I guess we can get started. Thanks everybody for joining today for day two of the Citi Global TMT Conference. I'm Steve Enders, part of the software research team here at Citi, and with us for the session, we have the team from Asana. Sonalee and Aziz, I want to thank you so much for joining and making the flight cross-country to be here. Thank you for having us. We're delighted. Yes, apologies, we did take the red-eye post earnings and came straight to this conference. If we nod off, just poke us. I do want to talk about earnings, but before we do that, I think you both, I think it was about a year ago exactly that you were announced as CFO of Asana. I guess maybe what surprised you from your first year here about Asana versus your perception coming in, and where do you kind of see the most, I guess, opportunity to, I guess, operationalize the business a little bit more? Oh, okay. You're right. It's exactly a year, or in five days, it will be exactly a year. Happy anniversary to me. It's a really good question. I've been here a year, but it actually feels like I've been here a lot longer because I feel very embedded and like part of the Asana DNA at this point, which is a really good thing. What surprised me most? I think I was always very fascinated by the category and all the potential it had. That was one of the reasons I wanted to come to Asana. I felt like it was this really exciting, exciting, collaborative work management category that still had a ton of runway in terms of its growth potential. That was even before you added AI. Enter a couple of quarters ago when we launched AI Studio and actually all the work that went into the launch of AI Studio. I think just how big the AI opportunity is for this category. I think it truly brings CWM into its own. It goes from a really nice to have, driving higher ROI, to a must-have in this new world where you have humans that are going to be collaborating with AI and agents. You need a platform that can coordinate all that work between those different constituents. I think that most companies, and certainly large enterprises, haven't really put their finger on what the right tool or application is to truly get value from this new world we're operating in. I think Asana fits right in there. It's just the scale of that opportunity. When I joined, I already thought it was a massive opportunity, truly greenfield. Now I just see how much that's been augmented by AI. The other thing is, when you're first having conversations, I met Dustin a couple of times in his office and he was so excited about AI. I remember he was whiteboarding. What I realized when I arrived at Asana is AI Studio has been many, many years in the making. That's the other thing that dawned on me, and it's so fabulous, is we have this head start. Dustin always talked about how it would be such a shame if we squandered this head start. The great thing is that we are truly capitalizing on it and exploiting it. That's the other thing. Finally, you asked me about how do we operationalize it? I think it's really important that we take this really large install base we have and ensure that we go from seat-based CWM model to multi-product platform selling, trenches of credits, and ultimately consumption in this hybrid model in this new world. I want to make sure that we free up dollars to be able to invest in those areas where we see the most outsized opportunity. I think it really is turbocharging what we're doing on AI Studio. For those of you who tuned into our earnings, we more than doubled our ARR from AI Studio last quarter. We're really excited about what AI Studio can mean for the rest of this year as it continues to ramp, most importantly as we look to 2027 and 2028 and beyond. Okay, that's great to hear. I'm sure we're going to dig in a lot to the AI opportunity later in the session. I do want to touch on earnings from last night. Can you give us the high-level takeaway around what happened or how we should be thinking about earnings? Yeah, sure. It was a really good quarter, a really solid quarter. We beat on revenues. We beat significantly on operating margin again, and we had a really strong free cash flow number as well. NRR, which is a metric that we pay a lot of attention to, ticked up, both in quarter and rolling four quarter. I think we're really excited about that. We saw some great trends in our international business. Again, the AI Studio outperformance. I think it was overall just a really, really solid showing. We raised our guide. What we did was incorporate all of the beat and then some in the low end of the guide. For the midpoint and the high end of the guide, we decided not to touch it because I wanted to maintain some conservatism and prudence just for some of the trends that we saw in Q2, which were really good, but too early to really call a trend. Holding them a little bit back as well. All right. That makes sense. Maybe we can talk about the transition of Dustin moving away from the CEO, Dan coming in. What's kind of been the, you know, I think he's been on board maybe a month now at this point. About a month, yeah. Yeah, I guess what's the first month been like with Dan, and maybe what changes in the medium or longer term for Asana with him coming on board? Okay. It's early to answer that question because he literally is a month in. You know, what can I say about Dan? He has spent a lot of time meeting with customers, which I think is exactly what he should be doing, understanding their pain points, understanding the customers who love us, who have adopted Asana really well. How can we take what they're doing and extrapolate that among the base? He has also spent a lot of time with our product teams. I think you heard me talk about NRR being one of the most important metrics that we run the business on. I think he's looking for things we can do in the product, which will allow our customers to stick with us, be stickier. Some of the initiatives