Asana Q3 2024 Earnings Call Transcript

Quartr
Provided by Quartr
December 5, 2023

There are 12 speakers on the call.

Operator

Thank you for standing by, and welcome to Asana's Third Quarter Fiscal Year 20 24 Earnings Conference Call. At this time, all participants are in a listen only mode. After the speaker presentation, there will be a question and answer I would now like to hand the call over to Catherine Buon, Head of Investor Relations. Please go ahead.

Speaker 1

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana's 3rd quarter 2024. With me on today's call are Dustin Moskovitz, Asana's Co Founder and CEO Ann Raimondi, our Chief Operating Officer and Head of Business and Tim Won, 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, 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. Please refer to our filings with the SEC, including our most recent Annual Report on Form 10 ks and Quarterly Report on Form 10 Q for additional information on risks, uncertainties and assumptions that may cause actual results to differ materially from those set forth in such statements.

Speaker 1

In addition, during today's call, we will discuss non GAAP financial measures. These non GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Reconciliations between GAAP and non GAAP financial measures and a discussion of the limitations of using non GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our Investor Relations webpage at investors. Asana.com. And with that, I'd like to turn the call over to Dustin.

Speaker 2

Thank you, Catherine, and thank you all for joining us on the call today. In Q3, we beat our top and bottom line expectations again and continue to build on our leadership in the enterprise. Q3 revenues grew 18% year over year and non GAAP operating loss margins were 5.9%, an improvement of over 30 percentage points versus the year ago period. Top line growth was led by our continued success in the enterprise. Revenues from our core customers or those spending $5,000 or more on an annualized basis grew 20% and revenue from our enterprise customers grew at an even faster clip.

Speaker 2

Dollar based net retention rate from greater than the dollar based net retention rate for our overall customer base. As you can see, our investments in the enterprise are beginning to pay off we further our partnerships with some of the largest companies across major industries. While the macroeconomic headwinds continue, Especially impacting business in our renewal base, we're seeing signs of stabilization in new business. Overall, awareness and demand for work management continues to expand. Across our total customer base, we're at over 3,000,000 paid seats, showing increasing adoption of Asana Worldwide.

Speaker 2

From an operational standpoint, we've made great progress on improving our non GAAP operating margins. On a 9 month basis, margins improved 34 percentage points year over year. We expect improvement in non GAAP operating margin year over year for the full year as we focus on operational efficiency and growth, which Tim will talk about more. This year is an important transition period for us. In the past year, we've optimized our investments across our organization, making substantial year over year improvements in our margins each quarter.

Speaker 2

We've brought onboard enterprise software veterans to lead our go to market strategy and execution. And we're embarking on a new product cycle of innovation on our industry leading platform, leveraging AI. With that, let me turn to our progress on the product side. So what have we announced? In early October, we rolled out Smart summaries to identify action items and highlights from conversations, tasks and comments Smart Editor to write clearer, more compelling responses that strike the right tone and Smart Fields to organize projects with auto generated custom fields.

Speaker 2

We also started rolling out 2 more features in November. First, Smart Answers to get timely answers and insights about projects, identify blockers and determine next steps. And second, smart status to identify blind spots, open questions and roadblocks with automatic status updates. We've had great early feedback from beta customers. Tens of thousands of users are learning our AI powered features.

Speaker 2

One of the most popular has been Smart Summaries that not only helps you identify action items and highlights from conversations, tasks and comments, but also automatically generates subtasks. This allows for more flexibility and much greater productivity. One of our beta customers specifically like Smart Status. They told us that they currently spend 2 to 2.5 hours every other week reading context to do this manually. They added, I'm especially excited to see you roll this out at the portfolio level.

Speaker 2

And I'm excited about that too, because it's going to powerfully amplify the value you get from connecting work across levels in the Asana Work Graph without requiring any additional work from customers. In contrast to some other approaches, we focused on integrating AI into existing user workflows to maximize their value, like creating a new project, Building out the details of a task, including suggesting subtasks, we're writing a new status summary for a project. And customers are really excited about some of our upcoming roadmap that uses all our Work Graph context to intelligently orchestrate work, like helping predict the time required for tasks so that they can more easily plan and manage their work. The interest and momentum when it comes to Asana and AI is growing. As you know, we had successful customer events in New York City and London last quarter with our Work Innovation Summit focused on AI and the future of work.

