"Contradictions Emerge in AI Studio's Renewal Impact and Tech Vertical Stability During Q3 2026 Earnings Call"

Date of Call: None provided

Financials Results

• Revenue: $201M, up 9% YOY, exceeded the high end of guidance
• EPS: $0.07 per diluted share (net income $17.9M)
• Gross Margin: 89%, expects to maintain 89%-90% in FY26
• Operating Margin: 8% non-GAAP operating margin, up 12 percentage points YOY

Guidance:

• Q4 FY26 revenue expected $204M to $206M (8%–9% YOY).
• Q4 non-GAAP operating income $14M to $16M (7%–8% operating margin).
• Q4 non-GAAP net income per diluted share $0.07 (assumes ~244M diluted shares).
• FY26 revenue guidance raised to $789M to $791M (~9% YOY).
• FY26 non-GAAP operating income $52.5M to $54.5M (~7% operating margin); FY26 non-GAAP EPS $0.25–$0.26.
• Reinvesting portion of outperformance into AI platform and product development.

Business Commentary:

* Revenue and Financial Performance: - Asana reported revenue of $201 million for Q3, growing 9% year-on-year, exceeding the high end of guidance. - The company generated non-GAAP operating income of $16.3 million, or an 8% operating margin, also exceeding guidance. - This growth was driven by disciplined cost management, reallocation of spending towards high leverage areas, and improvement in customer retention.

• AI Integration and Product Offering:
• Asana's AI Studio delivered another good quarter with solid growth in sequential bookings, including early traction with self-serve users.
• AI Teammates, expected to be generally available early next year, received strong positive feedback from initial 30 beta customers.

• The company is leveraging AI to modernize workflows and improve operational efficiency, which is resulting in increased adoption and customer engagement.

  

• Customer Retention and Expansion:

• Asana achieved a net dollar-based retention rate of 96%, with 97% for core customers and 96% for customers spending $100,000 or more.

• The improvement in retention is attributed to efforts in strengthening customer satisfaction and product experience, leading to a 12-month high in gross retention.

• Geographic and Vertical Expansion:

• International revenue grew 12% year-on-year, with strong performance in EMEA and Japan.
• Significant expansions and wins were noted in the financial services, healthcare, and public sector verticals, driving growth in these key sectors.
• Asana's ability to adapt to industry-specific solutions and strong execution in core markets contributed to this international and vertical expansion.

Sentiment Analysis:

Overall Tone: Positive

• "This was a solid quarter." Q3 revenue of $201M, up 9% YOY, "exceeding the high end of our guidance." Non-GAAP operating income $16.3M (8% margin) and adjusted free cash flow $13.4M. Company raised full‑year revenue guidance and highlighted AI Studio/AI Teammates momentum, improved NRR and expanding enterprise and international strength as drivers of confidence.

Q&A:

• Question from Matthew Bullock (Bank of America): Early learnings from the AI Studio self-serve launch — ARR contribution and any influence AI Studio had on renewals this year as a multiproduct company?
  Response: Self-serve AI Studio has broad early adoption across customer sizes, provides signal for sales, and is helping renewals by creating strategic, consumable use cases — management is focused on driving adoption/consumption.

• Question from Steven Enders (Citi): Within the tech vertical, given continued layoffs, why do you think we're near a trough and how will that impact Q4/next year?
  Response: Tech remains a headwind but is stabilizing; downgrades tend not to repeat, some large tech customers expanded, and AI Studio/Teammates create new budgets and consumption-based revenue that mitigate seat-based downgrades.

• Question from Steven Enders (Citi): What's changed in assumptions for the Q4 guide versus last quarter?
  Response: Raise driven by four factors: enterprise strength (15% growth in $100k+ customers), exceptional mid‑market strength, international growth (12% YOY), improved retention/NRR and sequential AI momentum.

• Question from Josh Baer (Morgan Stanley): As AI agents proliferate, will Asana be one of many agents or the orchestration layer — what differentiates you to win that opportunity?
  Response: Asana's differentiator is Work Graph context plus built‑in controls and checkpoints: AI Teammates operate as multiplayer, team‑level agents with governance, enabling orchestration across work rather than isolated copilots.

• Question from Robert Oliver (Baird): Where is the partner/channel ecosystem today, what inning are you in and where are you seeing traction?
  Response: Channel is in early innings with strong momentum; partners want to do more and Asana is focused on making partnerships consistent and successful rather than purely transactional.

