Thank you for standing by, and welcome to Asana, Inc.'s Third Quarter Fiscal Year 2026 Earnings Conference Call. At this time, participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. To remove yourself from the queue, you may press star 11 again. I would now like to hand the call over to Eva Leung, head of investor relations. Please go ahead.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana, Inc.'s third quarter fiscal year 2026. With me on today's call are Dan Rogers, our CEO, Anne Raimondi, our chief operating officer and head of business, and Sonalee Parekh, our chief financial officer. Today's call will include forward-looking statements, including statements regarding the expected release and benefits of our product offering, and our expectation for revenue to be generated by those offerings, our retention and expansion opportunities, our expectation for our financial outlook, including our revised full-year guidance, strategic plans, our market position, and growth opportunities, and our capital allocation strategy, including our stock repurchase program among other items. Forward-looking statements include risks, uncertainties, and assumptions that may cause our actual results to be materially different from those expressed or implied by the forward-looking statements. Please refer to our filings with the SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, for additional information on risks, uncertainties, and assumptions that may cause actual results to differ materially from those set forth in such statements. In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial measures are in addition to and not a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Reconciliation between GAAP and non-GAAP financial measures and a discussion of the non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our investor relations page at investors.asana.com. And with that, I'd like to turn the call over to Dan.

Thank you for joining us today. This was a solid quarter. We believe the future of work is one where humans and AI collaborate with the right context, controls, and checkpoints. That's the foundation of AI Studio and our newly announced AI teammates. And customers use these capabilities in production, and are already delivering real productivity gains. I'm excited to share more about our AI platform in a moment. But first, let's turn to the financial highlights from the quarter. Q3 revenues were $201 million, growing 9% year over year, exceeding the high end of our guidance. We generated non-GAAP operating income of $16.3 million or an 8% operating margin, also exceeding the high end of our guidance. Our margin improvement reflects disciplined cost management and a thoughtful reallocation of spending towards high leverage areas while still preserving capacity to invest in our AI platform. Free cash flow was also strong at $13.4 million in the quarter, or 7% on a margin basis. Overall, NRR was 96%, a slight improvement across all cohorts from last quarter, even with a heavier volume of large, predominantly tech renewals this quarter. Retention within our monthly customer base is at a twelve-month high, reflecting the work we've done to strengthen customer satisfaction and in-product experience which Anne will share more about in a moment. We expanded with some key customers this quarter, including one of the largest multinational entertainment companies in the world, two of the largest Fortune 100 healthcare service providers, and several large tech sector customers, including a Fortune 500 People Cloud platform as well as a leading AI data platform. AI Studio delivered another good quarter with solid growth in sequential bookings, including early traction with self-serve users. I want to highlight two AI Studio wins that demonstrate how customers across…

Thanks so much, Dan. It's been a privilege to spend the past seven years helping build Asana, Inc., first in the boardroom and then alongside the team every day. I've loved this company from the start, and that hasn't changed. I'm proud of the progress we've made building a true enterprise-grade platform and deepening our relationships with the most innovative customers around the world. I want to sincerely thank the entire Asana, Inc. team for their incredible passion and dedication. I'll continue to be a strong advocate for Asana, Inc. and a dedicated Asana, Inc. user. I genuinely believe that the foundations are in place for the company to lead the next wave of work centered around AI-human collaboration and to define how teams work for years to come. That progress was evident again in our Q3 results. In Q3, our enterprise motion continued to scale. The number of customer net adds from the $100,000 plus cohorts grew 15% year over year, while core customers spending $5,000 or more grew 8% year over year. International markets remain a strength for our business, especially EMEA and Japan. Our international revenue grew 12% year over year, and the US market grew 7% year over year. An example of that: we landed a new multiyear competitive deal with Guardian, the British-based global news organization, to consolidate their tech stack and improve cross-departmental collaboration. Asana, Inc. was chosen over competitors for its flexibility, enabling teams like product, advertising, and group technology and data to streamline everything from agile road mapping to resource capacity planning on a single platform. We continue to increase our presence in non-tech, with those sectors once again growing in the teens. Dan noted some of the momentum we saw in healthcare, I want to call out two other important areas…

As a reminder, to ask a question, you will need to press 11 on your telephone. To remove yourself from the queue, you may press 11 again. You will be limited to one question and one follow-up to allow everyone the opportunity to participate. Our first question comes from the line of Matt Bullock of Bank of America. Please go ahead, Matt.

