Asana Accelerates
Asana (ASAN) is the newest and smallest position in my portfolio. As the ASAN stock price is up 16% today (after their acceleration in revenue growth to 72% this q/q that was announced in their earnings call yesterday) and the stock price is up over 100% in just the past three months since my initial investment, they have earned a write up; although ASAN currently occupies only a 3.5% position in my portfolio of 9 companies.
What: Asana is a SaaS company based in San Francisco that helps teams around the world orchestrate their work, from small projects to strategic initiatives using a work management platform that was rolled out in 2012 (and which now also integrates with hundreds of named partners’ software). The co-founder, Dustin Moskovitz, also co-founded another little company called Facebook with some guy name Zuck, and the software was created by one of Google’s original engineers. The founders and the management team certainly have the experience and “chops” and are doing a great job of accelerating growth and adoption of a software that has become far more critical in the remote and work from home environment of Covid-19.
The Call: First, the brutal honesty…I was actually hoping to see their growth accelerate even more than they announced…like one of Elon’s rocketships…perhaps even into the low 80’s. Alas, that did not happen, but this was their Q2 and I begrudgingly admit that they absolutely did not disappoint, announcing 72% revenue growth y/y (a very nice increase sequentially from the 60.7% y/y growth last quarter and their 4th consecutive quarterly increase in revenue growth). That is incredible acceleration either way, even if they won’t quite make it to Mars, the moon is an option!
Revenues from customers spending over $5k grew by 97%! Revenue from customers spending over $50k grew 111%!! And the growth of the existing customers is exemplified by a dollar-based net retention rate of 118%, 125% and 145% respectively in those three customer sizes. This is exactly what I love to see combined with strong overall customer base and growth, of which they now have an incredible 107,000 paying customers.
The overall earnings call was extremely positive punctuated by nearly every analyst congratulating them on a great quarter. Just a few of the highlights if you didn’t listen to the call:
- Expanded into 3 new languages for a total of 13 languages.
- Partnered with Zoom (who is also a quickly growing customer)
- Announced new product suites for Enterprise (large) customers
- Raised their full year guidance again by 6% ($20m)
- New listing on the LTSE (Long Term Stock Exchange)
- Many new large enterprise customers including CVS, Viacom
- 89% gross margins!!
- Announced new extremely experienced COO, Anne Raimondi.
- Best growth in 6 quarters
- Opened new offices including Chicago and growing sales and h/c quickly
- Channel partners across 75 countries internationally.
I do not see any red flags with this company. ASAN has plenty of green field opportunities and an incredible TAM as they continue their rapid growth in the US and internationally, announce new products, large customer growth, strong partnerships, and fantastic margins. I like their proven management team and they are executing well. I can’t ding them on profitability, as that is simply not their goal at the moment, as they strive to maximize growth and customer penetration. I am currently looking at a company called Monday (MNDY) in a similar space who just put up screaming 92% revenue growth a few weeks ago (though I don’t think they can maintain it next quarter); they show incredible promise also, but I have not yet ascertained how similar they are and if one is better than the other to own right now. MNDY has a higher valuation and is therefore “more expensive”, but no doubt deserved with their higher 92% growth.
Maintaining my 3.5% position in ASAN for now and looking for opportunities to buy more.