we've already launched on that, like becoming multi-product and the foundational service plans that we talked about in earlies, I think he's going to be doubling down there. The other thing I would say is that Dan moves at the speed of light. He is like a high-velocity guy. When he asks for something to get done and it's not done like the next day or by the end of the week, he's asking you why, why, you know, and that is a bit of a change for how we do things at Asana, but I like it. I think it's a really good force to push us forward. The other thing is he's very focused on innovation and dialing up growth and accelerating growth. I hear him talk about that in just about every meeting. It's like, how are we going to accelerate rate growth? Where can you free up investments, Sonalee? Where can we get dollars to go and chase down this growth? I think that's also a really important mindset that he's bringing to Asana. Yeah, that's great. That's interesting. I do want to keep this interactive. If there are questions in the room, we want to make sure that we get to those. I do want to address the SEO side because I think there was some talking about it. I'm sure that you haven't heard about that at all today. I guess maybe what did you see in the quarter from the SEO, SEM dynamics? As we think about the guidance, what are you assuming in there versus what you actually saw? Yeah, so we've seen the pressure from the change in the AI search and LLM landscape for several quarters. We've seen it in the quarter in Q2 escalate and then come down towards the end of it. We've been fairly proactive in recognizing that we had to adapt the way that we focus on SEO and where we focus on SEO and our paid search. Ensuring that the content that we're creating is ready for AI, so that it is discoverable by AI search, by the LLMs, and that the channels that we are employing are consistent with the channels that those methods are pulling from. That has led to diversification of our channels, focusing on the content and the metadata to be more discoverable. It's really put a higher emphasis on conversion. As the top of funnel has been impacted, we've really focused on conversion and improved the conversion. We're seeing more higher intent traffic that's converting at higher rates that's offsetting that impact on top of funnel. That's been actually a great learning for us because as we think about combating this, it's not about just where we're employing dollars and the channels and adapting to an AI search world. It's also like, how do we improve the buying experience for those self-serve customers and get them through that process with less friction so that they drive higher conversion? Once they're there, how do we improve adoption and utilization so that they stay with us longer? We have a disproportionate amount of our churn actually coming from that monthly base, and a disproportionate amount of that is actually leaving within the first six months. How do we keep them there longer? We feel that we have a plan in place to offset the top of funnel impacts with higher conversion by Q4. As that's taking place, there's a little bit of potential pressure on our small business and self-serve motion and those customers. That's why when we guided, we factored that in. It's probably the reason we didn't raise the high end of the guide alongside the low end to keep the midpoint rolling in the full beat, just to reserve some caution there for this trend that's unfolding, which we've been proactive about, and we feel like we have a pretty good path forward to fully offset that by Q4. Okay. I guess a couple of follow-up questions there. I think you said that it actually got a little bit better through the quarter, at least the headwinds maybe pulled back a little bit. What have you seen so far in 3Q coming off of that as well? Let's start there, and then I guess I'll have another follow-up. Do you want to take that? Yeah, as he's mentioned, we've seen this for several quarters. I would say it is dynamic, it's evolving, it's new, but it peaked before August. Since then, certainly at top of funnel, we've seen less negative impact to website visits. I think we've also become a lot shrewder about how we're addressing it in terms of our content. We've started working with slightly different partners, started working with different channels, and we're using more of YouTube and Reddit and things like that. I think it's a combination of both of those factors. One is the impact is lower, and two is we're getting better at mitigating it. That's in the last, yeah, last say six weeks or six or eight weeks. Gotcha. Okay, that makes sense. It sounds like you're thinking about 4Q, what you have in place, it starts to improve kind of going through 3Q and 4Q is back to normal? From a top of funnel and conversion and that kind of equilibrium, the impact on revenue wouldn't be felt until more Q1, just given the cycle of that to convert. Okay, gotcha. That makes sense. I think I'm ready to move on from SEO in that conversation. Yeah, I think it's on from it. Any questions in the room? Otherwise, we'll move on to the AI product and AI Studio. Maybe just to start there and dig in a little bit more. I think you said it doubled this quarter. More than doubled. More than doubled. Okay, more than doubled. How are the use cases that customers are using AI Studio for? How is it different than what they had done historically with Asana? What is, like how are the most sophisticated customers, like the most interesting use cases? What does that look like for you all? Yeah, so you know, we've really been excited about what we've seen from AI Studio and the adoption with both our base and new customers. You know, the use case, it's been only a couple of quarters, so it's early. The initial focus was really on the base, those customers that have built rules and workflows on Asana, and how do we turbocharge that with AI? The initial kind of use cases have