Asana (ASAN) IPO: What You Need to Know

Mark Zuckerberg's Harvard University roommate and Facebook, Inc. (FB) co-founder Dustin Moskovitz, together with early Facebook employee Justin Rosenstein, founded Asana, Inc. (ASAN) in 2008.

Launched at the end of the global financial crisis that ushered the great recession, Asana's mission is to help companies of different sizes and industries with collaboration and productivity tools. The company is going public at a time when most industries face the biggest challenges in terms of remote work coordination, productivity and digital transformation amid the ongoing COVID-19 pandemic.

"Today, most progress is severely impeded by the difficulty of coordinating teams and a pervasive lack of clarity about what needs to be done, when," Dustin Moscovitz said in a blog post on the day of the company's listing. "For me, working on Asana is an opportunity to solve the problems around 'work about work' for teams everywhere."

The company, which now serves clients in 190 countries, registered a little over 30 million Class A shares, with each Class A share entitled to one vote. Asana followed in the footsteps of its competitor Slack, which listed its shares on the NYSE through a direct listing in June 2019. Asana's Class B shareholders are entitled to 10 votes per share. Morgan Stanley, JPMorgan, Credit Suisse, and Jefferies advised on the transaction.

Financials

• Long road to profitability: reported net losses each fiscal year since 2008
• Net loss for fiscal year 2020 (as of Jan. 31): $118.6 million, more than doubling its $50.9 million net loss in fiscal year 2019
• Net loss for the past six months: $30.5 million as of July 31, 2019, compared to $76.9 million for the six months ended July 31, 2020
• Revenue in fiscal year 2020: $142.6 million, up 85.8% year over year
• Customers: 82,000 paying clients as of July 2020
• Growing market: $23 billion in 2020 to $32 billion in 2023, according to IDC estimates
• Shareholders: Benchmark Capital Partners, Generation IM Climate Solutions, and the Founders Fund have biggest percentages of Class B shares

Asana's leadership and directors hold 33% of its Class A shares and 68% of total voting power, according to the SEC filing. Benchmark has about 14 million, Generation IM Climate Solutions has 9.7 million, and Founders Fund has 8.7 million Class B shares.

Competitive Market 

In addition to Slack, Asana's competitors include Airtable, monday.com, Wrike, Trello, Atlassian Corporation Plc (TEAM), and Smartsheet Inc. (SMAR). Forrester's research identified Asana, Smartsheet, and Wrike among the top 10 market leaders in the segment of collaborative work management tool providers, based on the company's market strategy and offering.

"Asana seeks to optimize worker productivity by delivering capabilities that employ machine learning and the graph workspace to enable searches, filters, and algorithms to optimize prioritization of project and personal tasks," the report noted. 

Asana has attracted quite a few high-profile customers across a range of industries, including Roche Holding AG (RHHBY), New York University, Coursera, Uber Technologies, Inc. (UBER), and Vodafone Group Plc (VOD). However, at the end of July, Asana had only 82,000 paying clients compared to 3.5 million free users. Its conversion to paid customers rate grew from 3.6% in January 2018 to 4.7% in July 2020.

The Bottom Line

If Asana succeeds in convincing more paying customers that its software and tools are superior to the competition, the company will be on track to profitability and emerge as one of the most ambitious players in the collaboration and productivity space.