Despite Modest Q1 Revenue Beat, Asana's Future Moderation Triggers Cautious Outlook: Analysts

JMP Securities analyst Joe Goodwin maintains Asana Inc ASAN with a Market Outperform and raises the price target from $28 to $30. 

Asana reported a Q1 FY24 revenue growth of 26% Y/Y to $152.4 million, beating the consensus of $150.6 million. Non-GAAP EPS loss came in at $(0.09), an improvement from $(0.30) the prior year, beating the consensus of $(0.18).

The analyst likes this stock for its product superiority for work management in the enterprise, supported by its growth rate in the $5Kplus category of 32% in the quarter, large TAM, estimated to be $51 billion by 2025 that may be compounded by advances in large neural networks, narrowing its losses and on track to be FCF positive by the end of 2024 and FCF breakeven for the full year 2024 and co-founder and CEO Dustin Moskovitz's 30 million share trading agreement.

Oppenheimer analyst George Iwanyc maintains Asana with an Outperform and raises the price target from $25 to $28.

Asana reported better-than-expected Q1 FY24 results, encouraging operating gains as recent cost cuts drove margin improvement. 

Positively, management remains focused on balanced investment, raising FY24 operating income guidance while reiterating expectations for positive free cash flow before the end of CY24. 

The analyst continues to see attractive user and use case expansion opportunities as Asana enhances its platform and realigns its sales and go-to-market efforts to serve better its enterprise customers where there's more room for expansion.

Piper Sandler analyst Brent Bracelin reiterates Asana with a Neutral and $24 price target. Top-line growth moderated to 26% (vs. 34% last quarter and 57% a year ago) despite a slight $2 million top-line beat. 

Despite commentary suggesting signs of stabilization have begun to emerge to start the year, the outlook of 17% growth implies further moderation ahead. 

He remains cautious on ASAN shares, given eroding operating metrics that suggest macro pressures have not yet abated, partially exacerbated by outsized exposure to the technology vertical.

The analyst notes that favorable execution on margin improvement could alleviate some model risk this year. He adjusted his FY24 top-line growth estimate to 17.3% (vs. 17.6% prior) and boosted EPS $0.05 higher on continued margin profile improvement. 

KeyBanc analyst Jason Celino reiterates a Sector Weight on the stock. Asana posted good Q1 results with a modest revenue beat and meaningfully better operating margin on continued cost discipline. 

Incorporating the quarterly outperformance, the company is raising its FY24 margin guidance. 

While Asana noted stabilization outside of tech and remains committed to expense management, the company continues working through macro pressures and customer downgrade activity.

Price Action: ASAN shares are trading lower by 4.35% at $21.86 on the last check Friday.