10-Q: Asana Q3 2026: Revenue Growth Amidst Rising Losses & AI Focus

Asana, Inc. reported a 9% revenue increase to $201 million for Q3 FY2026, alongside a net loss of $68.4 million, as it continues strategic investments in AI and operational efficiency.

Summary

• Revenues for the three months ended October 31, 2025, increased by 9% to $201.0 million, up from $183.9 million in the prior year period.
• Net loss for the three months ended October 31, 2025, was $68.4 million, compared to a net loss of $57.3 million in the same period last year.
• Net loss per share, basic and diluted, was $(0.29) for Q3 2025, compared to $(0.25) for Q3 2024.
• Gross profit for Q3 2025 was $178.7 million, with a gross margin of 89%, consistent with the prior year.
• Total operating expenses increased by 11% to $248.7 million for Q3 2025, primarily driven by a 106% increase in General and Administrative expenses due to a $30.7 million impairment charge.
• Research and development expenses decreased by 11% to $73.8 million, and sales and marketing expenses decreased by 4% to $100.2 million for Q3 2025.
• Net cash provided by operating activities for the nine months ended October 31, 2025, was $62.8 million, a significant improvement from net cash used of $0.9 million in the prior year period.
• Free cash flow for Q3 2025 was $13.4 million, compared to $(18.2) million in Q3 2024.
• The dollar-based net retention rate was 96% as of October 31, 2025, consistent with the prior year, but for Core customers (spending over $5,000 annually) it decreased from 98% to 97%, and for customers spending over $100,000 annually it decreased from 99% to 96%.
• The company had 25,413 Core customers as of October 31, 2025, contributing approximately 76% of Q3 revenues, up from 23,609 in the prior year.
• Customers spending over $100,000 on an annualized basis increased to 785 as of October 31, 2025, from 683 in the prior year.
• An impairment charge of $30.7 million was recorded during Q3 2025 related to right-of-use assets and underlying property and equipment associated with subleased office spaces.
• The 2025 Restructuring Plan, approved in Q4 FY2025, involved a workforce reduction of approximately 5% globally, with $2.2 million in charges recorded during the nine months ended October 31, 2025.
• The stock repurchase program was amended on May 30, 2025, to remove the expiration date and authorize an additional $100.0 million, with $97.5 million remaining available as of October 31, 2025.

Sentiment

Score: 4

Explanation: While Asana demonstrated solid revenue growth and improved operating cash flow, the increase in net loss, primarily driven by a significant impairment charge, and the slight decline in dollar-based net retention rates for key customer segments indicate ongoing challenges in achieving sustainable profitability. The company's strategic focus on AI integration and cost management is positive, but the competitive landscape and macroeconomic headwinds remain significant. The stock repurchase program offers some support, but the dual-class structure and history of losses warrant a cautious outlook.

Positives

• Revenue increased by 9% year-over-year for both the three and nine months ended October 31, 2025, demonstrating continued top-line growth.
• Net cash provided by operating activities significantly improved to $62.8 million for the nine months ended October 31, 2025, compared to net cash used of $0.9 million in the prior year, indicating better operational cash generation.
• The company achieved positive free cash flow of $13.4 million for Q3 2025 and $52.8 million for the nine months ended October 31, 2025, reflecting improved liquidity.
• Non-GAAP income from operations turned positive at $16.3 million for Q3 2025, a substantial improvement from a loss of $7.6 million in Q3 2024.
• Non-GAAP net income was $17.9 million for Q3 2025, compared to a loss of $4.8 million in Q3 2024, highlighting improved performance when excluding certain non-cash and restructuring items.
• The number of Core customers (spending over $5,000 annually) grew to 25,413, and customers spending over $100,000 annually increased to 785, indicating continued success in attracting and expanding with larger accounts.
• Research and development expenses decreased by 11% and sales and marketing expenses decreased by 4% for Q3 2025, suggesting efforts to manage operating costs.

Negatives

• Net loss increased to $68.4 million for Q3 2025, up from $57.3 million in Q3 2024, and the accumulated deficit grew to $2,059.5 million.
• General and administrative expenses surged by 106% in Q3 2025, primarily due to a $30.7 million impairment charge related to subleased office spaces.
• Dollar-based net retention rates for Core customers and customers spending over $100,000 annually both declined, from 98% to 97% and 99% to 96% respectively, indicating potential challenges in retaining or expanding spend from existing larger customers.
• Interest income and other income (expense), net, decreased by 27% in Q3 2025, mainly due to lower interest income on marketable securities and negative foreign currency transaction impacts.
• Macroeconomic conditions, including inflation and fluctuating interest rates, continue to pose risks to global IT spending, potentially leading to longer sales cycles, reduced renewal rates, and delayed payments.

