Following the lead of Zscaler Inc., which saw its share price drop in extended trading today after warning of a challenging macro environment, shares in work management software company Asana Inc. also fell following a similar warning, despite strong results and a good outlook in its latest earnings report.

For the quarter that ended July 31, Asana reported an adjusted loss per share of four cents, much improving on a loss of 34 cents in the same quarter of last year, on revenue of $162.5 million, up 20% year-over-year. Analysts had expected Asana to report a loss per share of 11 cents on revenue of $157.91 million.

Asan saw the number of customers spending $5,000 or more annually grow to 20,782 in the quarter, up 15% year-over-year and customers spending more than $100,000 annually grew to 553, up 20%. The company’s overall dollar-based net retention rate in the quarter was 105%, but the figure improves the more customers spend, with the retention rate for customers spending over $5,000 annually sitting at 110% and customers spending over $100,000 coming in at 125%.

Business highlights in the quarter included Asana announcing intelligent product capabilities that revolutionize how program management office teams drive strategic alignment and build smarter enterprise processes that scale up. The company also jumped on the generative artificial intelligence bandwagon, announcing Asana Intelligence in June. The service saw enterprise AI capabilities becoming core to Asana’s work management platform to empower organizations to accelerate decision-making, improve productivity and focus on what matters.

For the third quarter of fiscal 2024, Asana said it expects an adjusted loss of 10 to 11 cents per share on revenue of $163.5 million to $164.5 million. Analysts had been expecting a loss of 15 cents per share on revenue of $162.84 million.

For the full fiscal year, the company expects an adjusted loss of 39 to 42 cents per share on revenue or $642 million to $648 million versus an expected loss of 52 cents per share on revenue of $644.32 million.

With solid figures all around, typically, it would be expected that Asana’s share price would be up, but as the saying goes, the devil is in the details and the details, like Zscaler, were in the investor call.

In prepared comments, co-founder and Chief Executive Dustin Moskovitz warned of significant headwinds before handing over Anne Raimondi, the company’s chief operating officer and head of business, to elaborate further. Noting that the macro situation was at the top of everyone’s mind, Raimondi said, “Overall, the sentiment in our customer base has remained the same versus last quarter. While it hasn’t yet improved, it also has not gotten worse. Budgets continue to be scrutinized, seats are being optimized and decisions for expansion are being pushed out.”

But Raimondi added that “as customers continue to optimize budgets, we are also getting positive competitive signals, where customers are consolidating, removing incumbents and choosing Asana.”

Tim Wan, head of global finance, then added more fuel to concerns, writing, “While I’m pleased with our high-level results, some of the underlying drivers were not as strong as we had hoped. We continue to see headwinds from a macro standpoint and in our technology segment and you see that especially in our net dollar retention rate metrics. We also have more work to do as we develop our enterprise go-to-market muscle and continue transitioning upmarket.”

Image: Asana