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Asana (ASAN) Earnings Power Value (EPV) : $-8.13 (As of Jan24)


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What is Asana Earnings Power Value (EPV)?

As of Jan24, Asana's earnings power value is $-8.13. *

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

Margin of Safety is N/A.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future. Assumption: Current profitability is sustainable.


Asana Earnings Power Value (EPV) Historical Data

The historical data trend for Asana's Earnings Power Value (EPV) can be seen below:

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* Premium members only.

Asana Earnings Power Value (EPV) Chart

Asana Annual Data
Trend Jan19 Jan20 Jan21 Jan22 Jan23 Jan24
Earnings Power Value (EPV)
Get a 7-Day Free Trial - - - - -8.13

Asana Quarterly Data
Apr19 Jul19 Oct19 Jan20 Apr20 Jul20 Oct20 Jan21 Apr21 Jul21 Oct21 Jan22 Apr22 Jul22 Oct22 Jan23 Apr23 Jul23 Oct23 Jan24
Earnings Power Value (EPV) Get a 7-Day Free Trial Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only - - - -7.02 -8.13

Competitive Comparison of Asana's Earnings Power Value (EPV)

For the Software - Application subindustry, Asana's Earnings Power Value (EPV), along with its competitors' market caps and Earnings Power Value (EPV) data, can be viewed below:

* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.


Asana's Earnings Power Value (EPV) Distribution in the Software Industry

For the Software industry and Technology sector, Asana's Earnings Power Value (EPV) distribution charts can be found below:

* The bar in red indicates where Asana's Earnings Power Value (EPV) falls into.



Asana Earnings Power Value (EPV) Calculation

Earnings Power Value also known as just Earnings Power is a valuation technique popularised by Bruce Greenwald, an authority on value investing at Columbia University. It is arguably a better way to analyze stocks than Discounted Cash Flow analysis that relies on highly speculative growth assumptions many years into the future.

The basic concept of EPV is that one should value a stock based on the current free cash flow of a company and not on future projections which may, or may not, come true. This valuation tool excludes the potential growth that a company may have so that needs to be looked at separately. Since future growth is excluded from the analysis, only the maintenance capital expenditures are subtracted from after-tax EBIT (earnings before interest and taxes) and growth capex is ignored.

Asana's "Earning Power" Calculation:

Average of Last 20 Quarters Last Quarter
Revenue 389.6
DDA 8.2
Operating Margin % -68.77
SGA * 25% 97.1
Tax Rate % -0.93
Maintenance Capex 13.5
Cash and Cash Equivalents 519.5
Short-Term Debt 19.2
Long-Term Debt 258.7
Shares Outstanding (Diluted) 224.3

1. Start with "Earnings" not including accounting adjustments (one-time charges not excluded unless policy has changed). "Earnings" are "Operating Income.

2. Look at average margins over a business/Industry cycle: Average Operating Margin = -68.77%

To normalize margins and eliminate the effects on profitability of valuing the firm at different points in the business cycle, it is usually best to take a long-term average of operating margins. Ideally this would be as long as 10 years and include at least one economic downturn. However, since most of companies do not have as long as 10-year history, here GuruFocus uses the latest 5 years data to do the calculation. To smooth out unusual years but reflect recent developments, we take an average of the 5 year margin.

3. Multiply average margins by sustainable revenues and then adjust for maintenance SGA. This yields "normalized" EBIT:

To be conservative, GuruFocus uses an average of the 5 year revenues as the sustainable revenue.
EPV analysis recognises that part of SG&A expenditure is made to maintain and replace the existing assets, while part is made to grow sales. Since EPV is only interested in what it costs a going concern to maintain its existing asset base, it adds back a percentage of SG&A (between 15% and 50% - this is a matter of judgment and industry knowledge) to make up for the fact that some of this expenditure went to fund growth and shouldn't be accounted for. To start off, we assume 25% for the sake of prudence.
Sustainable Revenue = $389.6 Mil, Average Operating Margin = -68.77%, Average Adjusted SGA = 97.1,
therefore "Normalized" EBIT = Sustainable Revenue * Average Operating Margin + Average Adjusted SGA = 389.6 * -68.77% +97.1 = $-170.834305124 Mil.

4. Multiply by one minus Average Tax Rate (NOPAT):

Same as average operating margin calculation, GuruFocus takes an average of the 5 years tax rates.
Average Tax Rate = -0.93%, and "Normalized" EBIT = $-170.834305124 Mil,
therefore After-tax "Normalized" EBIT = "Normalized" EBIT * ( 1 - Average Tax Rate ) = -170.834305124 * ( 1 - -0.93% ) = $-172.42989753386 Mil.

