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# Smartsheet Inc. NYSE:SMAR

## Earnings Call

_Tuesday, March 14, 2023 8:30 PM GMT_

### CALL PARTICIPANTS 2

 PRESENTATION 3

 QUESTION AND ANSWER 8

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**WWW.SPCAPITALIQ.COM**

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## Call Participants

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**EXECUTIVES**

**Aaron Turner**
_VP of Investor Relations &_
_Treasurer_

**Mark P. Mader**
_President, CEO & Director_

**Pete Godbole**
_CFO & Treasurer_

**ANALYSTS**

**Aleksandr J. Zukin**
_Wolfe Research, LLC_

**Brent John Thill**
_Jefferies LLC, Research Division_

**David E. Hynes**
_Canaccord Genuity Corp.,_
_Research Division_

**Jackson Edmund Ader**
_SVB Securities_

**Jacob Roberge**
_William Blair & Company L.L.C.,_
_Research Division_

**John Stephen DiFucci**
_Guggenheim Securities, LLC,_
_Research Division_

**Michael James Turrin**
_Wells Fargo Securities, LLC,_
_Research Division_

**Pinjalim Bora**
_JPMorgan Chase & Co, Research_
_Division_

**Rishi Nitya Jaluria**
_RBC Capital Markets, Research_
_Division_

**Robert Edward Simmons**
_D.A. Davidson & Co., Research_
_Division_

**Scott Randolph Berg**
_Needham & Company, LLC,_
_Research Division_

**Seoyoung Lee**
_Morgan Stanley, Research Division_

**Terrell Frederick Tillman**
_Truist Securities, Inc., Research_
_Division_

**Unknown Analyst**

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## Presentation
....................................................................................................................................................................

**Operator**

Ladies and gentlemen, thank you for standing by. My name is Brent, and I will be your conference
operator today. At this time, I would like to welcome everyone to the Smartsheet Fourth Quarter Fiscal
2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to turn today's call over to
Mr. Aaron Turner, Head of Investor Relations. Sir, please go ahead.

**Aaron Turner**
_VP of Investor Relations & Treasurer_

Thank you, Brent. Good afternoon, and welcome, everyone, to Smartsheet's Fourth Quarter and Fiscal
Year 2023 Earnings Call. We will be discussing the results announced in our press release issued after
the market closed today. With me today are Smartsheet's CEO, Mark Mader; and our CFO, Pete Godbole.
Today's call is being webcast and will also be available for replay on our Investor Relations website at
investors.smartsheet.com. There's a slide presentation that accompanies Pete's prepared remarks, which
can be viewed in the Events section of our Investor Relations website.

During this call, we will make forward-looking statements within the meaning of the federal securities
laws. We have based these forward-looking statements largely on our current expectations and projections
about future events and financial trends. These forward-looking statements are subject to a number of
risks and other factors, including, but not limited to, those described in our SEC filings available on our
Investor Relations website and on the SEC website at www.sec.gov.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, our
actual results may differ materially and adversely. All forward-looking statements made during this call
are based on information available to us as of today, and we do not assume any obligation to update these
statements as a result of new information or future events, except as required by law.

In addition to the U.S. GAAP financials, we will discuss certain non-GAAP financial measures. A
reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that
accompanies this call, which can also be found on our Investor Relations website. With that, let me turn
the call over to Mark.

**Mark P. Mader**
_President, CEO & Director_

Hello, and welcome to our fourth quarter earnings call for fiscal year '23. Our fourth quarter results caped
off a strong year for Smartsheet, a year in which we extended our leadership position in collaborative work
management, delivered our best year ever for new customer bookings, acquired outfit to strengthen our
marketing and creative management solutions, added 2.2 million users to the Smartsheet platform and
generated positive free cash flow for the year for the first time.

While Pete will provide additional details, I want to call out some of our highlights from the quarter.
Revenue for the quarter was $212 million, up 35% year-over-year. We added $62 million in annual
recurring revenue in Q4, bringing our total ARR to more than $854 million.

In Q4, we saw expansions at Volvo, USA Today and Allscripts, among many others. And we had new
customer wins at companies such as [indiscernible]. Our expansion motion within our customer base
continued with 311 customers expanding by $50,000 or more and 118 expanding by $100,000 or more.

In Q4, we had 2 transactions of more than $1 million and now have a total of 45 customers with ARR over
$1 million. Despite these successes, we've seen the changing macroeconomic environment negatively
impact expansion rates across customer segments. However, even with these less favorable macro
backdrops, our enterprise customers continue to exhibit the fastest growth rates.

-----

Our product investment and go-to-market strategy is focused on winning the enterprise, and we have
seen great success in this segment. We now have over 3,300 large enterprise customers, defined as
organizations with over 10,000 employees. ARR from just this customer segment is now over $260 million
and grew over 40% in FY '23.

We believe this segment alone represents a multibillion-dollar revenue opportunity for Smartsheet.

While we may have seen some companies be more thoughtful with spending in this environment, we
believe that in the long term, enterprises, especially large enterprises, remain the best opportunity to
drive long-term profitable growth. and no one in this category is winning the enterprise like we are.

In FY '23, in response to the changing macroeconomic environment, we took steps to improve our
profitability. These actions resulted in Q4 profitability, non-GAAP operating income and free cash flow
exceeding our guidance. As we look ahead, we expect our scale combined with our increasingly efficient
operating model to generate positive operating margins and over $110 million of free cash flow in FY '24.