Great. Thanks for taking the question. I first, I wanted to ask about AI Studio, specifically the self-serve launch. Anything you can share in terms of early learnings from that launch? Any feedback in terms of ARR contribution from the self-serve launch? And then separately, would love to hear more color on the influence AI Studio is having on the renewals of this year, given that it's the first renewal cycle you guys have had being a multiproduct company?

Hi, Matt. It's Anne. I'm happy to answer that. In terms of AI Studio self-serve, we just launched that last quarter, and so we are what we're pleased with is just the wide adoption and customers really trying it out. Customers of all sizes, including those that regularly buy self-serve from us. So that's the good news is it just really democratizes access to AI Studio, and people get to try it and actually get value out of it. So we're continuing to watch that and watch consumption. On that. It also gives us signal and the sales team signal on where to call into, into the self-serve, you know, signals in corporate and enterprise. So excited about that and continue to watch that. You asked a good question about renewals. I think AI Studio has been a real help in renewal conversations. One, it's strategic. There's just more for us to sell to customers. And we're really helping to advise them on their AI strategy overall. So we're pleased with how that's been, helping renewals. And then for customers that have bought AI Studio, what we're really paying attention to is adoption and consumption. And so getting as many use cases implemented as possible having them see real value. So those are how we're monitoring everything around AI Studio.

Thank you.

Our next question comes from the line of Steve Enders of Citi. Please go ahead, Steve.

Okay. Great. Thanks for taking the questions here, and great to have worked with you, and yeah, best of luck on your next adventure there. Guess just to start, I want to ask on I guess, within the tech vertical specifically, and I think there's been some further high-profile layoffs in that space. I guess, what is it that you're seeing that's maybe giving you confidence that we're near a trough there, things are going to improve and just how are you kind of viewing the impact of that into Q4 and maybe into the next year?

Yeah. Hi. First, to kinda answer your question on, we do see the tech vertical stabilizing. It does remain an overall headwind to us. There are a few important dynamics worth calling out. First is we don't see a follow-on downgrade path with those tech customers. Once they've downgraded once, they tend not to downgrade again, and that's a meaningful shift. So in fact, several of our largest tech customers this quarter actually expanded as they renewed, and logo churn continued to improve. We also saw, and certainly we'll touch on this later, I'm sure, a twelve-month high in gross retention amongst our monthly customers. And then we do see this nice and you're just kinda rounding out the PCR on AI Studio. A nice move for multiproduct moving us off of seat-based products. AI Studio and AI teammates open up new budgets for us. New use cases. And they do create a strong lever to mitigate OC downgrades. They also introduced a new consumption-based revenue stream. Have our foundational service plans, and those drive deeper adoption. And much higher utilization in our customers and making it even stickier. And then as customers stick with us to do cross-functional workflows, even more deepened by AI Studios, that helps us expand to new budgets. And makes us a lot more less dependent on employee count of those tech companies.

Okay. That's helpful. And maybe just to follow-up just to get a little bit more clarity on the four Q guide. You know, it looks like a pretty healthy raise here, and just kinda wondering maybe what changed in your assumptions for Q4 versus how you're thinking about it last quarter when you provided the guide there?

