FWIW - whilst I realise that Asana are in investment mode and the bottom line does not look pretty, I felt that their growth and market position was superior to SmartSheets. I swapped out my Smartsheets holding for Asana on a relative basis.

It might end up like ZS vs Crowdstrike where I felt the growth rate and conviction were stronger with Crowdstrike and swapped out my holding of ZS into Crowdstrike but at the end of the day the share price performance has been pretty similar.

Ant

		Q120	Q220	Q320	Q420*
revenue		47.71	52.02	58.91	62.5/68.18*	
Gross margin	86.99%	86.50%	87.57%		
Op margin	-50.13%	-52.20%	-63.30%	-65.60%
Net margin	-49.65%	-50.52%	-65.03%	-65.70%
FCF margin	-35.77%	-42.10%	-33.10%	
EPS		-0.24	-0.34	-0.34	-0.26
YOY		70.56%	57.23%	54.69%	44%/56.84%*
QOQ		9.74%	9.05%	13.23%	6%/15.74%*
diluted shares	75.64	76.38	113.26	158.00

We need to carefully pay attention to the diluted shares change in each earing report of the company just after IPO.

For Q3, EPS is flat to the same as Q2,-0.34/share. However, considering the large increased diluted shares (76.38m->113.26m from Q2->Q3, a +48% increase!! , both the net/operation margin get worse. That means they are now facing a harsh competitions with TEAM,SMRT, etc.

For Q4, they guide EPS -0.26/share and revenue 62.5m. Considering 158m diluted shares when Q4, the Op&Net margin will be both still around poor -65% . If we use the same sandbagging degree of Q3 to estimate, their Q4 revenue will be around 68.18m, a +56.84% YOY and +15.74% QOQ .

In conclusion, Asana seems in acceleration of the revenue growth, gross margin, and EPS even in the COVID period this year. And it probably will become a 60+ growth company the next year. But they need to improve their relatively poor op & net margin in the future to gain more investors' attention. Asana is still a not-bad company now for it's high gross margin (87.7%!), good DBNR(115% up), 60+ growth, small market cap(4.2b), and relatively cheap price.

The price is up 15% after the earning report. I hold a small 3% position and consider increasing it to 5%~10% if ASAN makes itself a more profitable business in Q4.

For Q3, EPS is flat to the same as Q2,-0.34/share. However, considering the large increased diluted shares (76.38m->113.26m from Q2->Q3, a +48% increase!! , both the net/operation margin get worse. That means they are now facing a harsh competitions with TEAM,SMRT, etc.

For Q4, they guide EPS -0.26/share and revenue 62.5m. Considering 158m diluted shares when Q4, the Op&Net margin will be both still around poor -65% . If we use the same sandbagging degree of Q3 to estimate, their Q4 revenue will be around 68.18m, a +56.84% YOY and +15.74% QOQ .


The degradation of operating and net margins does not in itself indicate an increase of competition in the marketplace. It could be as simple as a highering spree of sales professionals and engineers; growth costs money. It is not uncommon to see the cost of growth ramp faster than the actual growth for a period early in the lifecycle of a company. Even though Asana did a direct listing instead of an IPO, there will be a one time cost of going public and a perpetual increase of administrative costs due to managing the requirements of being public.

The two leading indicators of an increase in competitive pressure that I watch out for is a slowdown in revenue growth and/or a decrease in gross margins. A gross margin decrease could signal price discounting which is almost always a signal that the competition is impacting sales.

I had a 2% position which I increased by 50% on Monday before the earnings report.

Lee

Yes, ASAN showed some progress..

Both SMAR and ASAN seems to have seen Covid trough and shown some acceleration..

I agree ASAN shows faster growth 50%+ but on a ~$60M / quarter vs SMAR is on a 40%+ growth rate with a $100M / qtr..

There were interesting comments from analysts on SMAR conf call.. effectively saying SMAR seems to have cemented itself as a leader in the pack in the eyes of customers and competitors are asked to compare themselves to SMAR... and these were comments from an analyst, not the management..

SMAR so far has done well with targeted acquisitions as well.

I also like SMAR's connector strategy.. not sure ASAN has something similar to boost its growth...

ASAN seems to have a large freemium customer bases.. low cost marketing.. something similar to NET.

I am moderately bullish on both these names.. have ~3% split into these names.. I think these two companies should accelerate as we emerge from current lockdowns, specially in late 2021.. and have easier comps to beat.. and better scale will help them improve cash flow.. more room for multiples to grow..

I plan to add more into these each quarter as they grow.

