Q1 2025 Asana Inc Earnings Call

Okay.

Operator: Good day, and thank you for standing by. Welcome to Asana's first quarter 2025 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.

Good day, and thank you for standing by.

Speaker Change: I'll come to us on its first quarter of 2025 earnings call.

Speaker Change: At this time all participants are in a listen only mode.

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

Speaker Change: To ask a question during the session you'll need to press star one one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised.

Speaker Change: To withdraw your question. Please press star one again.

Catherine Buan: Please be advised that today's conference is being recorded. I would now like to hand the conference over to Catherine Buan, Head of Investor Relations. Please go ahead.

Speaker Change: Please be advised that today's conference is being recorded.

Kathryn: I would now like to hand, the conference over to Kathryn one head of Investor Relations. Please go ahead.

Catherine Buan: Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana's first quarter fiscal year 2025. With me on today's call are Dustin Moskovitz, Asana's co-founder and CEO, Anne Raimondi, our Chief Operating Officer and Head of Business, and Tim Wan, our Chief Financial Officer. Today's call will include forward-looking statements, including statements regarding our expectations for free cash flow, our financial outlook, strategic plans, and our market position and growth opportunities. Forward-looking statements involve risks, uncertainties, and assumptions that may cause our actual results to be materially different from those expressed or implied by the forward-looking statements.

Dustin A. Moskovitz: Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for our son is first quarter of fiscal year 2025 with me on today's call are duston Moskovitz, Exxon as co founder and CEO and Remondi, our Chief operating officer, and head of business and Tim <unk>, Our Chief Financial Officer.

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

Speaker Change: 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. 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.

Catherine Buan: 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. 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.

May cause actual results to differ materially from those set forth in such statements.

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

Speaker Change: A reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations webpage at investors thought the Sana Dot com.

Catherine Buan: Reconciliation between GAAP and non-GAAP financial measures and a discussion of the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations webpage at investors.asana.com. And with that, I'd like to turn the call over to Dustin. Thank you, Catherine, and thank you all for joining us on the call today. Asana had a good first quarter as we continue to execute on our enterprise go-to-market strategy and make progress on Asana AI.

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

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

Dustin: So I had a good first quarter as we continued to execute on our enterprise go to market strategy and make progress on our solar AI.

Catherine Buan: I'll go through a few of the highlights from the quarter and then jump into how I see the AI landscape evolving. Q1 revenues grew 13% year-over-year, with revenue from our largest customers growing even faster than that, and non-GAAP operating margins improved 5 percentage points year-over-year.

Dustin: I'll go through a few of the highlights from the quarter and then jump into how I see the AI landscape evolving.

Dustin: Q1 revenues grew 13% year over year with revenue from our largest customer is growing even faster than that.

Dustin: non-GAAP operating margin improved five percentage points year over year.

Dustin A. Moskovitz: Our growth continues to be fueled by some of the largest and most strategic companies in the world who are partnering with Asana to redefine how they work. It's been a solid start to the year, and we continue to focus on our enterprise playbook, sales productivity, and building our enterprise muscle. Now I want to get to what's top of mind for me. AI is a disruptive force that will dramatically reshape all of software, rigid software categories like ITSM, and CRM; you can go down the list. They're all designed for an earlier paradigm.

Speaker Change: Our growth continues to be fueled by some of the largest and the most strategic companies in the world who are partnering with us on AR and redefining how they work.

Speaker Change: It's been a solid start to the year and we continue to focus on our enterprise playbook sales productivity and building our enterprise muscle.

Speaker Change: Now I want to get to what's top of mind for me.

Speaker Change: As a disruptive force that will dramatically reshape all of software.

Speaker Change: Richard software categories like TSM CRM you can go down the list. They are all designed for an earlier paradigm.

Dustin A. Moskovitz: AI is transforming the way we manage work, the way we do work, and the way we think about how to work. Everyone's mental model for how work gets done today needs to be rethought. Let me start with how folks currently think about our category, collaborative work management. What used to be about helping humans coordinate work at scale has expanded to enabling humans and AI to collaborate and achieve extraordinary things together. At Asana, we believe the future of work is humans and AI collaborating side by side, with AI teammates taking on and completing increasingly complex tasks and workflows.

Speaker Change: AI is transforming the way we manage work the way, we execute work and the way we think about how to work.

Speaker Change: Everyones mental model for how work gets done today needs to be rethought.

Speaker Change: Let me start with how folks currently think about our category collaborative work management.

Speaker Change: What used to be about helping humans coordinate work at scale has expanded to enabling humans and AI to collaborate and achieve extraordinary things together.

<unk>: At <unk>, we believe the future of work as humans and AI collaborating side by side with AI teammates, taking on and completing increasingly complex tasks and workflows.

Dustin A. Moskovitz: There's incredible enthusiasm for AI in the enterprise, and rightfully so. But most of what's been released today is co-pilots and assistants, AI that's meant to help personal productivity, summarize and generate text, and look up information. These are useful, but they're asking a lot of users to decide to change their existing behaviors and, in many cases, involve a new chat application with its own learning curve.

<unk>: There is incredible enthusiasm for AI in the enterprise and rightfully so.

But most of what's been released today are co pilots in our systems.

Speaker Change: That's meant to help personal productivity summarized and generate taxed and look up information.

Speaker Change: These are useful but they are asking a lot of users decided to change their existing behaviors and in many cases involve a new chat application with its own learning curve.

Dustin A. Moskovitz: We're just starting to scratch the surface of what's possible when thinking of AI less as an assistant and more as a teammate. Today, AI can take on individual tasks and assist in completing workflow steps, and as we go forward, AI will take on more and more complexity. From taking on individual tasks, to assisting with individual projects and workflows, to eventually overseeing entire portfolios of work, helping you balance the workload, avoid missing deadlines, and keep the team aligned around shared clarity.

Speaker Change: We're just starting to scratch the surface of what's possible when thinking that they are less as an assistant and more as a teammate.

Speaker Change: Today, AI can take an individual pass and assist in completing workflow steps and as we go forward and more and more complexity.

Speaker Change: I'm, taking on individual task to assisting with individual projects and workflows to eventually overseeing entire portfolios of work, helping you balance the workload avoid missing deadlines and keep the team aligned around shared clarity.

Dustin A. Moskovitz: But there's still a trust issue in the enterprise. In fact, our Work Innovation Lab found that 53% of executives are concerned people will make decisions using unreliable information from generative AI. We've all seen confabulating chatbots, and this doesn't breed confidence in the workplace. So there are a few key problems customers are grappling with. How can we trust AI? How do we ensure humans are in the loop and held accountable?

Speaker Change: But theres still a trust issue in the enterprise in fact, our work innovation lab found at 53% of executives are concerned people will make decisions using unreliable information from generative AI.

Speaker Change: We've all seen congratulating chat bots and this doesn't breed confidence in the workplace.

Speaker Change: So there are a few key problems customers are grappling with how can we trust II, how do we ensure human during the loop and held accountable.

Dustin A. Moskovitz: And then how do we scale AI at work from just an assistant to a teammate? So it's not just completing discrete tasks. Instead, AI could be taking on bigger bodies of work and taking responsibility for higher-level goals. What gives me so much confidence is that the work graph is the ideal structure to overcome these hurdles and scale AI with confidence. Asana understands how work and workflows map to goals and can break them down in ways both humans and AI can understand in action.

Speaker Change: How do we scale AI at work from just an assistant to a teammate so its not just completing discrete tasks.

Speaker Change: Instead, they are it could be taking on bigger bodies of work and taking responsibility for higher level goals.

Speaker Change: What gives me so much confidence that the work graph is the ideal structure to overcome these hurdles and scale AI with confidence.

Speaker Change: So I don't understand how work and workflows map the goals and can break it down in ways, both humans and AI and can understand and actions.

Dustin A. Moskovitz: We capture the relevant context without the digital exhaust that exists in other collaboration tools that focus more on documents or chat or the scaling and visibility issues you see with your peers and work managers. A helpful analogy is thinking of Asana and the work raft as a form of digital scaffolding.

Speaker Change: We capture the relevant context without the digital exhaust that exists in other collaboration tools that focus more on documents or chat, where the scaling and visibility issues you see with our peers and work management.

Speaker Change: Helpful analogy is thinking of a sign on the Warcraft as a form of digital scaffolding.

Dustin A. Moskovitz: Said another way, we have the necessary structure; we understand the relationships between people, work, and workflows, and that means we can direct the AI to consider exactly the right content. Now try to decipher a signal from all the data in your enterprise. With this understanding, AI can begin to provide intelligent assistance, automate tasks, and even act as an agent or teammate, driving work forward. Imagine an AI teammate that's the most organized, knowledgeable, effective, and encouraging project manager that you've ever worked with, Helping you figure out the best way to plan and accomplish your work, and even doing a lot of the work themselves, rather than assigning it all to others.

Speaker Change: Said another way, we have the necessary structure, we understand the relationships between people work in workflows and that means we directly to consider exactly the right context.

Speaker Change: Not trying to decipher where the signal from all the data in your enterprise.

Speaker Change: With this understanding AI can began to provide intelligent assistance automate tasks and even act as an agent or teammate driving work forward.

Speaker Change: Imagine an AI teammate that's the most organized knowledgeable effective and encouraging product manager that you have ever worked with helping.

Speaker Change: Helping you figure out the best way to plan and accomplish your work and even doing a lot of the work themselves rather than signing at all to others.

Dustin A. Moskovitz: Our platform is also where the actual collaboration between humans and AI will happen. By deeply integrating AI capabilities into the tools teams already use to manage and execute work, we're creating the ideal environment for humans and machines to work together seamlessly. With Asana, AI teammates appear right in the flow of work, not in a separate. As we build this future, Asana's focus on how work is structured will be a key advantage.

Speaker Change: Our platform is also where the actual collaboration between humans and AI will happen.

Speaker Change: Yes.

Speaker Change: By deeply integrating AI capabilities into the tools teams already used to manage and execute work, we're creating the ideal environment for humans and machines to work together seamlessly.

Speaker Change: With us on our AI teammates appear right in the flow of work not in a separate tool.

Speaker Change: And as we built this future scientists focused on how work is structured will be a key advantage, we know which context to look at and we don't try to look at all possible data, which is how do you usually end up with there. So I'd like to say that language models confabulate when they try to give you an answer based on what's in the training data, but there are vastly more accurate when asked to give you an answer based on what's in the context window.

Dustin A. Moskovitz: We know which context to look at, and we don't try to look at all possible data, which is how you usually end up with errors. I like to say that language models confabulate when they try to give you an answer based on what's in the training data, but they're vastly more accurate when asked to give you an answer based on what's in the context.

Dustin A. Moskovitz: Our strategic advantage is being able to identify the most important context well because it's explicitly identified by the relationships between the tasks, projects, portfolios, goals, and people in the work graph. This context and high signal-to-noise ratio will allow the AI we develop to deliver insights and automation with a level of precision and impact that scattered, noisy data simply can't match. Let's think about this in the context of common workflows our customers rely on Asana for every day.

Speaker Change: Our strategic advantage is being able to identify the most important context, well because it is explicitly identified by the relationships between the tax projects portfolio of schools and people in the Warcraft.

Speaker Change: This context and high signal to noise ratio will allow the AI redevelopment to deliver insights and automation with a level of precision and impact that scattered noisy data simply can't match.

Speaker Change: Yes.

Let's think about this in the context of common workflows, our customers rely on us honor for everyday.