Risks

• Prior growth rates may not be indicative of future growth, and the company has a limited operating history at its current scale.
• The company has a history of losses and may not achieve or sustain profitability.
• A focus on long-term growth may negatively impact near and medium-term profitability.
• Quarterly results may fluctuate significantly and may not meet expectations due to various factors, including demand, competition, and macroeconomic conditions.
• Inability to attract new customers, convert free/trial users to paying customers, expand usage within organizations, or develop new features that achieve market acceptance.
• The market for work management solutions may develop more slowly than expected or decline, adversely affecting the business.
• Operating in a highly competitive industry, requiring continuous technological developments, including successful AI deployment.
• Failure to effectively develop and leverage sales capabilities would harm the ability to expand usage and achieve broader market acceptance.
• Information technology systems, or those of third parties, or data being compromised could lead to regulatory investigations, litigation, fines, business disruptions, and reputational harm.
• Failure to manage technical operations infrastructure or experiencing service outages, interruptions, or delays in platform deployment.
• Inability to ensure platform interoperates with a variety of third-party software applications.
• The loss of one or more key personnel could harm the business.
• Inability to attract and retain highly qualified personnel in competitive markets.
• Failure to maintain company culture as it grows could harm employee engagement and business.
• Dependence on a strong brand; failure to maintain and enhance it could impair customer expansion.
• Reliance on third parties (e.g., Apple App Store, Google Play) to distribute mobile applications, with potential interference risks.
• Reliance on traditional web search engines to direct traffic to the website; failure to rank prominently could reduce traffic.
• International sales and operations expose the company to risks inherent in international markets (e.g., localization, privacy laws, staffing, competition, currency fluctuations, geopolitical instability).
• Sales to government entities, or customers reliant on government funding, are subject to additional challenges and risks.
• Excessive fraudulent activity could incur substantial costs and lead to loss of payment acceptance rights.
• Merger and acquisition activities could require significant management attention, disrupt business, dilute stockholder value, and adversely affect financial condition.
• Exposure to intellectual property rights claims and other litigation that are expensive to support and could have a material adverse effect.
• Inability to protect intellectual property rights could diminish brand value and other intangible assets.
• Failure to obtain or maintain the right to use certain intellectual property could negatively affect the business.
• Use of open source and third-party software could impose unanticipated conditions or restrictions and subject the company to litigation.
• Subject to stringent and evolving U.S. and foreign laws, regulations, and obligations related to artificial intelligence, privacy, data protection, and security, with potential for regulatory actions, litigation, fines, and reputational harm.
• Use of AI and machine learning technologies in products and operations gives rise to legal, business, and operational risks, including accuracy, bias, ethical issues, and new regulations.
• The trading price of Class A common stock may be volatile and could decline significantly and rapidly.
• The dual class structure of common stock concentrates voting control with founders, directors, executive officers, and their affiliates, limiting other stockholders' influence.
• Sales of substantial amounts of Class A common stock in public markets, or the perception of such sales, could cause the trading price to decline.
• Business and financial performance may differ from projections or third-party attributions.
• The share repurchase program may not be fully implemented or enhance the long-term value of the share price.
• Trading price and volume could decline if securities or industry analysts do not publish research or publish unfavorable research.
• Requirements of being a public company may strain resources, divert management's attention, and affect the ability to attract and retain executive management and qualified board members.
• No intention to pay dividends for the foreseeable future.
• Additional stock issuances could result in significant dilution to stockholders.
• Certain provisions in corporate charter documents and Delaware law may prevent or hinder attempts by stockholders to change management or acquire a controlling interest.
• Reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States.
• A failure to establish and maintain an effective system of disclosure controls and internal control over financial reporting could adversely affect the ability to produce timely and accurate financial statements.
• Exposure to foreign currency exchange rate fluctuations.
• If estimates or judgments relating to critical accounting policies prove to be incorrect, results of operations could be adversely affected.
• Catastrophic events, health epidemics, or geopolitical conflicts may disrupt the business.

Future Outlook

The company expects to continue investing in innovation and technology development, particularly in AI integration, anticipating that research and development expenses will increase in dollar amount but decrease as a percentage of revenues over time. Sales and marketing expenses are also projected to increase in dollar amount but decrease as a percentage of revenues over the long term. General and administrative expenses are expected to increase in dollar amount but generally decrease as a percentage of revenues. The company maintains a full valuation allowance for deferred tax assets, expecting this to continue for the foreseeable future due to its history of losses. Management believes current liquidity, including cash, cash equivalents, marketable securities, and available credit facilities, will be sufficient to meet working capital and capital expenditure requirements for at least the next 12 months. Future capital requirements will depend on various factors, including revenue growth, subscription renewals, and continued investment in product development and market expansion. The company may also pursue acquisitions or investments in complementary businesses and may seek to raise additional capital through debt or equity financings.