Our scale and profitable business model further secure Smartsheet as the leader in collaborative work
management. We are operating at an ARR scale, enterprise adoption rate and profitability level that are
unmatched in category. This leadership position is recognized by top-tier review sites and publications.
We recently earned a top 5 placement on G2's 2023 Best Products for Enterprise List, making us the only
CWM platform to rank anywhere in the top 50. The list recognizes software companies that have best-inclass enterprise customer service, products and experiences. And earlier this month, we were recognized
for our industry-leading enterprise work management and digital asset management solutions on Fast
Company's Most Innovative Companies List in the enterprise category.

At Smartsheet, adoption of our capabilities-based products play a key role in our enterprise success. These
capabilities now make up 31% of our subscription revenue, up 5 points year-over-year. Capabilities drove
many large customer expansions in Q4. For example, a leading enterprise human capital management
provider signed a 3-year enterprise license agreement that will give all 8,000 Smartsheet users at the
company access to our full suite of advanced capabilities.

Through January, on a year-over-year basis, they created 67% more forms, provisioned 132% more
control center projects and created 210% more WorkApps. A key smart use case at this HCM provider is
in professional services org, where they use Smartsheet to manage customer deployments. Smartsheet
has become their global standard for customer deployments in part because our enterprise-grade security
gives them the ability to manage sensitive customer data on our platform while still allowing for efficient
collaboration.

Our secure collaboration model has allowed this company to bring more than 42,000 external collaborators
from different client organizations onto the Smartsheet platform.

Q4 was a strong quarter for Smartsheet Advance. A Fortune 500 global manufacturer had a high 6-figure
annual expansion that included an upgrade to a higher-advanced tier. This upgrade resulted from the viral
adoption of Smartsheet across the organization. This year alone, they created over 5,000 dashboards,
increased their WorkApps used by 430% and provisioned nearly 5,000 projects using control center.

This company will now use Smartsheet to help achieve its $1 billion 3-year operational cost savings
initiative.

Advanced usage through connected users also drove a 7-figure expansion at a Fortune 100 telecom
company, which brought the customer's total ARR to over $3 million. Over 50,000 Smartsheet users
across 11 departments in 8 countries now use Smartsheet. This deal was driven by increased demand and
adoption as more teams look to centralize their work on Smartsheet.

Our platform underpins over 1,000 WorkApps, 4,000 projects managed using control center and over
28,000 dashboards. It is now the starting point for thousands of workflows that span integrated apps such
as Salesforce, Jira and Slack, and serves as a central hub for the company's collaboration with more than
500 external organizations.

-----

Wins such as these speak to the power of the advanced model where the value of Smartsheet increases as
the use of Smartsheet grows. In January, we published our inaugural Future of Work Management report,
which showed that over 80% of workers at every level across organizations say, project management is
being done by people whose title or job description doesn't include Project Manager. The research also
showed a significant perception gap between leaders and workers with respect to their current project
management tools.

60% of leaders say they've made the necessary investment in tools, but just 36% of workers who
responded feel this way. This gap drives a robust, continuous flow of opportunity for Smartsheet.

Here's a great example of how the best tools can empower people and business transformation. In Q4,
we had an RFP win against 3 CWM competitors, which expanded our footprint at a Fortune 500 global
biopharma company. The seeds of this win were planted when one team member in the purchasing
organization took the initiative to design a Smartsheet-based system to automate the company's complex
and time-consuming paper and e-mail-based purchase order management process.

Smartsheet didn't just modernize PO management, our platform also reached the company's
transformation office, where Smartsheet is now supporting the company's critical initiatives. As the
company's business transformation platform, Smartsheet Control Center and WorkApps are now helping
them manage 5 strategic portfolios of work, each containing dozens of work streams that will guide the
company towards its goal of positively impacting the health of 2.5 billion people in the next 10 years.

On the product front, we closed out another year of customer-focused innovation, having delivered over
400 product enhancements. In Q4, we launched the Smartsheet Desktop Application, content automation
with integration of outfit, capacity view and numerous automation enhancements. We also further
increased platform scalability to power sophisticated workflows and drive thousands of business-critical
work streams for customers of all sizes.

In FY '24, our investment efforts will be focused on helping our biggest customers grow faster with us as
well as driving efficiency and how we sell to and serve our emerging customers.

To enhance customer experience and value, we continue to evaluate and integrate artificial intelligence
into the Smartsheet platform. Our AI innovation began in 2018 following our acquisition of Converse.AI.
More recently, we have enabled petabyte-scale intelligent content management through our proprietary
powered AI engine [indiscernible] Intelligence. Using recognition models, content is analyzed and tagged,
making it easier for people to find creative assets with natural language search. And for over a year,
predictive models have powered navigation recommendations in Smartsheet.

Now our sights are set on the next wave of innovation, degenerative AI. The progress we've made in our
early development is very promising and the impact to accelerating customer onboarding, solving for
advanced business designs and unlocking self-directed discovery can serve as a catalyst for growth in FY
'25 and beyond.

In closing, I'm proud of how our team executed in FY '23, expanding our enterprise leadership position,
while navigating macro headwinds and driving significant efficiencies in the business. We continue to
keep our customers' needs top of mind as we prioritize investments that enable them to drive meaningful
change for their organizations.

