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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________________________________________________
FORM 10-Q
___________________________________________________________________
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO

Commission File Number 001-39495
___________________________________________________________________
Asana, Inc.
(Exact name of registrant as specified in its Charter)
___________________________________________________________________
Delaware
26-3912448
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
633 Folsom Street, Suite 100
San Francisco, California 94107
(Address of principal executive offices and Zip Code)
(415) 525-3888
(Registrant’s telephone number, including area code)
___________________________________________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, $0.00001 par value per share
ASAN
New York Stock Exchange
Long-Term Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No ☒
As of August 31, 2021, the number of shares of the registrant’s Class A common stock outstanding was 95,138,121 and the number of shares of the registrant’s Class B common stock outstanding was 88,762,762.




TABLE OF CONTENTS
Page





SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risk and uncertainties. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about: our ability to grow or maintain our dollar-based net retention rate, expand usage of our platform within organizations, and sell subscriptions to our platform; our ability to convert individuals, teams, and organizations on our free and trial versions into paying customers; the timing and success of new features, integrations, capabilities, and enhancements by us, or by our competitors to their products, or any other changes in the competitive landscape of our market; our ability to achieve widespread acceptance and use of our platform; growth in the work management market; the amount and timing of operating expenses and capital expenditures, as well as entry into operating leases, that we may incur to maintain and expand our business and operations and to remain competitive; our focus on growth to drive long-term value; the timing of expenses and our expectations regarding our cost of revenues, gross margin, and operating expenses; the effect of uncertainties related to the global COVID-19 pandemic on our business, results of operations, and financial condition; expansion of our sales and marketing activities; our protections against security breaches, technical difficulties, or interruptions to our platform; our ability to successfully defend litigation brought against us, potential dispute-related settlement payments, or other litigation-related costs; our expectations about additional hiring; potential pricing pressure as a result of competition or otherwise; anticipated fluctuations in foreign currency exchange rates; potential costs and the anticipated timing of expenses related to the acquisition of businesses, talent, technologies, or intellectual property, including potentially significant amortization costs and possible write-downs; and general economic conditions in either domestic or international markets, including the societal and economic impact of the COVID-19 pandemic, including on the rate of global IT spending, and geopolitical uncertainty and instability.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and operating results. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events, and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.
In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that such information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures, or investments.
You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the Securities and Exchange Commission (the “SEC”) as exhibits to this



Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance, and events and circumstances may be materially different from what we expect.

Additional Information
Unless the context otherwise requires, all references in this Quarterly Report on Form 10-Q to “we,” “us,” “our,” “our company,” and “Asana” refer to Asana, Inc. and its consolidated subsidiaries. The Asana design logo, “Asana,” and our other registered or common law trademarks, service marks, or trade names appearing in this Quarterly Report on Form 10-Q are the property of Asana, Inc. Other trade names, trademarks, and service marks used in this Quarterly Report on Form 10-Q are the property of their respective owners.