Dustin A. Moskovitz: In resource planning today, you can ask Asana's AI to determine the bottlenecks and key staffing risks by project portfolio or goal. AI can also apply decision-making principles with judgment to route work to the right team. In the future, AI will understand the complexity of each project, predict potential roadblocks, and proactively suggest the best team composition to ensure success. That team would be made up of human and AI teammates working together.

Speaker Change: And resource planning today, you can ask Hassan as AI to determine the bottlenecks and key staffing risks by project portfolio or goal.

Speaker Change: Yes, I can also apply in decision, making principles with judgment throughout work to the right team.

Speaker Change: And the future AI will understand the complexity of each project predict potential roadblocks and proactively suggests the best team composition to ensure success.

Speaker Change: That team would be made up of humans and AI teammates working together.

Dustin A. Moskovitz: For goal management, today's Asana AI can assist in writing goals based on best practices, help identify which teams are the best suited to take on the work, and actually identify which work in the organization would be best to link to that goal. In the future, AI will analyze the work graph to identify which initiatives are driving the most progress toward key results and suggest course corrections for those that are off track.

Speaker Change: For Golar management today's this on an AI can assist in writing goals based on best practices help identify which teams are the best suited to take on the work and to actually identify which work in the organization would be best to wait tobacco.

Speaker Change: And the future AI will analyze the warcraft to identify which initiatives are driving the most progress towards key results and suggested course corrections for those that are off track.

Dustin A. Moskovitz: Today, for product launches, PMOs can use AI to recognize where other teammates need to be added, where decisions need to be made, and ask Asana's AI to review work and assign approval. You can have Asana AI complete work now, like having it help edit and draft creative. As work gets done today, AI will create accurate real-time status reporting on goals, portfolios, and projects based on the exact format your team prefers. What's next?

Speaker Change: Today for product launches Pmo's can use AI to recognize where other teammates need to be added where decisions need to be made and ask Hassan as AI to review work and assign approval tasks.

Speaker Change: You can help us on the AI and complete work now like having it help edit and dropped to creative briefs.

Speaker Change: As work its done today I will create accurate real time status reporting on goals portfolios and projects based on the exact format your team prefers.

Speaker Change: What's next AI will take an increasingly complicated portions of the work in hand offs associated with the successful launch all while keeping human teammates accountable and loop.

Dustin A. Moskovitz: AI will take on increasingly complicated portions of the work and handoffs associated with a successful launch, all while keeping human teammates accountable in the loop. That's just thinking about the transformation of common workflows our customers rely on us for today. The opportunity here is so much bigger. We now have the ability to customize and personalize workflows afterwards, and we can do this in infinite ways. This level of customization is hard to even grasp because it was so out of reach before.

Speaker Change: That is just thinking about the transformation of common workflows, our customers rely on us for today.

Speaker Change: The opportunity here is so much bigger we now have the ability to customize and personalize workflows effortlessly and can do this in infinite ways. This level of customization that is hard to even block because it was so out of reach before.

Dustin A. Moskovitz: There will be a significant amount of value creation as a large swath of enterprise workflows are reinvented with AI, and rigid software categories of the past are reshaped. This is where we're focused, and I believe we're uniquely positioned to win. Our experience isn't that we simply automate the work; it's that we can do more, move faster, and raise the bar on quality. Like we see in all paradigm shifts in technology, people translate workflows from the previous paradigm into the new paradigm before they realize this is incredibly limiting.

Speaker Change: There will be a significant amount of value accretion as a large swath of enterprise workflows are reinvented with AI and Richard software categories in the past our reshaped.

Speaker Change: This is where we're focused and I believe we are uniquely positioned to win.

Speaker Change: And our experience isn't that we simply automate the work. So we can do more move faster and raise the bar on quality.

Like we see in all paradigm shifts in technology people translate workflows from the previous paradigm into the new paradigm before they realize this is incredibly limiting.

Dustin A. Moskovitz: The opportunity is to transform. Google and Meta built the best ad businesses in history by creating products only possible in the internet age, adapting ad units to new form factors, and building auction-based pricing with dynamic ad placement. This radically new and profitable model is analogous to the moment we're in. Let me give a concrete example.

Speaker Change: The opportunity is to transform.

Speaker Change: Google and meta the best ads businesses in history by creating products only possible in the Internet age adapting AD units to new form factors and building auction based pricing with dynamic ad placement.

Speaker Change: This radically new and profitable model is analogous to the moment we are in.

Speaker Change: Let me give a concrete example.

Dustin A. Moskovitz: Right now, people think about automatically translating their marketing content to suit different verticals with AI. But maybe, in the near future, your marketing landing page is selected from a thousand possible ones, and it could be pre-customized by Asana AI workflows based on what will be the best possible match to the viewer. Because customizing to this degree is worth the inference cost, and Asana can make it easy. Or maybe vendor selection is done by AIs running sophisticated RFPs instead of people viewing marketing pages and asking questions.

Speaker Change: Right now people think about automatically translating their marketing content to see different verticals with AI.

Speaker Change: But maybe in the near future Youre marketing landing page is selected from 1000 possibilities.

Speaker Change: They can be pre customized biopharma workflows based on what will be the best possible match to the viewer because customizing to this degree is worth the insurance cost and Hassan I can make it easy.

Speaker Change: We're maybe vendor selection is done by AI is running sophisticated rfps instead of people viewing marketing pages and asking questions.

Dustin A. Moskovitz: And here's where elevating the quality and automated customization translates into increasing velocity and revenue for customers. I have more conviction than ever that the entire software category is ripe for dramatic upheaval. And Asana is well positioned to capture the opportunity and present it. Disrupt old software categories and be the digital scaffolding for humans and AI working together on any workflow that helps achieve their objectives, and we expect our business will expand.

Here's where elevating the quality and automated customization translates into increasing velocity and revenue for customers.

Speaker Change: I have more conviction than ever that the entire SaaS landscape is ripe for dramatic upheaval and Hassan is well positioned to capture the opportunity it presents.

Speaker Change: The old software categories and be the digital scaffolding for humans and AI working together on any workflow that helps achieve their objectives.

Speaker Change: And we expect our business will expand to.

Dustin A. Moskovitz: We believe AI will drive revenue growth for us in three key ways. First, it already enhances the value we deliver in our work management functionality, like with our smart summary and smart status. We don't package the AI parts of our core features as a separate SKU, because we understand AI functionality is simply table stakes for participation in SAS at this point.

Speaker Change: We believe AI will drive revenue growth for us in three key ways.

Speaker Change: First it already enhances the value we deliver in our work management functionality like with our Smart summary, and smart status features.

Speaker Change: We don't package the AI parts of our core features as a separate SKU, because we understand AI functionality simply table Stakes for participation in SaaS at this point.

Dustin A. Moskovitz: However, we believe the differentiated value provided by AI plus the Asana work graph makes us more competitive and increases our pricing. Motivating Customers to Migrate to Our New Package. At the same time, AI is enabling us to introduce new powerful use cases that can be sold independently. So the second way we expect AI to drive revenue growth is via license-based add-ons.

Speaker Change: However, we believe the differentiated value provided by AI plus the amount of Warcraft makes us more competitive and increases our pricing power.

Speaker Change: Motivating customers to migrate to our new packages.

Speaker Change: And at the same time AI is enabling us to introduce new powerful use cases that can be sold independently for.

Speaker Change: So the second way, we expect it will drive revenue growth as the license based out of them and we have specific ones. We're developing now.

Dustin A. Moskovitz: And we have specific ones we're developing now. On top of that, like we've suggested in the past, there might be more usage-based AI revenue in the future as well. And over the past few months, we've gained conviction, specifically in the context of custom work. We're working on a private beta with select customers, and we intend to expand more broadly to our enterprise customers as the year continues.

Speaker Change: On top of that like we've suggested in the past there might be more usage based AI revenue in the future as well.

Speaker Change: And over the past few months, we've gained conviction of that specifically in the context of custom workflows.

Speaker Change: We're working on a private beta with select customers and we intend to expand more broadly into our enterprise customers as the year continues.

Dustin A. Moskovitz: I'll reiterate again how incredible this opportunity is in front of us and how well positioned we are to capture the AI opportunity in the enterprise. We believe that with AI and the WorkGraph, we'll further penetrate our existing market, and with AI-enabled features like custom workflows, we'll increase our TAM and expand into new markets. We moved early on it.

Speaker Change: I'll reiterate again, how incredible this opportunity is in front of us and how well positioned we are to capture the AI opportunity in the enterprise.

Speaker Change: We believe that with AI and the Warcraft will further penetrate our existing market opportunity and with AI enabled features like custom workflows will increase our tam and expand into new markets.

Speaker Change: We moved early on Hey, I'm. The Warcraft provides the ideal structure and scaffolding for AI to be effective with a number one AI work management platform and we're just getting started.

Dustin A. Moskovitz: The WorkRaft provides the ideal structure and scaffolding for AI to be effective. We're the number one AI work management platform, and we're just getting started. We look forward to sharing more details at our Work Innovation Summit in San Francisco on June 5th and later this year in October in New York City. And with that, I'll turn things over to Anne. Thanks, Dustin.

Speaker Change: We look forward to sharing more details at our work innovation summit in San Francisco on June 5th and later this year in October in New York City.

Speaker Change: And with that I'll turn things over to Anne.

Anne Raimondi: To further your point, our biggest, most innovative customers are focusing on AI as well. The Asana work graph is a framework that, combined with AI, makes work even more effective. As a result, our AI roadmap is a top request for executive briefings. We are well positioned to be the solution for many of the questions that are pervasive in this early stage of AI adoption. We've started to roll out our new AI workflow capabilities to select a group of customers who are reinventing how they work today, and the early feedback has been nothing short of jaw-dropping.

Anne: Thanks, Dustin to further your point our biggest most innovative customers are focusing on AI as well.

Anne: <unk> is the scaffolding that combined with AI makes work even more effective.

Anne: As a result, our AI roadmap has a top request for executive briefings, we are well positioned to be the solution for many of the questions that are pervasive in this early stage of AI adoption.

Anne: We started to rollout our new AI workflow capabilities to select group of customers, who are reinventing how they work today and the early feedback has been nothing short of jaw dropping.

Anne Raimondi: In fact, in the last few weeks, I've been meeting with customers in Tokyo, New York, and across EMEA, and their response has been amazing. They see massive potential for these AI teammates to drive productivity, fuel innovation, and deliver better results. As one customer said, Asana's AI capabilities have the potential to help us realize our vision of becoming an AI-powered workforce. Now, let's transition to our Q1 performance. We had a solid finish to the quarter despite ongoing budget scrutiny and other headwinds.

Anne: Fact, the last few weeks Ive been meeting with customers in Tokyo, New York and across EMEA and their response has been amazing they see massive potential it is AI teammates to drive productivity fuel innovation and deliver better results as one customer said <unk> AI capabilities have the potential to help us realize our.

Anne: <unk> of becoming an AI powered workforce.

Speaker Change: Now, let's transition to our Q1 performance Lee.

Lee: We had a solid finish to the quarter, despite ongoing budget scrutiny and other headwinds.

Anne Raimondi: Today, we believe that we have better predictability in our business, a strengthening pipeline, and we are starting the year better positioned to serve our customers throughout the entire customer lifecycle, enhancing our ability to partner and grow together. By geography, EMEA in Japan led revenue growth, and overall international revenues grew 14.5% year over year.

Today, we believe that we have better predictability in our business strengthening pipeline and we are starting the year better positioned to serve our customers throughout the entire customer lifecycle, enhancing our ability to partner and grow together.

