Thank you for standing by, and welcome to Asana's Fourth Quarter Fiscal Year 2026 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Eva Leung, Head of Investor Relations.

Good afternoon and thank you for joining us on today's conference call to discuss the financial results for Asana's fourth quarter and fiscal year 2026. With me on today's call are Dan Rogers, our Chief Executive Officer; 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 offerings and our expectations for revenue to be generated by those offerings, our retention and expansion opportunities, our expectation for our financial outlook, including our FY '27 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 limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings release, which is posted on our Investor Relations web page at investors.asana.com. And with that I'd like to turn the call over to Dan.

FY '26 was a year of progress for Asana, we exited the year with solid momentum. We evolved into a multi-product platform with the launch of AI Studio, and we advanced our AI capabilities with the introduction of AI Teammates, all of which helped us build a foundation layer of Agentic Enterprise. Importantly, we stabilized NRR, materially expanded our operating margins and free cash flows, and we set the structural foundation for long-term profitable growth. So let me share few highlights of the quarter. Q4 revenues with $205.6 million grew 9% year over year. We generated non-GAAP operating income of $18.2 million, or a 9% non-GAAP operating margin. Our operating margin reflects disciplined cost management as well as thoughtful reallocation of spending toward these higher-leverage areas and we still preserved capacity to invest in our AI platform. Our adjusted free cash flow was also strong at $25.7 million in the quarter, or 13% on a margin basis. Customer health improvements continued to take hold. Our reported NRR remained stable, and for the third consecutive quarter, our in-quarter NRR improved. Our top 10 renewals in the quarter delivered net revenue retention above 100%. This reflects a long-term commitment of our largest customers, sustained that the value platform continues to deliver for the world's leading companies. Key renewals with expansions this quarter included a leading global advertising and marketing organization, a top-tier European markets infrastructure provider, and several large tech sector customers including a Fortune 10 tech platform. Looking at our AI momentum, it continues to be strong across both monetization and engagement. AI Studio continued to scale rapidly, in fact, we exited FY '26 with over $6M in ARR and grew over 50% quarter-on-quarter in Q4. Our customers are embedding AI Studio in their business-critical workflows like campaign launches, product intake,…

Thanks, Dan. It has been a privilege to serve as CFO of Asana and to partner with you, Dustin, and the leadership team. I'm incredibly proud of the financial foundation and operating strength we've built together, and I'm confident in the company's strategy and trajectory as we scale into the Agentic Enterprise opportunity. I'm also deeply confident in Aziz's ability to step seamlessly into this role. He has been my partner in driving our financial strategy, and his impact has extended well beyond the finance function. He brings deep financial expertise, strong operational judgment, and a clear understanding of how we drive durable growth and profitability. I'm proud of the team we've built, and I know the company is in excellent hands. Now, turning to our results for the quarter. Q4 revenues came in at $205.6 million, up 9% year over year. We have 25,928 Core customers, or customers spending $5,000 or more on an annualized basis. Revenues from Core customers grew 10% year over year. This cohort represented 76% of our revenues in Q4. We have 817 customers spending $100,000 or more on an annualized basis and this customer cohort grew at 13% year over year. As a reminder, we define this customer cohorts based on annualized GAAP revenues in a given quarter. Our overall dollar-based net retention rate was 96%. Core customer NRR was 97%, and among customers spending $100,000 or more NRR was 96%. As a reminder, our NRR is a trailing four-quarter average and therefore a lagging indicator of more recent trends. Our in-quarter NRRs improved again this quarter and marked our third consecutive quarter of in-quarter improvement. The improvement was mostly due to improvements in gross retention and expansion thanks to our multi-product strategy and seat expansion. Improving NRR remains a key focus area, and…

[Operator Instructions] Our first question comes from the line of Taylor McGinnis of UBS.

Sonalee, it's been great working with you and wishing you all the best. And Aziz, congrats on the promotion, very well deserved. Maybe a 2-parter for me. First, I think there are a lot of questions on how sticky Asana workflows are in an AI world and what moat Asana has in developing its own AI solutions. I know you spoke a little bit about this in the prepared remarks, but maybe you can just provide a bit more color based on what you're seeing from your customer base. And then as a second part to that, could you talk about how the Asana app in Claude work? So does this create a risk that Claude is used to automate more Asana workflows? And I guess, how would Asana share in those economics? So maybe you could just provide more color and unpack why it makes sense for Asana to partner here and how that's being structured?