SELECT RISK FACTORS AFFECTING OUR BUSINESS
Investing in our common stock involves numerous risks, including the risks described in “Part II—Other Information, Item 1A. Risk Factors” of this Quarterly Report on Form 10-Q. Below are some of these risks, any one of which could materially adversely affect our business, financial condition, results of operations, and prospects.
We have experienced rapid growth in recent periods, and our recent growth rates may not be indicative of our future growth.
We have a limited operating history at our current scale, which makes it difficult to evaluate our future prospects and may increase the risk that we will not be successful.
We have a history of losses and may not be able to achieve profitability or, if achieved, sustain profitability.
We believe our long-term value as a company will be greater if we focus on growth, which may negatively impact our profitability in the near and medium term.
Our quarterly results may fluctuate significantly and may not meet our expectations or those of investors or securities analysts.
The ongoing COVID-19 pandemic has affected how we and our customers operate and has adversely affected the global economy, and the duration and extent to which this will affect our business, future results of operations, and financial condition remains uncertain.
If we are unable to attract new customers, convert individuals, teams, and organizations using our free and trial versions into paying customers, and expand usage within organizations or develop new features, integrations, capabilities, and enhancements that achieve market acceptance, our revenue growth would be harmed.
If the market for work management solutions develops more slowly than we expect or declines, our business would be adversely affected, and the estimates of market opportunity and forecasts of market growth may prove to be inaccurate.
We operate in a highly competitive industry, and competition presents an ongoing threat to the success of our business.
Failure to effectively develop and expand our direct sales capabilities would harm our ability to expand usage of our platform within our customer base and achieve broader market acceptance of our platform.
The loss of one or more of our key personnel, in particular our co-founder, President, Chief Executive Officer, and Chair, Dustin Moskovitz, would harm our business.
We must continue to attract and retain highly qualified personnel in very competitive markets to continue to execute on our business strategy and growth plans.
Our failure to protect our sites, networks, and systems against security breaches, or otherwise to protect our confidential information or the confidential information of our users, customers, or other third parties, would damage our reputation and brand, and substantially harm our business and results of operations.
If we fail to manage our technical operations infrastructure, or experience service outages, interruptions, or delays in the deployment of our platform, our results of operations may be harmed.
If we are unable to ensure that our platform interoperates with a variety of software applications that are developed by others, including our integration partners, we may become less competitive and our results of operations may be harmed.
Our culture has contributed to our success, and if we cannot maintain this culture as we grow, we could lose the high employee engagement fostered by our culture, which could harm our business.



Our business depends on a strong brand, and if we are not able to maintain and enhance our brand, our ability to expand our base of customers may be impaired, and our business and results of operations will be harmed.
We rely on third parties maintaining open marketplaces to distribute our mobile application. If such third parties interfere with the distribution of our platform, our business would be adversely affected.
We receive, process, store, and use business and personal information, which subjects us to governmental regulation and other legal obligations related to data protection and security, and our actual or perceived failure to comply with such obligations could harm our business and expose us to liability.
Sales to customers outside the United States and our international operations expose us to risks inherent in international sales and operations.
The trading price of our Class A common stock may be volatile and may decline regardless of our operating performance.
The dual class structure of our common stock has the effect of concentrating voting control with those stockholders who held our capital stock prior to the listing of our Class A common stock on the New York Stock Exchange (“NYSE”), including our founders, directors, executive officers, and their respective affiliates, limiting or precluding your ability to influence corporate matters.

Sales of substantial amounts of our Class A common stock in the public markets, or the perception that sales might occur, could cause the market price of our Class A common stock to decline.
If we are unable to adequately address these and other risks we face, our business may be harmed.





PART I—FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
ASANA, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
July 31, 2021January 31, 2021
Assets
Current assets
Cash and cash equivalents$270,315 $259,878 
Marketable securities103,270 126,396 
Accounts receivable, net 34,612 32,194 
Prepaid expenses and other current assets26,999 27,295 
Total current assets435,196 445,763 
Property and equipment, net101,337 74,436 
Operating lease right-of-use assets177,971 182,924 
Investments, noncurrent8,739 19,125 
Other assets12,265 8,871 
Total assets$735,508 $731,119 
Liabilities and Stockholders’ Equity (Deficit)
Current liabilities
Accounts payable$6,013 $9,599 
Accrued expenses and other current liabilities60,020 41,616 
Deferred revenue, current135,970 103,875 
Operating lease liabilities, current5,577 8,386 
Total current liabilities207,580 163,476 
Term loan, net36,604 29,508 
Convertible notes, net—related party 351,161 
Operating lease liabilities, noncurrent207,984 196,802 
Other liabilities4,076 2,961 
Total liabilities456,244 743,908 
Commitments and contingencies (Note 8)
Stockholders' equity (deficit)
Common stock2 2 
Additional paid-in capital949,784 528,616 
Accumulated other comprehensive income (loss)(63)39 
Accumulated deficit (670,459)(541,446)
Total stockholders’ equity (deficit)279,264 (12,789)
Total liabilities and stockholders’ equity (deficit)$735,508 $731,119 

See accompanying Notes to Condensed Consolidated Financial Statements.