Lee: By geography, EMEA, and Japan led revenue growth and overall international revenues grew 14, 5% year over year.

Anne Raimondi: The EMEA team continues to execute well with strong leadership and more seasoned sales. This is a great leading indicator for North America, where the step up in leadership happened about one year later. As we mentioned previously, we expect dollar-based net retention to bottom in Q2, at or slightly below 100% for the overall number, and stabilize starting in Q3. Specifically, there are still some seat adjustments that we need to allow, especially in the U.S. As Dustin mentioned on a previous call, in order to get to reacceleration, you need to first go through stabilization.

Lee: The EMEA team continues to execute well with strong leadership and a more seasoned sales team. This.

Lee: This is a great leading indicator for North America, where the step up in leadership happened about one year later.

Lee: As we mentioned previously we expect dollar based net retention to bottom in Q2 at or slightly below a 100% for the overall number and stabilized starting in Q3 specifically.

Lee: Specifically there are still some seed adjustments that we need to lap, especially in the U S.

Lee: As Dustin mentioned on our previous call in order to get to Reacceleration need to first go through stabilization.

Anne Raimondi: The good news is that we are seeing good signs with stability across new bookings and our average contract value. We believe we are well-poised for re-acceleration in the second half of the year. Now turning to customer dynamics in Q1, our enterprise customers continue to expand. They're making long-term investments in Asana, and this is reflected in multi-year deals and consolidation decisions. We close deals in key verticals such as manufacturing, retail, and professional services, and are even seeing tech companies. We have several deals across manufacturing. Suzuki, a leading Japanese manufacturer, expanded its use of Asana this quarter to drive further operational efficiency and digital transformation.

Dustin: The good news is that we are seeing good signs of stability across new bookings and our average contract values.

Speaker Change: We believe we are well placed for reacceleration in the second half of the year.

Speaker Change: Now turning to customer dynamics in Q1, our enterprise customers continue to expand their making long term investments in <unk> and this is reflected in multiyear deals and consolidation decisions we can.

Speaker Change: Most deals in key verticals, such as manufacturing retail and professional services and are even seeing tech companies expand.

Speaker Change: We had several deals across the manufacturing sector.

Speaker Change: So snooki, a leading Japanese manufacturer expanded its use of Astana this quarter to drive further operational efficiency and digital transformation.

Anne Raimondi: It was initially adopted by the IT team and later deployed to the overseas automotive sales department for remote work during COVID-19. Asana is now used by over 1,000 employees across sales, IT, legal, and engine design to manage their work and strategic projects. And they're seeing great results. For example, one team has already reduced overtime hours by 35%.

Speaker Change: It was initially adopted by the team and later deployed to the overseas automotive sales department for remote work during COVID-19.

<unk> is now used by over 1000 employees across sales.

Speaker Change: Legal and engine design to manage their work and strategic projects and they're seeing great results. For example, one team has already reduced overtime hours by 35%.

Anne Raimondi: Also, one of the largest digital communications companies in the world expanded their use of our enterprise solution this quarter in their go-to-market operations division to manage the global transformation of their sales force in preparation for AOC. Our reporting capabilities were a key differentiator that led to this deal and will give leaders visibility into progress towards their go-to-market transformation goals. And we continue to see ongoing success in the retail and CPG space. For example, a premium footwear brand, renowned for their cutting-edge technology, went wall-to-wall and up-tiered to our enterprise solution.

Speaker Change: Also one of the largest digital communications companies in the world expanded their use of our enterprise solution this quarter and their go to market operations Division to manage the global transformation of their sales force in preparation for AI.

Speaker Change: Our reporting capabilities are a key differentiator that led to this deal and we will give leaders visibility into progress towards their go to market transformation goals.

Speaker Change: And we continue to see ongoing success in the retail and CPG space.

Premium footwear brand, we're known for their cutting edge technology with wall to wall and up tier to our enterprise solution.

Anne Raimondi: One of my favorite examples of how they rely on our platform is to manage new store openings, pop-up stores, and workplace projects with more than 10 other departments. We're also making progress in financial services. Notably, Sumitomo Mitsui Trust Bank, a Japanese financial services firm with thousands of employees, expanded with us this quarter.

Speaker Change: One of my favorite examples of how they rely on our platform is to manage new store opening pop up stores and workplace projects with more than 10 other department.

Speaker Change: We're also making progress in financial services, notably Sumitomo Mitsui Trust Bank, the Japanese financial services firm with thousands of employees expanded with us this quarter.

Anne Raimondi: Finally, one of the leading tourism and economic development organizations in EMEA expanded their use of Asana this quarter to manage strategic projects aligned to their goal to double the size of their economy within the next 10 years. We believe that digital transformation is just the first step in the AI transformation opportunity, and we believe we are the leader in AI collaborative work management. And we have more work to do.

Speaker Change: Finally, one of the leading tourism and economic development organizations in EMEA expanded their use of Hassan edits Carter to manage strategic projects aligned to that goal to double the size of their economy within the next 10 years.

Speaker Change: We believe that digital transformation is just the first step in the AI transformation opportunity and we believe we are the leader in AI collaborative work management and we have more work to do.

Anne Raimondi: Throughout this year, we are focusing on a number of initiatives to further strengthen our execution. First, we continue to hire quota-carrying sales reps as we see the opportunities grow and accelerate with AI. Second, we remain steadfast on accelerating our pipeline and enhancing the efficiency of our outbound prospecting.

Speaker Change: Throughout this year, we are focusing on a number of initiatives to further strengthen our execution.

Speaker Change: First we continue to hire quota carrying sales reps as we see the opportunities to grow and accelerate with AI.

Speaker Change: Second we remain steadfast on accelerating our pipeline and enhancing the efficiency of our outbound prospecting we're.

Anne Raimondi: We're not just aiming to increase the pace at which we operate but also to deepen our engagement with our customers. Third, leveraging AI internally. We are improving the seller experience and efficiency by leveraging AI.

Speaker Change: We're not just aimed to increase the pace at which we operate but also to deepen our engagement with our customers.

Anne Raimondi: For example, we're using our own Asana AI for outbound workflows, such as customizing customer outbound. In summary, our strategy is designed to drive AR growth, improve efficiency, and build stronger relationships with our customers. And with AI joining the team, we can deliver even greater value to our customers. We're excited about the path ahead and confident in our ability to execute on these initiatives. And with that, I'll hand it over to

Third leveraging AI internally, we are improving the seller experience and efficiency by leveraging AI. For example, we're using our own us on AI for outbound workflows, such as customizing customer outreach.

Speaker Change: In summary, our strategy is designed to drive growth improve efficiency and build stronger relationships with our customers.

And with AI, joining the team, we can deliver even greater value to our customers.

Speaker Change: We're excited about the path ahead and confident in our ability to execute on these initiatives.

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

Tim M. Wan: Thank you, Anne. Q1 revenues came in at $172.4 million, up 13% year over year. We have 22,162 core customers, or customers spending $5,000 or more on an annualized basis. Revenue from core customers grew 15% year over year. This cohort represented 74% of our revenues in Q1, up from 73% in the year-ago quarter. We have 607 customers spending $100,000 or more on an annualized basis, and this customer cohort grew at 19% year-over-year.

Tim: Thank you Ann Q1 revenues came in at $172 4 million up 13% year over year.

Tim: We have 22162 core customers.

Tim: Our customer spending 5000 or more on an annualized basis.

Revenue from core customer grew 15% year over year.

Tim: This cohort represented 74% of our revenues in Q1.

Tim: 73% in the year ago quarter.

Tim: We have 607 customers spending 100000 or more on an annualized basis and this customer cohort grew at 19% year over year.

Tim M. Wan: As a reminder, we define these customer cohorts based on annualized GAAP revenues in a given quarter. I want to give you some color on our 100K customer progress since customer count based on gap revenues is a lagging indicator and does not capture the progress we have made. On an ARR basis, we added over 30 100K customers in Q1 versus over 20 in the year-ago quarter. Our overall dollar-based net retention rate was 100%.

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

Tim: I want to give you some color on a 100 K customer progress since customer count based on GAAP revenues is a lagging indicator and does not capture the progress we have made.

Tim: On an <unk> basis, we added over 3100 K customers in Q1 versus over 20 in the year ago quarter.

Tim: Our overall dollar based net retention rate was 100%.

Tim M. Wan: Our dollar-based net retention rate for a core customer was 102%, and among customers spending $100,000 or more, our dollar-based net retention rate was 108%. As a reminder, our dollar-based net retention rate is a trailing four-quarter average calculation and thus a lagging indicator. However, we continue to see stable logo churn rates overall and low churn in our largest accounts. I'll speak specifically to our outlook regarding that in a moment. As I turn to expense items and profitability, I would like to point out that I will be discussing non-GAAP results in the balance of my remarks. Gross margins came in at 89.8%.

Tim: Our dollar based net retention rate for our core customer was 102%.

Tim: And among customers spending 100000 or more our dollar based net retention rate was 108%.

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

Speaker Change: We continue to see stable logo churn rates overall and low churn in our largest accounts I'll speak specifically to our outlook regarding this in a moment.

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

Speaker Change: Gross margins came in at 89, 8%.

Tim M. Wan: Research and Development was $55 million, or 32% of revenue; sales and marketing was $88.6 million, or 51% of revenue. GNA was $27.1 million, or 16% of revenue. Operating loss was $15.8 million, and our operating loss margin was 9%, representing a 5 percentage point improvement versus a year ago. The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability. Our net loss was $13.3 million, and our net loss per share was $0.06.

Speaker Change: Research and development was 55 million or 32% of revenue.

Speaker Change: Sales and marketing was $88 6 million or 51% of revenue.

Speaker Change: G&A was $27 1 million or 16% of revenue.

Speaker Change: Operating loss was $15 8 million and our operating loss margin was 9% representing a five percentage point improvement versus a year ago.

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

Speaker Change: Net loss was $13 3 million and our net loss per share was <unk> <unk>.

Tim M. Wan: Moving on to the balance sheet and cash flow, cash and marketable securities at the end of Q1 were approximately $524.3 million. Our remaining performance obligations, or RPO, were $380 million, up 14% from the year-ago quarter. 86% of RPO will be recognized over the next 12 months. That current portion of RPO grew 15% from the year-ago quarter. Our total ending Q1 deferred revenue was $297.1 million, up 13% year-over-year. Q1 free cash flow was negative 4.3 million, or negative 2% on a margin basis, an improvement from negative 11% from the year-ago quarter.

Speaker Change: Moving onto the balance sheet and cash flow cash.

Speaker Change: Cash and marketable securities at the end of Q1 were approximately $524 3 million.

Speaker Change: Our remaining performance obligations or <unk> was $380 million up 14% from the year ago quarter.

Speaker Change: 86% of <unk> will be recognized over the next 12 months.

That current portion of <unk> grew 15% from the year ago quarter.

Speaker Change: Our total ending Q1 deferred revenue was $297 1 million.

Speaker Change: Up 13% year over year.

Speaker Change: Q1 free cash flow was negative $4 3 million or negative 2% on a margin basis, an improvement from negative 11% from the year ago quarter.

Tim M. Wan: Moving to guidance for Q2 Fisco 2025, we expect revenues of $177 to $178 million, representing growth of 9% to 10% year over year. We expect nominal gap losses from operations of $23 million to $21 million, representing an operating margin of negative 12% at the midpoint of guidance. And we expect a net loss per share of $0.09 to $0.08, assuming basic and diluted weighted average shares outstanding of approximately $230 million for the full fiscal year 2025.

