Asana Inc (NYSE:ASAN) shares tanked in early trading on Wednesday, even after the company reported upbeat second-quarter results.
The company reported its results amid an exciting earnings season. Here are some key analyst takeaways.
JMP Securities On Asana
Analyst Patrick Walravens maintained a Market Outperform rating while cutting the price target from $27 to $21.
Asana reported mixed quarterly results, with a non-GAAP loss of five cents per share coming in better than consensus of a loss of eight cents per share, Walravens said in a note.
He added, however, the company's revenue growth decelerated to 10% year-on-year, from the previous quarter's 13%, with dollar-based net retention declining to 98%, from 100% in the prior quarter.
Management's guidance was "disappointing overall," with projections of a non-GAAP loss of seven cents per share for the fiscal third quarter, higher than the consensus of a loss of four per share, the analyst stated.
While the company’s go-to-market is "slowly improving under CRO Ed McDonnell and CMO Shannon Duffy," there seems to be room for new CFO Sonalee Parekh to cut costs "with more than $360M in Sales & Marketing spend this year and only about $70M in net new revenue," he further wrote.
KeyBanc Capital Markets On Asana
Analyst Jackson Ader reaffirmed an Underweight rating while reducing the price target from $12 to $10.
"Deals slipped out of the quarter, large customers are renewing at lower commitment levels, the tech sector continues to weigh on the overall business, and a new CFO is coming in," Ader wrote in a note.
While some of the issues the company faced were new, like the increasingly back-end weighted quarters, "but for the most part, things remain the same," the analyst stated.
"The level of expenses for the amount of revenue booked remains elevated, and we are now entering a period where expense growth is flirting with outpacing revenue growth," he added.
Check out other analyst stock ratings.
Piper Sandler On Asana
Analyst Brent Bracelin reiterated a Neutral rating while cutting the price target from $14 to $12.
Asana grew revenue 10% year-on-year to $179.2 million, delivering a beat of $2 million to the midpoint of its guidance, Bracelin said. "Calculated billings growth decelerated to 7% vs. 9% last Q," he added.
Although the company reported a record number of multi-year deals and "improvement in certain non-tech verticals (e.g. retail, consumer goods)," it also witnessed deals decline sequentially into the fiscal third quarter and "consistent macro headwinds vs. Q1," the analyst stated.
"Management lowered the 2H implied growth guidance to 9% y/y from 10%," he further wrote.
Oppenheimer On Asana
Analyst Ittai Kidron maintained an Outperform rating while lowering the price target from $23 to $20.
Although Asana reported better-than-expected results for the fiscal second quarter, "ongoing macro headwinds on seat expansion and deal push-outs" led to a miss in the third-quarter guidance, Kidron said. The company's "strategic focus on up-market enterprise gains (649 >$100K customer, +17.4% YoY)" was a positive in the quarter, he added.
The disappointing third-quarter guidance reflects "continued macro/renewal headwinds (longer sales cycles, IT budget scrutiny, seat downgrades) and some deal push-outs (some close in August)," the analyst wrote.
"While noting the near-term hurdles, we remain engaged on the longer-term AI and work-management opportunity, and the efforts already made to realign Asana’s sales/GTM motion," he further stated.
RBC Capital Markets On Asana
Analyst Rishi Jaluria reiterated an Underperform rating and price target of $10.
Asana's quarterly results were "disappointing across the board, marked by a skinny revenue beat, a billings miss, significant NRR compression, and minimal margin upside," Jaluria wrote in a note.
With persisting renewal headwinds faced by the tech vertical and a number of delayed deals, the company lowered its full-year revenue guidance to between $719 million and 721 million, from the prior projection of $719 million to 724 million, the analyst stated.
"Asana announced a CFO transition, and while a replacement has been named, a transition adds risks," Jaluria added.
ASAN Price Action: Shares of Asana had declined by 5.94% to $12.50 at the time of publication on Wednesday.
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