Asana Inc Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Josh Baer - Morgan Stanley & Co. LLC - Analyst : Great. Thanks for the question and welcome, Sonalee. Thanks for all the commentary on leverage into next year. Want to come back to AI Studio though, and the business model there with the platform fee, consumption credits. All that's really exciting. Appreciate how that's going to change the economics of customer expansion. I'm wondering what your expectations are on seat growth and that trend for existing customers. On the one hand, is there potential for headwinds to seat growth just from all the value AI and AI Studio. On the other hand, is there an opportunity as that opens up new use cases for broader expansion? Thanks.

Question: Rob Oliver - Robert W. Baird & Co. Incorporated - Analyst : Great. Thank you. Good afternoon and also, Sonalee, welcome from me as well. My first question is for Dustin or Anne. I'd be curious if you guys can talk a little bit about -- you mentioned -- and Dustin some bold numbers relative to the opportunity for AI Studio versus the current seat-based business. So clearly, some of the signs you're seeing are pretty exciting internally. Can you talk a little bit about what the early drivers are of use cases internally? Are you seeing any benefit from, say, for example, the rollout of view only and the rollout of AI Studio and workflow builder, where it enables a broader subset of perhaps non-seat-based users to leverage us on Asana's AI technology? Any color there would be helpful and then I had a follow-up for Sonalee.

Question: Rob Oliver - Robert W. Baird & Co. Incorporated - Analyst : That's very helpful. Thank you for that, Dustin. And then, Sonalee, just one for you. And I appreciate that we're going to get more detail on this headed into FY26 and appreciate you laying out some of the points of leverage that you see. One of the ones you mentioned was sales and marketing, and I'd just be curious for your initial perspective there. Asana is a company that -- after hiring Ed, Ed and Anne, I think have been trying to move upmarket and do more in enterprise -- nice and then you work with partners. I know you guys called a nice partner led win. I think it was in Japan or Asia as well. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 9:30PM, ASAN.N - Q3 2025 Asana Inc Earnings Call So clearly, there's momentum there; great logos you guys have added. On the other hand, there's a lot going on and it now seems like the sales force may have to add a new skill set of selling consumption in addition to selling logos and seats. So just curious just how you might think of that from a high level, knowing we'll get more detail next quarter. Thank you very much.

Question: Brent Bracelin - Piper Sandler & Co. - Analyst : Thank you. Good afternoon. Anne, I wanted to start with you here that the Q4 guide would mark the third straight quarter of 10% growth. That certainly implies stabilization in the business. Wanted to drill down into the non-tech part of the business where you're seeing some momentum here in improving growth. Can you frame the non-tech pipeline activity that you're seeing and maybe provide a little color on the type of a profile of non-tech deals. Is this a broader number of smaller non-tech lands? Are you starting to see large enterprise non-tech lands? Walk us through what's driving the land there and stabilization overall. Thanks.

Question: Brent Bracelin - Piper Sandler & Co. - Analyst : Helpful color there. Sonalee, for you, I know it's early, and I really look forward to hearing more about the cost rationalization plan. But you do have a bogey here for Q4. Can you walk us through the path to positive free cash flow? I ask because there was an $18 million burn here in Q3. And I'm just trying to think through the rationalization and ability to get to positive free cash flow here in Q4.

Question: Steven Enders - Citi Investment Research (US) - Analyst : Okay. Great. Thanks for taking the questions here. I guess I'm going to go back to AI Studio but maybe ask more about how that maybe comes together from a model perspective. And I guess it sounds like it may be beginning to have an impact on revenue today. But can you just maybe help us think about what the timeline would potentially look like for monetization, and how you're thinking about that and if maybe we're seeing any impacts to numbers today either in RPO or some other of the metrics here?

Question: Steven Enders - Citi Investment Research (US) - Analyst : Okay, perfect. No, that's great to hear and helpful context there. If I could squeeze one more in here. Just on net retention, good to hear it stabilized in quarter. Once we maybe begin to see that impact some of the reported net retention numbers and begin to see that metric stabilize a little bit. And I guess if we kind of peel back the under -- some of the underlying metrics of net retention, what is it that's helping support that? Is it just fewer down-sells on the tech side and getting through that, or are you starting to see a little bit more of the expansion initiatives support those metrics there? Thanks.

Question: Michael Funk - BofA Global Research (US) - Analyst : Yeah. Thank you for the questions tonight. First one for you, Dustin, and thank you again for the details in AI Studio and good to hear that it's going as well or better than expected. You mentioned some early learnings on power users and enterprises. And so just wondering how the actual and projected usage trends are affecting your thoughts around pricing, token bucket size, and how you might adjust that over time trying to weigh in and balance profitability?

Question: Michael Funk - BofA Global Research (US) - Analyst : Yeah, no. Or even prior to that, you had mentioned that the initial launch, you'd have buckets of credits that you sell at incremental tranches for heavier users. But then later, you mentioned that you've seen power users and some specific early adopters and even internally. So just wondering how that influenced your thought about the sizing of those buckets and in the price and if you try to project usage patterns across your customers.

Question: Michael Funk - BofA Global Research (US) - Analyst : And one more if I could please. Hey, Sonalee, how are you doing?

Question: Michael Funk - BofA Global Research (US) - Analyst : Good to talk to you again. You mentioned NRR improving during the quarter, and I heard the add-in comments on some of the reasons for the improvement, but do you believe the improvement is now sustainable, that we're on an upward trend? Or will there be some quarters maybe where some of those factors once again weigh on NRR on a quarterly basis?

Question: Brent Thill - Jefferies LLC - Analyst : Thanks. Dustin, maybe if you could just give us your sense of what's happening over the next six to nine months in terms of the demand environment. It feels like things are getting better, routes are opening up. That seems a little better. And it seems like tech is starting to feel like it's come back a bit. I know you haven't commented, but can you just characterize what you're seeing also on the just tech-specific installed base and what you're seeing there?

Question: Brent Thill - Jefferies LLC - Analyst : And inside tech, how would you characterize that base? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. DECEMBER 05, 2024 / 9:30PM, ASAN.N - Q3 2025 Asana Inc Earnings Call

Question: Lucky Schreiner - D.A. Davidson & Co, - Analyst : Thanks for taking my questions. Congrats on the quarter and looking forward to working with you, Sonalee. I wanted to follow up on the macro question actually. Last quarter, you called out a little bit of a tougher macro on longer sales cycles, but it sounds like that might be starting to flip a little bit. You mentioned the customers skipping their POC entirely. What's your sense on where sales cycles are maybe going? Is it fair to say that they're starting to contract a little bit more?

Question: Lucky Schreiner - D.A. Davidson & Co, - Analyst : Great. And then, Sonalee, I know it's early, but to the extent that you can say, of the three key areas you talked about for efficiencies, is there one that stands out as maybe the biggest opportunity for margin expansion?