been those dominant use cases for Asana. Anything that has a data intake component, campaign management, content creation, management in the marketing world, project management. We've seen the majority of the early use cases focus where Asana really differentiates itself. What's really exciting is now with smart workflows and bringing AI Studio to more and more customers, we're seeing the proliferation of very new use cases and new ICPs that aren't really the majority or large areas of focus for Asana or how we're used now adopting AI Studio and automating processes in these new areas. Things like HR onboarding, vendor onboarding, we're seeing a lot in the compliance and regulatory world, security questionnaires, product development cycles. A different buyer type, and that's really the beauty of smart workflows. It's allowing us to really proliferate these out-of-the-box templates that allow our customers to get to value faster with AI Studio and adopt very new use cases. It's bringing new buyer sets, new ICPs, new departments into Asana, which is amazing. Really encouraged by the traction that we're seeing. That's great to hear. With the customers that have adopted it so far, how is the underlying metrics, how is it different? What does NRR look like, is it materially different for that customer set? Are the user trends different for that customer or user seat expansion trends? Is it different for those customers? How do you kind of think about what that means? Yeah, I think it's a little. Just because they're mostly annual customers and we've only had it, like it's only been GA for a quarter. Believe me, we will be watching it and we have a theory, we have a thesis that they are going to be stickier because that's kind of the beauty of it too. When all those use cases that Aziz was talking about, you are ensuring that Asana is truly embedded in your daily workflows. It makes it a lot harder to switch it off. Our thesis is that it helps NRR and that's partly, you know, that when we talk about going multi-product and even like Dan's priorities, like being multi-product, again, that should have a positive impact on retention. And expansion because it, you know, driving that stickier engagement should lead to better seat reach and expansion of seats. The other exciting thing is self-serve just got rolled out a few weeks ago. Those are predominantly monthly customers now having access to AI Studio. That's about 40% of our customer base, procures Asana through self-serve methods, and so now that whole base has access to Asana and they're typically renewing on a monthly cycle. We will get to see over the coming quarters the impact of AI Studio on that customer base as they adopt and utilize AI Studio and derive the benefits, the retention, associated retention benefits on that customer cohort, which tends to be our most churning segment, you know, smaller customers. That's a huge opportunity as those customers become more sticky. Okay. I guess with Studio, just for that customer base, how easy is it to actually begin to use, begin to implement it? Is there any handholding from a salesperson or from an account manager that needs to happen to make them able to use it? Yeah, it's a great question. It's something that we give a lot of thought to when we first started rolling it out. Obviously, even before we went to GA, we had a beta program running with several of our largest customers. We got really good feedback from them. What I would say is the early adopters tend to be those builders, those people who are already using Asana rules, like if this, then do that. For that population, I think AI Studio is super intuitive. I think for somebody like me, I needed a little bit of help. For somebody like me, these sort of out-of-the-box workflows that Aziz talked to, this workflow gallery that we've put out, which we're going to augment, and it's a big focus of our marketing team right now, I think that will be super helpful to ensure that they're properly adopted and getting the use. The whole point is we want our customers to get as much value out of this as possible because right now we're charging a quarterly platform fee and they're getting tranches of credits, but we want them to keep coming back to the well and getting more credits. I think this next evolution of, I guess it's AI Studio 2.0, which is, I called it AI Studio for dummies. I don't think Dustin liked that, but it's AI Studio for Sonalee where you have these custom pre-built workflows and those work really well for me. It sounds like you have something to add, but I was going to say, you add Teammates, which is something that's going to come out in the fall, and I'll let you talk to that. I think that ends up making it even more accessible to, I think what you mean is the general base. Yeah, I mean, I think Teammates absolutely, it really, you know, AI Studio is a no-code builder, so it's designed to be easy to use. Teammates, the interaction with Teammates is like interacting with a colleague. The prompts are like how you would interact with a colleague. Where AI Studio really derives the most benefit is in these multi-step workflows where there's handoffs with humans. Teammates can reason and execute tasks and projects independently of humans, just being prompt and engaged like you do with a colleague. It's all the underpinnings, all the work graph and the things that make Asana differentiate in the marketplace, that context is aware of who's doing what and when and why. That's governed by boundaries. Those Teammates operate in that operational boundary, with context being easily prompted, which is super exciting. They could build the workflows, they could operate within multi-step workflows, they can execute on more narrow workflows or just targeted projects. It's also a good way to ensure customers are set up on Asana in a way that allows them to maximize the benefit of their investments. Those Teammates can really help drive