Yeah. Sure. Thanks for the question. So four things I'd really call out that I'm seeing which are giving me confidence this quarter to raise that full-year guide. So the BEAT in Q3 was driven by consistent execution across most of our core pillars. So first thing to call out is enterprise strength. We saw a 15% year-over-year increase in customer spending $100,000 or more. And we're seeing stable demand trends in this segment. And improvement in pipe conversion that is leading to productivity gains. So the other thing I would just mention there is that whilst we don't typically break out $50,000 to $100,000 customer cohort, we saw exceptional strength there. This quarter. On the international side, that remains a strength for our business. So especially EMEA and Japan. So continued strength there. International revenues grew 12% year over year, outpacing our, you know, overall corporate growth rate. Improving an NRR. And I think this is really key, and you'll have noted, like, my commentary around this changed. So we successfully renewed with several of the large tech companies that I called out last quarter that were looming. This was one of the key factors that impacted our NRR improvement quarter over quarter. Retention within our monthly customer base, as Dan said, is at a twelve-month high. That reflects a lot of the work and investments we've made to strengthen customer satisfaction and the in-product experience, which you've heard Anne talk about over the last several quarters. And then finally, AI momentum. So we saw continued momentum with AI Studio. We saw sequential strong quarter-over-quarter growth. That's helping drive conversations with customers at renewal, which Anne just touched upon. So AI Studio and FSP are leading to larger initial lens. Expansion, and mitigation of downgrade. So, you know, just a reminder is what I said in my per remarks is that I'm really encouraged by the Q3 trends in NRR. And that was part of what gave me the confidence on raising the guide overall.

Our next question comes from the line of Josh Baer of Morgan Stanley. Please go ahead, Josh.

Yes. Thank you. Questions for Dan. Just as AI agents become embedded across probably most productivity tools, how should we think about Asana, Inc.'s competitive position there? I mean, are you expecting Asana, Inc. to be one of many agents that knowledge workers engage with? Or is it important for Asana, Inc. to really become that orchestration layer that coordinates all agentic workflows across the enterprise? And if so, what really differentiates you, gives you the advantage to win that opportunity?

Thanks, Josh. Appreciate the insightful question. Yeah. Look. Here's how I would frame it. This is not gonna be a winner-takes-all opportunity for us. In fact, we will sit alongside many of the other agentic players. But to turn to your question of differentiation, the way I think about it is today, broadly speaking, the alternatives fit into three different buckets. Bucket number one, single-player copilots and personal assistants. Now they're great for personal productivity. They're very easy to pilot. They're great at doing lightweight individual tasks. But they don't scale across an organization. Each person is kinda building their own version, and that is leading to agent sprawl. Context often stays siloed. The knowledge doesn't compound. Quality and cost varied by individual. There's no shared governance model. Second approach we see are bucket two for agents. We see as point solutions, and these are from some of the systems like CRM or ITSM solutions. Those are deeply integrated into tools so that they're already being used, and so they're really good for structured workflows within their domain. As you can imagine, they're limited in that narrow ecosystem. They don't address a lot of cross-functional work or the unstructural work between the spaces and between the departments. Third bucket is DIY solutions that people are really hacking and building directly on top of LLM providers. They're super flexible, for experimentation, attractive for quick prototypes or bespoke workflows. But, again, these seem to run into issues with governance, duplication, scaling costs, cross-team coordination, and maintaining those prompts and controlling that access and ensuring consistency all requires ongoing admin. So Asana, Inc. would take a completely different approach. Our AI platform has context, controls, and checkpoints built in. So if you look at AI teammates, these address many of those gaps because they operate as true members of the team, not just individual copilots. So if you think about all of the context that Asana, Inc. has in our WorkGraph, who's doing what by when, how, and why, those are the key ingredients that's missing in those other approaches. Intelligence alone isn't enough. AI needs this rich context and rich workflows to be effective. But Asana, Inc. also provides the checkpoints, review steps, permissions, and governance models to prevent that sprawl and maintain quality and cost control at scale. And because AI Studio and AI teammates work together in one system, customers get reliable automations that are repeatable for work as well as flexible agents for more nuanced judgment-based work. So this is all without that overhead that we talked about on those DIY agent solutions or without the limitations of some of those functional silos of CRM and ITSM native tools. The result is an AI layer that actually scales across teams and not just within them.

Great. Thank you for your insights.

Our next question comes from the line of Rob Oliver of Baird. Please go ahead, Rob.

Great. Thank you. Good afternoon. I also wanted to extend my best wishes to you, Anne. It's been nice working with you. Dan, my question is for you just around the channel ecosystem and some of the momentum that you guys called out there. Partner-attached growth being strong again. Can you give us some sense for where you see kind of the partner ecosystem currently as someone who has a background with a lot of companies that have pretty advanced partner ecosystems? Where is it today? Kind of what inning are we in? Where does it need to be? And where in particular are you guys seeing that traction today? And then I had a quick follow-up as well for Sonalee. Thanks.