Taylor, thank you for the kind words to Sonalee and Aziz. They're both being over here. And yes, just I'll hit your question directly. The reason that we believe AI is a tailwind for Asana is because we're not just a collaboration application. We are the coordination layer for work. If you think about how work is structured, the ownership, the sequencing, the tracking, the completion across teams, that really is perfect for our platform. So as the foundational models get more sophisticated, it doesn't eliminate the need for coordination execution. It actually increases it. More AI output means more actions, more dependencies, more cross-functional complexity. So AI doesn't reduce that coordination, it multiplies it. So you heard in the prepared remarks why our strategy is to become the pioneer of the Agentic Enterprise. This is where Agentic Enterprises where humans and the AI agents are coordinating together at scale. And if you think about our history, 17 years ago, we created the Work Graph, which was around human-to-human coordination, which is about the who, the what, the why, the when of work. It's that same architecture that provides the framework for human to agent collaboration. So specifically to our differentiation, that Agentic enterprise requires 4 things, #1, context in the flow of work, which is about that unique understandings of who's doing what, by when and how across the enterprise. It also requires a durable institutional memory. So this means a persistent, permissioned understanding of those relationships between projects and people. It requires multiplayer orchestration. Think about that as a shared canvas for teams to work upon, where agents and humans can work together on the same projects. Then finally, it requires enterprise-grade confidence. Enterprises need auditability, broad-based access control, cost controls, ROI visibility. Now Asana was built with those enterprise controls from day 1. So one of our products is a real practical manifestation of that, which is AI Teammates. These are teammates that are working against structured enterprise memory. They have permissioned governance. They're coordinated across workflows. They're acting as collaborators with inside real teams and real projects. That's why we've had such strong feedback from the 200 customers that we have in beta today. So AI doesn't replace Asana, it actually amplifies the need for structured context, institutional memory, cross-functional orchestration and governed execution, and that's our architectural advantage. That is the foundational layer for AI, a system of action for work. With regards to your question around Claude, think of the Claude application as a way within the Claude context to access the Asana Work Graph and UI if you're an Asana customer. So you would need to be a Claude customer and an Asana customer. Then within your AI chats, you can turn those into actionable work inside Asana.

Our next question comes from the line of Billy Fitzsimmons of Piper Sandler.

Sonalee, best of luck in your future endeavor. And Aziz, congratulations. I want to double-click on the tech vertical commentary in the prepared remarks. In past quarters, we've seen indications that the tech vertical has stabilized. You had spoken to fewer tech downsells, better tech renewals. And last week, we had a fintech company radically downsize its workforce due to AI. That's an example of one, but it's an example that's on a lot of people's minds. So how is the potential for maybe AI-related workforce reduction, specifically in the tech vertical factored into guidance? And then what's Asana seeing and hearing in real time from customers?

Yes, first, a couple of notes on tech. As you noticed, this is our third straight quarter of in-quarter improvement in NRR from the tech sector. And our tech ARR is flat for the first time in 7 quarters. So we're obviously closely monitoring the fintech company that you discussed, but we feel much more isolated today than we did 12 to 18 months ago. There's a few reasons for that. #1, our tech exposure is structurally lower. Tech is now less than 25% of our revenue and continues to decline as a percentage of our mix. So our revenue base is way more diverse across non-tech industries and international. #2, the nature of our enterprise relationships continues to strengthen. We've discussed AI studio and AI Teammates. These allow us to go much deeper into core workflows and critical business processes that tie more directly to business outcomes, not just headcount. So this workflow level embedding trends continues to materially drive our NRR and help with our retention. Third, we just don't have the same level of concentrations of renewal exposure in FY '27 that we had over the prior 2 years. So the renewal profile is much more balanced. This doesn't mean we're immune to macro workforce changes, but it does mean that today, stabilization in tech, improving in-quarter NRR, stronger expansion activity suggests that trends are going to be much more durable than we experienced previously. And our strategy of Agentic Enterprise is directly aligned to making retention less seat volume dependent and more workflow value dependent.