Management Comments

• "We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability in the near and medium term."
• "We expect our dollar-based net retention rate to fluctuate due to a number of factors, including the expected growth of our revenue base, the level of penetration within our customer base, our ability to retain our customers, and the macroeconomic environment."
• "Macroeconomic conditions have affected customers renewal decisions, which has impacted our dollar-based net retention rate in recent periods."
• "We expect our gross profit to increase in dollar amount and our gross margin to remain relatively consistent over the long term."
• "We anticipate continuing to invest in innovation and technology development, including the integration of AI in our products, and as a result, we expect research and development expenses to continue to increase in dollar amount, but to decrease as a percentage of revenues over time."
• "We continue to make strategic investments in our sales and marketing organization, and we expect sales and marketing expenses to remain our largest operating expense in dollar amount. We expect our sales and marketing expenses to continue to increase in dollar amount but to decrease as a percentage of revenues over time, although the percentage may fluctuate from period to period depending on the extent and timing of our initiatives."
• "We expect our general and administrative expenses to continue to increase in dollar amount for the foreseeable future but to generally decrease as a percentage of our revenues, although the percentage may fluctuate from period to period depending on the timing and amount of our general and administrative expenses."
• "We expect to maintain this full valuation allowance for the foreseeable future as it is more likely than not the deferred tax assets will not be realized based on our history of losses."
• "We believe our current cash, cash equivalents, marketable securities, and amounts available under our November 2022 Senior Secured Credit Facility will be sufficient to meet our working capital and capital expenditure requirements for at least the next 12 months."

Industry Context

Asana operates in the rapidly evolving and highly competitive work management solutions market, which is increasingly influenced by advancements in AI and machine learning. The company positions itself as a leading platform for human + AI coordination, offering both core work management and a consumption-based AI Studio product. The broader industry faces ongoing macroeconomic uncertainties, including inflation, fluctuating interest rates, and geopolitical instability, which are impacting global IT spending, lengthening sales cycles, and affecting customer renewal decisions across the sector. Regulatory landscapes for AI, privacy, data protection, and security are also rapidly changing globally, adding complexity and compliance costs for companies in this space.

Comparison to Industry Standards

• NA

Management Changes

Corporate Governance

Legal Proceedings

• The company is not a party to any material pending legal proceedings as of October 31, 2025.
• From time to time, the company may be subject to various claims and other legal matters arising in the ordinary course of business, but believes none would have a material adverse effect on its financial position, results of operations, or cash flows.

Related Party Transactions

• Lease expenses of $0.4 million for Q3 2025 and $1.2 million for the nine months ended October 31, 2025, were paid for office facilities leased from a company affiliated with members of the board of directors.
• Advertising expenses under an agreement with a company affiliated with a board member were not material for the three and nine months ended October 31, 2025 (compared to $0.3 million for Q3 2024 and $1.3 million for 9M 2024).

Stakeholder Impact

• Shareholders: Face potential dilution from future equity raises, stock price volatility, and concentrated voting control. The stock repurchase program aims to enhance value, but no dividends are expected.
• Employees: A 5% global workforce reduction occurred under the 2025 Restructuring Plan. The company faces intense competition for talent, and stock-based compensation is a significant component of remuneration.
• Customers: Benefit from continued investment in AI and platform enhancements. However, macroeconomic conditions may impact their spending and renewal decisions. Risks related to data privacy, security, and platform availability are present.
• Creditors: The company is in compliance with financial covenants under its November 2022 Senior Secured Credit Facility.
• Suppliers/Partners: The company relies on third-party hosting services (e.g., AWS) and software integrations, making these relationships critical to operations.

Next Steps

• Continue to invest in innovation and technology development, including the integration of AI in products.
• Continue strategic investments in the sales and marketing organization.
• Manage and potentially expand international operations, navigating associated regulatory and economic risks.
• Evaluate and respond to evolving Trade Controls and assess their impact on the business.
• Evaluate the impact of adopting new accounting standards: ASU 2023-09 (Income Taxes), ASU 2024-03 (Expense Disaggregation Disclosures), and ASU 2025-06 (Internal-Use Software).
• Potentially enter into arrangements to acquire or invest in complementary businesses, services, and technologies, including intellectual property rights.
• May seek to raise additional funds through equity, equity-linked arrangements, and debt.

Key Dates

Recommendation

While Asana demonstrated solid revenue growth and improved operating cash flow, the increase in net loss, primarily driven by a significant impairment charge, and the slight decline in dollar-based net retention rates for key customer segments indicate ongoing challenges in achieving sustainable profitability. The company's strategic focus on AI integration and cost management is positive, but the competitive landscape and macroeconomic headwinds remain significant. The stock repurchase program offers some support, but the dual-class structure and history of losses warrant a cautious 'Hold' recommendation, awaiting clearer signs of sustained profitability and improved retention metrics.

Keywords

Work Management Platform, AI Coordination, Cloud Software, Enterprise Software, Productivity Tools, SaaS, Financial Results, SEC Filing, ASAN, Q3 Earnings, Stock Repurchase, Restructuring, Corporate Governance, Risk Factors, Net Retention Rate, Operating Cash Flow