EPS of $-0.20 increased by 35.5% from previous year
Gross margin of 89.7%
Net income of -48.36M
"AI must be context-aware and embedded where teams already collaborate. We are building the future of the agentic enterprise, where organizations can deploy prebuilt or custom agents embedded in structured workflows with the right context and guardrails." - Dan Rogers
Asana Inc (ASAN) QQ2 2026 Earnings Analysis: AI Studio Accelerates Growth, Margin Expansion, and Global Go-To-Market Momentum
Executive Summary
Asana delivered a solid QQ2 2026 performance highlighted by 10% year-over-year revenue growth to $196.9 million, a gross margin of 89.7%, and a non-GAAP operating margin of 7%—an almost 1,600 basis point year-over-year expansion. The quarter showcased meaningful progress in AI Studio adoption, with AI-powered workflows and AI Studio ARR growth more than doubling QoQ, reinforcing management’s view that AI-enabled workflows are becoming a core driver of operating efficiency and customer value. Despite near-term macro and SMB demand headwinds, Asana maintained strong balance-sheet health, generated $35.4 million of adjusted free cash flow (18% margin), and executed a disciplined capital allocation program including $27.8 million of share repurchases.
Management also guided for a constructive second half, with Q3 revenue guidance of $197.5–$199.5 million and full-year revenue guidance raised to $780–$790 million, implying 8–9% growth on a reported basis. Non-GAAP operating income is guided to $46–$50 million for the full year (6% margin), with non-GAAP EPS of $0.23–$0.25. The guidance acknowledges ongoing SMB top-of-funnel pressure and potential downgrades, but also reflects the company’s confidence in AI Studio-driven expansion, cross-sell within existing customers, and a stronger international contribution. Overall, the QQ2 results position Asana to execute on its AI-first product strategy while continuing to scale profitable growth, supported by a robust cash position and high-quality ARR backlog (RPO).
Key Performance Indicators
Revenue
196.94M
QoQ: 5.16% | YoY:9.89%
Gross Profit
176.72M
89.73% margin
QoQ: 5.16% | YoY:10.98%
Operating Income
-49.46M
QoQ: -12.65% | YoY:35.60%
Net Income
-48.36M
QoQ: -20.85% | YoY:33.01%
EPS
-0.20
QoQ: -17.65% | YoY:35.48%
Revenue Trend
Margin Analysis
Key Insights
QQ2 2026 revenue: $196.936 million, up 10% YoY and 5.16% QoQ (currency-adjusted growth ~9.4% YoY).
Gross profit: $176.715 million; gross margin 89.73% (already near the high end of SaaS peers).
Operating performance: non-GAAP operating income margin 7.0% (GAAP operating income -$49.456 million; GAAP operating margin -25.11%). Adjusted for hiring timing, margin expansion remains a key driver of profitability.
R&D: $79.376 million (19.9–24% of revenue range); down 16% YoY as a share of revenue, signaling efficiency improvements.
Sales and marketing: $106.677 million (about 54% of revenue) reflecting disciplined GTM investments amid AI scaling.
Financial Highlights
Revenue and gross profitability
- QQ2 2026 revenue: $196.936 million, up 10% YoY and 5.16% QoQ (currency-adjusted growth ~9.4% YoY).
- Gross profit: $176.715 million; gross margin 89.73% (already near the high end of SaaS peers).
- Operating performance: non-GAAP operating income margin 7.0% (GAAP operating income -$49.456 million; GAAP operating margin -25.11%). Adjusted for hiring timing, margin expansion remains a key driver of profitability.
Cost structure and efficiency
- R&D: $79.376 million (19.9–24% of revenue range); down 16% YoY as a share of revenue, signaling efficiency improvements.
- Sales and marketing: $106.677 million (about 54% of revenue) reflecting disciplined GTM investments amid AI scaling.
- G&A: $41.118 million (~21% of revenue).
- Adjusted free cash flow: $35.4 million (18% of revenue), underscoring strong cash generation in a growth phase.
Customer and product momentum
- Core customers (spending $5k+ annually): 25,000+, up in mid-single digits; 76% of revenue from this cohort.
- 100k+ customers: 770, up 19% YoY.
- Net revenue retention (NRR): 96% trailing four-quarter, up from 95% prior quarter; in-quarter NRR improvements were observed across overall and core cohorts, with a modest downgrade impact within the $100k+ cohort.
- AI Studio traction: more than doubled AI Studio ARR QoQ; AI Studio Plus self-serve launched with ~40% of buyers in self-serve channel; nearly 20% of AI Studio workflows created via the Smart Workflows Gallery.
Liquidity and capital structure
- Cash, cash equivalents, and marketable securities: ~$475.2 million.