Sonalee here. Firstly, thank you, everyone, for your really kind comments. I've loved working with all of you, analysts covering our stock. But just with respect to the guide, as Dan called out, and you've heard me call out actually in the last couple of quarters, we have seen improvements in NRR, third consecutive quarter of in-quarter NRR improvement. Of our top 10 renewals this quarter, of which many were tech, they renewed above 100%. But the good news is we've only incorporated a modest improvement into our guide. But in terms of what we're actually seeing in front of us right now, we don't see big risk with respect to the tech renewals. This is purely prudence. And again, just wanting to see several quarters of that stability before calling a trend. I think what you've found with me, and I think you will find with Aziz is we guide based on what we have high confidence in today and what we see in front of us today.

Our next question comes from the line of Rob Oliver of Baird.

I'll also pass on my congrats to Aziz and certainly great working with you. My question is for you, Sonalee. Just around your comments around the top of funnel and some of the prolonged nature of the change in adapting to sort of the new environment around the open web and how people are accessing information. I was wondering if you could just help us understand, I know you guys said you still feel very good about the PLG motion. What sort of changes have you made today? What changes are working? And how do you expect that will play out here in FY '27 so you can get back to a more normalized top of funnel?

Thank you, Rob. Let me start, and I'll hand over to Sonalee. So first off, yes, there are a lot of headwinds in PLG. Buying behavior in self-serve and SMB has shifted meaningfully for many of the players in SaaS over the last 12 to 18 months. There is a structural shift in how customers are discovering and evaluating and experiencing software. That being said, we have seen improvements. We continue to see sequential improvements in our top of funnel and conversion. And our AEO search initiatives and channel mix adjustments are driving improvement, but the recovery is a bit more gradual than we initially expected. So you'll see us doubling down in PLG in the areas of AI-enhanced search, funnel optimization and product experience, channel mix evolution and monetization expansion within self-serve. We've also brought new leaders in place, our CMO and our PLG GM, to have clear accountability to these adjustments. So the phased road map for us in H1 looks like deeper product experience improvements and conversion optimization and in the second half, new product introductions into the self-service space, including some AI-driven offerings. So PLG and SMB remain an important growth segment for us. In fact, Asana is just so well suited to being bought and consumed digitally. So our objective is to rebuild PLG into a growth driver in the long term.

Yes, if I can just add to that. If you look at our PLG contribution to the guidance for fiscal year '27, it's about a 2-percentage point drag on ARR growth and again, fully embedded in that fiscal year '27 guide. We're not modeling top-of-funnel pressure abatement despite this strong focus on reimagining the motion and hopefully offsetting those headwinds with all the initiatives Dan called out. And I think what's important to note here is that absent that 2-point drag from PLG, this would represent an acceleration in this guide. So I think that's super important to think about just in the context of the overall guide. The other thing I would just say with respect to the guide is it's not embedding any further improvement from tech stabilization, and it's only factoring in a very modest improvement from the NRR improvements that we've seen to date. So if any of those end up being better than expected, that would represent upside.

Our next question comes from the line of Rishi Jaluria of RBC.

Let me echo my colleagues. Sonalee, it's been fantastic working with you over the past 1.5 years and wishing you all the best in your next endeavors. Aziz, congratulations. Really looking forward to working even more closely with you in this function. Look, I want to maybe think about thinking about the growth trajectory of Asana. Sonalee, you talked about RPO, if I'm not mistaken, is accelerating. You're talking about AI SKUs is representing 15% of new ARR this year and maybe greater ramp in the back half of the year. As we think about all of these moving pieces, I know it's not in the guide for FY '27, but as we think maybe beyond that, what are kind of the building blocks to drive acceleration in Asana as a whole, including from Asana AI?

So let's start with our strategy. Our strategy is to be the pioneer of the Agentic enterprise. That is a strategy that fundamentally orientates us towards long-term growth acceleration. So we're positioning Asana not just as a C2M provider, but as a system of action, the layer for the Agentic Enterprise, which is a larger and faster-growing TAM. In the near term, it's a tale of 3 cities. Firstly, we are going to benefit from the AI tailwind. You saw that with AI Studio, where we achieved $6 million of ARR in Q4. And our AI products are going to be 15% of our new ARR in FY '27. Teammates will be [ GA-ing ] in late Q1, which allows us to have new reasons to talk to our installed base and approach net new buying centers. On the PLG side, that continues to be a near-term headwind. Our objective is to turn that into a long-term tailwind. And in the absence of that PLG headwind, we'd be reaccelerating in the near term. And the third point is around our SLG or sales-led business. And here, you're seeing positive proof points already, tech stabilization and NRR is encouraging, but we need some more quarters of proof points. So if we bring that all together, reacceleration for us is a combination of AI-driven monetization, PLG stabilization and rebuild, compounding SLG productivity, improved retention dynamics and expansion into the broader Agentic Enterprise TAM. We believe the structural advantages of our platform position us well to capture that opportunity over the long term.