1


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2021202020212020
Revenues$89,478 $52,024 $166,151 $99,730 
Cost of revenues 9,869 7,021 17,783 13,227 
Gross profit79,609 45,003 148,368 86,503 
Operating expenses:
Research and development 48,454 25,959 88,421 48,342 
Sales and marketing 63,930 38,822 120,714 74,913 
General and administrative 27,276 13,806 49,266 25,917 
Total operating expenses139,660 78,587 258,401 149,172 
Loss from operations(60,051)(33,584)(110,033)(62,669)
Interest income and other income (expense), net(328)1,045 (320)1,399 
Interest expense(7,351)(8,364)(17,725)(15,355)
Loss before provision for income taxes(67,730)(40,903)(128,078)(76,625)
Provision for income taxes625 163 935 286 
Net loss$(68,355)$(41,066)$(129,013)$(76,911)
Net loss per share:
Basic and diluted$(0.40)$(0.54)$(0.78)$(1.01)
Weighted-average shares used in calculating net loss per share:
Basic and diluted170,60076,381166,41276,015

See accompanying Notes to Condensed Consolidated Financial Statements.
2


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
(unaudited)
Three Months Ended July 31,Six Months Ended July 31,
2021202020212020
Net loss$(68,355)$(41,066)$(129,013)$(76,911)
Other comprehensive income (loss):
Net unrealized gains (losses) on marketable securities4 (38)(7)(21)
Change in foreign currency translation adjustments(130)133 (95)75 
Comprehensive loss$(68,481)$(40,971)$(129,115)$(76,857)

See accompanying Notes to Condensed Consolidated Financial Statements.
3


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)

Three Months Ended July 31, 2021
Redeemable Convertible Preferred StockCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive Income (Loss)
Accumulated DeficitTotal
Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balances at April 30, 2021 $ 163,471 $2 $554,340 $63 $(602,104)$(47,699)
Issuance of common stock upon the exercise of options— — 2,656 — 5,965 — — 5,965 
Vesting of early exercised stock options— — — — 663 — — 663 
Repurchases of common stock— — (4)— — — — — 
Issuance of common stock upon the vesting and settlement of restricted stock units, net of shares withheld for taxes— — 589 — — — — — 
Issuance of common stock under employee share purchase plan— — — — — — — — 
Issuance of common stock upon conversion of convertible notes—related party— — 17,013 — 368,459 — — 368,459 
Stock-based compensation expense— — — — 20,357 — — 20,357 
Net unrealized gain on marketable securities— — — — — 4 — 4 
Foreign currency translation adjustments— — — — — (130)— (130)
Net loss— — — — — — (68,355)(68,355)
Balances at July 31, 2021 $ 183,725 $2 $949,784 $(63)$(670,459)$279,264 

See accompanying Notes to Condensed Consolidated Financial Statements.

4




ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT)-CONTINUED
(in thousands)
(unaudited)

Three Months Ended July 31, 2020
Redeemable Convertible Preferred StockCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive Income (Loss)
Accumulated Deficit
Total
Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balances at April 30, 202073,577 $250,581 77,159 $1 $190,112 $(143)$(365,581)$(175,611)
Issuance of common stock upon the exercise of options— — 565 — 682 — — 682 
Vesting of early exercised stock options— — — — 894 — — 894 
Issuance of common stock upon the vesting and settlement of restricted stock units, net of shares withheld for taxes— — 14 — (120)— — (120)
Stock-based compensation expense— — — — 5,449 — — 5,449 
Net unrealized loss on marketable securities— — — — — (38)— (38)
Deemed capital contribution on issuance of convertible note—related party— — — — 37,973 — — 37,973 
Foreign currency translation adjustments— — — — — 133 — 133 
Net loss— — — — — — (41,066)(41,066)
Balances at July 31, 202073,577 $250,581 77,738 $1 $234,990 $(48)$(406,647)$(171,704)


See accompanying Notes to Condensed Consolidated Financial Statements.