Speaker 2

We expect to continue the marketing momentum into next year. As we shared at the Work Innovation Summit in our Investor Day, The way we've engineered our products with AI is more than a copilot for individuals. We see it as both copilot and air traffic control for entire organizations. The work graph serves as a shared map, powering us on intelligence, helping to align human intention with AI guidance as they work together to achieve a customer's goals. Unlike tools that are narrowly focused on individuals or specific teams and use cases, it's not a map of the relationships across the entire company between individuals, And the work they're trying to achieve, ensuring you get reliable, accurate and trusted generative output.

Speaker 2

Simply asking open ended about all the training data used to train the foundation model yield results that aren't as useful, leading to hallucinations that decrease trust and adoption of AI. With Asana, AI amplifies the power of connecting our customers' work to their business goals, allowing them to accomplish things within the right context. This is a highly differentiated capability that customers are very excited about and the Summit attendees reported an moment on the value of the work graph when seeing our AI demos. We also recently hosted an Asana Intelligence training event with over 1500 people from leading organizations in industries such as media, Transportation, education, food and beverage and of course, tech, illustrating how broad interest in Asana Intelligence is growing. Notably, we're also seeing adoption of Asana within leading AI companies like Anthropic, OpenAI and Alignment Research Center.

Speaker 2

Our new packaging strategy introduced at our Investor Day in October and launched less than a month ago will further adoption of AI and help on ramp customers to our advanced and enterprise tiers. Early feedback from the sales force was that customers are excited to learn about our multiple enterprise offerings. In closing, I'm more excited than ever about the potential of VASANA and where we can go with the platform and capabilities. For example, it's even more amazing to work with our own R and D team right now. I'll have an idea for something our OEMs might do in the product and very often a couple of weeks later they'll come back and say they've got a working version.

Speaker 2

It It was easier to build than they expected and the output is more impressive than they predicted it would be. Everything we're focused on today is in service of enterprise growth, Building pipeline, retention and sea level customer engagement. And now I'll turn it over to Ann.

Speaker 3

Thanks, Dustin. In Q3, we continued to be impacted by macroeconomic headwinds. Deal cycles continue to be longer and budgets continue to be a significant factor. However, as Dustin mentioned, we are beginning to see signs of stabilization, especially for new business, which includes expansion. We still need to work through some of the original headwinds that are impacting larger customers.

Speaker 3

Geographically, we saw bright spots in Asia, especially Japan in Europe this quarter. As an example, Asana was particularly strong with high profile retail and consumer product goods companies this quarter. Our pipeline continues to build, especially with the success of events such as our Work Innovation Summit in New York City and London in October. Revenue from our top 2 product tiers grew over 25% in Q3. As we continue to roll out new packaging that was shared at Investor Day, we expect to see new customers in particular accelerate their journey into our premium tiers to utilize our most unique enterprise capabilities.

Speaker 3

Enterprise customers representing organizations with over 2,000 employees continue to be our fastest growing customer cohort. Executives are planning long term and looking to partner with 1 strategic partner, and we believe this is driving multiyear commitments for us. Our enterprise customers are asking us about AI and automations in Asana. For example, customers we're meeting with through our executive briefing program are excited about the roll up of status reports using Asana's AI features. Currently, writing project status might take hours, But with AI, each report can be written in just a few minutes, while never missing an important detail, leaving employees and executives with more time for more valuable work.

Speaker 3

Also, Asana plus AI helps organizations ramp usage where change management may otherwise be a factor. We believe our AI roadmap and our new packaging will help to further drive adoption. We're seeing new business broadly across several diverse industries: healthcare, financial services, media, transportation, manufacturing, among many others. Within Media, customers rely on Asana to manage their core business processes such as developing on air creative, managing production workflows and sourcing new talent on our platform. Paramount Global, a leading global media and entertainment company, has been a customer of ours for a few years now and expanded their use of Asana to all their employees this quarter.

Speaker 3

And we had another large media conglomerate, DIRECTV that had a significant expansion this quarter. We're seeing continued growth within the Healthcare and Biotech vertical this quarter. For example, Norton Healthcare, who we have talked about in the past, increased their commitment with Asana this quarter. They use Asana to onboard hundreds of new physician providers to their vast hospital and healthcare system. Additionally, another healthcare provider that serves over 100,000,000 people around the world expanded their use of Asana.

Speaker 3

Departments that serve their clinical programs as well as marketing and financial operations rely on Asana to automate work, Manage strategic projects, enable seamless collaboration across teams and facilitate executive reporting so they can increase operating efficiency to drive better patient outcomes. And we continue to expand in other industries. A global transportation and food delivery marketplace company expanded their use of Asana in a multi year early renewal deal. Our robust analytics capabilities, Jira DataSync integration and product roadmap, including AI capabilities, were key factors for this win. Our enterprise solution is a strategic application for the company and is used cross functionally by many departments for everything from business strategy planning to product development to account management.