Speaker Change: Moving to guidance for Q2 fiscal 2025, we expect revenues of $177 million to $178 million.

Speaker Change: Representing growth of 9% to 10% year over year.

Speaker Change: We expect non-GAAP loss from operations of 23 million to $21 million.

Speaker Change: Representing an operating margin of negative 12% at the midpoint of guidance.

Speaker Change: And we expect net loss per share of <unk> to <unk> <unk>, assuming basic and diluted weighted average shares outstanding of approximately 2% to $30 million.

Speaker Change: For the full fiscal year 2025.

Tim M. Wan: We expect revenue to be in the range of $719 million to $724 million, representing a growth rate of 10 to 11 percent year over year. We expect a non-gap loss from operations of $59 million to $55 million, representing an operating margin of negative 8% at the midpoint of guidance. We expect to be free cash flow positive for the full year, and we expect a net loss per share of $0.21 to $0.19, assuming a basic and diluted weighted average number of shares outstanding of approximately $231 million.

Speaker Change: We expect revenue to be in the range of $719 million.

$724 million.

Speaker Change: Representing a growth rate of 10% to 11% year over year.

Speaker Change: We expect non-GAAP loss from operations of 59 million to $55 million.

Representing an operating margin of negative 8% at the midpoint of guidance.

Speaker Change: We expect to be free cash flow positive for the full year.

Speaker Change: And we expect net loss per share of <unk> 21 to <unk> 19, assuming basic and diluted weighted average shares outstanding of approximately $231 million.

Tim M. Wan: As you can see from our guidance and commentary, we are clearly seeing early signs of stability and are well poised for moderate acceleration in the second half. Based on some of the early signs in the business and positive feedback from strategic customers. We are frontloading our investments this year to capture the AI opportunity, as reflected in our Q2 operating income guidance. That said, we're still maintaining our full year operating income guidance and also expect to be free cash flow positive for the full year.

Speaker Change: As you can see from our guidance and commentary we are clearly seeing early signs of stability and are well poised for moderate acceleration in the second half.

Speaker Change: Based on some of the early signs in the business and positive feedback from strategic customers.

We are frontloading, our investments this year to capture the AAR opportunity as reflected in our Q2 operating income guidance.

Speaker Change: That said, we're still maintaining our full year operating income guidance and also expect to be free cash flow positive for the full year.

Tim M. Wan: As you heard from Dustin, we're excited about the opportunity ahead and believe that AI will dramatically alter the software landscape. Asana is in a strong position to deliver a tremendous amount of value for our customers because of the Asana platform. Looking further ahead, adding revenue streams in the form of license-based add-ons and consumption-based revenue will align with where the market is heading. Any AI consumption-based or add-on revenue has not been factored into our fiscal year 25 guidance, and to the degree that we have any, it will likely be immaterial this fiscal year.

Speaker Change: As you heard from Dustin we're excited about the opportunity ahead and believe that AI will dramatically alter the software landscape.

Speaker Change: <unk> is in a strong position to deliver a tremendous amount of value for our customers because of the <unk> graph.

Speaker Change: And looking further ahead, adding revenue streams in the form of license based add ons.

Speaker Change: And consumption based revenue will align with where the market is heading.

Any AI consumption based or add on revenue has not been factored into our fiscal year 'twenty five guidance.

Speaker Change: And to the degree that we have any it will likely be immaterial this fiscal year.

Operator: We will continue to iterate and work with our customers to roll out these features over time and share more with you over the coming months and on future earnings calls. With that, operator, we are ready for Q&A. As a reminder, to ask a question, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.

Speaker Change: We will continue to iterate and work with our customers to rollout. These features over time and share more with you over the coming months and future earnings call.

Speaker Change: With that.

Speaker Change: Operator, we are ready for Q&A.

Speaker Change: As a reminder to ask a question. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Operator: In the interest of time, we ask that you limit yourself to one question and one follower. Please stand by while we compile the Q&A roster. Our first question comes from the line of Rob Oliver with Baer. Great. Good afternoon.

Speaker Change: Interest of time, we ask that you limit yourself to one question and one follow up.

Speaker Change: These standby, while we compile the Q&A roster.

Speaker Change: Our first question comes from the line of Rob Oliver with Baird.

Robert Cooney Oliver: Thank you very much for taking my questions. Dustin, I have a question for you. I really appreciate your perspective on this incredible moment we're in here with generative AI, and the potential paradigm shift that you laid out sort of away from traditional siloed application software categories is extremely interesting. I'd love to hear a little bit more on that and whether you're hearing that today or any indications of usage trending that way from some of the most sophisticated Asana customers that are sort of the thought leaders on the Asana platform. And then I had a follow-up question for Anne.

Robert Cooney Oliver: Great. Good afternoon. Thank you very much for taking my question Duston.

Speaker Change: Quick question for you really appreciate.

Speaker Change: Your perspective on.

Speaker Change: This incredible moment, we're in here with generative AI and.

Speaker Change: Yeah.

Speaker Change: The potential paradigm shift that you laid out sort of away from traditional siloed applications software categories.

Speaker Change: Is extremely interesting and then I'd love to hear a little bit more on that and whether you're hearing today or any indications of usage trending that way from some of the most sophisticated asada customers.

Speaker Change: Sort of the thought leaders on the guests on our platform and then I had a follow up for Ann.

Dustin A. Moskovitz: Yeah, I'm trying to connect the question to the words I used. I may have misunderstood it a little bit, but what I think is true is that the way that these workflows happen will change quite dramatically. And I think, as a result, which borders exist between which categories will change as well.

Speaker Change: Yeah, I'm trying I'm trying to conduct the question to the words I used I may have missed conveyed it a little bit but what I think is true is that the way that these workflows happen.

Speaker Change: <unk> will change quite dramatically and I think as a result, which borders exists between which categories will change as well.

Dustin A. Moskovitz: So, for example, a lot of ITSM right now is sort of oriented around large numbers of humans taking tickets and figuring out how to respond to them. And if we move to a world where the vast majority of responses are fully automated and handled with the end user immediately, I think that will change the emphasis on where that software lives and where the value creation is. In terms of what our customers are doing now, I was talking basically about the future of AI-driven workflows in Asana, and I mentioned that we're also working in a closed beta with a few select customers. But it's still still very, very early.

Speaker Change: So for example, a law.

Speaker Change: Lot of GSM right now is sort of oriented around.

Speaker Change: Large numbers of humans, taking tickets and figuring out how to respond to them and if we move to a world where the vast majority of responses or.

Speaker Change: Fully automated and handled.

With the end user immediately.

Speaker Change: I think that will change the emphasis on whereabouts software labs.

Speaker Change: And where were the value creations.

Speaker Change: In terms of what our customers are doing now so I was talking basically about the future of AI driven workflows in a sauna.

Speaker Change: And I mentioned that we're also.

Speaker Change: Working in close beta with a few select customers.

Dustin A. Moskovitz: I don't think anyone has replaced an entire category of software yet like that, but that's what I see coming in the future, just because the potential is so dramatic. But a lot of what we've learned as well is it's really hard to learn exactly how these things work until you're actually doing them.

Speaker Change: But it's still still very very early I don't think anyone has replaced an entire category of software yet like that.

Speaker Change: But that's what I see coming coming in the future.

Speaker Change: Because the potential is so dramatic.

Speaker Change: But a lot of what we've learned as well is.

Speaker Change: It's really hard to learn exactly how these things manifest until you're actually doing it. So we put the new functionality in front of customers and we might suggest a particular use case for it but almost immediately they are sort of brainstorming 10, or 20, others literally sometimes pulling in their colleagues I'm, saying like Hey can you imagine what you can do with this and I think there is.

Dustin A. Moskovitz: So we put the new functionality in front of customers, and we might suggest a particular use case for it, but almost immediately, they're sort of brainstorming, you know, 10 or 20 others, literally sometimes pulling in their colleagues and saying, like, hey, can you imagine what you can do with this? And I think there's going to be quite a lot of discovery and innovation there. And so part of the point I was making is that where we've been recently, people kind of view AI entirely by analogy. It'll be like the same workflow, but now it'll be done in a partially automated way. And I think that's an unnecessarily limited way of looking at the world.

Speaker Change: Gonna be quite a lot of disk.

Speaker Change: Discovery and innovation there.

Speaker Change: And so part of the point I was making is I think that the where we've been recently people kind of view AI entirely by analogy it'll be like the same workflow, but now it'll be done in a partially automated way.

Speaker Change: I think that's a unnecessarily limited way of looking at the world.

Anne Raimondi: That's helpful. Thank you. And then, Anne, my follow-up is for you. Just, you know, what I think has come up in our conversations, and I assume others as well, is just some of the feeling of being overwhelmed or confused from some enterprise buyers, relative to all of the different AI offerings that are out there and every application vendor coming with an AI offering. And I'd be curious as you and Ed go to market, continue to kind of ramp up the enterprise playbook and build that muscle.

Speaker Change: That's helpful. Thank you and then and.

Speaker Change: My follow up is for you just.

Speaker Change: <unk> coming up in our conversations and I assume others as well as just some of the.

Speaker Change: I guess feeling of being overwhelmed or confusion from some enterprise buyers relative to all of the different AI offerings that are out there in every application vendor coming with an AI offering and I'd be curious as you.

Speaker Change: Go to market continue to kind of ramp up the enterprise playbook and build that muscle.

Anne Raimondi: You know, what are some of the ways that you guys are getting in front of the right executives and differentiating your offering amongst, you know, a sea of other application vendors out there touting their AI opportunities? And that, I guess, that question would be particularly germane to customers that might be new to Asana on the enterprise side. Thank you.

What are some of the ways that you guys are getting in front of the right executives in differentiating your offering amongst.

Speaker Change: A sea of other application vendors out there.

Speaker Change: Touting their their AI opportunity in that I guess my question would it be particularly germane to customers that might be new to us on on the enterprise side. Thank you.

Robert Cooney Oliver: Thanks, Rob that's a great question because there are there is a lot out and I think everybody. As you said is panning out I think the things that are helping us differentiate is.

Robert Cooney Oliver: Really we've been focusing a lot on ensuring that we are bringing them.

Speaker Change: Strategy, two especially CIO is we are at work innovation lab published original research on.

Speaker Change: On the topics facings yesterday, including AI and.

Speaker Change: 77% of I T.

Speaker Change: Leaders are saying they are the ones responsible for part of our approach is bringing both this original research.

Speaker Change: Unique approach to AI, and then showing them CIL what's possible. So we recently had our customer advisory Board sessions with Cio's, both in Europe and in the U S and.

Speaker Change: And just by showing what's already possible Amazon as doesn't just that it's really generating these ideas around what's already possible today and what are the possible tomorrow.

Speaker Change: And so our focus on growing up market and really reaching the C level decision makers is also starting to pay off because many of them just wanted a trusted partner to lay out our strategy together on how to approach AI and so they're excited about also just our security and safety and health.

Stephane: How we've built AI into fan out so that's what I think we're the most excited about in these conversations is just the executive level engagement and then there is lighting up when they're seeing what they can already do Amazon and as Stephane said. It just generates you know 10 to 20 more I guess is are these pilots that we're running a really critical.

George Michael Iwanyc: And so, these pilots that we're running are really critical for us to be able to show them the value so quickly, and we're excited to share more about what's happening there. So, that's going to come at the Work Innovation Summit in both San Francisco next week and then in the fall in New York in October. Our next question comes from the line of George Iwanyc with Oppenheimer.

Stephane: For us to be able to show them the values so quickly.

Stephane: Excited to share more about what's happening there so that's.

