 spend level.

Our focus on moving up market, so moving more of our customers to the 100000 spend levels.

Speaker 4: and our new packaging, which will help with more lands, improve adoption and new expansion. And with that, I'll turn it back to...

And our new packaging, which will help with more lands improve adoption and new expansion.

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

Okay.

Yes.

Speaker 1: As a reminder, to ask a question, you will need to press star 1 1 on your telephone. To remove yourself from the question queue, please press star 1 1 again. Please stand by while we compile.

As a reminder to ask a question you will need to press star one one on your telephone to remove yourself from the question queue. Please press star one again.

Please standby, while we compile the Q&A roster.

Speaker 1: Our next question comes from the line of Josh Baer of Morgan Stanley .

Our next question comes from the line of.

Josh Baer of Morgan Stanley.

Speaker 5: Great, thank you very much for the question. Wanted to talk about the shift up market and focus on the enterprise. And just wondering where you think you are, what inning as far as the investments in product go to market, just thinking through the packaging strategy, leadership changes, Tim, that you just referenced, and anything else as far as initiatives and focus there.

Great. Thank you very much for the question.

I wanted to talk about the shift up market and focus on the enterprise.

Just wondering like where you think you are.

What inning as far as the investments in product go to market just thinking through the packaging strategy leadership changes.

Tim that you just referenced.

And anything else as far as initiatives and focus there.

Speaker 2: Josh, this is Anne, thanks for your question. Yeah, I think we're feeling good about the investments that we've been making to go up market. You called out a couple of different things, so I'll address those. We're really excited that all of our key leadership roles across go to market are now filled. And these leaders have been adding great talent to the team where we've needed additional enterprise expertise.

Hey, Josh This is Ann Thanks for your question, Yeah, I think we're feeling good about the investments that we've been making to go upmarket.

You called out a couple of different things. So I'll just address those we're really excited that all of our key leadership roles across go to market are now filled.

And these leaders have been adding great talent to the team where we've needed additional enterprise expertise.

Speaker 2: We have more ramp wraps and reps with greater tenure than this time last year. So we're feeling good about that as well. And we'll continue to invest appropriately to support growth in priority markets so we can reach and serve customers well. On package.

We have more ramped reps and reps with greater tenure debt than this time last year. So we're feeling good about that as well and we'll continue to invest appropriately to support growth in priority markets. So we can reach and serve customers well.

Packaging.

Speaker 2: We're seeing really early positive feedback and interest from customers. In particular, customers really appreciate our approach to providing AI in every paid plan. That's clearly tied to value and supported by our guiding principles for AI. We've only been fully rolled out now for a few weeks, but with two enterprise plans now available, we're already seeing dozens of customer migrations up to those packages that include additional investment in Asana. So we're excited about that. I'm excited about the quality of the sales conversations with executives.

We're seeing really early positive feedback and interest from customers in particular, our customers really appreciate our approach to providing AI in every paid plan.

That's clearly tied to value and supported by our guiding principles for AI.

We've only been fully rolled out now for a few weeks, but with two enterprise plans now available we're already seeing dozens of customer migrations up to those packages that include additional investment in <unk>. So we're excited about that I'm excited about the quality of the sales conversations with executives and greater velocity in helping these.

Speaker 2: and greater velocity in helping these customers choose the right strategic plans for both value and growth. So more to do, but excited that the investments that we've been making both in go-to-market, the team and product and our plans are starting to have good traction.

Must choose the right strategic plans for both value and growth so more to do but excited that the investments that we've been making false and go to market the team and product and our plans are starting to have good traction.

Speaker 5: Great, thank you. And a quick one for Tim, just on the target for positive free cash flow, just wanted to confirm, is that

Great. Thank you and then quick one for Tim just on the target for positive free cash flow.

To confirm is that.

Speaker 5: You know, without regard to the macro, meaning if it gets better, worse, stays the same, you know, no matter what the growth trajectory is, we're still looking for positive free cash flow by the end of 24.