5. Add back Excess Depreciation (after tax at 1/2 average tax rate). This yields "normalized" Earnings:

Excess Depreciation = Average DDA * % of Excess Depreciation (after tax at 1/2 average tax rate) = 8.2 * 0.5 * -0.93% = $-0.038477064 Mil.
"Normalized" Earnings = After-tax "Normalized" EBIT + Excess Depreciation = -172.42989753386 + -0.038477064 = $-172.46837459786 Mil.

6. Adjusted for Maintenance Capital Expenditure:

First, calculate the revenue change regarding to the previous year. If the revenue decreased from the previous year, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
Second, if the revenue increased from the previous year, then calculate the percentage of Net PPE as of corresponding Revenue.
Third, calculate Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was negative, then the Maintenance Capital Expenditure = Capital Expenditure (positive).
If [Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase] was positive, then the Maintenance Capital Expenditure = Capital Expenditure (positive) - percentage of Net PPE as of corresponding Revenue * revenue increase.
Fourth, GuruFocus uses an average of the 5 year maintenance capital expenditures as maintenance CAPEX.
Asana's Average Maintenance CAPEX = $13.5 Mil *.
* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.

7. Investors require a return of "WACC" for the risk they are taking: WACC = 9%

8. Asana's current cash and cash equivalent = $519.5 Mil.
Asana's current interest bearing debt = Long-Term Debt & Capital Lease Obligation + Short-Term Debt & Capital Lease Obligation = 258.7 + 19.2 = $277.881 Mil.
Asana's current Shares Outstanding (Diluted Average) = 224.3 Mil.

Asana's Earnings Power Value (EPV) for Jan24 is calculated as:

EPV = ( ( Norm. Earnings-Maint. CAPEX *) / WACC + CashandEquiv - Int. Bearing Debt ) / Shares Outstanding (Diluted Average)
= ( ( -172.46837459786 - 13.5)/ 9%+519.5-277.881 )/224.3
=-8.13

Margin of Safety (EPV)=( Earnings Power Value (EPV)-Current Price )/Earnings Power Value (EPV)
=( -8.1342624999063-14.62 )/-8.1342624999063
= N/A

* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD.
* For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.

* GuruFocus does not store EPV value into our database if Average Maintenance CAPEX is 0.


Asana  (NYSE:ASAN) Earnings Power Value (EPV) Explanation

Assumption: Current profitability is sustainable.

Earnings power value (EPV) uses a very basic equation which assumes no growth, although it does rely on an assumption about the cost of capital as well as the fact that current earnings are sustainable. It also involves several adjustments to clean up the underlying Earnings figures.


Be Aware

Though using today's earnings in calculating Earnings Power Value, GuruFocus is normalizing these earnings to the business cycle. This eliminates the effects on profitability of valuing the firm at different points in the business cycle. This means that we are considering the average earnings over 5 years.


Asana Earnings Power Value (EPV) Related Terms

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Asana (ASAN) Business Description

Industry
Traded in Other Exchanges
Address
633 Folsom Street, Suite 100, San Francisco, CA, USA, 94107
Asana is a provider of collaborative work management software delivered via a cloud-based SaaS model. The firm's solution offers scalable, dynamic tools to improve the efficiency of project and process management across countless use cases, including marketing programs, managing IT approvals, and performance management. Asana's offering supports workflow management across teams, provides real time visibility into projects, and reporting and automation capabilities. The firm generates revenue via software subscriptions on a per seat basis.
Executives
Tim M Wan officer: Chief Financial Officer C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Eleanor B Lacey officer: GC, Corporate Secretary C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Anne Raimondi director C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Dustin A. Moskovitz director, 10 percent owner, officer: President, CEO, & Chair P.O. BOX 2929, SAN FRANCISCO CA 94126
Lorrie M Norrington director C/O EBAY INC., 2145 HAMILTON AVENUE, SAN JOSE CA 95125
Justin Rosenstein director, 10 percent owner C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Krista Anderson-copperman director C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Amit K. Singh director 3000 TANNERY WAY, SANTA CLARA CA 95054
Chris Farinacci officer: Chief Operating Officer C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Andrew Lindsay director C/O ASANA, INC., 633 FOLSOM STREET, SUITE 100, SAN FRANCISCO CA 94107
Steven M Spurlock 10 percent owner 2480 SAND HILL ROAD, SUITE 200, MENLO PARK CA 94025
Benchmark Capital Management Co. Vi, L.l.c. 10 percent owner 2480 SAND HILL ROAD, SUITE 200, MENLO PARK CA 94025
Generation Im Climate Solutions Fund Ii, L.p. 10 percent owner PO BOX 309, UGLAND HOUSE, GRAND CAYMAN E9 KY1-1104
Founders Fund Iv Management, Llc 10 percent owner ONE LETTERMAN DRIVE, BUILDING D, SUITE 500, SAN FRANCISCO CA 94129
Matt Cohler director, 10 percent owner 2480 SAND HILL ROAD, SUITE 200, MENLO PARK CA 94025