Q2 2027 Asana Inc Earnings Call Transcript
Key Points
- Revenue exceeded guidance at $216.4 million, up 10% year-over-year, with accelerating growth and broad-based strength across industries and geographies.
- Net revenue retention improved across all reported cohorts, with overall NRR up to 97% and core and $100K+ customer NRR both at 98%.
- AI products (AI Studio and AI Teammates) drove about 25% of net new ARR, up from 17% last quarter, and customers adopting them show deeper engagement, better retention, and faster expansion.
- The US business returned to double-digit revenue growth (10% year-over-year) for the first time in over two years, driven by improved bookings and retention in the tech sector.
- The company is launching Agentic Work Management (AWM) in mid-September, embedding AI Teammates, AI Studio, and Dash into all paid tiers, which is expected to drive broader adoption and create new consumption-based revenue streams.
- RPO and current RPO growth accelerated to approximately 12% and 11% year-over-year, respectively, excluding a large prior-year contract, indicating strong upmarket momentum.
- Non-GAAP operating margin expanded to 10%, up 300 basis points year-over-year, while maintaining flat expense base and investing in AI products.
- Adjusted free cash flow was strong at $42.3 million, with a 20% margin, benefiting from better-than-expected collections.
- The PLG (product-led growth) headwind is building, with an estimated 100 basis points of revenue growth pressure in Q3 and 150 basis points in Q4, as lower bookings from the sub-$5,000 cohort compound.
- The transition to consumption-based AI pricing and AWM packaging is expected to create a $1.2 million revenue timing headwind in the second half of fiscal 2027, split between Q3 and Q4.
- Gross margin declined to 87%, down 120 basis points sequentially, due to higher AI infrastructure costs, the Stack AI acquisition, and mix shift to AI products, with further pressure expected in Q3 and Q4.
- The company expects gross margin to be in the mid-80s exiting the year, reflecting ongoing investment in AI product delivery costs ahead of consumption revenue recognition.
- Revenue growth guidance for Q3 is only 8-9% year-over-year, down from 10% in Q2, due to the PLG headwind and packaging transition, indicating near-term growth deceleration.
- The company assumes minimal FY27 revenue contribution from new products like Asana Client Management, Service Management, and Command, with meaningful impact not expected until FY28.
- The sub-$5,000 customer cohort continues to drag down company-wide NRR, and improvements in this segment are not expected to contribute to NRR until FY28.
Thank you for standing by, and welcome to Asana's second quarter fiscal year 2027 earnings conference call. (Operator Instructions) I would now like to hand the call over to Eva Leung, 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's second quarter fiscal year 2027. With me on today's call are Dan Rogers, our Chief Executive Officer; and Aziz Megji, 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 expectations for our financial outlook, including our fiscal year '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.
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