Without regard to the macro meaning if it gets better or worse stays the same.

No matter what the growth trajectory is we're still looking for positive free cash flow by the end of 'twenty four.

Speaker 4: Yeah, I mean, I think we I think we kind of said, you know, our outlook hasn't really changed. Things haven't gotten noticeably better, nor noticeably worse. So we're still committed to delivering free cash flow by the end of calendar. 24. Great, thank you.

Yes, I mean, I think we I think we kind of said.

Our outlook hasn't really changed things havent gotten noticeably better nor noticeably worse. So we're still committed to delivering free cash flow by the end of calendar 'twenty four.

Great. Thank you.

Thanks, Josh.

Thank you.

Our next question.

Speaker 1: comes from the line of Alex Zukin of Wolf Research.

Comes from the line of Alex Zukin uplift research.

Speaker 4: Hey guys, thanks for taking the question. So maybe just two for me, one on

Hey, guys. Thanks for taking the question. So maybe just two for me one on.

Speaker 4: the dust bar in the renewals that you're seeing in some of your largest customers, it seems like you're pretty confident about that NRA cropping at 100 plus or minus. So what has kind of been some of that dynamic reactivity or maybe just give us a sense for the visibility that you have there, what you've seen play out today, you mentioned some of the larger deals, but what's happening on renewal with a competitive environment, and then just a quick follow.

Thus far in the renewals that you are seeing in some of your largest customers. It seems like you're pretty confident about that NR dropping.

At 100, plus or minus so what has kind of been some of that dynamic or activity or maybe just give us a sense for the visibility that you have there what you've seen play out today, you mentioned some of the larger deals, but what's happening on renewal, where the competitive environment and then just a quick follow up for Tim.

Yeah.

Speaker 4: Hey Alex, it's Tim. So I think what we're seeing is obviously we have pretty good line of sight in terms of the utilization of many of our large accounts.

Hey, Alex it's Tim So I think what we're seeing is obviously, we have pretty good line of sight in terms of the utilization of many of our large accounts what I would say is similar to what we shared at the Investor day. Most of the most of the the net retention rate is impacted by seat adjustment or <unk>.

Speaker 4: What I would say is, similar to what we shared on the Investor Day, most of the net retention rate is impacted by seat adjustment or seat reductions, primarily from companies that either had a layoff at this time last year, and their renewal is up, and they're just readjusting their own footprint. So I feel like we have

<unk>, primarily from companies that either had a layoff at this time last year and their renewal is up and Theyre just readjusting their their own footprint. So I feel like we have we know which companies are likely going to renew we know their utilization. So we have a pretty good handle.

Speaker 4: We know which companies are likely going to renew. We know their utilization. So we have a pretty good handle in terms of what the outlook will look like. Obviously, there can always be surprises. But I think we feel pretty confident about the current.

In terms of what the outlook will look like obviously theres always there can always be surprises, but I think we feel pretty confident about the current line of sight.

Speaker 3: Perfect, and then just maybe on the balance, it was down sequentially. Was that again a result of that heightened downselling pressure and any way to think about. Uh, CRPO for, uh, for Q4 and kind of how to tie that with. Uh, with where where we are at a high level for growth next year.

Perfect and then just maybe on the <unk> balance it was down sequentially was.

Was that again as a result of that heightened down selling pressure in any way to think about.

<unk> for for Q4, and kind of how to tie that with.

We're where we are.

At a high level for growth next year.

Yes, I mean I think we.

Speaker 4: You know, I think from an RPO or CRPO perspective, it did grow, I want to say 21% on a year-over-year basis. And there's some, there's certainly some lumpiness in terms of, you know, some of the shape of the deals. I would say the RPO number is also impacted kind of by the renewals and that's kind of what we've been seeing pressure on in terms of the business.

I think from a from an <unk> perspective, it to grow I want to say, 21% on a year over year basis, and Theres. Some theres certainly some lumpy lumpiness in terms of some of the shape of the deals.

I would say the RPI number is also impacted by the renewals and that's kind of what we've been seeing pressure on in terms of the business.