Q4 was another showcase of our CWM leadership, our winning enterprise strategy, the power of our
platform and the scalability of our business model. We are excited to continue this momentum in FY '24
and beyond. Before I turn the call over to Pete, I want to acknowledge the transition of Smartsheet's
Board Chair role.

We recently appointed Mike Gregoire as the new Chair of our Board of Directors. He succeeds Geoff
Barker, who has been on our Board since 2012 and has served as Chair since 2017 and will remain on
the Board following this transition. We appreciate and thank Geoff for his leadership. His commitment to
governance and execution during the company's transition from private to public and in the years that
followed, strengthened our ability to deliver value to customers and shareholders.

-----

Mike has been a valuable member of the Smartsheet Board since late 2019. His expertise in operating
technology companies at scale aligns very well for our next phase of growth. We are pleased to welcome
Mike to the chair position and look forward to working with him more closely. Now let me turn the call over
to Pete. Pete?

**Pete Godbole**
_CFO & Treasurer_

Thank you, Mark, and good afternoon, everyone. As Mark mentioned, Q4 was another strong quarter. We
exceeded our guidance across the top and bottom line and posted quarterly operating income for the first
time. We saw particular strength in our largest customers who continue to exhibit expansion rates above
our overall net dollar retention rate, an advance, which contributed a record level of billings and revenue
in the quarter.

Despite strength in these areas, we saw the impacts of a worsening macro environment. Similar to past
quarters, we see these pressures manifest as smaller deal sizes and longer sales cycles, which ultimately
led to lower expansion rates among our customers.

In FY '23, we placed an intense focus on driving operational efficiencies, which has resulted in a faster
path to profitability than previously contemplated. We focused on driving operational efficiencies by
eliminating lower value activities, while maintaining sales capacity. These operating efficiencies have
contributed to our outperformance in our operating income and free cash flow in Q4 and our guidance for
FY '24.

We expect the macro to worsen in FY '24, but the plan we have created positions the company to
capitalize on an improving economy when that eventually occurs. We are continuing to pursue sustained
growth and profitability in a disciplined and thoughtful manner, while focusing on allocating capital to
growth initiatives.

Our strategy of focusing on large accounts for the last several years has been a part of that thinking and
this year, we plan to invest in 4 areas: first, widen our competitive lead on the dimension of enterprise
scale; second, unlock product-led discovery and adoption; third, enhance IT, governance, control and
security; and fourth, elevate our user experience.

I will now go through our financial results for the full year and fourth quarter. Unless otherwise stated, all
references to our expenses and operating results are on a non-GAAP basis and are reconciled to our GAAP
results in the earnings release and presentation that was posted before the call.

For the full fiscal year '23, we ended with total revenue of $766.9 million, up 39% year-over-year. Billings
of $892 million, up 35% year-over-year. Operating loss of $36 million and free cash flow of $9.8 million.

We ended the year with annual recurring revenue of over $854 million, a year-over-year increase of $215
million.

Next, I will provide more color on our fourth quarter financial results. Fourth quarter revenue came in at
$212.3 million, up 35% year-over-year. Subscription revenue was $198.9 million, representing year-overyear growth of 37%. The Services revenue was $13.5 million, representing year-over-year growth of 15%.
Capabilities made up 31% of subscription revenue, up from 26% of revenue in Q4 of last year.

Turning to billings. Fourth quarter billings came in at $286.7 million, representing year-over-year growth
of 28%. Approximately 94% of our subscription billings were annual with 3% monthly. Quarterly and
semiannual represented approximately 3% of the total. Multiyear billings represented less than 0.5% of
total billings.

Moving on to our reported metrics. The number of customers with ARR over $50,000 grew 36% year-overyear to 3,206 and the number of customers with ARR over $100,000 grew 45% year-over-year to 1,484.
These customer segments now represent 62% and 48%, respectively, of total ARR. The percentage of our
ARR coming from customers with ARR over $5,000 is now 89%.

-----

Next, our domain average ACV grew 20% year-over-year to $8,377. We ended the quarter with a dollarbased net retention rate of 125%. The full churn rate remains below 4%. Consistent with our assumption
of the macro environment in FY '24, we expect our net dollar retention rate to trend lower into the high
teens by the end of the year.

Now turning back to the financials. Our total gross margin was 82%. Our Q4 subscription gross margin
was 86%. We expect our gross margin for FY '24 to remain above 80%.

Overall operating income in the quarter was $7.5 million or 4% of revenue, which represents a 6
percentage point sequential margin improvement. Free cash flow in the quarter was positive $16.4 million.

Now let me move on to guidance. Our guidance reflects the expectations of a worsening macroeconomic
environment. Therefore, we have incorporated more conservatism into our guidance philosophy. If the
macro environment does not decline, this will be a source of upside to our current full year expectations.

In FY '23, we placed a heavy internal focus and operational rigor and moderating our hiring plan to
adapt to the changing macro economy. In FY '24, these initiatives combined with the natural economies
of scale in our business will result in significant improvements in our margin profile and free cash flow
performance.

In FY '24, we are investing in enterprise growth with the ramped sales team and continue to invest in
widening the technology advantage of our platform. As a business approaching $1 billion of ARR, we are
set up to leverage this natural scale via operational initiatives that we started in FY '23.

For the first quarter of FY '24, we expect revenue to be in the range of $213 million to $215 million, and
non-GAAP operating income to be in the range of $8 million to $10 million. We expect non-GAAP EPS to be
$0.08 to $0.09 based on diluted weighted average shares outstanding of 136 million.