Stephane: That's gonna come at the work innovation summit, both in San Francisco next week and then in the fall in October in New York in October.

Our next question comes from the line of George <unk> with Oppenheimer.

Dustin A. Moskovitz: Thank you for taking my question. Dustin, staying on the AI topic, kind of digging into your comments with respect to the discovery and innovation process, can you maybe tie into how you're using AI internally to how you're kind of adjusting both the product roadmap and the go-to-market roadmap on the enterprise side? Uh, sure.

Stephane: Okay.

Speaker Change: Thank you for taking my questions.

Speaker Change: Staying on the AI topic kind of digging into your comments with respect to the discovery and innovation process can you maybe tie into how youre using the AI internally to how you are kind of adjusting both the product roadmap and go to market roadmap on the enterprise side.

Speaker Change: Sure.

Dustin A. Moskovitz: I always struggle a little bit with these questions, because AI for us is really more than one thing. There are a number of features that we have in the product already and have been part of our roadmap, and we talked about at last year's Work Innovation Summit and have been delivering. And so a lot of that lives next to functionality that we use day in and day out. So things like smart summaries or being able to use smart answers to sort of, you know, ask questions about the current project that you're looking at.

Speaker Change: I always start a little bit with these questions because.

Speaker Change: AI for US is really more than one thing. So there are a number of features that we have in product already and had been part of our roadmap and we talked about at last year's work innovation summit and had been had been delivering and so a lot of that lives next to functionality that we use day in and day out so so things like smart summary.

Speaker Change: <unk> or being able to use smart answers to sort of ask questions of the current projects that youre looking at.

Dustin A. Moskovitz: And so that just ends up being part of part of our normal workflow and part of customer workflows as well. The part that I was speaking about that feels a little bit newer are these custom AI workflows. And in a lot of ways, it is a continuation of a roadmap we've been working on for 10 years. It's been kind of magical for me, actually, to sort of feel like the language models are just sort of like this, this missing keystone in our existing workflow builder, because we already have integrations with a lot of the other tools enterprises are using, we already have this sort of RPA-style workflow automation, and we already have a very powerful templating engine.

Speaker Change: And so that just ends up being part of part of our normal workflow and part of customer workloads as well the part that I was speaking to that it feels a little bit newer or these customer workflows.

Speaker Change: And in a lot of ways. It is a continuation of the roadmap we've been working on for 10 years.

Speaker Change: Been kind of magical for me actually to sort of feel like.

Speaker Change: The the language models are just sort of like dismissing Keystone in our existing workflow builder because you already have integrations to a lot of the other tools that enterprises are using we already have the sort of RPI style workflow automation, we already have a very powerful templating engine.

Dustin A. Moskovitz: And now we have this additional ability to take some of the steps and actually do part of the work, which we refer to as actually assigning work to an AI teammate. And so that is a really important development and opens up a lot of possibilities for us. And now we can just kind of do it all inside Asana, inside our UI, entirely with user-built workflows; it doesn't require, you know, IT to come in and do it.

Speaker Change: And now we have this additional ability to take some of the steps and actually do part of the work what we referred to is actually assigning worked in AI teammate.

Speaker Change: And so that is.

Speaker Change: A really important development and opens up a lot of possibilities for us, but it's not actually this giant new effort on our roadmap because it's really combining with all these other building blocks we have.

Speaker Change: And in terms of how we're using it internally, we're basically taking a lot of our existing workflows that have partial automation or partially templated.

And we're taking individual stops and turning them into element Oh and workflows.

And so that is.

Speaker Change: Working really well because in a lot of a lot of cases frankly by capped around it we had.

Speaker Change: Sort of API, driven scripts that we were running in the background to kind of move things along in various parts of the product and now we can just kind of do it all inside of Sona insider UI entirely with user belts workflows it doesn't require.

Dustin A. Moskovitz: And so a lot of what's happening is we're kind of spreading the knowledge internally about how to do that, and how to think about it in the context of the work you're already doing. And to sort of follow on to the question that Dan answered earlier, I think our advantage is exactly that, maybe not with brand new customers to Asana but for our existing enterprise deployments. We're not saying, hey, do something completely new in Asana; we're saying, take your existing workflows, and we'll make them better.

Speaker Change: To come in and do it.

Speaker Change: And so a lot of what's happening is we're kind of spreading the knowledge internally about how to do that and how to think about it in context of the work you're already doing.

Dan: And just sort of follow on to the question that Dan answered earlier I think our advantage is exactly that maybe not with brand new customers to us on it but for our existing enterprise deployments were not saying, hey, do something completely new in a sauna, we're saying take your existing workflows will make them better and we will take steps that bad.

Dustin A. Moskovitz: We'll take steps that your team is currently doing and, you know, not necessarily take it all the way from start to finish. I think the best AI results are really a collaboration between the AI and the humans, but we can give you a really strong first draft, or we can give you many drafts, or we can give you, you know, a bunch of translations into a bunch of different languages or into a bunch of different user personas.

Dan: Your team is currently doing and you know.

Dan: Not necessarily take it all the way from start to finish I think the best AI results are really a collaboration between the air and he made.

Dan: Women's but.

Dan: We can give you a really strong first draft or we can give you many drafts or we can give you a bunch of translations into a bunch of different languages or into a bunch of different user personas.

Dustin A. Moskovitz: And that can just really accelerate things and help people think bigger and deliver higher-quality results. So that's a lot of what I'm seeing now. I'm not trying to describe this sort of radical shift in our strategy; I really see it as an opportunity to capitalize on something we've been working on for a long time. Thank you.

And that can just really accelerate things in helping people think bigger and deliver higher quality results.

Dan: So that's a lot of what I'm seeing now.

Dan: Not trying to describe the sort of radical shift in our strategy I really see it as an opportunity to capitalize on something we've been working on for a long time.

Anne Raimondi: And then as a follow-up, kind of digging into your number two priority with accelerating the pipeline, can you kind of parse that out with what you're seeing on the enterprise side versus the SMB side? Yeah, definitely. So on Pipeline, Pipeline grew year over year, and we've been consistently hitting or exceeding internal targets, both inbound and outbound in every region, and across every pipeline source. So we are really bullish about seeing those results.

Speaker Change: Thank you and then as a follow up kind of digging into your.

Number two priority with accelerating the pipeline can you kind of parse that out with what youre seeing on the enterprise side versus the F&B side.

Anne Raimondi: And it's really a strong partnership between our sales and marketing teams. As I mentioned, we also, in Q1, saw strength in our SMB segment. So we saw double-digit year-over-year growth in new AR there, as well as improvement in our negative rate.

Speaker Change: Yeah definitely so on pipeline pipeline grew year over year, and we've been consistently hitting or exceeding internal targets, both inbound and outbound in every region.

Speaker Change: And across every pipeline source, so or are really.

Speaker Change: Bullish about saying that those results and it's really a strong partnership between our sales and marketing teams I mentioned.

Speaker Change: The focus on our work innovation Labs original research, but that's also combined with the executive events, we've been running with the work innovation assignments around the World and then our executive briefings through our work innovation Center. So it's all coming together to enable us to reach a C level decision makers and that's been incredibly light.

Speaker Change: Helpful. In terms of building that enterprise pipeline. We also in Q1 and saw strength in our F&B segment, and so we saw double digit year over year growth in EMEA are there as well as improvement in our negative rate, we saw strength in SMB customer acquisition.

Anne Raimondi: We saw strength in SMB customer acquisition, as well as in our sales-assisted SMB movement. So we're also pleased to see that while our focus absolutely has been continuing to grow up-market in enterprise, the stability and improvement in the lower end of the market is also an early positive signal for our business. Our next question comes from the line of Brent Bracelin with Piper Sandler. Thank you. Good afternoon.

Speaker Change: As well as in our sales assisted F&B emotion, So where we're also pleased to see that while our focus absolutely has been continuing to grow at market in enterprise the stability and improvement in alerts and other market is also an early positive signal for our business as well.

Speaker Change: Our next question comes from the line of Brent <unk> with Piper Sandler.

Brent Alan Bracelin: Tim, maybe we'll start with you. Obviously, growth has been challenged here for the last, you know, a couple of years. You talked about actually seeing some expansion, seed expansion within tech, and demand stabilization. Walk us through what you're seeing, maybe by industry segment. Do you think the worst of the headwinds in that tech vertical, which I know has been a big vertical for you, are now behind you? Any color there by vertical certainly would be helpful.

Speaker Change: Thank you good afternoon, Tim maybe we'll start with you.

Speaker Change: Obviously growth has been challenged here for the last couple of years.

Speaker Change: <unk> talked about actually seeing some expansion seat expansion within tech.

Speaker Change: <unk> stabilization.

Speaker Change: Walk us through what Youre seeing maybe by industry segment.

Speaker Change: Zinc.

The worst of the headwinds in that tech vertical that I know has been a big vertical for you are now behind you any color there by vertical certainly would be helpful. And then I have one quick follow up.

Tim M. Wan: And then I have one quick follow-up. Yeah, I would say, you know, when we look at our net expansion rate, the thing that we're starting to see across all the segments is that now things have started to stabilize. And what was really driving the initial drop in our gross renewals and that expansion rate was primarily driven by a lot of layoffs related to tech. And I think what we're seeing just from a Q1, early Q2 standpoint, and even the Q1 results, things have started to stabilize. So I think we're really encouraged by that. The other thing I would point to is the pipeline comment that Anne made, the fact that the pipeline grew year over year.

Speaker Change: Yeah, I would say you know when we.

Speaker Change: We look at our net expansion rate the thing that we're starting to see over all across all the segments are now things have started to stabilize and what was really driving the initial drop in our gross renewals and net expansion rate was primarily driven by a lot of the layoffs related to tag.

Speaker Change: And I think what we're seeing just from a from acute early Q2 standpoint, and even in the Q1 results things have started to stabilize.

Speaker Change: I think we're really encouraged by that the other thing I would point to is the pipeline comment that and made the fact that we.

Tim M. Wan: And it's not just coming from tech. It's really coming from across a number of different industries. And I think work management is continuing to grow as a category. So I think it's that combination. A couple of colors.

Speaker Change: The pipeline grew year over year, and it's not just coming from tech it is really coming from across.

Speaker Change: A number of different industries and I think you know work management is continuing to grow as a category. So I think it's really that combination.

Dustin A. Moskovitz: And then Dustin, for you, this concept that AI is going to live inside of these project management planning tools, assigning work to, you know, humans and AI assistants certainly sounds intriguing. But we've kind of been waiting for AI to show up at the application layer for a while; even Microsoft, I think 95% of the AI revenue Microsoft gets is still on the Azure infrastructure as a service side, seeing very little adoption of AI at the application layer.

Speaker Change: Couple of color and then Dustin for you at this concept that.

Speaker Change: AI is going to live inside of these project management planning tools assigning work too.

Speaker Change: Humans and AI assistance certain.

Speaker Change: It sounds intriguing, but we've kind of been waiting for for AI to show up at the application layer for awhile, even Microsoft I think 95% of the AI revenue Microsoft is still on the Azure infrastructure as a service side seeing very little adoption of AI in the App layer, what's your best guess.

Dustin A. Moskovitz: What's your best guess on when we'll start to see more meaningful adoption of AI in the Asana application layer? Do you think this is going to be a groundswell of interest a year from now? Is it two years out?

Speaker Change: Gas on when we'll start to see more meaningful adopt.

Speaker Change: Adoption of AI in the US on application layer do you think this is going to be.