• Question from Robert Oliver (Baird): On cost optimization — how much more run‑rate improvement is left and have infrastructure/cloud costs been fully optimized?
  Response: Work is not done; further margin upside remains via geo‑mix, vendor rationalization and sales/marketing productivity, while balancing reinvestment in AI; margin expansion will continue but likely at a slower pace than FY26.

• Question from Jackson Ader (KeyBanc): With retention rates improving but revenue growth easing, were expansions/upsell more muted this quarter?
  Response: Improvements were driven by fewer downgrades and select expansions (notably some large tech renewals); multiproduct offerings (FSP, AI Studio) are enabling flat/small uptick renewals and setting up future expansion.

• Question from Jackson Ader (KeyBanc): Can Asana both reaccelerate revenue and expand operating margins heading into 2027 and beyond?
  Response: Yes — management remains committed to both; multiproduct AI strategy (AI Studio/AI Teammates) is the key lever for revenue reacceleration while cost discipline supports multiyear margin expansion.

• Question from Patrick Walravens (Citizens Bank): How do you materially increase organizational velocity without backfiring?
  Response: Increase velocity through tighter decision‑making, an operating principle of rapid 'get to beta' launches with fast iteration, and a clear operating rhythm defining who does what by when.

• Question from Patrick Walravens (Citizens Bank): With Asana approaching $1B revenue, how high can margins go — could they reach the 20s?
  Response: With 89%–90% gross margins and continued efficiency, reaching operating margins in the '20s is within the realm of possibility over time, though growth/investments may temper near‑term pace.

• Question from Arsenije Matovic (Wolfe Research): How did large tech renewals in Q3 trend vs expectations, are you more confident for Q4, and is that reflected in updated guidance?
  Response: Q3 renewals outperformed expectations due to operational rigor and more products to sell; management is more confident into Q4 and the updated guidance reflects improved in‑quarter NRR, gross retention (notably in $100k+ cohort), multiproduct expansion and international/mid‑market strength.

Contradiction Point 1

AI Studio's Role in Renewals

It highlights a shift in the emphasis on how AI Studio has been benefiting renewals, which could impact the perception of the product's value and the company's strategic direction.

Can you share updates on the self-serve AI Studio launch? How is AI Studio impacting renewals as a multiproduct company's first renewal cycle? - Matthew Bullock (Bank of America)

20251203-2026 Q3: AI Studio has been beneficial in renewal conversations as it provides more to sell to customers and helps with strategic planning. - Anne Raimondi(COO & Head of Business)

What early learnings have you observed from the self-serve AI Studio launch? How is AI Studio impacting renewals? - Matthew Bullock (BofA Securities)

2026Q3: The self-serve experience also helps the sales team prioritize outreach. AI Studio has been beneficial in renewal conversations as it provides more to sell to customers and helps with strategic planning. - Anne Raimondi(COO & Head of Business)

Contradiction Point 2

Tech Vertical Stability and Impact on Q4

It involves differing assessments of the stability in the tech vertical and its potential impact on future quarters, which could influence expectations regarding the company's financial performance.

What factors are driving confidence in the tech vertical's stabilization, and how will this affect Q4 and next year? - Steven Enders (Citi)

20251203-2026 Q3: We see tech vertical stabilizing. Tech customers are renewing and expanding, with no further downgrades. AI Studio mitigates seat downgrades by opening new budgets and creating new use cases. We see improved retention and stability in demand. - Daniel Rogers(CEO)

What is the current outlook for the tech vertical with recent layoffs, and its impact on Q4 and next year? - Steven Enders (Citigroup Inc.)

2026Q3: We see tech vertical stabilizing, though it remains a headwind. We don't expect further downgrades following the initial one. Some large tech customers expanded upon renewal. - Daniel Rogers(CEO & Director)

Contradiction Point 3

AI Studio Impact on Renewals

It involves the impact of AI Studio on renewals, which directly affects the company's revenue and growth prospects.

Can you share details on the self-serve AI Studio launch? How is AI Studio impacting renewals as the first multiproduct renewal cycle? - Matthew Bullock(Bank of America)

20251203-2026 Q3: AI Studio helps in strategic conversations and advising customers on AI strategy. We're pleased with its impact on renewals. - Anne Raimondi(COO)

What is the visibility on larger renewal deals in the second half and how is AI Studio preventing downgrades? - Matthew Bullock(Bank of America)

2026Q2: We saw our largest ever tech knowledge base renewals in Q2, and while a few large logos did come down in terms of the number of seats, we also saw more customers staying on for additional products and solutions. - Anne Raimondi(COO)