- Remaining Performance Obligation (RPO): $507.3 million, up 29% YoY; current RPO represents a near-term revenue recognition profile (roughly 75% of RPO recognized within the next 12 months, per commentary).
- Deferred revenue: $313.6 million, up 8% YoY.
- Net debt: approximately $31.38 million (net cash position implied by the reported cash and debt mix).
- Buybacks: $27.8 million repurchased in the quarter at an average price of $14.20; $128 million remaining on authorization as of 7/31.
Guidance and outlook
- Q3 FY2026 guidance: Revenue $197.5–$199.5 million; non-GAAP operating income $12–$14 million (6–7% margin); non-GAAP EPS $0.06–$0.07 (assuming ~244 million diluted shares).
- Full-year FY2026 guidance: Revenue $780–$790 million (8–9% YoY growth, currency tailwinds ~50 bps); non-GAAP operating income $46–$50 million (about 6% margin); non-GAAP EPS $0.23–$0.25 (assuming ~243 million diluted shares).
- Commentary underscores continued SMB top-of-funnel pressure and potential downgrades, but anticipates sequential margin expansion and AI-driven consumption growth in the back half.
Income Statement
Metric
Value
YoY Change
QoQ Change
Revenue
196.94M
9.89%
5.16%
Gross Profit
176.72M
10.98%
5.16%
Operating Income
-49.46M
35.60%
-12.65%
Net Income
-48.36M
33.01%
-20.85%
EPS
-0.20
35.48%
-17.65%
Key Financial Ratios
Net Income vs. Revenue
Expense Breakdown
Management Commentary
Key management themes from the earnings call:
- AI-first strategy grounded in the Work Graph: Dan Rogers emphasized that AI must be context-aware and embedded in workflows to unlock real productivity, describing AI teammates and agented workflows as the future of enterprise collaboration.
- Quote: “AI must be context-aware and embedded where teams already collaborate. We are building the future of the agentic enterprise, where organizations can deploy prebuilt or custom agents embedded in structured workflows with the right context and guardrails.” – Dan Rogers
- AI Studio as a platform for enterprise productivity: The leadership stressed the no-code AI workflow builder, smart workflows, and self-serve capabilities as core accelerants to adoption and value realization.
- Quote: “With AI Studio, we're delivering a platform for AI-powered work. At its core, it's our no-code AI workflow builder, which allows organizations to inject AI directly into their processes to unlock meaningful productivity gains.” – Dan Rogers
- Go-to-market evolution and international expansion: Anne Raimondi highlighted the growing enterprise cohort, international growth, and the rollout of AI Studio Plus for self-serve to drive acquisition and downstream expansion.
- Quote: “In Q2, our enterprise motion continued to scale. The number of customer net adds from the $100,000 plus cohorts grew 19% year over year, while our core customers spending $5,000 or more grew 9% year over year.” – Anne Raimondi
- Customer health and retention: The team underscored stability in NRR at 96%, improved in-quarter NRR metrics, and the positive impact of AI Studio and foundational service plans on retention and seat utilization.
- Quote: “Our overall NRR improved to 96% from 95% last quarter. In-quarter NRR increased… driven by strong seat growth and healthy AI Studio and foundational service plan adoption.” – Anne Raimondi
- Product roadmap and events: The company highlighted AI teammates in public beta, a growing gallery of prebuilt AI Studio workflows, and global Work Innovation Summit events as catalysts for pipeline and brand momentum.
- Quote: “We had record attendance at our Sydney event… and Japan Work Innovation Summit… Preview of AI teammates well received.” – Anne Raimondi
AI must be context-aware and embedded where teams already collaborate. We are building the future of the agentic enterprise, where organizations can deploy prebuilt or custom agents embedded in structured workflows with the right context and guardrails.
— Dan Rogers
With AI Studio, we're delivering a platform for AI-powered work. At its core, it's our no-code AI workflow builder, which allows organizations to inject AI directly into their processes to unlock meaningful productivity gains.
— Dan Rogers / alternatively attributed to Dan in the same section
Forward Guidance
Assessment of the Q3 and full-year outlook against QQ2 performance:
- Revenue trajectory: The guided Q3 revenue range of $197.5–$199.5 million implies 7.4–8.5% YoY growth, below the QQ2 growth rate but in line with a more normalized mid-cycle growth path as AI Studio gains scale. The full-year revenue guidance of $780–$790 million implies 8–9% YoY growth, which is modestly above prior guidance and reflects expectations for continued AI-driven up-sell and cross-sell with existing customers, plus incremental international contribution.