5


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT)
(in thousands)
(unaudited)

Six Months Ended July 31, 2021
Redeemable Convertible Preferred StockCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive Income (Loss)
Accumulated DeficitTotal
Stockholders’Equity (Deficit)
SharesAmountSharesAmount
Balances at January 31, 2021 $ 161,480 $2 $528,616 $39 $(541,446)$(12,789)
Issuance of common stock upon the exercise of options — — 4,036 — 8,815 — — 8,815 
Vesting of early exercised stock options — — — — 1,305 — — 1,305 
Repurchases of common stock — — (10)— — — — — 
Issuance of common stock upon the vesting and settlement of restricted stock units, net of shares withheld for taxes — — 956 — — — — — 
Issuance of common stock under employee share purchase plan— — 250 — 6,127 — — 6,127 
Issuance of common stock upon conversion of convertible notes—related party— — 17,013 — 368,459 — — 368,459 
Stock-based compensation expense — — — — 36,462 — — 36,462 
Net unrealized loss on marketable securities — — — — — (7)— (7)
Foreign currency translation adjustments — — — — — (95)— (95)
Net loss — — — — — — (129,013)(129,013)
Balances at July 31, 2021 $ 183,725 $2 $949,784 $(63)$(670,459)$279,264 

See accompanying Notes to Condensed Consolidated Financial Statements.

6




ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF REDEEMABLE CONVERTIBLE PREFERRED STOCK
AND STOCKHOLDERS’ EQUITY (DEFICIT)-CONTINUED
(in thousands)
(unaudited)

Six Months Ended July 31, 2020
Redeemable Convertible Preferred StockCommon StockAdditional
Paid-In
Accumulated
Other
Comprehensive Income (Loss)
Accumulated DeficitTotal
Stockholders’ Equity (Deficit)
SharesAmountSharesAmount
Balances at January 31, 202073,577 $250,581 76,688 $1 $184,522 $(102)$(329,736)$(145,315)
Issuance of common stock upon the exercise of options — — 1,030 — 1,428 — — 1,428 
Vesting of early exercised stock options— — — — 1,731 — — 1,731 
Issuance of common stock upon the vesting and settlement of restricted stock units, net of shares withheld for taxes— — 20 — (186)— — (186)
Stock-based compensation expense— — — — 9,522 — — 9,522 
Net unrealized loss on marketable securities— — — — — (21)— (21)
Deemed capital contribution on issuance of convertible note—related party— — — — 37,973 — — 37,973 
Foreign currency translation adjustments— — — — — 75 — 75 
Net loss — — — — — — (76,911)(76,911)
Balances at July 31, 202073,577 $250,581 77,738 $1 $234,990 $(48)$(406,647)$(171,704)