Okay, great. Thanks, guys.

Thank you.

Please standby for our next question.

Speaker 1: Next question comes from the line of Taylor McGinnis of UBS. Please go ahead Taylor.

Our next question comes from the line of Taylor Mcginnis of UBS. Please go ahead Taylor.

Speaker 6: Yeah, hi, thanks so much for taking my question. So, maybe first, could you give us a sense of the growth or NRR expansion activity outside of the impacted verticals like tech and where you're seeing the most rationalization or optimization activity? Just perhaps it could help give some visibility to the growth we could see coming on the other side of these tougher renewal activities.

Yeah, hi, thanks, so much for taking my question. So maybe first could you give us a sense of the growth our IRR expansion activity outside of the impacted verticals like packing.

Youre seeing the most rationalization or optimization activity.

Perhaps you could give it could help give some visibility to the growth we could see coming on the other side of the tougher renewal activity.

Speaker 4: Yeah, I don't know. I don't know if we share this on a call on this call or the call earlier, but I think we did make a comment in the past that

Yes.

Okay.

I don't know if we shared this on the call on this call or the call earlier, but I think we did make a comment in the past that.

Speaker 4: What we've seen is that like if you segment our business across tech versus non-tech, that the non-tech sector is actually growing faster than our tech business. And most of the pressure that we've seen on both the renewals and expansion is coming from the tech. Many of the customer logos and stories that have highlighted such as healthcare and media, those are non-tech businesses and I think we're really encouraged by the footprint. Now.

What we've seen is that like if you segment, our business across tech versus non tech non tech sector is actually growing.

Faster than our tech business and most of the pressure that we've seen on both the renewals and expansion is coming from the tech.

Many of the customer logos and stories out and highlight it.

Such as healthcare and media.

Our non tech businesses and I think we're really encouraged by the footprint now the other thing Thats.

Speaker 4: The other thing that's also, you know, the other positive that I would want to point out is that where we've had new leaders for about a year, you know, in regions in about, for about a year, we've seen better performance out of those reps and out of those geographies. So I'm really encouraged by what we see in Asia and some early signs from Europe as well. So I think we're encouraged both by the regions and the non-tech sectors that we've gained foothold in.

That's also the other positive that I wouldn't want to point out is that where we've had new leaders for about a year and regions and about for about a year.

We've seen better performance out of those reps and out of those geographies. So I'm really encouraged by what we see in Asia and some early.

Early signs from Europe as well so I think were encouraged both by the regions and the non tech sectors that we've gained foothold in.

Speaker 6: Perfect. And then my second question is going off of Alex's question that he asked earlier. So, if you look at billings and bookings growth the last, like, two quarters, I think it's been in the low teens. So, how should we think about those metrics being leading indicators as we think about growth going forward? And then as we look into 4Q and 1Q, is there any additional color you can provide on what the renewal bases look like in those quarters and if there's anything to keep in mind from, you know, one to the next and how that might compare to what we've seen more recently?

Perfect and then my second question is going up without question that he asked earlier. So if you look at billings and bookings growth. The last two quarters I think it's been in the low teens. So how should we think about those metrics being leading indicators as we think about growth going forward and then as we look into <unk> and <unk> is there any additional color you can provide.

On what the renewal basis looked like in in those quarters, and if theres anything to keep in mind from one to the next and how that might compare to what we've seen more recently.

Speaker 4: Yeah, I mean, I think at this point, we're not giving fiscal year 25 guidance, but what I would encourage you all to to think about is just like we want to be, you know, stay as conservative as possible until we have more line of sight into the new year and how the how the year will shape up. So, but we'll provide an update, you know, on our Q4 earnings call. Thank you.

Yes, I mean, I think at this point, we're not giving fiscal year 'twenty guidance, but what I would encourage you all to think about it is just like we want to be.

As conservative as possible until we have more line of sight into the new year and how the how the year will shape up so, but we will provide an update.

On our Q4 earnings call.

Thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of Pat Wall-Ravens of JMT Securities. Your question please, Pat.

Comes from the line of Pat Walraven of JMP Securities. Your question. Please Pat.

Speaker 7: Oh, great. Thank you very much. Dustin. I'm going to go really big picture here.

Oh, great. Thank you very much.

Dustin I'm going to go really big picture here.

Speaker 7: Do you think the changes in the governance of OpenAI is bad for the future of humanity?

Do you think that changes in the governance at open AI is bad for the future of humanity.

Yeah.

Speaker 7: Uh yeah, that is really big picture. I know, I know. I have one for Tim after, but I'm going to start with that.

Yes that is really big picture.

I have one for Tim after but I'm going to start with that.

I mean honestly I.

Speaker 12: sort of don't feel like we know what the changes to the governance of opening i are they uh... my understanding is that they have a temporary board whose goal is to creating a government structure and what the new board and uh... you know i think what the judges based on that uh... and i i do wanna maybe just like echo from the comments that i i i've seen from smarter pundits felt like

I sort of don't feel like we know what the changes to the governance of opening IR. They my understanding is they have a temporary board whose goal is to create a new governance structure and elect a new board and I.

I think lots of judge it based on that.

I do want to maybe just like Echo some of the comments I've seen from smarter pundant so like.

Speaker 12: you know i don't i don't think uh... i ever really thought that trying to govern the private companies to act differently was going to be you know the thing that that most the risk

I don't think.

I haven't really thought that trying to govern the private companies to act differently. It was going to be the thing that that most derisked problems.

Speaker 12: problems with AI, and so I really think it just underscores the need to solve it with higher-level regulation rather than governance structures.

Problems with AI, and so I really think it just.

Underscores the need to solve it with higher level of regulation.

Rather than governance structures.

Speaker 4: And then Tim, much more practically. In your script, you commented that some of the underlying drivers were not as strong as we'd hoped. I mean, I think you touched on some of that, but can you just sort of summarize what you're referring to there? Yeah, I would say two things. I think we're still seeing pressure on renewals. So I think there's compression kind of in our net expansion rates. That's one. And I do think we'll lap those by the end of Q1 primarily because we do, like if you kind of look back at layoff and tack off.

Yes agreed.

And then Tim.

More practically in your script you commented that some of the underlying drivers were not as strong as we'd hoped I mean, I think you've touched on some of that but but can you just sort of summarize what you were referring to there.

Yes, I would say two things I think like we're still seeing pressure on renewables. So I think there is compression kind of in our net expansion rates that's one.

I do think we will lap those by the end of Q1, primarily because we do like if you kind of look back at layoffs in tech.

Speaker 4: There were a number of large companies that were still doing layoffs at the beginning of Q1. And I think once we kind of get through that period, I think we'll have some more tailwinds in our NRR. The other piece obviously is I think like the regions that I spoke about that are performing, AMIA and APAC, those have been nice surprises. But I think we still have more work to do in America.

There were a number of large companies that were still doing layoffs at the beginning of Q1.

And I think once we kind of get through that period I think we'll have some more tailwind in our NR.

The other piece, obviously is I think like the regions that I spoke about that are performing EMEA and APAC those have been nice surprise us, but I think we still have more work to do and Americas.

Speaker 12: I just want to add to you since layoffs have been in the news again recently, but just by the numbers, I think it's just important to put them in context of the proportion. So like the cycle we're seeing now from some of the recent announcements, if you just use that it up all up, it's about one 10th or less than what we saw a year ago. So those are still headwinds with those specific customers, but it's not nearly the same as what we're sort of trying to lap and cycle out of the numbers.

I just want to add too since late layoffs have been in the news again recently, but just by the numbers I think it's just important to put them in context. The proportion so like the cycle. We're seeing now from some of the recent announcements if you just add it up all up it's about 110th or less than what we saw a year ago. So those are still headwinds with those specific.

<unk>, but it's not nearly the same as what we're sort of trying to lap and cycle out of the numbers.

