Asana Q2 FY2027 Earnings: Operating Margins Improve as Revenue Grows 10%

Asana (NYSE: ASAN) reported fiscal Q2 2027 revenue of $216.4 million, up 10% year over year, while its GAAP diluted loss per share narrowed to $0.17 from $0.20. Operating margins improved and cash generation increased, although gross margin declined and overall dollar-based net retention remained below 100%.

Core Earnings Data

Revenue growth was accompanied by narrower GAAP losses and higher non-GAAP profit. GAAP operating margin improved by approximately 6.1 percentage points, while non-GAAP operating margin rose to 10% from 7%.

Operating cash flow and adjusted free cash flow also increased. The main counterpoint was gross profit growth of approximately 5%, which trailed the 10% increase in revenue.

Adjusted free cash flow is defined by Asana as free cash flow plus restructuring-related cash costs. Non-GAAP results exclude items including stock-based compensation, acquisition-related expenses and certain other costs.

Customer Trends and Upmarket Performance

Asana ended the quarter with 26,778 Core customers—those generating at least $5,000 in annualized revenue—up 7% year over year. Revenue from these customers increased 11%, slightly faster than total company revenue.

The number of customers generating at least $100,000 in annualized revenue rose 16% to 890. This faster increase among larger customers supports management’s view that its upmarket business is gaining momentum.

Retention improved across every reported cohort, but the absolute rates still indicated net contraction within existing customer groups. Overall dollar-based net retention was 97%, while both Core customers and customers generating at least $100,000 annually recorded 98%. Asana calculates these figures as the average of quarterly retention rates over the four quarters ending with the latest quarter.

Operating Expense Discipline Offset Gross-Margin Compression

Cost of revenue increased to $30.3 million from $20.2 million, or approximately 50%, substantially faster than revenue. As a result, calculated GAAP gross margin declined to approximately 86.0% from 89.7%. The earnings release did not identify a specific reason for the increase in cost of revenue.

The company offset this pressure by keeping total operating expenses nearly flat at $227.3 million, compared with $226.2 million a year earlier. Sales and marketing expense declined to $104.4 million from $106.7 million, while research and development and general and administrative expenses increased modestly.

Stock-based compensation also fell to $56.3 million from $62.2 million. These factors helped narrow the GAAP operating loss and supported the increase in non-GAAP operating income, even though gross-margin performance moved in the opposite direction.

Cash Flow and Balance Sheet

Operating cash flow rose to $46.0 million despite a $39.2 million GAAP net loss. Stock-based compensation of $56.3 million was an important noncash adjustment, while deferred revenue increased by $26.5 million during the quarter.

As of July 31, 2026, Asana held $219.6 million in cash and cash equivalents and $120.3 million in marketable securities, for combined liquidity of approximately $339.9 million. That was down from approximately $434.0 million at January 31, 2026, primarily through a decline in marketable securities.

During the quarter, Asana paid $71.6 million for an acquisition, net of acquired cash, and repurchased $51.5 million of common stock. Repurchases totaled $96.5 million during the first six months of fiscal 2027. These uses of capital help explain why combined cash and securities declined despite positive operating cash flow.

Earnings Guidance

Asana raised its full-year revenue and non-GAAP operating-margin guidance, although the prior numerical ranges were not included in the release. The Q3 outlook calls for 8% to 9% revenue growth, modestly below the 10% recorded in Q2, and a non-GAAP operating margin of 8% to 9%.

The Q3 EPS forecast assumes approximately 236 million diluted weighted-average shares, while the full-year forecast assumes approximately 239 million shares.

Management’s View

CEO Dan Rogers said improving retention and faster growth among larger customers were strengthening Asana’s core business. He also said customers using AI Studio and AI Teammates in important workflows were engaging more deeply, retaining better and expanding faster, although the company did not quantify the revenue contribution from those products.

Asana plans to launch Agentic Work Management in Q3 and make AI Teammates, AI Studio and Asana Dash available across every paid tier. CFO Aziz Megji also described an opportunity to add consumption- and outcome-based revenue streams alongside seat-based subscriptions. The strategy could create additional expansion paths, but its financial contribution remains unquantified.

Recent Insider Transactions

The supplied six-month insider summary lists 16,948,189 shares purchased across 18 transactions and 227,350 shares sold across 15 transactions, resulting in 16,720,839 net shares purchased. It also reports total insider holdings of 102.28 million shares and a 19.50% net-purchase ratio.

The latest 10 itemized records, however, consist of seven sales, two stock awards and one stock gift. Because the itemized data does not provide share quantities, it cannot be fully reconciled with the six-month aggregate, and the transactions alone do not establish insiders’ views of the company’s prospects.

Risks Investors Should Watch

• Retention remains below 100%. The 97% overall net retention rate means revenue from existing customer cohorts remained lower on a net basis, despite sequential improvement across the reported groups.
• Gross-margin pressure could offset further efficiency gains. Cost of revenue rose approximately 50%, causing calculated gross margin to decline by about 3.7 percentage points.
• Q3 guidance implies some moderation. Expected revenue growth of 8% to 9% is below Q2’s 10%, while the projected non-GAAP operating margin of 8% to 9% is below the latest quarter’s 10%.
• The GAAP and non-GAAP results remain far apart. Stock-based compensation was $56.3 million, exceeding quarterly non-GAAP operating income and remaining a significant recurring expense.
• AI monetization requires execution. Asana is expanding AI access and considering consumption- and outcome-based revenue, but it has not quantified current AI revenue or the expected financial effect of the new pricing approach.

Summary

Asana’s fiscal Q2 2027 results showed better operating efficiency, narrower GAAP losses and higher cash generation alongside 10% revenue growth. Growth among larger customers and improving retention supported the company’s raised full-year outlook, but declining gross margin, net retention below 100% and slightly slower Q3 growth guidance remain the principal areas to monitor.