Speaker Change: A groundswell of interest a year from now is it two years out what's your best guess on how this is implemented I know AI is not one thing, but as you think about a more meaningful adoption within the installed base. How long do you think it's going to take.

Dustin A. Moskovitz: What's your best guess on how this is implemented? I know AI is not one thing, but as you think about more meaningful adoption within the installed base, how long do you think it's going to take? Thanks.

Dustin A. Moskovitz: Yeah, that's a big sweeping question, so I'll give you a big sweeping answer. To your point, it's not one thing. I mean, we have quite a lot of usage of existing AI functionality already. That said, we only packaged it in our new packages.

Speaker Change: Yeah.

Speaker Change: Yeah. So that's a big sweeping question. So I'll give you a big sweeping answer.

Speaker Change: To your point, it's not one thing I mean, we have quite a lot of usage of our existing AI functionality already that said, we packaged in only in our new packages. So it's not available to all customers and there's some subset of customers that aren't ready to use AI at all and they just haven't gotten to that place and they're sort of corporate security posture.

Dustin A. Moskovitz: So it's not available to all customers, and there are some subset of customers that aren't ready to use AI at all. And they just haven't gotten to that place yet.

Dustin A. Moskovitz: And they're sort of in a corporate security posture. It's not that they're using other products; they're just not using anything. And so there is still somewhat of a, you know, sort of Jeffrey Moore style, adoption curve here, and I think we're still in the early adopter part of it. Part of the reason I'm excited about the add-ons that we're talking about for AI and the consumption-based model is that I think it'll allow us to match that reality and focus on just the early adopters and give them a great experience and let them lean in. And that's something.

Speaker Change: It's not that they're using other products, they're just they're just not using anything and so there is still somewhat of a you know sort of Geoffrey Moore style, you know adoption curve here and I think we're still in the early adopter part of it part of the reason I'm excited about the add ons that we're talking about for AI and the consumption based model is I think it will allow us.

Speaker Change: To match that that reality and focus on just the early adopters and giving them a great experience.

Dustin A. Moskovitz: So, you know, I'm involved with Entropic a lot. And we share a board member with OpenAI. And, you know, I talked to the labs, and that's kind of what I see on their side as well, that there are a few customers that are generating a lot of activity and sort of figuring it out and figuring out what else they can do in their business. And I think with custom AI workflows, we're going to focus on that.

Speaker Change: And letting them lean in and that's something I'm. So you know I'm involved with.

Speaker Change: Tropic, a lot and we share a board member with open AI and I talk to the labs and that that's kind of what I see on their side as well as there's a.

Speaker Change: A few a few customers that are generating a lot of activity and sort of figuring it out and figuring out what else. They can do in their business.

Speaker Change: And I think with customary I workflows, where we're going to focus on that and then we'll be able to tell that story and tell about the transformative impact that's having and use that to get the next set.

Dustin A. Moskovitz: And then we'll be able to tell that story and talk about the transformative impact it's having, and use that to get the next set. Additionally, just in terms of adoption overall, an observation I have is that the places where people agree there's been real AI creation already are where it's integrated very closely into existing workflows. So I think the two best examples are GitHub Copilot for development and then also, you know, various kinds of support ticketing. And I don't think it's a coincidence there.

Speaker Change: Additionally, just in terms of adoption overall, an observation I have is that the places where people agree theres been real AI creation already are aware its integrated very closely into existing workflows. So I think the two best examples are github copilot for development.

Speaker Change: And then also you know various kinds of support ticketing.

Dustin A. Moskovitz: I think what they share is that they're not asking these broad employee bases to learn prompt engineering, to learn how to engage with these chat apps, and importantly, to sort of like learn how to repeat a workflow with these chatbots. Because even when you have something like custom GPTs, you still kind of end up having to do this iterative, OK, I'm giving you the documents we care about. I'm giving you the prompts.

Speaker Change: And I don't think it's a coincidence there I think what they share is that theyre not asking these broad employee bases to learn prompt engineering to learn how to engage with these chat op chat apps and importantly to sort of like learn how to repeat a workflow with the chat bots, because even when you have something like custom gpt's.

Speaker Change: Still kind of end up having to do this iterative okay I'm, giving you the documents we care about I'm, giving you. The prompt we're taking the first step that we're taking the second step. It is just really high friction and onerous and it's a hard hard hard habit to starts and a hard habit to break.

Dustin A. Moskovitz: We're taking the first step. Now we're taking the second step. It's just really high friction and onerous.

Dustin A. Moskovitz: And it's a hard habit to start and a hard habit to break. Whereas, with the existing functionality we have, where it's getting most adopted, it is just appearing in the context of something you're already trying to do, like writing a status summary, or you're in a task thread, and a lot of activity has happened, and you want to, like, summarize what's happened. And I'm really excited about this idea of sort of push first pull AI. I talked about it in previous earnings calls.

Speaker Change: Whereas with the existing functionality, we have where it's getting most adopted it is just appearing in context of something you already trying to do like writing a status summary.

Speaker Change: Or you're gonna toss threat and a lot of activity has happened and you wanted to summarize what's happened.

Speaker Change: And I'm really excited about I've I've talked in previous earnings calls about this idea of sort of push versus pull I AI, we're increasingly getting to a place where we're deciding to run the AI and just sort of delivering you. The content. So that's showing up for project summaries.

Dustin A. Moskovitz: We're increasingly getting to a place where we decide to run the AI and just sort of deliver the content. So that's showing up for project summaries, where now we deliver them to your notification inbox, and to your email. And so that is just like a sort of different mental model for adoption.

Speaker Change: Now, we deliver them to your notification and box into your you know and so that is just like a sort of different mental model for adoption, it's not that the and.

Dustin A. Moskovitz: It's not that the end users have to decide whether this thing is giving them a ton of value. And so now I'm going to change my habits and adopt this new tool and become a prompt engineer. It means that the application vendor, in this case, Asana, is deciding how AI can amplify the value that you're getting. And for the functionality that we've deployed so far, that doesn't show up as a separate revenue line for us because we think all CWM products are going to have to do this, but it does amplify the value of the product offerings and especially differentiated product offerings like smart status that benefit from having the work connected to higher-level goals.

Speaker Change: End users have to decide this thing is giving me a ton of value and so now I'm going to like change my habits and adopt this new tool and become a prominent prompt engineer.

That the application vendor in this case, China is deciding how AI can amplify the value that you're getting.

Speaker Change: And for the functionality that we've deployed so far that doesn't show up as a separate revenue line for us because we think all CW and products are going to have to do this but it does amplify the value of the product offerings, and especially the differentiated product offerings like smart status that benefits from having to work connected to higher level goals.

Dustin A. Moskovitz: And so we're seeing more interest in sort of choosing Asana and betting on it for the long run. And we're also seeing it drive more value appreciation in our higher tiers. And I'm excited.

Speaker Change: And so we're seeing.

Speaker Change: More interest in a sort of choosing a sauna and betting on it at the platform for the long run and we're also seeing it drive more value appreciation in our up tiers and I'm excited.

Dustin A. Moskovitz: One of the things we're doing at the Work Innovation Summit is we're talking about what I think of as sort of the upper pyramid of clarity, AI value. So things that benefit more portfolios and goals. And that's going to be a place where I think we're going to be much more differentiated from the rest of the market. And where we have the ability to do something that other people can't, that's when I think it'll create more of a sort of unique pricing opportunities

Speaker Change: One of the things we're doing at the organization. Some of it is we're talking about what.

Speaker Change: I think of as sort of upper pyramid of clarity AI value. So so things that benefit more portfolios.

Speaker Change: Portfolios and goals and that's going to be a place where I think we're gonna be much more differentiated.

Speaker Change: From the rest of the markets.

And where we have the ability to do something that other people can't that's one I think it will create more of a sort of unique pricing opportunity. So we talked about resource planning is the big one there.

Dustin A. Moskovitz: We talked about resource planning being a big one there. And yeah, so really excited to be able to deploy that to market. So I think I would just recharacterize it a little bit as what early adopters are adopting now.

Speaker Change: And yeah, so really excited to be able to pull you out to market. So I think I would just re characterize it a little bit as the early adopters are adopting now.

Dustin A. Moskovitz: And because it's not just one thing they're adopting, you do kind of have to break it down into what's working well and what isn't. And yeah, there's the push versus pull concept as well. So what is the user deciding to initiate? What's the application deciding to initiate?

Speaker Change: And because it's not just one thing they're adopting you kind of have to break it down into what's working well and what isn't.

Speaker Change: And.

Speaker Change: Yeah. There is the push first ball concept as well so what is the use of deciding to initiate what's the application deciding to initiate.

Speaker Change: And so I think where you're going to see the most impressive adoption. It will be companies like a sauna that are figuring out how to integrate it into existing workflows and existing applications.

Speaker Change: Rather than getting people to adopt an entirely new platform.

Jackson Edmund Ader: And so I think where you're going to see the most impressive adoption will be companies like Asana that are figuring out how to integrate it into existing workflows and existing applications rather than getting people to adopt an entirely new platform. Our next question comes from the line of Jackson Ader with KeyBank Capital Markets. Thanks for taking our questions, guys. Um, I guess the first one is actually following up on what I think are some really ambitious talking points from the company and from you, Dustin, about workflow automation across the enterprise and disparate applications and business functions, you know, and Asana kind of working across those lines. But I have a two-parter.

Speaker Change: Our next question comes from the line of Jackson Ader with Keybanc capital markets.

Speaker Change: Okay, great. Thanks for taking my questions guys.

Jackson Edmund Ader: I guess the first one is actually following up on what I think is.

Speaker Change: Oh.

Speaker Change: Some really ambitious talking points from from the company and from you Duston about workflow automation across the enterprise and disparate applications.

Speaker Change: And business functions.

Speaker Change: And kind of working across those lines.

Speaker Change: I have a two parter for that number one.

Dustin A. Moskovitz: Number one. Do you think that the core work management or collaboration tool, the core Asana, needs to reach some sort of critical mass within an enterprise for the customer to then grant your AI technology access to the systems of records that you will need in order to derive value for them? Um, sorry, just to clarify, by systems record, you mean other than Asana's, the system of record, integrations? Yeah, yeah, ERP, CRM, you know, HR.

Speaker Change: Do you think that the core.

Speaker Change: Work management, our collaboration tool the core Astana needs to reach some sort of critical mass within an enterprise for then the customer to grant your AI technology access to the systems of record that you will need in order to derive value for them.

Speaker Change: I'm, sorry, just to clarify by systems of record you mean other than us on is the system of record integrations.

Speaker Change: Yes, ERP CRM, yes.

Dustin A. Moskovitz: Um, so, I think just like at the highest level, no, I don't think you need critical mass; you need a team that is interested in that workflow. But there are a number of different ways to address privacy or security concerns.

Speaker Change: Sure.

Speaker Change:

Speaker Change: So.

Dustin A. Moskovitz: We don't necessarily need kind of like, you know, carte blanche access to a tool like that; we can kind of do what we already do today with integrations, which is we're basically making a call out for a specific record, and that service returns it to us. And I think the bigger friction there is just like how hard it is to set up an integration and necessarily whether the customer thinks it's worth it or whether they've invested enough in Asana. So I guess it just doesn't resonate as a problem we're facing.

Speaker Change #100: I think just like at the highest level no I don't think you need critical mass you need a team that is interested in that workflow.

Speaker Change #100: But there are a number of different ways to address like privacy or security concerns like we don't necessarily.

Speaker Change #100: Need kind of like you know carte Blanche access to a tool like that we can kind of do what we already do today with integrations, which is we're basically making a call out for a specific record in that services returning it to us.