For the full fiscal year '24, we expect our revenue guidance to be $943 million to $948 million,
representing growth of 23% to 24%. We expect services to be 6% of total revenue. We expect our
non-GAAP operating income to be in the range of $35 million to $45 million, representing an operating
margin of 4% to 5% and a non-GAAP net income per share to be $0.31 to $0.38 for the year based on
approximately 137.5 million diluted weighted average shares outstanding.

We expect FY '24 billings growth to be 20%, and we expect our free cash flow for FY '24 to be $110
million.

To conclude, Q4 was another strong quarter, highlighted by our continued outperformance, our strength in
the enterprise and emerging profitability. We see FY '24 as a year where our enterprise investments set us
up for durable, long-term growth.
Now let me turn the call over to the operator. Operator?

-----

## Question and Answer
....................................................................................................................................................................

**Operator**

[Operator Instructions] Your first question is from the line of John DiFucci with Guggenheim Securities.

**John Stephen DiFucci**
_Guggenheim Securities, LLC, Research Division_

Well, first of all, congrats on elevating Mike Gregoire to the Chairman position. I think he fits really well
with our view at least of how you guys approach the business. He's pretty straightforward. It's also nice to
see you demonstrate the profit power of the software model with both the results this quarter, but also in
your guidance for next year. So it's great to see [indiscernible]. But my question, Pete, you said guidance
reflects a worsening macro. So it sounds it's a little more conservative than usual, which I think is the
right thing to do here.

But last quarter, you gave some specifics around go-to-market metrics. And you talked about positive
comments on pipeline, close rates, sales productivity, [indiscernible]. You also said you'd be close to a fully
ramped sales force, and I think you sort of mentioned that too here. Can you sort of hit some of those, do
you think that are most important? And what you're -- what is implied in guidance in this year? Are they
all -- are you assuming all of those things sort of moderate throughout the year? Or are there some of
them that actually hold steady and some sort of moderate?

**Pete Godbole**
_CFO & Treasurer_

So John, I'll parse that question down to what you asked. So let's start with Q4. We exceeded our
guidance relative to the expectations we have set based on advanced booking and larger transactions that
we did. But as we built through the quarter, we saw a nominal worsening relative to past trends. And what
that meant was a slight degradation in the close rate and an elongation of the sales cycle.

We're seeing a strong pipeline. It's the close rate that we're seeing the slight degradation on. So given
that phenomena, what we've opted to do is be conservative in building a nominally worsening guide for
those in FY '24 as it relates to our top line view.

**John Stephen DiFucci**
_Guggenheim Securities, LLC, Research Division_

Okay. That makes sense. And if I could, just a quick follow-up to that, Pete. It sounds like the NRR is
going to -- though you said it will decline to the high teens by the end of the year. So it sounds like it's
progressively. And I realize that's a trailing 12-month metric. But does that imply that -- should I be
thinking about that as like the year-over-year subscription growth or perhaps the ACV growth would also
decelerate throughout the year too? Or is it not quite that?

**Pete Godbole**
_CFO & Treasurer_

So the net dollar retention rate, John, aligns with our billings guide, if you think of the top line, those are
intertwined. And the same factors that affect the billings guide we just walked through are at play for
the net dollar retention rate. So you're seeing a basic macroeconomic impact. We have a pretty healthy
growth rate but there's a macroeconomic impact that puts a slight pullback from those rates, if you will.

**Operator**

Your next question is from the line of Brent Thill with Jefferies.

**Brent John Thill**
_Jefferies LLC, Research Division_

-----

Mark, on the enterprise, it seemed like that held up better. Can you just give us a little more color on
what you're seeing and kind of back to Pete's comments in the monitoring of demand? Or where are you
factoring in for the enterprise close in the back half? And for Pete, just when you think about the economic
headwinds worsening, did you see that across multiple countries? Was it more pronounced in Europe
versus U.S.? Any color you can get from a geographic perspective would be great.

**Mark P. Mader**
_President, CEO & Director_

Brent, I think one of the things that I was looking for in the quarter was how the conversion of pipeline
that extended in the previous quarter played out. So one of the things that was really encouraging to see
was in business that did extend last quarter, a lot of that business converted this quarter. And when I look
at our net sequential adds on over $50,000, $100,000, we saw really healthy numbers. We added, I think,
138 over $100,000 customers. We added over 240 over $50,000. So I was really pleased to see that.
So we continue to see strength there. I think the expectations from customers is clarity on what one's
presenting to them and how it connects to value. Are you helping me identify new sources of revenue? Are
you helping me retain my existing ones? Are you helping me drive savings? So some of them spoke to in
my remarks, spoke to that ability to help customers expand or drive savings. And that remains very much
alive and well.

I think the -- going into the year, I feel like we have a sales team, which is probably the most ramped
team we have -- have had heading into a year. So I think that will continue to yield nicely on that part of
our business.

Now as we make investments in our product, I'm also as motivated to continue to drive that product-led
growth piece, which builds all the future growers. So we do talk about enterprise a lot, but I think there's
also some really favorable things coming out this year, which helped lay that foundation for future growth.
Pete?

**Pete Godbole**
_CFO & Treasurer_

Sure. And then to the second part of your question, we did see more macroeconomic, sort of, what I call,
pressure in Europe. That's one part of it. But between the customer base over here, we saw really good
success with our larger enterprise customers. And we probably saw a little more pressure with our SMB
and smaller ARR customers. So that's a little bit of texture where we saw it.