Speaker 3

1 of the largest hospitality companies in the world headquartered in France chose Asana in a multiyear land deal for their global marketing, communications and e commerce department. A global 2,000 retail company with Over 1,000 store locations expanded their use of Asana and upgraded to our enterprise solution to manage the openings and maintenance of their metro stores as well as their quarterly planning workflow. And some of the most influential leaders in tech are expanding. Following the momentum from Q2, we expanded significantly with a large high profile enterprise software company. This is a good leading indicator that when tech recovers, it could be a tailwind for us.

Speaker 3

In summary, we are seeing more multiyear deals up both sequentially and year over year, winning on vendor consolidation decisions and are continuing to diversify our enterprise success across more industries. But we still have more work to do. Looking to Q4 and the beginning of next year, we continue to focus on building pipeline for new enterprise ARR with targeted events and executive meetings around the world improving expansion rates through customer success programs and strategic initiatives such as the introduction of AI in our new product tiers enhancing our professional services offerings, which will deepen our partnerships with our most strategic accounts and increasing adoption of our differentiated enterprise capabilities. And with that, I'll hand it over to Tim.

Speaker 4

Thank you, Anne. While I'm pleased with our high level results, some of the underlying drivers were not as strong as we had hoped. As Anne mentioned, we continue to see headwinds from a macro standpoint, which continues to impact our dollar based net retention rates. We also have more work to do as we develop our enterprise go to market muscle and continue transitioning up market. By the same token, I'm proud of the efforts the team has put in to manage costs and improve efficiency.

Speaker 4

We continue to make and we expect to continue to see substantial progress on improving our operating margins. On to our Q3 results. Q3 revenues came in at $166,500,000 up 18% year over year. We have 21,346 core customers or customers spending $5,000 or more on an annualized basis. Revenue from core customers grew 20% year over year.

Speaker 4

This cohort represented 74% of our revenues in Q3, up from 73% in the year ago quarter. We have 580 customers spending $100,000 or more on an annualized basis and this customer cohort grew 18% year over year. As a reminder, we define these customer cohorts based on annualized GAAP revenues in a given quarter. Our dollar based net retention rates were lower mainly driven by seat adjustments. Our overall dollar based net retention rate was over 100%.

Speaker 4

Our dollar based net retention rate for our core customer was over 105%. And customer spending $100,000 or more, our dollar based net retention rate was over 120%. As a reminder, our dollar based net retention rate is Trailing 4 quarter average calculation and thus lagging indicator. We continue to see stable local churn rates overall and low churn in our largest accounts. However, companies remain mindful of the near term economic challenges.

Speaker 4

I'll speak specifically to our outlook regarding this in a moment. As I turn to expense items and profitability, I would like to point out that I'll be discussing non GAAP results in the balance of my remarks. Gross margins came in at 90.6%. Research and development was $51,200,000 or 31 percent of revenue, an improvement from 36% a year ago. Sales and marketing was $82,600,000 or 50 percent of revenue, an improvement from 70% a year ago.

Speaker 4

G and A was $26,900,000 or 16% of revenues, an improvement from 22% a year ago. Operating loss was $9,800,000 and our operating loss margin was 6%, representing a 31 percentage point margin improvement versus a year ago. The improvement in our operating margin demonstrates our ability to take a balanced approach to growth and profitability. Net loss was $8,200,000 and our net loss per share was 0 point 0 $4 Moving on to our balance sheet and cash flow. Cash and marketable securities at the end of Q3 were approximately $530,000,000 Our remaining performance obligations or RPO was $335,100,000 up 23% from the year ago quarter.

Speaker 4

We expect 85% of our RPO will be recognized over the next 12 months. The current portion of RPO grew 21% from a year ago quarter. Our total ending Q3 deferred revenue was $255,400,000 up 19% year over year. Our free cash flow is defined as net cash from operating activities, less cash used in property and equipment and capitalized software costs, excluding non recurring items such as costs related to restructuring. Q3 free cash flow was negative $11,500,000 were negative 7% on a margin basis, an improvement from negative 34% from the year ago quarter.