I don't even really get what these guys do. This feels like Slack's kid brother - a good company, decent-to-good stock that will never be a big winner.

I realize they are obviously selling it well, and that 89,000 customers is no joke. But it just doesn't have anywhere near the urgency, essentiality (good word), clarity that our other top stocks - Zoom, Crowdstrike, Okta, Cloudflare, Docusign do. Especially in a tough economy is it really going to be easy to prove the value of the products to prospects?

And on a personal note, which admittedly may be rude of me, I'm just tired of tech billionaire pseudo enlightenment blather...

Why Asana?
Dustin and JR found inspiration in Buddhist principles to center and guide the product they wanted to build: bringing ease, focus, and flow to a world otherwise full of chaos. Asana is a Sanskrit word that refers to the place and posture in which a yogi sits. A pose requires marrying form and flow, staying centered while moving through distractions.

We typically pronounce Asana with the emphasis on the second syllable: uh-sah-nuh. But we’re not prescriptive about it. We welcome other pronunciations too, including the Sanskrit pronunciation ah-suh-nuh.

Just makes me want to see Dustin and JR go on this show...

https://www.youtube.com/watch?v=PVhuGCVIf3g

I have no beef w anyone who gets the product/valuation better than I do and sees room to grow. I'm sure it can be a good investment. But I'd be stunned if it ever makes the big leagues here.

For me - hard pass.

BD

FWIW, to my understanding, SmartSheet and Asana product is project management software. In other words, it is a modern and cloud based version of Microsoft Project.

I see combined, these companies have >1500 customers paying >$50K per year with some of them paying >$500K / year and >$1M / year.. so its certainly adding value to many companies.

Big appeal here is subscription based SaaS and land and expand model. This type of SW likely to continue to grow at steady rate well past fast growing communication SW bretherns like Slack and Zoom. Think of these guys as marathon runners (I think at-least 5+ years growth runway here at >30%).

And given its less sexy nature, it is unlikely to see either MSFT or other large name come chasing this space..

So sustained growth, quality SaaS with high gross margin and lack of concern of big name competition, and easier comp for next few quarters - seems to me a good recipe for multiple expansion fueling stock price ramp.

I see combined, these companies have >1500 customers paying >$50K per year with some of them paying >$500K / year and >$1M / year.. so its certainly adding value to many companies.

Just note the companies define customers differently. SMAR uses a domain based definition (like @cisco.com). ASAN seems to count customers as each group who signs up within a company. Presumably those could merge into one customer as well.

Just noting there is a difference.

AJ

FWIW, my wife works for a big tech company you've heard of and loves Asana.

This feels like Slack's kid brother - a good company, decent-to-good stock that will never be a big winner.
...it just doesn't have anywhere near the urgency, essentiality (good word), clarity...
...I'm sure it can be a good investment. But I'd be stunned if it ever makes the big leagues here.

Totally agree with Dan on this one, but I own a 3% position. Why? Two reasons:

1) I don't want to invest my entire portfolio into CRWD, NET, and DOCU. Since I can't find more of the like, I need some tier 2 positions. Therefore I still hold a double-digit ZM position even though the numbers going forward seem less clear to me than these big 3. Same with ETSY (but I think it's even better, because even though ETSY has been running up lately, it still isn't expensive AT ALL. Maybe I should add more...) And I still have a 20%+ cash position, so I'm open to finding several more for tier 2.

2) Asana's numbers are good though not great. 55% growth is very good (if not, we're truly spoiled) and I think it could accelerate a smidge in Q4, and optimistically next year as well. But even if the growth rate stays around where it is, dominance and staying power of growth will be more important than maxing out the growth rate. One thing that makes me think they are becoming the dominant company in their space is their customers.

Google, Uber, Deloitte, Okta, Spotify, Coupa

compare that to Smartsheet's touted customers: Whirlpool, Western Digital, McGraw Hill, Cisco -- not exactly the technological up and comers!

Trello doesn't seem to do as much as Asana anyway, but their customers seem meh too: https://info.trello.com/customer-stories

I agree with what everyone has been saying in this thread, that Asana doesn't merit a large position at this time. I probably won't add much to my 3.2% position. But I also see some potential here, and not much risk. At $28, the trailing PS ratio is 22. Perhaps there is risk that this one underperforms the tier 1 companies, but there's not much downside here, as I see it.

Bear

I probably don't have skill or time, but man I'd love to see what it would look like if we went back five years, and built ports to track using only top four consensus picks seeing what those returns would look like. I gotta figure they'd be dang good. And to be honest I think I could sleep okay enough through 2021 with a CRWD, NET, ZM, DOCU port.