**Operator**

Your next question is from the line of Josh Baer with Morgan Stanley.

**Seoyoung Lee**
_Morgan Stanley, Research Division_

This is Sophie Lee on for Josh Baer. I'm wondering if you saw any benefit of vendor consolidation? And if
you saw any customers consolidating to the Smartsheet platform? If you can also highlight any customer
conversations that changed meaningfully in the past quarter and some of the outcome of that discussion?

**Mark P. Mader**
_President, CEO & Director_

I think on the consolidation front, Sophie, we're seeing -- it's quite common when we have a multi -$100,000, multimillion dollar opportunity that there is presence of others in the environment. I think
where we benefit is we have very commonly presence within multiple nodes of the business. We remain,
I think, really grateful for those high conversion rates in those situations. I spoke to one of those in the
biopharma space this year, which was a bake-off where we were able to demonstrate the value and they
moved quite quickly. That is going to be a very large account for us over the next 10 years.

-----

So I would say the number of times, there is that formal RFP really high diligence bake-off, those are still
pretty few and far between, but they typically happen on the accounts that really matter. So we definitely
put energy into those when they do come about.

**Operator**

Your next question is from the line of Alex Zukin with Wolfe Research.

**Aleksandr J. Zukin**
_Wolfe Research, LLC_

Good to see a solid quarter, and congrats on kind of the margin guide. Just 2 quick ones for me. First, if
we dig in a little bit to the macro factors that you saw in the quarter versus what you guided to getting
worse. I guess clearly, your churn was strong at some 4% but maybe if you split up what you're seeing
around expansions with existing customers versus net new, where are you seeing that bigger impact from
the macro, any downward pressure on renewals? And then I have a quick follow-up.

**Pete Godbole**
_CFO & Treasurer_

So Alex, I'll take your question in pieces. So first of all, the net dollar retention rates are fairly healthy.
And the pullback that we've seen is on the expansion side of it tied to sort of what's happening in the
macro. And what we've seen is it's been relatively strong with our larger customers and our enterprise
customers, and there's a little more pressure with the SMB and smaller ARR customers. So that's how
we've seen it play out. We haven't seen, as I said, the churn number materially get impacted. So we've
seen fairly strong commitment to the Smartsheet platform.

**Aleksandr J. Zukin**
_Wolfe Research, LLC_

Perfect. And then, I guess, with respect to the margin guidance, maybe talk about through the linearities
through the year, the exit rate that we should be looking at for fiscal '24. And specifically, as you
contemplate kind of this net new growth algorithm -- growth profitability algorithm where your billings
growth is at that kind of 20% level, what is the aspiration around sales efficiency in terms of that magic
number or the ability to kind of generate a balance of both?

**Pete Godbole**
_CFO & Treasurer_

So I'll start by saying that this is a big market, and we think there's plenty of room in the growth in this
market long term. We're bullish in this market, and we are the leaders in the enterprise segment and
across the whole category. So when we think of this business in terms of the longer-term growth, we see
this as a solid growth.

Now there's going to be macroeconomic adjustments as we go through different cycles of macroeconomic
change. So that's one part of it. But the second part of your question is on the profitability and how
we think of that moving forward. We're going to continue to be optimizing essentially the scale we've
attained. So if you think of the scale we've achieved, we don't need to add a lot of resources just given
the scale in terms of where we're at. And we're being more and more efficient because the -- every dollar
we've already gained cost us a lot less to serve compared to the dollar we need to invest to gain. So that's
playing into the economics you're seeing in sales and marketing is going to continue through. So you're
going to see that play itself in the future as well.

**Operator**

Your next question is from the line of Terry Tillman with Truist Securities.

**Terrell Frederick Tillman**
_Truist Securities, Inc., Research Division_

-----

I had to look at the press release like 3 times because I kept looking at -- is that $110 million of free cash
flow and surely it was. So great to see that. I have 2 questions. The first one is a multi-parter. And then
the second question, I'll follow up with. But on the first question around product and packaging. I think,
Mark, you said you have 3,300 customers that are considered enterprise. But I'm curious about is the
penetration of Advance now in that segment? And then if we take a step back, if we're looking at 23% to
24% growth in the total revenue, how should we be thinking about the enterprise segment? And then I
have a follow-up around [indiscernible].

**Mark P. Mader**
_President, CEO & Director_

Terry, the 3,300, again, that ties out to the large enterprise. That's over 10,000 employees. We obviously
have many more companies north of 2,000 employees as well. So in that very large segment, it is still
really early innings for Advance. We have -- while the bookings do tie out to a lot of the larger transactions
we have, it's a minority of that base. So we think it's still -- we're trying to figure out ways in addition to
our people-based processes to get these capabilities presented to people.

As I said on past calls on some of our road shows, we are working on both getting our professional sales
team able to solution advise and do outcome mapping with people, while getting our advanced product
line into a self-discovered state. So what that means is people at those 3,300 customers using our product
in the context of what they're trying to solve, whether it's integration, whether it's providing advanced
access to data, having those things presented to them [indiscernible] having them experience those things
and then do -- really have inbound demand to us saying, hey, we use this thing, we'd like to talk to you
about this capability, which ultimately leads to a discussion of Advance.

So we are still, call it, second inning on the Advance penetration as it relates to these super large
customers. What's neat though is that we have enough data points now that really help us understand
how people are adopting those, what it means for connected users and how that flows through on the
economics.