that as well. We're excited about that and adding kind of Teammates with AI Studio and smart workflows into this kind of agentic enterprise as Dan described it on the call last night. These are all growth drivers as they get layered on through the back half of this year. Okay, that's great to hear. Maybe that's a good part to start delving into the model a little bit. Just to start, how do you think about the contribution from the AI portfolio for this year? As we think about the ramp-up and that kind of being deployed a little bit more fully, what does that mean for the go-forward view of Asana? Yeah, I like the way that you described it because it's a ramp-up. Like, you know, this is small today in the context of a company that's close to $800 million ARR. When we start talking about $1 million of ARR, that, you know, we're still super excited it more than doubled in the current quarter. It's still small in the context of overall Asana, but it will be a more meaningful driver of growth next year and even the second half versus the first half because, of course, we only went GA last quarter. You know, again, it's this layering. There are two things that I think about when I think about the growth of AI Studio. One is the customers that buy the platform and pay the platform fee. Then it's the customers that become power users. They're not just paying the platform fee, they're using up their credits and coming back for more credits. Then with Teammates, even more credits, hopefully. You get that kind of consumption piece on top of it. Then you have the Teammates. I think, like, again, Dan is all about velocity. I think there will be lots of interesting product, you know, hopefully product announcements to come, and hopefully we'll be moving with a lot of velocity there. I think the other thing about, and this is a driver of growth, is when you have customers buying more than one product from you, you have stickier customers. We expect to see a positive impact on NRR, which is something that has been a headwind, a significant headwind to our growth. I'm really excited about the impact for 2027. I think we said it's not a meaningful contributor in the current fiscal year 2026, but it will be a much more meaningful contributor and an important contributor to our growth. It will add more than a point of growth next year. I'm not guiding on next year yet, but it is an important growth driver. I don't know if there's anything you'd add then. Okay, that makes sense. I don't want to disappoint you. I do want to ask about margin. Okay. Thank you. I was disappointed on the earnings call. No one asked about it the last two, and I'm like, wait, we've worked so hard. Let's give you the opportunity to talk about it. I mean, it's been a big point of focus for you to come in and do that. I guess what have you kind of already done, or what have you kind of changed to be able to support that, to drive that margin opportunity? How do you think about how much more room there is to drive? Yeah. Just to put it into context, since a year ago, over the last year, we've improved margins by 16 percentage points, year- over -year. In Q2, we delivered margins in excess of 7%. I said by Q4, and we raised our guidance to 6% operating margin. What I have said also is that our Q4 exit rate will be above the Q2 margin number we printed, so above 7%. There is more to come. It won't be the same magnitude as what you saw in the last two quarters, partly because it's also really important for us to be able to invest ahead of the growth. In conversations with Dan, there are things on the product side, on the sales and marketing side that we want to have capacity to invest in, and particularly around AI and Teammates. The other thing on margin is we are definitely not done. We start with this amazing enviable position of 90% gross margin. There is a ton of inherent operating leverage in this business model. It is one of the things that truly attracted me to coming to Asana. Dustin built a great company with those industry-leading gross margins. With some small tweaks on the, not even headcount number of people, but just even like where our headcount is based, some small tweaks in terms of the low-cost, high-cost geo mix, some small tweaks around performance marketing and the efficacy of those channels, which is an area that Dan brings a lot of knowledge and experience, we can drive significant margin improvement over the next several years. I see significant upside from where we exit in Q4. All right. That's good to hear. I guess to your point around there are areas that you want to invest in, areas that I think Dan wants to kind of maybe accelerate or put his foot on the accelerator a little bit. Just how do you think about then the balance of what do you let flow through to the bottom line versus utilizing and putting back to work to try to grow the company? Yeah, I mean, I think like a couple of it's puts and takes, right? I think that there is an expectation from investors who own our company and, quite frankly, the management team and our board that, you know, given our scale, we should be operating at a higher margin than what we do today. I certainly wouldn't sit here in front of all of you and say, I'm happy, you know, if we can exit at 8% margin, you know, we're done. We need to drive some improvement, but it needs to be taken into context against the opportunity that's in front of us to really take share and drive meaningful share in this new world of CWM where AI is this huge, you know, or augments the opportunity. I'm balancing those two things. What I would say is there are very specific areas that we've identified that we believe will drive outsized ROI. Those opportunities I will ensure that we have capacity to invest in. There are still areas where, quite frankly, we're a bit fat and they need to be addressed. I think we have the team in place who will continue to be very, very disciplined in those areas. I