Asana Shares Fall on Soft Profit Outlook, Analysts Cautious By Investing.com

By Senad Karaahmetovic

Shares of Asana (NYSE:) are down almost 6% in premarket trading Friday after the company offered worse-than-expected Q2 profit guidance.

ASAN a Q1 loss per share of $0.30, $0.05 better than the analyst estimate of negative $0.35. Revenue for the quarter came in at $120.6 million versus the consensus estimate of $115.05 million. The company ended the first quarter with more than 126,000 paying customers.

For Q2, Asana expects an adjusted loss per share of 38c to 39c on revenue of $127 million to $128 million, while analysts were expecting $126 million in revenue. Asana expects a non-GAAP operating loss in the range of $72 million to $74 million in the second quarter.

On a full-year basis, Asana expects FY 2023 revenue in the range of $536 million to $540 million, topping the estimated $527 million to $531 million, compared to the consensus projection of $531 million.

“We reported strong revenue growth in the first quarter and we set a new record for the largest deployment in the company’s history at over 100,000 seats,” said Dustin Moskovitz, co-founder, and CEO of Asana.

“We are closing bigger net new customers, our largest customers are expanding at a fast pace and our revenue mix from our Enterprise and Business tier continues to climb.”

Morgan Stanley analyst Keith Weiss cut the price target to $35.00 per share from $38.00.

“Rapid growth & impressive large customer metrics sustained in Q1, w/ top & bottom line upside. While mgmt talked to an increased focus on efficiency, the FY23 guide of low-40’s rev growth + negative mid-40’s op margins still implies slightly negative ‘rule of 40’ in a market rewarding profitability,” Weiss said in a note.

JPMorgan analyst Pinjalim Bora also slashed the price target to $25.00 per share from $32.00.

“While we are encouraged by the shift in focus to drive leverage in the model, we think that will be a multi-quarter effort and we expect the stock to continue to underperform its peers in the meantime given its relatively high cash burn and sub-optimal growth plus margin profile,” the analyst wrote to clients.