Speaker 4

On a year to date basis, our free cash flow was negative $13,400,000 approximately $120,000,000 improvement from the same year ago period. Moving to guidance for Q4 fiscal 2024, we expect revenues of $167,000,000 to $168,000,000 representing growth of 11% to 12% year over year. We expect non GAAP loss from operations of $23,000,000 to $21,000,000 representing an operating margin of negative 13% at the midpoint of guidance, a measurable improvement from the same year ago period. And we expect net loss per share of $0.10 to $0.09 assuming basic and diluted weighted average shares outstanding of approximately 223,000,000. For the full fiscal year 2024, we expect revenue to be in the range of $648,500,000 to $649,500,000 representing a growth rate of 19% year over year.

Speaker 4

We expect non GAAP loss from operations of $66,000,000 to $64,000,000 representing an operating margin of negative 10% at the midpoint of guidance, an improvement from negative 38% in fiscal 2023. And we expect net loss per share of $0.27 to $0.26 assuming basic and diluted weighted average shares outstanding of approximately $219,000,000 Our guidance assumes that there is no change in the current macroeconomic environment. We expect our overall dollar based net retention rate to remain above 100% for the year. We continue to believe dollar based Net retention rate should bottom in Q1 at plus or minus 100 percent when a number of large deals from the previous year renewal. In addition, the leadership changes we have made in our sales organization will take time to manifest.

Speaker 4

We are committed to maintaining a disciplined and balanced approach optimizing costs and improving efficiency and profitability. We will continue to invest in the future growth opportunities like AI, which we expect will drive long term value. We remain committed to delivering positive free cash flow by the end of calendar 2024. As we work towards reaching free cash flow, we are encouraged by the progress we've made and I'm optimistic about our future. Over the next 18 months to 24 months, We anticipate incremental growth will be driven by expansion from our core customers, which will be a tailwind to our NRR.

Speaker 4

Our focus on moving up market, so moving more of our customers to the 100,000 spend levels and our new packaging, which will help with more lands, improved adoption and new expansion. And with that, I'll turn it back to the operator for questions.

Operator

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

Speaker 5

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

Speaker 3

Hey, Josh, this is Anne. Thanks for your question. Yes. I think we're feeling good about the investments, that we've been making to go up market. You called out a couple of different So I'll address those.

Speaker 3

We're really excited that all of our key leadership roles across go to market are now filled. And these leaders have been adding great talent to the team where we've needed additional enterprise expertise. We have more ramped reps And reps with greater tenure than this time last year. So we're feeling good about that as well. And we'll continue to invest appropriately to Growth in priority markets, so we can reach and serve customers well.

Speaker 3

On packaging, we're seeing Really early positive feedback and interest from customers. In particular, customers really appreciate our approach to providing AI in every paid plan. That's clearly tied to value and supported by our guiding principles for AI. We've only been fully rolled out now for a few weeks, but with 2 enterprise plans now available. We're already seeing dozens of customer migrations up to those packages that include additional In Asana.

Speaker 3

So we're excited about that, excited about the quality of the sales conversations with executives And greater velocity in helping these customers choose the right strategic plans for both value and growth. So more to do, but excited that The investments that we've been making both in go to market, the team and product and our plans are starting to have good traction.

Speaker 5

Great. Thank you. And a quick one for Tim just on the target for positive free cash flow. Just wanted to confirm is that Without regard to the macro, meaning, if it gets better, worse, stays the same, No matter what the growth trajectory is, we're still looking for positive free cash flow by the end of 2024?

Speaker 4

Yes, I mean, I think we kind of said, our outlook hasn't really changed. Things haven't gotten noticeably better nor noticeably worse. So We're still committed to delivering free cash flow by the end of calendar 2024.

Speaker 6

Great. Thank you.

Operator

Thanks, Josh. Thank you. Our next question comes from the line of Alex Zukin of Wolfe Research.

Speaker 2

Hey guys, thanks for taking

Speaker 7

the question. So maybe just 2 for me. 1 on thus far in the renewals that you're seeing in some of your largest customers, It seems like you're pretty confident about that NRR troughing at 100 plus or minus. So what has kind of been Some of that dynamic activity or maybe just give us a sense for the visibility that you have there, what you've seen Today you mentioned some of the larger deals, but what's happening on renewal with the competitive environment? And then just a quick follow-up for Tim.

Speaker 4

Hey, Alex, it's Tim. So I think what we're seeing is obviously we have pretty good line of sight in terms of the utilization of many of our large accounts. What I would say is similar to what we shared at the on the Investor Day, most Most of the net retention rate is impacted by seat adjustment or seat reductions, primarily from companies that either had A layoff at this time last year and their renewal is up and they're just readjusting their own footprint. So I feel like we have We know which companies are likely going to renew. We know their utilization.