think we can do both. We can make the investments to reinflict the growth in fiscal 2027 while still improving margins. With a 90% gross margin, the best way to improve margins is to grow. Revenue growth. Yeah. I'd say that all the time. It's a consistency reward on both sides. Exactly. Okay, that makes sense. I think we have about five minutes here. I just want to see if there's any questions in the room real quick before we're moving forward. Here, we got a mic coming. Just one second. How has the stock price affected hiring for your AI Studio development team? The AI Studio development team has been in place for a really long time, as has our CTO. I think, I don't know his exact tenure. Eva probably knows, but many, many years. One of the questions that Steve asked me initially is like, what was one of the things that surprised you? It was like, wow, this is something they've been working on for a long time. That team has been in place and the leadership of that team, you know, it's the same very, very strong leader who's there today. In terms of hiring, of course, we do have, we pay our people with both cash and equity. I think you've heard me talk about in the last several quarters, like with some of the attrition that we have seen in R&D, we're hiring in lower-cost geos. Those geos, and we have a center of excellence in Warsaw, which we've been very, very pleased with what we've derived from that so far. They're a highly engaged population of the overall Asana workforce. They don't have the same expectation with respect to stock-based compensation. That helps a lot as well. What I would say is that we are all focused on creating value, and that includes myself, the management team, our board of directors, and the leadership around our R&D function as well. We have attrited people in the Bay Area, and we also have people here in New York. A lot of our AI is actually right here in New York, in the World Trade Center. Yes, we've had attrition, but it's not outside. I don't think it's actually specific to the stock price. It's not the AI team. Yeah, and we haven't had outsized attrition in the AI team. I think a lot of them are very mission-driven. They came here because of our mission and what we're trying to do to help humanity thrive and people be more productive, and they're really enthused on that mission. We also like the work that's been done to create our AI foundation, and differentiation has been going on for like a decade. It's all driven by what's been developed in the work graph and that context-aware. That's what differentiates us. It's what takes it from individual productivity, which a lot of companies can try to address, to team productivity and organizational productivity. It's the team productivity and organizational productivity that will unlock, maximize those company-like benefits. That has been in place, and there's been a ton of investment, and the core team there has been extremely sticky. On certainly some of the AI, we haven't seen outsized attrition. We have great talent, so there's always people wanting to pick them off. That team, the attrition actually doesn't look any different from our other teams, and normal levels of attrition for Bay Area company. We have another question in the back. On the AI Studio product, is there any differentiation on the unit economics versus kind of like legacy products? The cogs and gross margin profile, like how we've built the pricing and the credit packages, are consistent in terms of the unit economics on the core product. Now if companies are eclipsing the platform fee and going into consumption-based credits and additional credit packages, that would weigh on the unit economics, but that would be, for us, that's a high-class problem because that customer is now super sticky and we've expanded really nicely with them. You know, no material differentiation on the unit economics on AI Studio versus core Asana unless they're really driving consumption and at that rate, it's a good problem to have. Okay, that's great. We've got about a minute left here. I guess I'll ask a high-level question to leave it. You think about the investments you're making today. It seems like there's a big view of the future of AI. How does that kind of transform Asana as a company, and how does it kind of transform the opportunity as you look out over the next few years? Yeah, I think you're right. We are transforming and this is Asana, and I think enterprise software in general is transforming. I think we have in many ways future-proofed ourselves with the launch of AI Studio and Teammates. I see a future world where it's hybrid. You have a seat model combined with platform and/or consumption-based pricing. I think there's absolutely a world, and Dustin called this out a couple of quarters ago, where our platform fee and consumption-based pricing eclipses our current subscription base and actually customers grow with us not through adding more seats but through much deeper engagement with us. I see a world where Asana is mission-critical, where Asana is embedded into, because we're a horizontal, embedded into everything that you do as a customer. I see an Asana where we scale. Right now, we have a customer that has more than 200,000 seats. I think one of our key differentiators is that ability to scale, and I see a world where we have many more lands like that and where we truly create value for our customers by being able to go wall to wall. I think today we don't do that enough, and I think this new opportunity that AI and particularly agentic AI and collaborative human-AI interaction creates an even larger opportunity for Asana to go after. I think we are going to be one of the key players in that new world. That's great to hear. I think it's a good place to leave it. Sonalee, Aziz, I want to thank you so much for being here. I want to thank everybody in the room for joining us today. Thank you. Thank you. Thanks for having us. Thank you.