Yeah. And Anne mentioned, we're hot on the heels of our London and New York summits, and we had the opportunity to partner breakouts at both of those. And I couldn't be more excited about our channel ecosystem. Our product and our category lend themselves very well to the channel. And so I see nothing but opportunity for us in building out that channel ecosystem. As I talk to many of our partners today, they just want to do more. They want us to be more consistent in how we help them to be successful. And so I do see it as a true ecosystem and partnership where we help ensure their success and not just a transactional channel for us. So yeah, very excited about the partner opportunity. Think we're at the early innings of it.

Great. Very helpful. Thanks. Appreciate that. And then, Sonalee, just for you, obviously, a lot of work has been done by you and the team on the cost optimization side, infrastructure, cloud. And just was curious, you know, I know you've been reallocating kind of stuff around the organization to try to drive higher ROI. When it comes to those costs, how much more runway do we have on that? Have they been optimized? Is there more to go? If you can give us flavor for what might be left, that would be great. Thank you.

Yeah. So the work is definitely not done. Thank you. Appreciate your support, but there is more margin upside to go for as we think about the remainder of this year, fiscal 2027, and beyond. So growing profitably continues to be a key focus of this team, you know, with continued emphasis on GeoMx benefits in terms of where our headcount sits, vendor rationalization. There's more to do there. Productivity improvements in sales and marketing, Dan has been, you know, very focused on. And that will allow us to continue expanding margins sequentially and for multiple years to come. That being said, we are balancing margin expansion with reinvestments in our AI platform to sustain our product leadership and to accelerate growth. Both are priorities, but we are investing alongside expanding margins to support that revenue acceleration goal. So if you think about fiscal 2027, we will build off our exit margin in Q4, which, you know, you see how I guided today. The only thing I would just caution is don't expect the same rate of margin expansion in '27 as you saw in '26. But I think, you know, that's well captured by consensus today. But, you know, by no means is the work done. And the other thing I would just say is, you know, we are reallocating spend, and what we're doing is to areas where we see higher ROI. So you know, that should have an overall benefit to operating margin. And the final point I would make is just gross margins continue to be, you know, in the 89% to 90% range. So just the operating leverage that we get as we continue to grow and scale will continue to play through and have a positive impact on margins.

Our next question comes from the line of Jackson Ader of KeyBanc Capital Markets. Please go ahead, Jackson.

Great. Thank you. The first question, it's really nice to see the retention rates picking up. And it sounds like, you know, that was due to lower gross churn. But if I think about, you know, revenue growth slowing just a little bit, should we read into this to mean that maybe the expansions or the upsell of existing customers was more muted than it has been in the prior quarters?

Hey, Jackson, it's Anne. I'll take that. Yeah. I do think what we're pleased with is the improvements we saw in downgrade. And then as Dan mentioned, seeing some good expansions in some of our large tech renewals. And we really are investing in the multi-strategy, multi-product strategy approach. So in some cases, what we're seeing is that because we've got FSP and we've got AI Studio, what we're able to do is drive, you know, flat or slightly uptick in renewal, but both of those are great for future retention and expansion. And so that's really where we've been making the investments as well as on the monthly side. So, you know, a large portion of our base is still monthly customers, and that retention has been at a twelve-month high. And so that's a lot of the work that we're doing both in customer support and in product experience. So both of those levers in terms of what we can sell to larger customers as well as continue to make sure the monthly base is healthy I think will ultimately lead to healthier retention.

Okay. Alright. Got it. Thank you. And then a quick follow-up. Sonalee, it was this time a year ago, your first call with the company. You said, you know, the goal I can't remember exactly. That Asana, Inc. could do both. Right? You could both reaccelerate revenue and also expand operating cash flow margins. I think on the margin side, like, pretty clear what you were just talking about with Rob. Absolutely delivered. But if we think about revenue acceleration, coupled with that, margin expansion, is that still doable? Is that still the goal, the expectation as we kind of head into 2027 or even or beyond?

