The Bull Case For Asana

Asana Inc. (ASAN) is a cloud-based project management tool that helps companies organize and coordinate projects all in one place.

The business was the brainchild of Facebook (FB) co-founder Dustin Moskovitz, who recognized that his own staff were spending most of their time coordinating their work schedules rather than just focusing on the team’s primary tasks.

He came up with a solution to fix the problem, and, in the process, figured it would be a valuable resource for other companies too.

Moskovitz identified three principal aspects of collaboration: coordination, communication, and content. It’s the first element in this list, coordination, that Asana mainly focuses on. The task of coordination seeks to answer two questions: who is doing what, and by when?

Traditionally, companies would try to manage issues surrounding coordination with tools such as spreadsheets and physical or electronic diaries. The problem now, however, is that society and the workplace have both undergone a digital revolution, and communication has become vastly more complicated, and vastly more distributed.

Employees no longer just rely on email to send and receive messages; instead, teamwork is being organized via social media platforms, WhatsApp, Slack, etc. This means more time managing those messages, with productivity taking a nosedive.

Asana solves this conundrum by providing a turnkey digital solution that enables companies to easily handle their workflow management needs. It has integrated its software with over 100 different tech providers – including Salesforce (CRM), Google (GOOG) and Adobe (ADBE) – and now boasts 107 thousand paying clients with a global customer footprint in more than 190 countries.

ASAN Stock History

Having only floated publicly in the second half of 2020, Asana remained under the radar somewhat until June this year when the company saw a run-up in its share price that has yet to end. 

The firm began life on the NYSE trading at around $25, but has shot up lately to change hands for just under the $100 mark. The stock had been pretty much flat until a couple of months ago, when Wall Street analysts apparently picked up on some heavy insider buying from no other than CEO Dustin Moskovitz himself.

Add to the fact the firm returned some very good quarterly results, and suddenly Asana was a tech sector growth story in the making.

Even though the company has already turned out to be a multi-bagger stock within its first 12 months of trading, the underlying worth of the business suggests it still has value to maintain its solid early momentum.

The company has had nine consecutive quarters of revenue growth now, and outperformed both earnings and revenue estimates for Q2 FY22 with an EPS of -$0.23 (beating by $0.03) and a top line of $89.5 million (beating by $7.24 million).

Asana Competition Is Atlassian, & More

Project management applications aren’t exactly a new technology, and the space is a fairly crowded one too – there are many household names already in the industry, and more getting in on the act: think brands like and Zoom (ZM) to name but a few.

It’s also difficult to make the case that any individual platform has much of a unique business moat to insulate them from competition, and that’s seemingly true with Asana. And this could be a big problem.

While Asana isn’t a small company by any means – it has a current market capitalization of $17.26 billion, after all – it still isn’t in the same ballpark as its closest rival Atlassian (TEAM), whose market worth is just shy of $100 billion.

The issue is compounded when you take into account that ASAN’s free cash flow was net negative to the tune of $8.5 million – meaning that funds for development and expansion won’t be easy to come by. 

However, in what is an admittedly highly competitive market, Asana actually comes out near the top when users of the platform are asked to rate their experiences with the company. G2, the specialist business software reviewer, found that customers appreciated its easy-to-use interface, which they said kept team members focused and motivated on their job at hand.

Perhaps this is Asana’s secret weapon: usability. Its growth figures certainly bear out this idea – customer adoption rates are accelerating right now, up year-on-year for each successive quarter since Q2 FY21.

Is Asana Stock A Buy?

Asana wasn’t profitable in the last quarter, making a GAAP net loss of $68.4 million, and a non-GAAP net loss per share of $0.23. The company’s bottom line was actually getting worse too: its GAAP net loss for the second quarter of fiscal 2021 was just $41.1 million – but its non-GAAP loss per share did improve from $0.34 the same time last year.

This makes it important that for the bullish thesis to hold out, ASAN needs to have some superb growth metrics behind it – and an otherwise optimistic outlook to inspire investors too.

Fortunately, Asana has both.

First, its total revenue growth sped up in the second quarter to 72%, with revenues taken from larger-sized clients up by more at 97%. Its biggest customers – those spending in excess of $50,000 – grew even faster, at 111% year-on-year. 

The firm’s Dollar-Based Net Retention Rate (DBNRR) also improved over the quarter. The DBNRR is a measurement of how much money the company’s customers have been spending in the current year compared with the previous one – and anything above 100% means that clients are spending more.

The number factors in positive effects – such as increased spending on higher margin products – as well as negative effects, such as customers downgrading, or taking their custom away from the company permanently.

In the second quarter the overall DBNRR was 118% across the entire business, with its highest spending segment accounting for a 145% increase as well. 

Crucially, Asana’s gross margins are both durable, high, and continue to grow year-on-year. Once the business irons out its operating leverages, ASAN’s present gross margin of 89.2% should turn into a quality net profit somewhere down the line.

From a valuation perspective, Asana’s current price is steep; but, as with any early stage SaaS business, this is to be expected. The firm’s price to sales ratio of 48.17 is about on par with other similar outfits – Shopify, for instance, is more or less at the same level with a sales multiple of 41.92.


Asana is a high-growth tech company offering actual worth to customers where it matters most – efficiency. The business is growing at rates any investor can appreciate, all the while generating excellent revenues and even better gross margins.

It’s just a matter of time before the firm becomes profitable – after which the sky’s the limit for this young and promising start-up.

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