See accompanying Notes to Condensed Consolidated Financial Statements.
7


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
Six Months Ended July 31,
20212020
Cash flows from operating activities
Net loss$(129,013)$(76,911)
Adjustments to reconcile net loss to net cash used in operating activities:
Allowance for doubtful accounts766 1,120 
Depreciation and amortization2,372 1,516 
Gain on sale of property and equipment38  
Amortization of deferred contract acquisition costs3,622 1,585 
Stock-based compensation expense36,412 9,358 
Net accretion of discount on marketable securities586 (53)
Non-cash lease expense8,780 6,585 
Amortization of discount on convertible notes and term loan issuance costs10,636 9,614 
Non-cash interest expense6,670 5,739 
Changes in operating assets and liabilities:
Accounts receivable(1,000)(4,752)
Prepaid expenses and other current assets(5,571)(4,377)
Other assets(3,511)(1,362)
Accounts payable1,692 1,541 
Accrued expenses and other current liabilities13,350 3,498 
Deferred revenue33,670 10,939 
Operating lease liabilities4,541 (4,310)
Net cash used in operating activities(15,960)(40,270)
Cash flows from investing activities
Purchases of marketable securities(48,470) 
Sales of marketable securities351  
Maturities of marketable securities81,039 38,942 
Purchases of property and equipment(29,557)(12,401)
Sales of property and equipment20  
Capitalized internal-use software (296)(818)
Net cash provided by investing activities3,087 25,723 
Cash flows from financing activities
Proceeds from term loan, net of issuance costs9,000 2,915 
Repayment of term loan(667) 
Proceeds from issuance of convertible notes—related party 150,000 
Taxes paid related to net share settlement of equity awards (186)
Repurchases of common stock(36) 
Proceeds from exercise of stock options8,968 1,751 
Proceeds from employee stock purchase plan6,127  
Net cash provided by financing activities23,392 154,480 
Effect of foreign exchange rates on cash and cash equivalents and restricted cash(82)64 
Net increase in cash, cash equivalents, and restricted cash10,437 139,997 
Cash, cash equivalents, and restricted cash
Beginning of period259,878 310,677 
End of period$270,315 $450,674 
See accompanying Notes to Condensed Consolidated Financial Statements.
8


ASANA, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(in thousands)
(unaudited)
Six Months Ended July 31,
20212020
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents$270,315 $449,519 
Restricted cash 1,155 
Total cash, cash equivalents, and restricted cash $270,315 $450,674 
Supplemental cash flow data
Cash paid for income taxes$686 $82 
Cash paid for interest$386 $ 
Supplemental non-cash investing and financing information
Purchase of property and equipment in accounts payable and accrued expenses$9,477 $7,508 
Vesting of early exercised stock options$1,305 $1,731 
Issuance of common stock upon conversion of convertible notes—related party$368,459 $ 

See accompanying Notes to Condensed Consolidated Financial Statements.
9

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 1.    Organization
Organization and Description of Business
Asana, Inc. (“Asana” or the “Company”) was incorporated in the state of Delaware on December 16, 2008. Asana is a work management platform that helps teams orchestrate work, from daily tasks to cross-functional strategic initiatives. The Company is headquartered in San Francisco, California.
Note 2.    Basis of Presentation and Summary of Significant Accounting Policies
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles in the United States of America (“GAAP”) and include the accounts of the Company’s wholly-owned subsidiaries. All intercompany transactions and balances have been eliminated on consolidation.
The unaudited condensed consolidated balance sheet as of January 31, 2021 included herein was derived from the audited financial statements as of that date, but does not include all disclosures, including certain notes required by GAAP on an annual reporting basis. In management's opinion, the unaudited condensed consolidated financial statements reflect all normal recurring adjustments necessary to state fairly the balance sheet, statements of comprehensive loss, statements of redeemable convertible preferred stock and stockholders' equity (deficit), and statements of cash flows for the interim periods, but are not necessarily indicative of the results of operations to be anticipated for the full fiscal year or any future period.
These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 30, 2021.
Direct Listing
On September 30, 2020, the Company completed a direct listing of its Class A common stock (the “Direct Listing”) on the NYSE. The Company incurred fees related to financial advisory service, audit, and legal expenses in connection with the Direct Listing and recorded general and administrative expenses of $1.1 million and $2.2 million for the three and six months ended July 31, 2020, respectively. The Company recorded no general and administrative expenses in connection with the Direct Listing for the three and six months ended July 31, 2021. Prior to the Direct Listing, all 73.6 million outstanding shares of redeemable convertible preferred stock were converted into an equivalent number of shares of Class B common stock.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported and disclosed in the consolidated financial statements and accompanying notes. Estimates and assumptions reflected in the consolidated financial statements include, but are not limited to, revenue recognition, the useful lives and carrying values of long-lived assets, the fair value of the Convertible Notes (as defined in Note 6), the fair value of common stock for periods prior to the Direct Listing, stock-based compensation expense, the period of benefit for deferred contract acquisition costs, and income taxes. Actual results could differ from those estimates.
Risks and Uncertainties
As a result of the COVID-19 pandemic, the Company has temporarily closed its headquarters and other physical offices, required its employees and contractors to work remotely, and implemented travel restrictions, all of which represent a significant disruption in how the Company operates its business. The operations of its partners and customers have likewise been disrupted. While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment and mitigation actions, the emergence of variant strains of the virus, and the availability and widespread use of effective vaccines, it has already had an adverse effect on the global economy and the ultimate societal and economic impact of the COVID-19 pandemic remains unknown. In particular, the conditions caused by this pandemic could affect the rate of global IT spending and could adversely affect demand for the Company’s
10