- Profitability trajectory: Non-GAAP operating margin guided to 6–7% for the full year, with Q4 margin expected to exceed current annual guidance. The company notes approximately 0.5 percentage point of margin benefit from hiring timing, signaling ongoing leverage from gross margins (~90%) and disciplined cost management.
- Earnings and capitalization: Non-GAAP EPS guidance of $0.23–$0.25 alongside an approximately 243–244 million diluted share base. The company remains committed to buybacks (net, offsetting dilution) and expects capital allocation to continue supporting long-term growth.
- Risks and sensitivity: Revenue guidance factors in potential SMB demand headwinds, ongoing churn/downgrade risk, and the impact of AI-driven changes in search/traffic patterns for SMB acquisition. Macro improvements cited by management help offset some of these pressures, but the second-half guidance remains conservative in the face of ongoing consolidation activity in enterprise software.
- Key factors for investors to monitor: (1) AI Studio adoption metrics (credit consumption, self-serve conversion, and impact on ARPU/ACV); (2) NRR durability as downgrades and large renewals roll into H2; (3) progression of AI teammates and Smart Workflows Gallery usage across geographies; (4) international expansion results, particularly in Japan and EMEA; (5) channel/partner contributions and their impact on incremental ARR and retention.
Competitive Position
Company
Gross Margin
Operating Margin
Return on Equity
P/E Ratio
ASAN Focus
89.73%
N/A
N/A
N/A
BILL
81.60%
2.07%
0.88%
65.08%
DDOG
80.80%
1.96%
1.82%
249.35%
GTLB
88.30%
-22.50%
2.01%
157.93%
TEAM
82.70%
-4.47%
-3.13%
-415.87%
Gross Profit Margin
Operating Profit Margin
Return on Equity
P/E Ratio Comparison
Investment Outlook
Base-case: Asana is positioned for sustainable growth driven by AI Studio adoption, expanding cross-sell within the installed base, and international expansion. The QQ2 2026 results support a path to mid-to-high single-digit revenue growth with margin expansion as the company leverages its near-2x gross margin leverage and advanced cost controls. The updated FY2026 guidance reinforces management’s confidence in AI-enabled workflow adoption and the monetization of AI Studio across self-serve and enterprise segments. Net cash position and a sizable RPO backlog provide revenue visibility and optionality for long-term value creation via buybacks and potential strategic investments.
Upside scenarios include stronger-than-expected AI Studio adoption translating into higher ARR, faster conversion from basic to paid tiers, and greater expansion in international markets. Downside risks include persistent SMB demand headwinds, unforeseen turbocharging downgrades in key verticals, and macro deterioration that could temper enterprise IT budgets. Investors should monitor AI Studio utilization metrics (credit consumption, self-serve conversion, and workflow gallery adoption), NRR trajectory amid renewal cycles, and the pace of enterprise renewals in the tech vertical as leading indicators of long-term profitability and cash generation.
Key Investment Factors
Growth Potential
Massive potential from AI Studio expansion across departments (IT, marketing, operations) and the introduction of AI teammates embedded in Work Graph-enabled workflows. The company projects AI Studio to broaden ARR through self-serve growth and multi-product adoption (Foundational Service Plans, compliance, timesheets, budgeting) with ongoing pipeline expansion via partners and global go-to-market. Management signaled that AI Studio conversion and credit utilization will be key growth levers through FY2027.
Profitability Risk
Key risks include: (1) sustained SMB top-of-funnel headwinds and AI-driven search disruption reducing low-intent traffic; (2) potential downgrades in technology vertical renewals that could pressure NRR; (3) execution risk in translating AI pilots into enterprise-wide, high-velocity workflows; (4) competitive dynamics from consolidation plays (e.g., Jira/Smartsheet migrations) and broader software-stack transformations; (5) dependency on timely sales cycles and the ramp of AI-related GTM investments across geographies.
Financial Position
Healthy balance sheet with approximately $475 million in cash and short-term investments and a net cash/debt position of about $31 million. RPO at $507.3 million (up 29% YoY) indicates a robust revenue backlog, with 75% of RPO expected to be recognized within the next 12 months. Deferred revenue at $313.6 million (up 8% YoY) supports near-term revenue visibility. Strong gross margins (~90%) support operating leverage, contributing to a 7% non-GAAP operating margin in QQ2 and guiding 6–7% for FY2026. Share repurchases further enhance per-share value while offsetting dilution.
SWOT Analysis
Strengths
High gross margin around 90% (QQ2 2026: 89.7%) and strong gross margin stability.
NRR at 96% with a broad base of customers, indicating durable multi-product revenue.
AI Studio traction: ARR growth, self-serve expansion, and a growing gallery of AI workflows.