Yeah. So without guiding to fiscal 2027 because, you know, I always do that in March, what I will say is that, you know, we are early innings on our new product strategy, our multiproduct strategy. And I believe AI Studio and AI teammates are going to be the key unlock in terms of driving that growth reacceleration. We, by no means, have given up on that, and it is absolutely this team's strategy to continue to do both. And, you know, I am strongly encouraged by what I saw on the NRR side. You know? And if you think about NRR, if we can even drive it a couple of points, you're looking at a very, very different growth profile. A very, very different financial profile. And, you know, I didn't when I put the comment in the prepared remarks about being at or near a bottom, you know, I didn't put that in lightly. You know, what's giving me confidence is the data that I'm seeing underlying the Q3 trends. So, you know, it's second consecutive quarter of in-quarter improvement. I don't know if you remember, but when I saw the first quarter improve, I said, you know, one quarter does not make a trend. Well, two quarters certainly gives me a lot more confidence. Secondly, you know, what a couple of us have called out on improvements in gross retention, that is across the board that we're seeing. And then, you know, the multiproduct it's early days. And I talked about the impact of AI Studio being small for this year. But as we look ahead, and when I think about the contributors to our net bookings for fiscal 2027, AI Studio and AI teammates will play a much stronger role there. So you can count on us to be delivering both for you. I'm gonna hand over to Dan because I think he wouldn't have taken the job if he didn't feel like he could do both.

Thanks, Sonalee. Maybe I'll just add a little color. And the color really is around, look, number one, collaborative work management. Our category is about to have its moment in the sun because of AI. CWM becomes the system of record for work, which means we've got the who, the what, the when, the where, and the why and the how of the work. And that context is just great to make AI effective. And that's exactly why we launched AI Studio. And why we followed up this quarter with the beta launch of AI teammates. Secondly, the PLG opportunity for us remains massive. Today, it's about 40% of our business. And in an AI search and LLM-driven world, we can double down on those high-performing channels with AI search and really target our marketing dollars towards higher propensity customers. So we're optimizing that trial experience, and we continue to help customers to reach value faster. CWM itself, this is number three, is a large and growing TAM. We have a recognized leadership position. But our work here isn't done. There's a huge runway for us to innovate and expand the surface where work gets done and deliver even more value to our customers. And fourth, and as Sonalee touched on, whilst we've made some progress in our go-to-market motion and efficiency, there's a lot more work to do. So I'll be focusing on everything from persona-based selling, tightening our execution and customer success, improving productivity, through high propensity leads and routing across all of our segments to unlock the potential in our go-to-market motions. And finally, for me personally, you know, my style is really about injecting tempo. It's about creating velocity for the organization, which is around faster decision-making, faster learning cycles, getting to beta faster, and strengthening the operating rhythm of the company. So all of these will lead to an improvement in innovation and execution velocity.

Our next question comes from the line of Patrick Walravens of Citizens Bank. Please go ahead, Patrick.

Oh, great. Thank you. I'm gonna change my question, Dan, because what you just said was super interesting. So I love the idea of increasing the velocity. How do you actually do it? Like, how do you get everyone to run faster? And, you know, we have all the, you know, code red stuff going on with OpenAI and Google right now, and so many people are commenting that, you know, just telling everyone to run faster doesn't mean it's gonna work. And sometimes, in fact, it backfires. So how do you do it? How do you increase the velocity?

Yeah. And I'd say, you know, my, fortunately, my prior experiences really were training ground for velocity, you know, high tempo organizations, executing scale. And so it's how I drive myself, but also the organizations. The first piece is around decision-making. And, you know, ensuring that you have a tight way to make decisions quickly with the right people involved and the right information that you need. The second is really a mindset or an operating principle around getting things to beta, and that is about launching new products, launching new capabilities in the knowledge that you're going to quickly iterate on them afterwards. And so it reduces the fear of kind of launching because you know that afterwards you're going to rapidly iterate. If you think about our AI studio self-service experience, this gives us a massive set of data points to continue to improve that product, you know, get it right to the middle of the bell curve. And then having the right operating rhythm so that everybody understands exactly what needs to be done by when and really kind of pushing the pace and the expectations around that with all of our leaders. Those are some of the things that we can kind of inculcate into the culture.