Okay, great. Thank you.

Thank you.

Our next question.

Speaker 1: comes from the line of George Kurosawa of Citi. Please go ahead, George.

Comes from the line of George <unk> of Citi.

Go ahead George.

Speaker 9: Thanks for taking the question. I'm on for for Steve. You talked about stabilization in new business. I'm wondering if you just double click a little bit into what you're seeing there. Any any color on on what metrics seem to be improving.

Thanks for taking my question I'm on for Steve you talked about stabilization in new business I'm wondering if you could just double click a little bit into what youre seeing there any any color on what metrics seem to be improving.

Speaker 4: Yeah, just in terms of new bookings that we're seeing and the consistency that we've seen over the last two, three quarters.

Yes, just in terms of new bookings that we're seeing and the consistency that we've seen over the last two or three quarters.

Speaker 4: I feel like, especially in some of the geographies that I mentioned, both from a predictable standpoint, from a pipeline standpoint, and from a close standpoint, I think those have been really encouraging, you know, I would say, if we were sitting here last year.

I feel like especially in some of the geographies that I mentioned, both from a predictable standpoint from a pipeline standpoint and from a close standpoint, those have been really encouraging I would say if we were sitting here last year, we were seeing deceleration in bookings, but sitting here today, it's much more stayed.

Speaker 4: we were seeing deceleration in bookings, but sitting here today, it's much more stable. Um, and I think that that's a sign and that we're optimistic that we build our bookings, you know, our new bookings up from this level.

So and I think that's a sign that we're optimistic that we build our bookings our new bookings up from this level.

Speaker 9: Got it. Super helpful. And I think during the analyst day, Ed talked a lot about some of the execution improvements in EMEA and then trying to replicate that success in U.S. Sounds like EMEA is still doing pretty well, but maybe just an update on how those changes to the U.S. go-to-market organization are going and when you expect to see some improvements. Thank you.

Got it.

<unk> helpful I think.

In the analyst day talked a lot about.

Some of the execution improvements in EMEA, and then trying to replicate that success in the U S. It sounds like EMEA is still doing pretty well, but maybe just an update on how those changes to the U S.

Go to market organization are going and when do you expect to see some improvements. Thank you.

Speaker 2: Yeah, George, it's Ann, I'll answer that. It's been great to have Ed on board a full quarter. Things that we're seeing him do both in America and around the world are continuing to create a really strong culture of winning, especially up market, driving a lot of operational rigor across the team. He's also been instilling a culture and a discipline of building strong executive relationships with customers. So that's been great to see. And then just a tight partnership with our global marketing organization. So the executive events we mentioned, getting our customers together with one another to share innovative work management practices, all of that I think is improving performance and we'll see that pay off in the coming quarters. But it's been, you know, and then we'll have more to share, but as he's been working really close with the Amer team, I think we're also seeing some great momentum there.

Yeah, George it's an.

Answer that it's been great to have add on board a full quarter.

Things that were seeing him do both in America and around the world are continuing to create a really strong culture of winning especially up market driving a lot of operational rigor across the team.

He has also been instilling a culture and a discipline of building strong executive relationships with customers. So that's been great to see.

Then just a tight partnership with our global marketing organization. So the executive events, we mentioned and getting our customers together with one another to share innovative work management practices. All of that I think is improving performance and we will see that path.

In the coming quarters, but it's been you know and then we'll have more to share but as he has been working really close with the aim of our team I think we're also seeing some great momentum there.

Speaker 10: Awesome. Thanks for taking my questions.

Awesome, Thanks for taking the questions.

Thank you.

Our next question.

It comes from the line of receipts.

Speaker 1: Jolaria of RBC Capital Markets. Your question please.

Jewelry of RBC capital markets. Your question please re queue.

Speaker 11: Hi, this is Chris Spound on Ferrisci Geleria. Thanks for taking the question. So I realized the new packaging strategy only went into effect back in November , but just wondering if you could expand a little bit more on the feedback you've heard so far.