**Pete Godbole**
_CFO & Treasurer_

And Terry, the second part of your question is that -- was on the 23% to 24% revenue growth and how
that parses out across segment. So our revenue growth is a function of our billings and our net dollar
retention rates, you think of the largest customers, they grow with us the fastest as we -- as Mark shared
on our biggest large enterprise customers, you can see the growth rate is really quick. And the best part
about that is they will grow faster than our median growth rate but what's interesting is that our biggest
customers are the most profitable for us as well. But that's the scale that leads to the $110 million you
see, which you referenced at the start. So we're pretty excited by those economics.

**Terrell Frederick Tillman**
_Truist Securities, Inc., Research Division_

Yes. Got it. And I guess just following up on the first part of the question. I mean, Mark, you were kind of
going down the path of product discovery. And I know we've talked about that a bunch in the past. You
go on the website. And if you just look at the sheer number of capabilities, a lot of these folks probably
don't even know all of what is under the hood, but is there a point in time this year where there is a major
kind of milestone where whether it's the technology, the AI or people they could really unleash this where
potentially this could become an upside driver around some of the product discovery initiatives on whether
it's billings or revenue?

**Mark P. Mader**
_President, CEO & Director_

Yes, Terry, we expect to benefit from this beginning in the second half. So engineering is underway right
now. Some of that self-discovery will be available heading into the second half. And consistent with how
Pete and I have forecasted the business, until a new idea, a new concept, the new innovation yields, we
don't bake it into our guide. So I would see that, Terry, if it performs to be incremental.

-----

**Operator**

Your next question comes from the line of Michael Turrin with Wells Fargo Securities.

**Michael James Turrin**
_Wells Fargo Securities, LLC, Research Division_

Great. Appreciate you taking the question and nice job with the close of the year. I think given the
prepared remarks, the focus on enterprise is clear. Could you just speak to how margin complements
that? I would think that could prove more people heavy, but clearly not the case given you're giving 10
percentage points of implied free cash flow margin expansion into next year. So can you just add more on
what enables that from the Smartsheet side and how you're able to balance both an enterprise focus and
the margin expansion in the current environment?

**Pete Godbole**
_CFO & Treasurer_

Sure. So Michael, 2 parts of it. The first one is, when you think of the enterprise customers and you think
of their -- the growth rates they have, that's a really high number. It sort of is better than our average by
a fair bit. And what that does for us is it creates a space where if you're looking at our growth and you're
looking at how much we invest in retaining the dollars we've already got, that's a fairly low number.

So that provides the basis for the margin accretion. We are investing in getting the new dollar, but
the base is growing by such a large number that it provides natural scale impact benefit to sales and
marketing. So that's one part of the equation. And the second part of the question is just a simple part of
-- we hired a lot of people last year given the size at which we are, and we don't need to hire the same
number of people and that lower hiring that we're going to go through this year is margin accretive. Those
are -- think of them as 2 simple facts that really drive the margin story.

**Michael James Turrin**
_Wells Fargo Securities, LLC, Research Division_

That's helpful. And then, I guess, just the other point that you mentioned in the prepared remarks, Pete,
was just also making sure you're able to capture the improvement whenever that were to surface in
the world. So it sounds like you have some natural capacity to grow into, but just how you continue to
thoughtfully add capacity to make sure you're striking the right balance?

**Pete Godbole**
_CFO & Treasurer_

Yes. For us, we are a sales-assisted motion. And now we've [indiscernible] with obviously the selfdiscovery that makes that motion go faster. But if you think about the way we've modeled it, we've
modeled our sales productivity in line with the way we think the macro is going to play. If the macro
changes and it turns on us, you will see a ramp in sales productivity because we've already got a ramped
sales force we brought in this year that's now enabled with the best technique. So we're ready to get
there. So that's the upside we see as the environment changes or as Mark mentioned, as we see the
benefit of some of these things, which we can measure, we can put more energy behind those initiatives
and drive upside to the current plan we have.

**Operator**

Your next question is from the line of Pinjalim Bora with JPMorgan.

**Pinjalim Bora**
_JPMorgan Chase & Co, Research Division_

Congrats on the quarter. Mark, good to hear that you're kind of leaning in on generative AI. Maybe help
us understand some of the use cases. But more fundamentally, how do you differentiate with generative
AI when everyone is kind of rushing to implement those large language models? Do you think it becomes
kind of table stakes at some point versus kind of increasing competitive advantage?

-----

**Mark P. Mader**
_President, CEO & Director_

Yes. I love the question. I think those who sprint towards embedding a standard capability that is not
differentiating can say that they're participating. But I actually don't think it really separates you from
the competition. I think the marriage between what is distinct and unique to your offering paired with
generative AI, that's the magic. So when we think about our assets and digital asset management,
whether it's the generation or images, manipulation of images that is paired with the Brandfolder and
Outfit offerings.

When I think about where we see major value unlocks in our world in terms of Smartsheet [indiscernible],
I think of the thousands of cases we get every single quarter from people saying, trying to figure out how
to design the most advanced formula and logic-based workflows in our app.

We've already done research. We've already generated formulas and logic with the help of generative AI,
which we think will be a major design win for customers. So when you think about -- it's not just driving
down the cost, it is unlocking a whole new set of population that in the current form may be dissuaded
from taking the next step. So I think it's in the context of the work people are tracking and designing
in Smartsheet, the digital asset. And then the third vector is really all of the inflow we get from our
customers into our help center.