Speaker 4

So we have a pretty good handle, in terms of What the outlook will look like? Obviously, there's always there can always be surprises, but I think we feel pretty confident about the current line of sight.

Speaker 7

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

Speaker 4

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

Speaker 7

Okay, great. Thanks guys.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Taylor McGinnis of UBS. Please go ahead, Taylor.

Speaker 8

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

Speaker 4

Yes. I don't know if we shared this on the call on this call or the call earlier, but I think we did make a comment in the past that What we've seen is that like if you segment our business across tech versus non tech that the non tech sector is actually growing faster than our tech business and most of the pressure that we've seen on both the renewals and expansion is coming from the tech. Many of the customer logos and stories And highlighted, such as healthcare and media, those are non tech businesses and I think we're really encouraged by the footprint. Now, The other thing that's also the other positive that I would want to point out is that where we've had new leaders for about a year in regions for about a year. We've seen better performance out of those out of those reps and out of those geographies.

Speaker 4

So I'm really encouraged by what we see in Asia and some early signs from Europe as well. So I think we're encouraged both by the regions and the non tech sectors that we've gained foothold in.

Speaker 8

Perfect. And then my second question is going off of Alex's question that he asked earlier. So if you look at billings and bookings growth the last like 2 quarters, I think it's been in the low teens. So How should we think about those metrics being leading indicators as we think about growth going forward? And then as we look into 4Q and 1Q, is there any additional Color you can provide on what the renewal basis look like in those quarters and if there's anything to keep in mind from one to the next and how that might compare to what we've seen more recently?

Speaker 4

Yes, I mean, I think at this point, we're not giving fiscal year 2025 guidance, but what I would encourage you all to think about is just Like we want to be, stay as conservative as possible until we have more line of sight into the new year and how the year will shape up. So but we'll provide an On our Q4 earnings call.

Speaker 3

Thank you.

Operator

Thank you. Our next question comes from the line of Pat Walravens of JMP Securities. Your question please, Pat.

Speaker 6

Great. Thank you very much. Dustin, I'm going to go really big picture here. Do you think the changes in the governance at OpenAI is bad for the future humanity?

Speaker 2

Yes, that is really big picture.

Speaker 6

I know. I have one for Tim after, but I'm going

Speaker 9

to start with that.

Speaker 2

I mean, honestly, I sort of don't feel like we know what the changes to the governance of OpenAI are. My understanding is they have a temporary board whose goal is to create a new governance structure and elect a new board and I think we'll have to judge it based on that. I do want to maybe just like echo some of the comments I've seen from smarter pundits though of like I don't think I ever really thought that trying to govern the private companies to act differently was going to be the thing that most derisked problems with AI. And so I really think it just underscores the need to solve it with higher level regulation rather than governance structures.

Speaker 6

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

Speaker 4

Yes, I would say 2 things. I think like we're still seeing pressure on renewals. So I think there is compression kind of in our net expansion rates. That's 1. And I do think we'll lap those by the end of Q1 primarily because we do like if you kind of look back at layoffs in tech, There were a number of large companies that were still doing layoffs at the beginning of Q1.

Speaker 4

And I think once we kind of get through that period, I think we'll have some more tailwinds in our NRR. The other piece obviously is I think like the regions that I spoke about that are performing EMEA and APAC, Those have been nice surprises, but I think we still have more work to do in Americas.

Speaker 2

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

Speaker 6

Okay, great. Thank you.

Operator

Thank you. Our next question comes from the line of George

Speaker 10

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

Speaker 4

Yes, just in terms of new bookings that we're seeing That we've seen over the last 2, 3 quarters, I feel like especially in some of the geographies that I mentioned, both From a predictable standpoint, from a pipeline standpoint and from a close standpoint, I think those have been really encouraging. I would say, if we were sitting here last year, We were seeing deceleration in bookings, but sitting here today, it's much more stable, and I think that's a sign and that we're optimistic that Build our bookings business our new bookings up from this level.

Speaker 10

Got it. Super helpful. And I think during the Analyst Day, Ed talked a lot about some of the execution improvements in EMEA and then trying to replicate that success in U. S. It sounds like EMEA is still doing pretty well, but maybe just an update on how those changes to the U.

Speaker 10

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

Speaker 3

Yes. George, it's Anne. I'll answer that. It's been great to have Ed on board a full quarter. Things that We're seeing him do both in America and around the world are continuing to create a really strong culture of winning, especially up market, Driving a lot of operational rigor across the team.