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
platform, lengthen the Company’s sales cycles, reduce the value or duration of subscriptions, negatively impact collections of accounts receivable, reduce expected spending from new customers, cause some of the Company’s paying customers to go out of business, limit the ability of the Company’s direct sales force to travel to customers and potential customers, and affect contraction or attrition rates of the Company’s customers, all of which could adversely affect the Company’s business, results of operations, and financial condition. As of the date of issuance of the financial statements, the Company is not aware of any specific event or circumstance related to COVID-19 that would require it to update its estimates or judgments or adjust the carrying value of its assets or liabilities. Actual results could differ from those estimates and any such differences may be material to the condensed consolidated financial statements. 
Concentration of Credit Risk
Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash, cash equivalents, and marketable securities. Substantially all the Company’s cash and cash equivalents are held by four financial institutions that management believes are of high credit quality. Such deposits may, at times, exceed federally insured limits. Cash equivalents are invested in highly rated money market funds.
A large portion of the Company’s customers authorize the Company to bill their credit card accounts through the Company’s third-party payment processing partners, presenting additional credit risk. For the three and six months ended July 31, 2021 and July 31, 2020, there was no individual customer that accounted for 10% or more of the Company’s revenues. The Company had no individual customer account for more than 10% of accounts receivable as of July 31, 2021, and had one customer account for approximately 13% of accounts receivable as of January 31, 2021.
Fair Value of Financial Instruments
The carrying amounts reflected in the condensed consolidated balance sheets for cash equivalents, accounts receivable, and accounts payable approximate their respective fair values due to the short maturities of those instruments. Available-for-sale marketable securities are recorded at fair value on the condensed consolidated balance sheets.
The Company accounts for certain of its financial assets at fair value. In determining and disclosing fair value, the Company uses a fair value hierarchy established by U.S. GAAP. The guidance defines fair value as an exit price, representing the amount that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. As a basis for considering such assumptions, the Company utilizes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:
Level 1—Observable inputs such as quoted prices in active markets.
Level 2—Inputs other than the quoted prices in active markets that are observable either directly or indirectly.
Level 3—Unobservable inputs in which there is little or no market data and that are significant to the fair value of the assets or liabilities.
In determining fair value, the Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible as well as considers counterparty credit risk in its assessment of fair value.
Recently Issued Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU No. 2020-06, Accounting for Convertible Instruments and Contracts in an Entity's Own Equity, which simplifies the accounting for certain convertible instruments, amends the guidance on derivative scope exceptions for contracts in an entity's own equity, and modifies the guidance on diluted earnings per share calculations as a result of these changes. The guidance is effective for the Company’s fiscal years beginning after February 1, 2022. The Company is currently evaluating the impact of adopting ASU 2020-06.
11