People are trying to -- when you look at the percentage of cases that come in, it's not break/fix. It's
typically grounded in how do I -- and how do I unlock with generative AI is significant. So the very
promising remark that I made in my remarks ties up to those 3 vectors that we're pursuing. And you'll
see us continue to engage our community and our customers through Early Adopter Program in the
coming quarters. And I would say I'm quite bullish for the out years in terms of what that means for our
customers.

**Pinjalim Bora**
_JPMorgan Chase & Co, Research Division_

Got it. Understood. And Pete, one question for you on the FCF guide. Obviously, it's extremely strong. But
help me understand kind of the context with respect to stock-based compensation on that. Seems like SBC
is growing about 23%, our understanding is that hiring is probably going to moderate. Help us understand
the FCF guide versus the SBC number. Is there a change in kind of comp structure going into this fiscal
year?

**Pete Godbole**
_CFO & Treasurer_

So the guide we provided obviously shows an improvement in the GAAP margins as well. So you can see a
proportionate improvement in the GAAP margins consistent with the non-GAAP margin improvement, and
it embeds a stock-based compensation element that basically shows it's being -- we're managing it to be
flat year-on-year. And we've taken a sort of special emphasis and initiatives that we can use to reduce the
stock-based compensation.

Obviously, there is a stacking effect that happens in stock compensation of previous historical brands. So
we're very mindful of what we're adding into the pile. And for example, this quarter, we made the change
to convert the bonuses we paid to senior employees, which used to be in stock to convert them to cash.
That's an example of, among many others of how we're managing stock-based compensation.

**Operator**

Your next question is from the line of Rishi Jaluria with RBC Capital Markets.

**Rishi Nitya Jaluria**
_RBC Capital Markets, Research Division_

Wonderful. First, I wanted to maybe hit a little bit on the macro side. And what sort of impact have you
seen from your existing customer base? And what are you kind of contemplating from the seat count

-----

reductions or I guess the layoffs you've been seeing across and what that means on the seat count side? I
know you're very well diversified, but we've seen a lot of layoffs in tech. So maybe you could talk through
what you've seen so far, what you're modeling and any tools that you've kind of had in your arsenal to be
able to counteract that or maybe slightly offset that? And then I've got a quick follow-up.

**Pete Godbole**
_CFO & Treasurer_

Yes. So the -- for us, the major element of what we're seeing is when you think of the expansion, it's
really on the gross expansion side of it. We're not seeing anything more than the normal historical
movement on what we would consider reduction. And to parse that even further, we are seeing sort of
what I call some seat churn, but that's not unusually different from the capability churn we see. So it's
sort of aligned and moving in lockstep together.

Some part of that obviously comes down to what we're doing. So what we're doing is we don't have an
ELA type model. What we have is the earned enterprise, which means we don't sell seats ahead of their
usage. People are using them, they leverage them. It is the same concept we use for connected users.
You're not paying for users you don't need. That really helps keep people on the side of the ledger where
they're staying with what they have. And then the question really becomes one of, what are you adding to
the list? Or how much are you going to add and when are you going to add those?

**Rishi Nitya Jaluria**
_RBC Capital Markets, Research Division_

Got it. That's helpful. And then the other kind of macro-related question, I wanted to better understand.
Pete, when you were talking about the impacts that you're modeling, you've seen lower close rates, you're
assuming that degrades further, which makes a lot of sense. Have you also seen deal compression as
well in terms of you thought a deal would be, call it, $1 million in ARR, and it ends up coming at less than
that, $800,000 or whatever be the case? And what are you modeling in terms of deal compression going
forward? Is that embedded in guidance?

**Pete Godbole**
_CFO & Treasurer_

Yes. So Rishi, we've modeled the trends we've seen. And so what we have modeled is some degradation,
the close rate. We've modeled some elongation in the sales cycles. And the deal compression that happens
typically is people deciding not to buy is not the issue, they're buying either things a la carte and in
smaller pieces. So it's still a healthy expansion rate, which is what I was looking at. Looking at our
expansion rate is healthy. And even the one we've guided to is a healthy expansion rate. It's just a matter
of moderation in the macroeconomic phase that exists.

**Mark P. Mader**
_President, CEO & Director_

Rishi, I think one thing also that has been helpful is there are some of the transactions this last quarter,
I would class as compliance-based licensing. So we have an agreement with you, you use the product
extensively. You have all these connected users and that discussion happens around, okay, here's the new
level at which you're engaging with the platform. It's not you making a choice over, oh, I think this would
be interesting, I didn't get value. It's a decision you made quarters ago that you're not clicking into and
those discussions are usually much more high velocity because it's really maintaining compliance than it is
making a new business decision.

**Operator**

Your next question is from the line of Jackson Ader with SVB Securities.

**Jackson Edmund Ader**
_SVB Securities_

-----

The first one, just given that these things are happening concurrently, like how confident are you -- there's
been a lot of discussion with [indiscernible] how confident are you that none of the [indiscernible] or close
rates are impacted by some of the expense cuts that you've made over the last kind of 6 to 12 months?