Hi, This is Chris found on for Richard you, Larry Thanks for taking the question.

I realize the new packaging strategy only went into effect back in November, but just wondering if you could expand a little bit more on the feedback you've heard so far.

Speaker 2: Hey Chris, I think the feedback that we're hearing both from our field to our having conversations with our customers, our renewals team, our customer success team, and from customers directly themselves is...

Sure Hey, Chris I think the feedback that we're hearing both from our field, who are having conversations with our customers our renewals team our customer success team and from customers directly themselves as they do really appreciate how we've made AI very accessible in the product in.

Every paid plan I think that is something that differentiates our approach to AI.

Speaker 2: designed directly into the workflows that employees and leaders are using. So that's actually brought forward some renewal conversations in some cases. We've been, as I mentioned earlier, just pleasantly surprised to see, you know, just the level of engagement even though we're only a couple weeks out in terms of customers choosing to move to our enterprise package. And now that we've got two of those choices, I think there's also, you know, the more robust conversations that we can have with customers who are interested in those features and functionality. But we...

Designed directly into the workflows that employees and leaders are using.

So that actually brought forward some renewal conversations in some cases, we've been as I mentioned earlier just pleasantly.

Price to see just the level of engagement, even though we're only a couple of weeks out in terms of customers choosing to move to our enterprise package and now that we've got two of those choices I think theres also more robust conversations that we can have with customers who are interested in those features and.

Speaker 2: package. And now that we've got two of those choices, I think there's also, you know, more robust conversations that we can have with customers who are interested in those features and functionality. But we anticipate we'll continue to share more with you and have more updates in the next quarter. But the first few weeks have been really positive. Great. Thank you.

Alrighty.

But we anticipate we will continue to share more with you and have more updates in the next quarter, but the first few weeks have been really positive.

Great. Thank you.

Thank you please standby for our next question.

Speaker 1: Our next question comes from the line of Brent Thiel of Jeffries. Your question, please, Brent.

Our next question comes from the line of Brent Thill of Jefferies. Your question. Please Brent.

Duston you put together this public plan to buy 30 million shares by the end of December I think the last filing had close to $9 million. So a long way to go can you just talk at a high level of.

Speaker 8: Dustin, you put together this public plan to buy 30 million shares by the end of December . I think the last filing had you close to 9 million, so a long way to go. Can you just talk at a high level of, you know, how you're thinking about this? Kind of, you know, the plan's only 30% filled. How do you think about that trajectory and the shape of that plan?

How youre thinking about this kind of.

The plan is only 30% filled how do you think about.

That trajectory and in the shape of that plan.

Yeah.

Speaker 12: Yeah, so I'll just confirm the 10 D51 is still filed and.

Yes, so I'll just confirm that the <unk> one is still filed and.

Speaker 12: Gosh, when did we originally file it? March? Okay, so all I can say is like the way I thought about that trajectory was locked in in March. And I had to try and forecast the future in a really volatile market. And so I did the best I could. And now things are playing out. But yeah, that's basically all I can say about it at this point.

Gosh when did when it was originally filed in March.

So.

All I can say is like the way I thought about that trajectory was locked down in March.

I had to try and forecast the future and are really volatile market.

And so did the best I could.

And now things are playing out.

But yeah, that's basically all I can say about it at this point.

Speaker 12: Okay, that's great. And Tim, just to follow up on the renewal, kind of, when you expect that to get more, more base underneath it. I mean, is there in the next couple quarters, is there an event or something that happens that you think you'll, you'll get a better basing on the renewals? Or how do you, how do you think about that specifically?

Okay, that's great and Tim just to follow up on.

The renewal kind of when you expect that.

Get more more base underneath that I mean is there in the next couple of quarters is there an event or something that happens that you think you'll you'll get a better basing on the renewals or how do you. How do you think about that specifically.

Speaker 4: Yeah, I mean, I think when we look at the renewals that we have coming up and the companies that were impacted, you know, at some point this year due to lay off and looking after utilization, we feel like we have a pretty good handle and plan and understand what that renewal will look like.