Rishi, just to add to Dan's comments. So you're right, both billings and CRPO accelerated in Q4. And I think that reflects the strong demand environment we're seeing from enterprise customers and their commitment to building long-term partnerships with us. The other data point is of those top 10 renewals in Q4 that were over 100% NRR, that was -- a fairly large proportion were tech customers. And then on AI products, the good news there is that AI Studio, we exited Q4 with over $6 million in ARR. But importantly, the velocity in the back half was much stronger than the front half. And we expect our AI platform to contribute about 15% of net new ARR in fiscal year '27. Add or layer on top of that, the launch of AI Teammates in the second half. And again, you see those potential drivers of growth as we look forward.

Our next question comes from the line of Steve Enders of Citi.

Congrats to both Sonalee and Aziz. And maybe this question is for Aziz, if he's in the room. But just in terms of how we think about the guide and how you think about running the finance strategy moving forward, just any changes in terms of what that means moving forward or how this guide was built versus maybe how things were done before?

Yes, Steve, it's good to be with you, and thanks for the question. So I've been -- I was fully involved in setting this guide as I have been since I arrived at Asana. So fully stand by it, fully support it, help Sonalee and Dan build it and get conviction over it. And there's no philosophical shift in the guidance strategy or the financial strategy. It will continue to be disciplined, continue to be close to the pin and reflect what we're seeing at the time of guide. It's a dynamic environment. There're upsides and potential risks. We factored that in the guide. So I'm fully supportive and aligned with it. So I appreciate the question.

Our next question comes from the line of Josh Baer of Morgan Stanley.

Congrats Sonalee and Aziz. Dan, you were talking about growth not needing to come at the expense of margins. I think if we look like very broadly or high level at the past, there's a period of very rapid growth and negative margins, more recently, decelerating growth, but really nice margin expansion. So what is it about today that allows for both growth and margins? Is it as simple as AI driving both product cycle, driving top line and AI efficiencies internally driving margin expansion, a combo or other factors? But what gives you confidence in growth and margins?

Yes. Thanks for the question, Josh, and I know we're going to see you in a couple of days' time in person. As you mentioned, firstly, the advancement of the AI models, the foundational models actually help us manifest our vision of the Agentic Enterprise. As the foundational layer of the Agentic Enterprise, we do see this as an accelerant for us. It allows us to deliver on a very ambitious product road map over the next 12 to 18 months. So yes, this is a new growth driver for us. And in doing so, it also allows us to scale efficiently as we grow within our own operations as we seek to continually push the frontier of driving to that level of efficiency. So yes, the answer is both.

Josh, I can't resist, but I have to add to that. You've seen strong margin expansion over the last couple of years. That's not something that is going to really change or abate. We think we can continue making investments in AI in a disciplined way, and we're confident we can continue expanding margins sequentially and, in many years, to come. And there are still meaningful levers to expand those margins, shifting our headcount to lower-cost regions, which we've already started, but there's more to come, third-party spend, increasing leverage in sales and marketing, where actually Aziz has been going deep in the last couple of months and then driving that AI-powered productivity gains, which you would all expect of us. So again, there's more goodness to come.

Our next question comes from the line of Jackson Ader of KeyBanc Capital Markets.

The one that I had was with AI expected to be 15% of net new ARR in the coming year. How should we be thinking about AI as truly additive and incremental versus maybe a replacement of what would have been broader platform spend within existing customers?

Yes. Let me jump in on that one. If you look at our AI Studio customers today, as an example, and AI Teammates, a lot of it is incremental that we are finding net new use cases and net new buying centers. And some of it is replacement. Some of it is being able to do the work that they were currently imagining that much more efficiently with an AI-enhanced solution. So a bit of a combination of both, I would say.

And just if I could add there, these new products, AI Studio and then increasingly with AI Teammates in the second half, they've been great in terms of expansion in these renewal conversations. So again, in terms of mitigating potential downgrades, I think it's something that we're looking forward to having as that incremental thing to go out to our customers with. So it's downgrade mitigation and also a significant expansion opportunity.

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

Thank you, everyone, for joining the call. We'll be on the road attending the KeyBanc, Citizens and Morgan Stanley Conferences this 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.

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