Thanks for the heads up post regarding Asana’s first reported Q. Bert wrote a nice Deep Dive about Asana on 10/8/20 at Tickertarget.com and since posted behind the firewall at SeekingAlpha.com. In his DD he reasoned for the sustained and perhaps accelerating growth in top and bottom lines. I lost track since.

Regarding positioning in the market I found what Bert said to be interesting.

And the fact is, given the price points for these solutions, users can deploy all of them, and many probably do so. When enterprises are spending $200k/year as an average for a team member all-in, spending an extra $20-$30 month to enhance communication or establish accountability or more clearly analyze the progress toward a task is not a huge investment.

My agreement with the reasoning presented by some of you and that of Bert, I took a small position in Asana.

If you, like me, are interested in what the Slack and or Zoom integration with Asana look like I recommend watching at least the first video at this Asana blog site ‘Slacking with Asana’ here https://blog.asana.com/2020/05/remote-work-integrations/

Why I sold some Zoom for the money to purchase a small position in Asana:
Ronjonb’s post titled: Reality vs Perception https://boards.fool.com/MessagePrint.aspx?mid=34689020 , in concrete terms stated the general idea of The Wall of Worry Zoom is climbing. GouchoRico’s response to my suggestion that Zoom might enter larger Enterprises quite quickly is here: https://boards.fool.com/jason-thanks-for-posting-that-you-pr.... It was my reply post to his Monthly portfolio, just prior to this one, where I realized my reasoning for staying overweighted in Zoom was so thin. That’s where I had convinced myself to bring my Zoom position down to 12%.


Jason

One interesting tidbit I remember from ASAN's earnings call is that they are enabling collaboration beyond enterprise boundary.. just as a Slack customer can chat with partner or supplier or customer over a Slack channel, Asana is enabling project tracking / management with vendor / customers..

So who does not want to track its vendors' progress on projects?
IMO - this can be one thing that can enable even stronger traction.

XMFBuffJam-
The degradation of operating and net margins does not in itself indicate an increase of competition in the marketplace. It could be as simple as a highering spree of sales professionals and engineers; growth costs money. It is not uncommon to see the cost of growth ramp faster than the actual growth for a period early in the lifecycle of a company. Even though Asana did a direct listing instead of an IPO, there will be a one time cost of going public and a perpetual increase of administrative costs due to managing the requirements of being public.

Bert Hotchfield at Tickertarget.com and Seeking Alpha on 10/9/20 -edited down by me:
operating expense are running at 163% of revenues -adding 30% to its headcount over the last 6 months and outsize growth in sales and marketing expense, mainly fueled by a major advertising program related to brand awareness. decline in the growth in sales and marketing spend is likely to be a harbinger of the trend of overall opex growth. If nothing else, its sets up a situation in which Asana will be able to over-attain expectations-derived as most of them are from the results of the latest recorded quarter.
Me:Yes it did- first reported Q on 12/9/20 was a beat and raise.

Bert-
Asana’s early bumpy ride in terms of its share price is likely a function of its choice to choose the direct listing route as a means to becoming a public company. At the end of the day, the company’s operational performance, and not how it went public will determine its valuation. The shares in the float will, over time, be the same using a direct listing approach as would be the case of using a traditional IPO with a standard six month lock-up. The fact that the shares are currently trading as they are presets an additional bargain for investors.

What does this mean regarding Asana’s share growth. The Q2 to Q3 growth in outstanding shares questioned in a prior post above; but, I haven’t looked into the differences between direct listings and the traditional paid for road shows much yet.

Jason

The last part of the prior post should have read, “The outstanding share price change between Q2 and Q3 was due to their being listed on the stock exchange”. Not IPO’d.

OT Direct listing vs IPO, per TD Ameritrade
Direct listings are an alternative to Initial Public Offerings (IPOs) in which a company does not work with an investment bank to underwrite the issuing of stock. While forgoing the safety net of an underwriter provides a company with a quicker, less expensive way to raise capital, the opening stock price will be completely subject to market demand and potential market swings.


In a direct listing, instead of raising new outside capital like an IPO, a company’s employees and investors convert their ownership into stock that is then listed on a stock exchange. Once the stock is listed shares can be purchased by the general public and existing investors can cash out at any time without the ‘lock up’ period of traditional IPOs. Spotify is a recent example of a company that has opted to skip a traditional IPO process and instead list its shares directly on an exchange?