Great. Thanks. And, Sonalee, if I can just ask a follow-up. I mean, not with the time frame on it, but, you know, when you talk about multiyear margin expansion and, you know, this company is gonna come up on a billion dollars pretty quick. Where can the margins be? I mean, can they be in the twenties? Where can they be?

Yeah. So when I think about the expansion that we've been driving thus far, you know, it all starts with that 90% gross margin or 89 to 90% gross margin. And the inherent operating leverage there. So think about it. If we continue growing even if like, I'm not gonna guide, but it's just even if you use consensus, you know, just if we kept expenses, you know, fairly flattish in many areas, you would still get consistent, you know, several percentage points of margin improvement every single quarter on a sequential basis. So there is no reason in my mind that we can't, you know, eventually aspire to be among the best in class in terms of enterprise SaaS software companies on margin. I always think, you know, we're the envy of many software companies with the gross margins that we have today. And, you know, even if AI Studio and AI teammates take off the way we hope they do, and there's, you know, a little bit of pressure on the gross margin, there is still a ton of runway. So, something with a two in front of it is certainly within the realm of possibilities.

Our next question comes from Arsenije Matovic of Wolfe Research. Please go ahead, Arsenije. Apologies. Arsenije, your line is now open. Go ahead.

Hey. So sorry. Can you hear me?

Yes, sir.

Alright. So just thanks again for the question. How did the large tech renewals in March trend versus your expectations given that heavier renewal volume in 4Q? Are you more confident in expansion and retention in 4Q than you were heading into March? And is that also now reflected in the updated guidance? Just a follow-up.

So they did perform better than we expected. Yeah. I'll take the Q3 renewals and what we're seeing in Q4. And we were very pleased by that. I think that's a combination of operational rigor on that as well as more product to sell. I think we're bringing that same approach into Q4. In Q4, while we have a higher volume of tech renewals, so continuing to make sure we bring that operational discipline. They're more mid-sized compared to the larger ones that we had in Q3, as well as now with the launch of teammates, you know, even more to sell and more conversations to have.

Yeah. And I'll just add to that. Just on the guidance side of things, when we look into Q4, even though we do have a large renewal base in Q4, as is typical, I would say I am more confident going into Q4 versus where I was when I guided on Q3.

Got it. And just to follow-up on that, you did mention the four factors supporting that confidence as well, but still embedding conservatism on new business. So I guess we just kind of unpack what specifically is supporting confidence in passing through, I think, double the beat in three Q even with that slightly lighter FX tailwind than you expected entering last quarter?

Yeah. So net retention is a big factor there. So, again, you know, it's two consecutive quarters now of in-quarter net retention improvement. And then the gross retention improvement across all cohorts. And importantly, the $100,000 plus cohorts saw the largest improvement among them. So that was even with the headwind from that large customer downgrade that we called out in Q1, but actually impacted from Q2 and will continue to impact for the next couple of quarters. So the fact that, you know, in Q3, we managed to improve in spite of that, you know, that added to my confidence levels. And then, you know, the multiproduct strategy in specifically AI Studio and the foundational service plans or FSPs, those are actively driving expansion and helping to mitigate downgrades. And certainly have been extremely helpful in renewal conversations. And then, you know, there are the other items that I called out earlier, but, you know, we're seeing strength in other areas of our business, including new business. So, you know, the enterprise strength and that mid-market cohort, that $50,000 to $100,000, you know, we don't break it out, but what I can tell you is what I saw this quarter was a lot of strength there. International, I continue to expect to, you know, it's been strong for the last two quarters, expect continued strength. And then even in the enterprise side of the house, we saw, you know, 15% year-over-year increase in customers spending $100,000 or more. And if you couple that with stable demand trends and improvement in conversion, which leads to productivity gains, you end up with a or I ended up with a more confident picture as I look towards Q4 and the full year.

Thank you. I would now like to turn the conference back to Eva Leung for closing remarks.

Thank you everyone for joining the call. We'll be on the road attending the UBS and Barclays Conference this and next week. Looking forward to seeing all of you. As always, if you have any questions, please reach out to me at ir@asana.com. Thank you very much.

And this concludes today's conference call. Thank you for participating. You may now disconnect.