Speaker Change #100: And I you know I think there's.

Speaker Change #100: The bigger friction there is just like how hard it is to set up an integration than necessarily whether the customer thinks it's worth it or they they've invested enough in a sauna. So I guess it just doesn't resonate cause us a problem we're facing.

Dustin A. Moskovitz: But also, I think there's quite a lot of work you can get done using just Asana as the system of record. So most of the built-in functionality I've been talking about doesn't need access to an external tool because it's actually helping you with the collaborative work management part of things. And then additionally, when you're doing something like Anne talked about, we've been implementing sales development outreach for Asana. That requires access to our marketing materials and like knowing how to speak Asana to, you know, sort of customize a message.

Speaker Change #100: But also I think there's quite a lot of work you can get done using justice Arnaud as the system of record. So most of the built in functionality I've been talking about doesn't need access to an external tool because it's actually helping.

Speaker Change #100: Helping you with the collaborative work management part of things.

Anne: And then additionally, when you're doing something like Anne talked about we've been implementing sales development outreach for a sauna.

Speaker Change #101: That requires access to like our marketing materials and like knowing how to speak Hassan I to customize the message, but it doesn't really well I guess, we didn't we just don't want to we want to look up the customer information. So it does a little bit but that those are our tools anyway and like yeah, I guess I should just leave it where I started.

Dustin A. Moskovitz: But it doesn't really, well, I guess we do still want to, we want to look up the customer information. So it does a little bit, but those are our tools anyway. And like, yeah, I guess I should just leave it where I started, like, I don't think that's a real problem we face. Okay, okay.

Speaker Change #102: I don't think that's a real problem we face.

Jackson Edmund Ader: And then, and then just a quick follow up. So, like, if I think about, you know, the same thing in addition to, you know, Asana, like those same kinds of records your CRM, ERP, blah, blah, blah. They are also developing their AI tools or, you know, copilots, right, or like, and when I think of workflow automation tools, right, I think of a different software company who is also trying to get into AI and Workflow Automation across the enterprise.

Speaker Change #103: Okay, and then and then just a quick follow up though like if I think about the same.

Speaker Change #103: In addition to.

Speaker Change #103: Those same kind of systems.

A record your CRM ERP blah blah blah.

Speaker Change #103: Yes.

Speaker Change #103: They are also developing in there.

Speaker Change #103: Tools or co pilots rider and when I think of workflow automation tools right I think about it.

Speaker Change #103: Software company, who is also trying to get into AI and workflow automation across the enterprise. So I'm just curious.

Jackson Edmund Ader: So I'm just curious, like, you know, why, what is the big, you know, 10,000 foot reason why Asana would be better positioned than maybe some of those larger companies that are larger in Being an A.I. Well, the same reasons we always are.

Speaker Change #104: Why what is the big <unk>.

Speaker Change #104: 10000 foot reason why I thought it would be better positioned than maybe some of those larger companies.

Speaker Change #104: <unk> systems of record companies in being in Atlanta.

Speaker Change #105: Well the the same reasons, we always are.

Dustin A. Moskovitz: I'm worried that something got projected onto what I said. I don't think we're entering the CRM category right now. What I do think is gonna happen is all of SAS is going to be transferred. And so who will be the dominant player in CRM a couple years from now? Maybe it's Asana, or maybe it's another dedicated vendor that was agile in the right way and embraced the technologies.

Speaker Change #106: Worried that's something got projected on to what I said I don't think we're entering the CRM category right now what do you think is going to happen is all SaaS is going to be transformed.

Dustin A. Moskovitz: I do think we have a lot of advantages in terms of the existing advantages in terms of having connectivity through the layers of the work graph, in terms of supporting cross-functional work. And it continues to be the case that the most valuable work is done cross-functionally. And so you know, again, we are seeing in practice where customers want to develop and build with Asana. And it isn't necessarily CRM; I just think that that is a category that is going to be ripe for disruption.

Speaker Change #106: And so who is the dominant player in CRM a couple of years from now maybe it's a sauna or yeah, maybe it's another dedicated vendor that was agile in the right way and embraced the technologies.

Speaker Change #106: I do think we have a lot of advantages.

Speaker Change #106: In turn the existing advantages in terms of having connectivity through the layers of the work graph in terms of supporting cross functional work.

Speaker Change #106: And it continues to be the case that the.

Speaker Change #106: The most valuable work is done cross functionally.

Speaker Change #106: And so you know again, we are we are seeing in practice, where customers want to develop and build with persona.

Speaker Change #106: And it isn't necessarily CRM I, just think that that is a category that is going to be ripe for disruption.

Speaker Change #106: And I think that.

Dustin A. Moskovitz: And I think that the thing I do see is that you can create such dramatically different results when you rebuild the workflow using AI that your priorities about what you care about change. And so if you're getting a dramatically better response rate, and your business development reps have much higher productivity, then maybe the other things that you thought of as a requirement for that category sort of fall by the wayside, and it's more about where you can successfully implement and adopt and get the results that you want.

The thing I do see is you can create such dramatically different results. When you rebuild the workflow using AI that your priorities about what you care about change.

Speaker Change #106: And so if youre getting a dramatically better response rates and your business development reps are have much higher productivity.

Speaker Change #106: And then maybe the other things that you thought it was a requirement for that category sort of fall by the wayside and it's more about where you can successfully implement and adopt and get the results that you want in there I think sona is just really well positioned to be early in the market and be able to not just address a single software category like that would be a solution that you can use across.

Dustin A. Moskovitz: And there, I think Asana is just really well positioned to be early in the market and be able to not just address a single software category like that but be a solution that you can use across teams and for cross-functional work. Our next question comes from the line of Josh Baer with Morgan Stanley. Great, thanks for the question, which is for Dustin.

Speaker Change #106: Teams and for cross functional work.

Speaker Change #107: Our next question comes from the line of Josh Baer with Morgan Stanley.

Joshua Phillip Baer: I wanted to come back to something that you mentioned earlier about OpenAI and Anthropic. Just wondering, how does your early involvement and your relationships and investments in those companies give Asana an advantage? If you could just expand a little bit, your involvement really informs your strategies. Yeah, so I think one of the themes on this call has just been the amount of kind of confusion there is in the market and, you know, how hard it is to decide where to kind of commit and invest and make choices for the future.

Speaker Change #108: Great. Thanks for the question.

Speaker Change #109: As for Duston wanted to come back to something that you mentioned earlier around open AI and anthropic just wondering how does your early involvement in your relationships and investments in those companies.

Speaker Change #110: On an advantage if you could just expand a little bit.

Speaker Change #111: Oh Youre involved in really informs your strategy that sounds great.

Speaker Change #110: Alright.

Dustin A. Moskovitz: And so there's just a huge advantage in sort of having direct communication with those teams. And, you know, we're mutual customers. And so, as we do with our customers, they're sort of previewing the roadmap with us, they're giving us early access to tools. Sometimes we get early access to the frontier models and sort of get to, you know, get to beta test them.

Speaker Change #112: Yeah. So I think one of the themes on this call has just been the amount of kind of confusion. There is in the market and you know how hard it is to decide where to kind of commit and invest and make choices for the future and so there's just a huge advantage and sort of having direct communication with those teams.

Speaker Change #112: And you know where where mutual customers and so as we do with our customers, they're sort of previewing the roadmap with us, they're giving us early access to tools.

Speaker Change #112: Sometimes we get early access to the frontier models and sort of get to get the beta tests and.

Dustin A. Moskovitz: And so that saves us a lot in terms of sort of knowing where things are going to converge in the future, where we should invest in our platform versus maybe where we're going to get a capability from the labs themselves, and maybe that will be better. And also, we've learned a lot about what it means to work with multiple at once. And, you know, I think that's just been really helpful for us to be able to build in a way that allows us to switch between them and, even in some cases, use both in a single workflow.

Speaker Change #112: And so that saves us a lot in terms of sort of knowing where things are going to converge in the future, where we should invest in our platform versus maybe where we're going to get.

Speaker Change #112: A capability from the labs themselves and maybe that will be better and also we've learned a lot about what it means to work with with multiple at once and I think that's just been really helpful for us to be able to build in a way that allows us to switch between them and even in some cases are used both in a single workflow.

Dustin A. Moskovitz: And so a lot is just about being able to have that sort of early access to a little bit of the future when everything is moving so quickly and developing so quickly. And just having really high bandwidth communication with those teams. I think I probably know, like, you know, 15 or 20 individual employees in a tropical rainforest now. And, and yeah, and there's quite a lot more connections here with the whole company.

Speaker Change #112: And so a lot is just about being able to have that that sort of early access to a little bit in the future. When when everything is moving so quickly in developing so quickly.

Speaker Change #112: And just having really high bandwidth communication with those teams I think I, probably know like 15 or 20 individual employees and a topic now.

Speaker Change #112: And Oh, yeah, there's quite a lot more connections here with the whole company. So.

Dustin A. Moskovitz: So yeah, it's really just about having those close relationships and being here where all that activity is happening and being able to just stand a little taller and see a little further. Great, thank you very much.

Speaker Change #112: So yes, it's really just about having those close relationships and being here, where all of that activity is happening.

Being able to just stand a little taller and see a little further.

Speaker Change #113: Great. Thank you very much.

Michael J. Funk: Our next question comes from the line of Michael Funk with Bank of America. Yeah, thank you for the question tonight. So the first one's higher level.

Our next question comes from the line of Michael Funk with Bank of America.

Speaker Change #114: Yes. Thank you for the question Tonight So.

Anne Raimondi: A number of software companies have talked about sequential enterprise demand weakness this quarter, calendar Q1 versus calendar 4Q. And if I heard your comments correctly, you know, what you're experiencing is markedly different or more positive. I think I heard you talk about a solid finish to the quarter, stabilizing or stable churn rates, and a strong pipeline. So if I heard that correctly, you know, to what relative strength do you attribute that relative strength? Is it the product? Is it relatively low penetration?

Speaker Change #115: First one higher level number of software companies have talked about sequential enterprise demand weakness.

Speaker Change #116: This quarter, our calendar Q1 versus calendar.

Speaker Change #117: For Q, if I heard your comments correctly, you're experiencing is markedly different or more positive I think you heard you talk about a solid finish to the quarter stable.

Speaker Change #117: Stabilizing our stable churn rates and strong pipeline.

Speaker Change #118: I heard that correct. So what do you attribute the relative strength.

Speaker Change #119: Doctors at relatively low penetration I think it would be helpful to put a finer point on that just given how the market's responded recently to some of the other company commentary.

Tim M. Wan: I think it would be helpful to put a finer point on that, just given how the markets have responded recently to some of the other company comments. Yeah, Michael, thanks for that question. I do think for us, unlike a year ago, we're now seeing customers planning to invest, especially in AI. And so AI, in particular, is also a potential driver of consolidation in our space because they see the benefit of having all of work management on one platform to really accelerate the benefits that would then accrue from AI on top of those workflows.

Michael: Yes, Michael Thanks for that question.

Speaker Change #121: I do think for us. Unlike a year ago. We're now seeing customers are planning to invest especially in AI and so and in AI. In particular is also a potential driver of consolidation in our space because they see the benefit of having all of them.

Speaker Change #121: Work management on one platform to really accelerate the and the benefits that accrue from AI on top of those workflows.