Yes, I mean, I think when we look at the renewals that we have coming up.

And the companies that were impacted at some point this year due to lay off and looking at their utilization, we feel like we have a pretty good handle and plan and understand what that renewal will look like.

Speaker 4: So I think we have line of sight, there's always surprises, but I feel like we have a pretty good handle in terms of lapping the difficult comps that will have probably by the end of Q1.

So I.

I think we have line of sight, there's always surprises, but I feel like we have a pretty good handle in terms of lapping difficult comps that we'll have probably by the end of Q1.

Great. Thank you.

Yes.

Thank you.

Our next question.

Speaker 1: comes from the line of Jason Salino of KeyBank Capital Markets.

Comes from the line of Jason Salina of Keybanc capital markets.

Speaker 9: Great, thanks for taking our question. This is actually Devon on for Jason today. I wanted to ask about the early renewal deal that you called out. I believe this is the second quarter. You're seeing this trend. I'm assuming this is customer driven, but any other details you can share, you know, what the reasons are from the customer side and are you expecting more of these early renewals happening in the common quarters.

Great. Thanks for taking my question. This is actually Devin on for Jason today.

I wanted to ask about the early renewal deal that you called out I believe this is the second quarter and you are seeing this trend I'm, assuming this is customer driven but any other details you can share what the reasons are from the customer side and are you expecting more of these early renewals happening.

The coming quarters.

Okay.

Speaker 2: Yeah, hey, Devin. So in that case that we mentioned, it's a global transportation and food delivery company, which I actually happen to be a very loyal customer of, but we'd been talking to them about just strategically all the use cases where they wanted to expand. And so what we really saw is both the combination of our AI features, the investments that we had made in scalability and security, and their business priorities and needs really just resulted in early renewal so that they could, again, roll out much more quickly. We anticipate seeing more of those. I think it's still early, but I do think with the conversations our teams are having with customers with our new plans, those could create opportunities for customers to early renew. But again, we'll have more of that to share as we have more traction with the new plans. But again, early conversations are driving good velocity in helping customers choose the right options for them as they plan for growth over the next year.

Yes, Hey, Devin so in that case that we mentioned, it's a global <unk> and food delivery company, which I actually happened to be a very loyal customer, but we had been talking to them about just strategically all the use cases, where they wanted to expand and so what we really saw is.

Both the combination of our AI features the investments that we had made in scalability and security and their business priorities and needs really just resulted in a early renewal also that they could again roll out much more quickly.

Do we anticipate seeing more of those I think it's still early but I do think with the conversations our teams are having with customers with our new plans those could create opportunities for our customers to early renew but again, we'll have more of that to share you know as we have more cash.

With the new plants, but again early conversations are driving good velocity and helping customers choose the right options for them as they plan for growth over the next year.

Got it that's helpful. And then maybe just one quick one just wanted to ask about the <unk> revenue guide I think at the midpoint.

Sort of assuming a DSL and sequential growth is that just mainly conservatism or any other.

Ladies and there would be helpful. Thanks.

Yes, I mean, I think it's <unk>.

Cost is kind of based on.

What we're seeing in the business right now.

Hopefully you know over the last probably since we've been public hopefully we.

Being in a position where we've over delivered in.

We try to do the best that we can on the forecast.

Speaker 1: Thank you. I would now like to turn the conference back to Catherine Boine for closing remarks. Madam.

Thank you I would now like to turn the conference back to Catherine O'brien for closing remarks Madam.

Speaker 14: Thank you. And we just want to thank you again for joining us today. We know that earnings is a very busy season for you. We appreciate your time and we look forward to seeing you on the road this month and in January . Thank you.

Thank you and we just wanted to thank you again for joining US today, we know that earnings is a very busy season for you. We appreciate your time and we look forward to seeing you on the road this month and in January Thank you.

Speaker 1: This concludes today's conference call. Thank you for participating. You may now disconnect.

This concludes today's conference call. Thank you for participating you may now disconnect.