Speaker 3

He's also been instilling a culture and a discipline of building strong Executive relationships with customers, so that's been great to see. And then just a tight partnership with our global marketing organization. So The executive events we mentioned, getting our customers together with one another to share innovative work management practices, All of that I think is improving performance and we'll see that pay off in the coming quarters. But it's And then we'll have more to share, but as he's been working really close with the AIMR team, I think we're also seeing some great momentum there.

Speaker 10

Awesome. Thanks for taking the questions.

Operator

Thank you. Our next question comes from the line of Rishi Jaluria of RBC Capital Markets. Your question please, Rishi.

Speaker 2

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

Speaker 3

Sure. Hey, Chris. I think the feedback that we're hearing both from our field who are having conversations with our customers, Our renewals team, our customer success team and from customers directly themselves is they do really appreciate how we've made AI very in the product in every paid plan. I think that is something that differentiates our approach to AI. AI designed directly into the workflows that employees and leaders are using.

Speaker 3

So that's actually brought forward some renewal conversations in some We've been, as I mentioned earlier, just pleasantly surprised to see just the level of engagement even though we're only a couple of weeks out in terms of customers choosing to move to our enterprise package. And now that we've got 2 of those choices. I think there's also more robust conversations that we can have with customers who are interested in those features and functionality. But we anticipate we'll continue to share more with you and have more updates in the next quarter, but the 1st few weeks have been really positive.

Speaker 2

Great. Thank you.

Operator

Thank you. Please stand by for our next question. Our next question comes from the line of Brent Thill of Jefferies. Your question please Brent.

Speaker 11

Dustin, you put together this public plan to buy 30,000,000 shares by the end of December. I think the last filing Had you close to $9,000,000 so a long way to go. Can you just talk at a high level of how you're thinking about this kind of The plan is only 30% filled. How do you think about that trajectory in the shape of that plan?

Speaker 2

Yes. So, I'll just confirm the 10b5-1 is still filed. And Gosh, when did we originally file it? March? March.

Speaker 2

Okay. So, all I can say is like the way I thought about that trajectory was locked in, in March, and I had to try and forecast the future in a really volatile market. And so I did the best I could. And now things are playing out. But yes, that's basically all I can say about it at this point.

Speaker 11

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

Speaker 6

you think about that specifically?

Speaker 4

Yes. I mean, I think when we look at the renewals that we have Coming up, and the companies that were impacted at some point this year due to layoff and looking at their utilization, we feel like we have a pretty good handle And plan and understand what that renewal will look like. So I think we have line of sight. There's always surprises, But I feel like we have a pretty good handle in terms of lapping the difficult comps that we'll have probably by the end of Q1.

Speaker 11

Great. Thank you.

Speaker 4

Thanks.

Operator

Thank you. Our next question comes from the line of Jason Celino of KeyBanc Capital Markets.

Speaker 9

Great. Thanks for taking our question. This is actually Devin on for Jason today. Wanted to ask about the early renewal deal that you called out. I believe this is the Q2 you're seeing this trend.

Speaker 9

I'm assuming this is customer driven, but any other details you can share, what the reasons are from the customer side? And Are you expecting more of these early renewals happening in the coming quarters?

Speaker 3

Yes. Hey, Devin. So, in that case that we mentioned, it's a Global, transportation and food delivery company, which I actually happen to be a very loyal customer of. But we've been talking to them about Just strategically all the use cases where they wanted to expand. And so what we really saw is both the combination of, our AI features, Investments that we had made in scalability and security, and their business priorities and needs, really just resulted in early renewal so that they could, again roll out much more quickly.

Speaker 3

Do we anticipate seeing more of those? I think it's still early, but I do think with the Conversations our teams are having with customers with our new plans, those could create opportunities, for customers to early renew. But again, we'll have more of that to share as we have more traction with the new plans. But again, early conversations are Driving good velocity in helping customers choose the right options for them as they plan for growth over the next year.

Speaker 9

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

Speaker 9

Thanks.

Speaker 4

Yes. I mean, I think it's the forecast is kind of based on our current what we're seeing in the business right now. And hopefully, over the last Probably since we've been public, hopefully, we've been in a position where we've over delivered and we try to do the best that we can on the forecast.

Operator

Thank you. I would now like to turn the conference back to Kathryn Bwan for closing remarks. Madam?

Speaker 1

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

Operator

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

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Earnings Conference Call
Asana Q3 2024
00:00 / 00:00
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