**Pete Godbole**
_CFO & Treasurer_

Jackson, the short answer to your question is, if we've made expense reductions, we've made them
in areas which are ancillary to the core selling or product areas. So we made changes, for example, in
support resources. We made changes in expenses that we spend on, we just reduced the dollar value
of those normal procurement type of things. So we haven't -- we've actually maintained our sales
capacity, and that's one thing we're pretty excited about going into the year. So when you talk about deal
compression or you talk about elongated sales cycles, that's really about what customers are feeling and
experiencing as they're making plans of their own on how to plan their business.

**Unknown Analyst**

Okay. Yes, that makes sense. So they're outside of the scope that you would expect to see. Okay. And
then, Mark, when we're talking about those rare instances where it might be a bigger RFP and Smartsheet
is already installed in a couple of [indiscernible], are there any business units that you feel like have an
outside influence on the ultimate company-wide decision, whether it's finance or IT or sales, marketing,
whatever?

**Mark P. Mader**
_President, CEO & Director_

I would say [indiscernible] user population as well as those responsible for ensuring a safe and scaled
environment. And I would say there are certain things that are non-negotiables where you have to
conform, whether that's in how it's administered, how you are licensed, how you allow non-licensed
people to interact with the information that is being stored. Those are all things that are, I think, pretty
tried, true and tested in that enterprise environment. I would say that the organization from a functional
standpoint, which I think are getting outsized sort of wait on the scale right now are those who are tying
out to revenue and both growth and retention. So I think the presence of field ops, any organization is
directly tied to customer experience, and financials, I would say, it plays a larger role today.

**Operator**

Your next question is from the line of DJ Hynes with Canaccord.

**David E. Hynes**
_Canaccord Genuity Corp., Research Division_

Mark, can you talk about what you've seen with some of your more marketing-oriented use cases,
Brandfolder, Outfit? It just feels like that's a category of spend that's seeing more scrutiny. So it would be
great to get any observations there.

**Mark P. Mader**
_President, CEO & Director_

Yes. I think conversations in the marketing and creative management arena that tie out to sort of concrete
financial benefit, like that presentation of value is landing very well. I think things are that are more
qualitative in nature in terms of being more confident about the work you're managing, being a little bit
more clear on the status of something still important, but probably not enough to tip the scales.

So on most of our large marketing-based solution discussions now, we are grounding it in accelerating
the completion of work, the elimination of third-party resource to get that work done and then the
quantification of what that campaign or that asset is actually yielding for your company. And people are
very interested to learn about how to quantify that. And the more weaken our marketers in going to their
CFOs, Pete, no offence, right, in presenting the value, I think that really gives the marketing teams much

-----

more confidence. So it's a newer arena for many marketing organizations, but I think it's -- it actually is
quite promising for the year ahead.

**David E. Hynes**
_Canaccord Genuity Corp., Research Division_

Yes. Okay. That's helpful. And then, Pete, just a follow-up for you. So look, in the context of the big
margin upside next year, and I know this is a question you won't want to answer, but can you help frame
like what kind of sales capacity you're thinking of adding in fiscal '24, maybe relative to what you did in
fiscal 2023? And the reason I ask, like, I think investors are going to want some assurances that we're
continuing to invest and position for growth in fiscal '25 and beyond. So any color there would be helpful
for folks.

**Pete Godbole**
_CFO & Treasurer_

So DJ, I think we're committed to growth. So think of that growth coming from a more efficient model.
So quite simply, if you think of the size of our base that we bring in for renewal, the cost in terms of what
it takes to service that base is much lower than what the cost is for bringing in a new dollar of business.
That economic or that effect is going to stack into how many resources we need. And now we will continue
to hire. We're going to hire this year as well. We'll hire next year, but the classes in size will be smaller
than what we have historically done. So you see an accretion to margin as a part of our longer-term plan
to grow margins.

**Operator**

Your next question is from the line of Scott Berg with Needham.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

Everyone, congrats on the nice results this quarter. I guess, Mark, I want to start with a question on a
totally different kind of, I guess, agenda is the company is pretty close to a $1 billion revenue run rate.
How does Smartsheet look differently at a $2 billion run rate, do you think?

**Mark P. Mader**
_President, CEO & Director_

I think the enrollment, Scott, of many more customers having a diversified experience in Smartsheet, that
will be very much present at $2 billion. So today, we talk about thousands of companies benefiting from
Advance. I think a couple of years from now, we're going to see tens of thousands of organizations having
a much more complete Smartsheet experience.

So a couple of years ago at Analyst Day, someone said, what's the thing you would most like to have
in your product and you know what, don't give me another thing. I want our customers to have perfect
information on what's possible. Now fortunately, I have done a whole bunch of them in those 2 years, but
I want those assets, those capabilities to land with our median customer. So we are working very hard,
not just to cater to the largest of the large, but how do you get that midsized customer and that upper
mid customer and even an emerging customer to understand the power of the platform. So I believe
you're going to have a much more cross-connected product experience across the various disciplines
within Smartsheet, whether it is on strategic transformation, it's marketing creative management, it's
PPM, it's core work management. You're going to have much more complete usage. And today, you'd see
-- you'll have evidence of hundreds of customers using us at scale, doing very sophisticated things that
will be driving towards the [indiscernible].

And I would say what that will result in is not only more customers, but also a significantly higher average
contribution per customer. So our ASP will climb meaningfully over the next few years as a result of that.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

-----

Got it. That's very helpful. And then from a brief follow-up perspective, a lot of discussion on the macro,
obviously, not a surprise given what's going on. But how do you all view your opportunity or recent
working with partners? