Asana shares jump on Q3 revenue beat and raised forecasts

Asana Inc . (NYSE: NYSE:ASAN ) saw its shares surge by as much as 37% after reporting third-quarter earnings that surpassed revenue expectations and provided an upbeat forecast. Analysts believe these results indicate signs of stabilization for the work management platform provider, particularly noting the positive reception of its AI Studio product.

For the third quarter, Asana reported revenue of $183.9 million, marking a 10% increase year-over-year and exceeding the $180.7 million estimate. The company also reported a narrower loss per share of 25 cents compared to 28 cents in the same period last year. The adjusted basic loss per share improved to 2 cents from a loss of 4 cents year-over-year.

Looking ahead, Asana forecasts fourth-quarter revenue to be between $187.5 million and $188.5 million, slightly above the Bloomberg consensus estimate of $187.9 million. The adjusted loss per share is anticipated to be between 1 cent and 2 cents, in line with the estimated loss of 1.5 cents.

The company has also provided a forecast for the fiscal year 2025, projecting an adjusted loss per share of 14 to 15 cents, which is more optimistic than the expected loss of 19 cents. Revenue expectations for the year are set at $723.0 million to $724.0 million, surpassing the estimate of $720.2 million.

In response to these results, analysts have revised their price targets on Asana. DA Davidson analyst Lucky Schreiner increased the price target to $20.00 from $13.00 while maintaining a Neutral rating. Schreiner acknowledged Asana's strong performance under the new CFO, Sonalee Parekh, and the company's initiatives to drive future revenue growth and margin expansion. However, the analyst prefers to see consistent execution before fully endorsing the stock.

JMP Securities analyst Patrick Walravens raised the price target to $25.00 from $21.00, maintaining a Market Outperform rating. Walravens highlighted Asana's better-than-expected financial results and the company's improvement in operating margin and revenue growth. Despite a slight miss on billings, the company showed strong remaining performance obligations (RPO) growth, which contributed to the stock's rise in aftermarket trading.

Citi analyst Steven Enders also increased the price target on Asana to $16.00 from $13.00, while maintaining a Neutral rating. Enders pointed to Asana's better-than-expected third-quarter performance and signs of progress in go-to-market execution. The company's focus on cross-selling its new AI Studio product and margin improvement was also noted. However, Enders remains cautious due to potential execution risks and a challenging demand environment, seeking further evidence of successful up-selling before changing the rating.

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Source: Investing.com