Asana: Strong Growth, Still Not Fully Priced

Jan. 04, 2021 10:56 AM ETAsana, Inc. (ASAN)5 Comments


  • Revenue growth rates are very enticing for this coordination SaaS platform.
  • Arguably, the single biggest blemish on this company is its very poor profitability profile.
  • On balance, I don't think the stock is fully priced. I argue that relative to the rest of the opportunities in the space, this stock is still attractive.
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Investment Thesis

Asana (NYSE:ASAN) is the new-ish kid on the block. This collaboration suite is expected to grow its top-line at 35% to 40% y/y into fiscal 2022 (finishing Jan. 2022).

Meanwhile, its guidance for Q4 2021 is pointing towards negative $40 million of non-GAAP operating income to grow its top line just $63 million. Having said that, I note that its non-GAAP gross profit margins of 88% are high enough to allow for improved growth and profit balance if Asana desired.

Given that the stock is still priced for just 16x next year's revenues, I proclaim this investment is worthwhile considering. Here's why:

Asana logo and design styles • Asana

What is Asana? And Why Now?

Asana is a coordination application, project, and portfolio management. It does away with cumbersome ways of managing workflow. It's a work management platform that addresses the pain of coordinating work.

Asana's TAM is estimated to reach $32 billion by 2023. Given that the company is guiding toward $213 million in revenues for fiscal 2021, this implies it has penetrated less than 1% of its TAM.

The company's goal is to grow its enterprise opportunity and make the task of organizing a team a rewarding experience.

Asana is attempting to answer who is doing what by when. That's the company's main goal. To bring a way of answering those simple questions to the 2020s.

Asana argues that it goes deeper than just being a simple collaboration platform, but more specifically a coordination application. For companies that wish to have clarity on who is doing what, so that more time can actually be spent on the work itself.

To this end, we have to note that despite sounding buzz-words-heavy, it also has tangible numbers to back up this narrative:


Above, we can see that the percentage of customers spending $5K or more on

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Disclosure: I/we have no positions in any stocks mentioned, but may initiate a long position in ASAN over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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