Asana Earnings Call: AI Momentum and Margin Strength

Asana, Inc. ((ASAN)) has held its Q4 earnings call. Read on for the main highlights of the call.

Asana’s latest earnings call struck an optimistic tone, as management balanced solid profitability gains and strong enterprise demand with a cautious stance on growth. Executives emphasized accelerating traction in AI products and expanding margins, arguing these positives more than offset ongoing pressure in self-serve channels and net retention that remains below 100%.

Steady Q4 Revenue Growth

Asana reported Q4 revenue of $205.6 million, up 9% year over year, signaling resilient demand despite macro and go-to-market headwinds. While not a hypergrowth print, management framed the performance as a solid base from which to drive operating leverage and expand enterprise adoption.

Full-Year Growth and Core Customer Expansion

For the full fiscal year, revenue reached $790.8 million, also up 9% year over year, supported by the addition of more than 1,800 Core customers. Core customers now total 25,928 and contributed 76% of Q4 revenue, with Core revenue growing 10% year over year as the company deepens wallet share in this segment.

Profitability and Margin Expansion Take Center Stage

Non-GAAP operating income in Q4 reached $18.2 million, translating to a 9% operating margin and marking a ten-point improvement from a year ago. Adjusted free cash flow of $25.7 million, or a 13% margin, underscored improved unit economics, with non-GAAP gross margin holding near 88% even as new products launch.

Improved Cost Efficiency Across Functions

Management highlighted notable cost discipline, with R&D expense falling to 23% of revenue from 29% a year prior. Sales and marketing declined to 43% of revenue and G&A to 13%, reflecting a deliberate shift toward higher-leverage initiatives while sustaining investment in growth and innovation.

AI Studio and AI Teammates Gain Early Traction

AI Studio exited the year with more than $6 million in annual recurring revenue and grew over 50% quarter over quarter in Q4, signaling strong early uptake. Over 200 customers have joined the AI Teammates beta, and Asana expects AI offerings to account for nearly 15% of new ARR in FY 2027 while adding about $10 million of incremental AI R&D spend.

Enterprise Demand and RPO Acceleration

Total remaining performance obligations reached $524.8 million, up 22% year over year, with current RPO growing 17%, pointing to healthy forward revenue visibility. Management also called out accelerating billings and top-10 customer renewals delivering net retention above 100%, reinforcing strength at the high end of the customer base.

Growth in Large Customers

Asana ended the year with 817 customers spending at least $100,000 annually, a cohort that grew 13% year over year. The company added more than 90 such customers during the year and highlighted large seat expansions and wins with global leaders in data analytics and design, underscoring its move upmarket.

International and Non-Tech Verticals Diversify Growth

International revenue grew 11% year over year, outpacing the company average and supported by wins across Europe, Japan, and Australia. Non-tech verticals such as manufacturing, energy and utilities, retail, consumer goods, and healthcare grew in the teens, while early government-sector deals began to materialize.

Balance Sheet Strength and Share Buybacks

The company ended the quarter with roughly $434 million in cash and marketable securities, providing a solid liquidity cushion. Asana repurchased $58 million of stock, or 4.5 million shares, in Q4, and the board boosted the buyback authorization by $160 million, leaving nearly $200 million available for future repurchases.

PLG and Self-Serve Headwinds Weigh on ARR

Product-led growth and self-serve small-business acquisition remain pressured by large language model-driven changes in search and paid media channels. Management expects these dynamics to shave about two percentage points off ARR growth in FY 2027 and has chosen not to model a recovery this year, signaling a measured outlook.

Net Retention Still Below 100%

Overall dollar-based net retention came in at 96%, with Core customers at 97% and the $100,000-plus cohort at 96%, all still below the 100% mark investors typically prefer. However, the company noted that in-quarter net retention improved for the third straight quarter, suggesting gradual stabilization even as the trailing four-quarter metric lags.

Limited Near-Term Revenue from AI Teammates

Despite strong customer interest, AI Teammates remain in beta and are expected to contribute little revenue in the first half of FY 2027. Management anticipates a more meaningful ramp in Q4, which caps near-term upside but could set up a stronger exit rate if adoption trends continue.

Tech Vertical Uncertainty and SMB Recovery Pace

The technology vertical stabilized to flat year over year in Q4 after previous declines, but executives cautioned it is too early to call a durable bottom and did not assume continued improvement in guidance. Similarly, while top-of-funnel and web conversion have improved sequentially, current product and go-to-market tweaks are not yet enough to fully offset PLG challenges, implying a gradual SMB recovery.

Gross Margin Impact from New Product Launches

Gross margin saw a modest impact from launch timing and upfront expenditures related to new offerings such as Asana’s government-focused product and AI Teammates. Even so, management expects gross margin to stay in the high-80s as it continues to invest in product rollouts while maintaining strong unit economics.

Guidance Points to Slower but Profitable Growth

For Q1 FY 2027, Asana guided revenue to $202.5 million to $204.5 million, up roughly 8.1% to 9.2% year over year, with non-GAAP operating margin in the high single digits. For the full year, revenue is expected between $850 million and $858 million, implying 7.5% to 8.5% growth, at least a 9.5% non-GAAP operating margin, and high-80s gross margin, assuming modest NRR improvement, a two-point ARR drag from PLG challenges, and minimal AI Teammates contribution until late in the year.

FY 2027 growth will be slightly slower than FY 2026’s 9% pace, reflecting conservative assumptions around retention and PLG, but profitability is set to improve further as AI investments scale. Management also expects AI-related offerings to represent about 15% of new ARR, indicating growing confidence that AI can become a meaningful driver of the model over time.

Asana’s earnings call painted a picture of a company transitioning from pure growth to a more balanced growth-and-profitability profile driven by enterprise customers and AI innovation. While PLG headwinds, sub-100% net retention, and sector uncertainty remain risks, investors heard a clear message that margin expansion, disciplined capital allocation, and early AI traction are reshaping the long-term investment case.