Transcription of the earnings call on Asana results (ASAN) for the 2nd quarter of 2026

Source: Motley_fool

Sept 3, 2025 11:27 PM

Image source: The Motley Fool.

DATE

Wednesday, September 3, 2025, at 4:30 PM ET

PARTICIPANTS

• Co-founder and chairman of the board — Dustin Moskovitz
• Chief Executive Officer — Dan Rogers
• Chief Operating Officer and Commercial Officer — Anne Raimondi
• Chief Financial Officer — Sonalee Parekh
• Head of Investor Relations — Eva Leung

RISKS

• Chief Financial Officer Sonalee Parekh stated: "Potential pressure related to downgrades persists, particularly in the technology sector, as a larger volume of renewals is concentrated in the second half of fiscal year 2026. This could bring the net retention rate (NRR) back to levels seen in Q1."
• Operations Director Anne Raimondi mentioned, "The pressure on the prospect funnel due to the evolving search landscape could weigh on the growth of small businesses in the second half of 2026."

KEY POINTS

• Total revenue — $196.9 million in Q2 2026, up 10% year-on-year and 1% above the top end of the forecast range.
• Non-GAAP Operating Margin — 7% for Q2 2026, an improvement of nearly 1600 basis points year-over-year and 240 points above the midpoint of the expected range.
• Main Client Revenue — 12% year-over-year growth in Q2 2026, representing 76% of total GAAP revenue.
• Customer cohort +$100,000 — 770 clients spending $100,000 or more annually in Q2 2026, up 19% year-on-year.
• International Revenue — Up 13% year-on-year for Q2 2026, surpassing US growth of 8%.
• NRR — 96% for Q2 2026. NRR of clients with +$100,000 was 95%, stable sequentially.
• Gross margin — Stable at 90% in Q2 2026, expected level for the 2026 fiscal year.
• Adjusted free cash flow — $35.4 million, or an 18% margin, for Q2 2026 (non-GAAP).
• Share Buybacks — $27.8 million of Class A common stock repurchased ( nearly 2 million shares) in Q2 2026. $128 million remains authorized.
• ARR from AI Studio — More than doubled quarter over quarter in Q2 2026.
• Core Service Plans (FSP) — Customers adopting the FSP have increased seat utilization by 20% in the three months following adoption.
• Updated Forecasts — Revenue forecasts for the fiscal year 2026 are now between 780 and 790 million $, representing an annual growth of 8-9%.

SUMMARY

Asana's management indicated that the rapid adoption of AI Studio is accelerating expansion opportunities, particularly through cross-functional workflows. The leadership team highlighted international dynamics and in non-technology sectors in Q2 2026, with notable expansions among large clients in financial services, manufacturing, and retail.

Damn, but they are really in a tricky situation with this AI search thing! It's eating up their organic traffic and they're trying to hide it from us under terms like "evolution of the search landscape". It's clearly Google and these damn models that summarize everything without people having to visit the sites! And on the tech side, we can see that contract renewals are going to be tight in the second half.

I am frankly surprised by their operating margin of 7%. For a SaaS company that is still struggling to maintain its growth, this discipline is impressive - almost 1600 basis points of improvement in a year! But are they not cutting too much in marketing investments? 45% of revenue in sales and marketing is less than many competitors at this stage.

Their new CEO seems obsessed with this "agentic enterprise" story - clearly a bet on AI to revive growth. But when all productivity tools start doing the same, what will really differentiate Asana?

Their AI Studio and these "teammates" AI seem to be their last card to play to stop the bleeding and justify their valuation. Either it works and they become the premier AI workflow manager, or they end up being acquired by a larger tech company.

GLOSSARY OF THE INDUSTRY

• Work Graph: Asana's proprietary structured model for mapping the relationships between projects, tasks, goals, and teams.
• AI Studio: No-code platform from Asana for building and deploying AI-based workflow automation.
• Smart Workflow Gallery: Suite of pre-built and AI-powered automation templates available in Asana.
• Fundamental Service Plan (FSP): Service plan designed to enhance customer health and retention.
• Agentic enterprise: A term used by Asana referring to organizational workflows activated by context-aware AI agents.

Honestly, I'm worried about them with this pressure on their customer acquisition. The freemium and self-serve model that was their strength is likely to be heavily impacted if no one can find their product via Google anymore. And the big tech companies that are cutting their expenses aren't going to help...

But who knows, maybe their AI strategy will really hit the mark? After all, Morningstar claims to have saved $600,000 thanks to that!

To be seen whether AI transformation will really revitalize their machine or if it's just marketing around a trend.