Tim M. Wan: And so we really see, you know, we've always been strong in having relationships with customers around digital transformation. We feel like digital transformation is sort of the first step and precursor to AI transformation. And so they're responding enthusiastically, as we are showing them what's already in the product and what's coming. And so I think that's actually what we're seeing in terms of the demand environment. And then as far as, you know, consolidations go, we're also just seeing that directly with customers. A hardware manufacturing company that we work closely with expanded to a three-year contract this quarter, and they replaced two other redundant tools, really being driven out of the CIO's organization. So the CIO wanted to drive business value by managing all of their roadmaps, their projects, their product launches, and their marketing workflows, all in Asana.

Speaker Change #121: And so we really see you know, we've always been strong and having relationships with customers around digital transformation, we feel like digital transformation is sort of the first stop and precursor to AI transformation.

Speaker Change #121: And so there is they are responding enthusiastically as we are showing them what's already in the product and what's coming and so I think that's actually what we're seeing in terms of in that demand environment and then as far as you know consolidations go.

Speaker Change #121: We're also just seeing that directly with customers our hardware manufacturing company that we work closely with expanded to a three year contract. This quarter. They replaced two other redundant tools really be driven out of the CIO organization. So the CIO wanted to drive business value by managing all of their roadmap there project their product launches.

And their marketing workflows, all in a sauna and that's giving their leadership team visibility and control across their most critical initiatives and so I think it's that confluence have CIO are looking to streamline and simplify their tech investments.

Anne Raimondi: And that's giving their leadership team visibility and control across their most critical initiatives. And so I think it's that confluence of, you know, CIOs are looking to streamline and simplify their tech investments, work management is emerging as a category that they're paying a lot of attention to, and, on top of that, wanting to embrace AI in a strategic way. And so I think we're seeing that all come together in our customer. Thank you for that comment. This is Tim.

Speaker Change #121: Management is emerging as a category that they're paying a lot of attention to you add on top of that wanting to embrace AI in a strategic way and so I think where we're seeing that all come together and our customers.

Speaker Change #122: Thank you for that comment.

Anne Raimondi: The only thing I would add is the investments that we've also made in our go-to-market leadership. That's been extremely beneficial in terms of moving the teams up. Focusing them on the enterprise market. And that was also the comment earlier about the strength of EBR International relative to the U.S. and presumably productivity improving and hopefully moving to North America later this year. Yeah, absolutely. And thanks, Tim. Kudos to the team. Yes We've been seeing real strength in EMEA.

Tim: This is Tim.

Speaker Change #123: The investments that we've also made in our go to market leadership.

Speaker Change #124: That's been extremely beneficial in terms of moving the teams up and focusing focusing them on the enterprise market.

Speaker Change #125: And that was the comment earlier about the strength.

Speaker Change #125: And E Bay, our international relative to the U S, presumably productivity, improving and hopefully migrating to North America later this year.

Speaker Change #126: Yeah, absolutely and thanks Kim.

Speaker Change #127: Kudos to the team, yes, we've been seeing.

Anne Raimondi: That's where, you know, in each market, we now have seasoned enterprise leadership. We're also seeing that globally, as we've been investing in new leadership in sales enablement and field readiness operations, as well as a new global leader for sales development. That's also helping to drive that consistency and performance in the enterprise. So we're excited to see more of that come in North America.

Speaker Change #128: Seeing real strength in EMEA, that's where you know in each market. We now have seasoned enterprise leadership. We're also seeing that globally as we've been investing in new leadership and sales enablement and field readiness operations as well as a new global leader for our sales development. That's also helping.

Speaker Change #128: <unk> to drive that consistency and performance in the enterprise so on and so we're excited to see more of that come in North America. Our general manager for North America joined at the beginning of the fiscal year and we're really excited to see that momentum that he's driving.

Anne Raimondi: Our general manager for North America joined at the beginning of the fiscal year, and we're really excited to see the momentum that he's driving. Our next question comes from the line of Taylor McGinnis with UBS. Yeah, hi, thanks so much for taking my question. So the first one is you talked about NRR going down in 2Q, but given that it's the trailing 12-month metric, I know it can be a little noisy. So I'm just wondering, can you give us color on how the renewal base in 2Q compares to what we've seen in past quarters in terms of size and churn risk?

Anne Raimondi: And then secondly, as we think about like the renewal rates that you're seeing in 2Q versus previous quarters, is the expectation that, you know, those will be similar, better, tougher, any more, I guess, color in terms of some of the quarterly dynamics? Thanks.

Speaker Change #129: Our next question comes from the line of Taylor Mcguinness with UBS.

Taylor Anne McGinnis: Yeah, Hi, thanks, so much for taking my question. So the first one is you talked about and are are going down in Q2, but given that the trailing 12 month metric I know it can be a little noisy. So I'm. Just wondering can you give us color on how the renewal base and QQ compares to what we've seen in past quarters in terms of size.

And churn risk and then secondly, as we think about like the renewal rates that you're seeing in QQ versus previous quarters is the expectation that those will be similar or better tougher like any more I guess color in terms of some of like the quarterly dynamics. Thanks.

Taylor Anne McGinnis: Yeah, I think we, you know, as we mentioned on the call Taylor, we specifically pointed out that we still have some tough renewals going into Q2. And we're very well aware of those customers. By coming out of Q2, we expect our gross renewal rate, as well as NRR, to pretty much stabilize. And you know, to the degree that expansion continues to happen, and the pipeline continues to build, we think those things will reaccelerate.

Speaker Change #131: Yeah, I think we you know I think as we mentioned on the call Taylor.

Speaker Change #132: We specifically pointed that we still have some tough renewals going into Q2, and we're very well aware of those customers, but coming out of Q2, we expect our.

Speaker Change #133: Gross renewal rate as well as the end of our two pretty much stabilize.

Speaker Change #133: And you know to a degree that expansion continues to happen and pipeline continues to build we think those things will reaccelerate.

Taylor Anne McGinnis: If I compare the slope of the curve of where things are today versus where they were a year ago, things last year were definitely on a downward slope in both our NRR and our GRR. And when I look back now, it's at the last two, three quarters, things are much more stable and have essentially, I would say, almost flattened. Honoree Holden.

Speaker Change #133: You know I, if I compare kind of the slope of the curve of where things are today versus where they were a year ago things last year was definitely on a downward slope in both our and our and our G. R. R.

Speaker Change #133: When I look back now at the kind of the last few last two or three quarters things are much more stable and have essentially I would say almost flat line.

Speaker Change #134: On a regional basis yeah.

Tim M. Wan: And then my second question is just in terms of the new pricing and packaging, and I'll obviously talk about how AI ties into this, but can you just give an update on terms of, you know, the uptick that you're seeing there, if any, and, you know, how that could be a growth driver in the back half of this year? Thanks. Yeah, Taylor. I'll answer that question.

Speaker Change #135: Perfect and then.

Speaker Change #136: A question is just in terms of the new like pricing and packaging and all obviously like AI.

Speaker Change #137: But can you just give like an update in terms of the uptick that you're seeing there if any and how that could be a growth driver in the back half of this year.

Anne Raimondi: So we're definitely continuing to see really encouraging signals that the new tiers are driving higher enterprise up-tiering and contributing to a larger volume of enterprise deals in our pipeline versus history. As of the end of Q1, we almost doubled the number of customers who adopted our new packaging compared to Q4. And since the launch of the new packages, customers up-tiering to our new enterprise packages comprised approximately 40% of our total enterprise tier AR expansion.

Tyler: Yeah, Tyler I'll answer that question. So we're definitely continuing to see really encouraging signals that the new tiers are driving higher enterprise I'm curious and contributing to a larger volume of enterprise deals in our pipeline and there's this historical as of the end of Q1, we almost doubled the number of customers who adopted.

Tyler: Our new packaging compared to Q4 and since the launch of any packages customers upgrading to our new enterprise packages comprised approximately 40% of our total enterprise tier air expansion. So early positive signals and we're moving as quickly as possible to get customers into these new plants.

Anne Raimondi: So early positive signals, and we're, you know, moving as quickly as possible to get customers into these new plans. Our last question will come from the line of Patrick Walravens with Citizens JMP. Great, thanks for taking my question. So I know there's been a lot of discussion about AI on the call, but I just wanted to drill down on one point. So there have been concerns about AI driving more seat compression; I just wanted to ask, as you put it, more AI tools in the hands of Asana customers.

Speaker Change #139: Our last question will come from the line of Patrick Wall Ravens with citizens JMP.

Speaker Change #140: Great. Thanks for taking my question. So I know there's been a lot of discussion about AI on the call I just wanted to drill down on one point.

Speaker Change #141: So there have been concerns about AI driving.

Speaker Change #141: More seat compression I just wanted to ask as you put it.

Anne Raimondi: Is that a line that gets crossed at a certain point, or does it actually make it more appealing for customers to put more behind Asana? How do you think about that? Yeah, so, you know, part of that is unknown.

Speaker Change #142: More AI tools in the hands of Hassan of customers that align that gets crossed at a certain point or does it actually make it more appealing for our customers put more behind us on it.

Speaker Change #143: How do you think about that thanks.

Patrick D. Walravens: But the two big things that I'd go back to are one, we still have a lot of seed expansion opportunities with our existing customers. So unless they're already wall to wall, I think, on balance, this is a reason to expand further. And then the other thing is, I think that moving or adding the consumption-based revenue line gives us some future proofing there, because it's really aligning price to value on what they're getting out of the functionality, rather than sort of fixating on the seats.

Speaker Change #144: Yeah. So you know part of that I think is unknown, but the two big things that I'd go back to their one we still have a lot of seed expansion opportunity in our existing customers.

Speaker Change #144: So unless they're already wall to wall I think on on balance. This is a reason to expand further and then the other is a I think that moving or adding the consumption based revenue line gives us some future proofing, there because it's really aligning price to value on what they are getting out of the functionality.

Patrick D. Walravens: So I think if that becomes a bigger trend, then we will move more in that direction, and this is setting us up well to be agile. But in the next few years, again, given what I said about the early adopter curve and the way these technologies are adopted, I don't think that's particularly relevant to the model or something that we're seeing in practice and in deals.

Speaker Change #144: Then sort of fixating on the seats. So I think if that becomes a bigger trend then we would move more in that direction and this is this is setting us up well to be agile, but.

Speaker Change #144: But in the next few years again, given what I said about their early adopter curve and the way. These technologies are adopted I don't think that's particularly relevant to the model or something that we're seeing in practice in deals.

Dustin A. Moskovitz: Okay, thanks. That concludes today's question-and-answer session. I'd like to turn the call back to Catherine Buan for her closing remarks. Thank you again for joining us today. I know it was a really busy day in earnings, and we appreciate your time. Looking forward to seeing you on the road this quarter. We'll be at all the conferences in San Francisco and New York. And, of course, please join us in San Francisco on Wednesday, June 5th for the Work Innovation Summit. You can register on our website or just register with IR at asana.com.

Speaker Change #145: Okay. Thanks.

Speaker Change #146: That concludes today's question and answer session I'd like to turn the call back to Catherine for closing remarks.

Catherine: Thank you again for joining us today I know it was a really busy day and earnings and we appreciate your time looking forward to seeing you on the road this quarter will be at all the conferences in San Francisco and New York and of course, please join us in San Francisco on Wednesday June 5th for work Innovation Summit, you can register on our website or just registered with IR at Sana Dotcom and look.

Catherine: Forward to seeing you on Wednesday, Thank you.

Catherine Buan: And looking forward to seeing you on Wednesday. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. ??? ??? ??? ??? ??? ??? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? , , , , , , , , , , ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Speaker Change #148: This concludes today's conference call. Thank you for participating you may now disconnect.

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