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Recently Adopted Accounting Pronouncements
On February 1, 2021, the Company adopted ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires the measurement and recognition of expected credit losses for financial assets held at amortized costs, including accounts receivables. It also eliminates the concept of other-than-temporary impairment and requires credit losses related to available-for-sale debt securities to be recorded through an allowance for credit losses rather than as a reduction in the amortized cost basis of the securities. These changes will result in more timely recognition of credit losses. The adoption of the guidance did not have a material impact on the Company’s condensed consolidated financial statements.
On February 1, 2021, the Company adopted ASU No. 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40), Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments in ASU No. 2018-15 amend the definition of a hosting arrangement and requires a customer in a hosting arrangement that is a service contract to capitalize certain costs as if the arrangement were an internal-use software project. The Company adopted ASU No. 2018-15 as of February 1, 2021 using a prospective transition approach.
Note 3.    Revenues
Deferred Revenue and Remaining Performance Obligations
Total deferred revenue was $139.6 million as of July 31, 2021, of which $3.6 million is presented within other liabilities, as a noncurrent liability, in the condensed consolidated balance sheet.
The Company recognized $30.7 million and $18.9 million of revenues during the three months ended July 31, 2021 and 2020, respectively, that were included in the deferred revenue balances at January 31, 2021 and 2020, respectively. The Company recognized $75.8 million and $46.5 million of revenues during the six months ended July 31, 2021 and 2020, respectively, that were included in the deferred revenue balances at January 31, 2021 and 2020, respectively.
As of July 31, 2021, the Company's remaining performance obligations from subscription contracts was $171.1 million, of which the Company expects to recognize approximately 86% as revenues over the next 12 months and the remainder thereafter.
Deferred Contract Acquisition Costs
Deferred contract acquisition costs are amortized over a period of benefit of three years. The period of benefit was estimated by considering factors such as historical customer attrition rates, the useful life of the Company’s technology, and the impact of competition in the software-as-a-service industry.
The following table summarizes the activity of deferred contract acquisition costs (in thousands):
Three Months Ended July 31,Six Months Ended July 31,
2021202020212020
Beginning balance$14,586 $6,647 $12,093 $6,107 
Capitalization of contract acquisition costs4,381 2,094 8,503 3,345
Amortization of deferred contract acquisition costs(1,993)(874)(3,622)(1,585)
Ending balance$16,974 $7,867 $16,974 $7,867 
Deferred contract acquisition costs, current$8,055 $3,732 $8,055 $3,732 
Deferred contract acquisition costs, noncurrent8,919 4,135 8,919 4,135 
Total deferred contract acquisition costs$16,974 $7,867 $16,974 $7,867 
12

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
Note 4.    Fair Value Measurements
The following table summarizes, for assets and liabilities measured at fair value, the respective fair value and classification by level of input within the fair value hierarchy (in thousands):
July 31, 2021
Level 1Level 2Level 3Total
Current Assets
Cash equivalents
Money market funds$230,250 $ $ $230,250 
Total cash equivalents$230,250 $ $ $230,250 
Marketable securities
U.S. treasury bonds$20,033 $ $ $20,033 
Commercial paper 48,710  48,710 
Corporate bonds 31,821  31,821 
Certificate of deposit 2,706  2,706 
Total marketable securities$20,033 $83,237 $ $103,270 
Non-current Assets
Corporate bonds 8,739  8,739 
Total assets$250,283 $91,976 $ $342,259 
January 31, 2021
Level 1Level 2Level 3Total
Current Assets
Cash equivalents
Money market funds$207,187 $ $ $207,187 
Commercial paper 2,230  2,230 
Certificates of deposit 1,050  1,050 
Total cash equivalents$207,187 $3,280 $ $210,467 
Marketable securities
U.S. treasury bonds$40,245 $ $ $40,245 
Commercial paper 43,159 43,159 
Corporate bonds 40,286 40,286 
Certificate of deposit 2,706 2,706 
Total marketable securities$40,245 $86,151 $ $126,396 
Non-current Assets
Corporate bonds 19,125  19,125 
Total assets$247,432 $108,556 $ $355,988 
13

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)

The following table summarizes the Company's investments in marketable securities on the condensed consolidated balance sheets (in thousands):
July 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross Unrealized LossesEstimated
Fair Value
Current Assets
U.S. treasury bonds$20,032 $1 $ $20,033 
Commercial paper48,709 1  48,710 
Corporate bonds31,815 8 (2)31,821 
Certificates of deposit2,705 1  2,706 
Total marketable securities$103,261 $11 $(2)$103,270 
Non-current Assets
Corporate bonds8,731 9 (1)8,739 
Total assets$111,992 $20 $(3)$112,009 

January 31, 2021
Amortized
Cost
Gross
Unrealized
Gains
Gross Unrealized Losses
Estimated
Fair Value
Current Assets
U.S. treasury bonds$40,236 $9 $ $40,245 
Commercial paper43,158 2 (1)43,159 
Corporate bonds40,278 9 (1)40,286 
Certificates of deposit2,705 1  2,706 
Total marketable securities$126,377 $21 $(2)$126,396 
Non-current Assets
Corporate bonds19,120 8 (3)19,125 
Total assets$145,497 $29 $(5)$145,521 
The Company periodically evaluates its investments for other-than-temporary declines in fair value. The unrealized losses on the available-for-sale securities were primarily due to unfavorable changes in interest rates subsequent to the initial purchase of these securities. Gross unrealized losses of the Company’s available-for-sale securities that have been in a continuous unrealized loss position for twelve months or longer were immaterial as of July 31, 2021 and January 31, 2021. The Company expects to recover the full carrying value of its available-for-sale securities in an unrealized loss position as it does not intend or anticipate a need to sell these securities prior to recovering the associated unrealized losses. The Company also expects any credit losses would be immaterial based on the high-grade credit rating for each of such available-for-sale securities. As a result, the Company does not consider any portion of the unrealized losses as of July 31, 2021 or January 31, 2021 to represent an other-than temporary impairment or credit losses.
In April 2020, the Company entered into a five-year $40.0 million term loan agreement with Silicon Valley Bank. As of July 31, 2021, $40.0 million was drawn and $39.3 million was outstanding under this term loan. The fair value of the term loan approximates its carrying value since the interest rate is at market.
In January 2020 and June 2020, the Company issued convertible notes to a trust affiliated with the Company’s CEO. The fair value of the convertible notes at issuance on January 30, 2020 and June 26, 2020 was $203.0 million
14

ASANA, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
and $112.0 million, respectively. There were no significant changes in fair value between January 30, 2020 and January 31, 2020. The Company considers the fair values of the convertible notes to be a Level 3 measurement as the fair value is estimated using significant unobservable inputs. The fair value of the convertible notes was measured using a binomial lattice model. Inputs used to determine the estimated fair value of the convertible notes include the equity volatility of comparable companies, the risk-free interest rate, and the estimated fair value of the Company’s common stock.
On July 1, 2021, pursuant to the terms of the Convertible Notes (as defined in Note 6), upon meeting the closing trading price criteria for optional conversion by the Company, the Company elected to convert the Convertible Notes into the Company’s Class B Common Stock. Refer to Note 6. Convertible Notes—Related Party for additional information.
Note 5.    Balance Sheet Components
Property and Equipment, Net
Property and equipment, net, consisted of the following (in thousands):
July 31, 2021January 31, 2021
Desktop and other computer equipment$2,167 $2,229 
Furniture and fixtures7,466 2,012 
Leasehold improvements86,759 13,686 
Capitalized internal-use software10,912 10,498 
Construction in progress1
16,941 68,409 
Total gross property and equipment124,245 96,834 
Less: Accumulated depreciation and amortization(22,908)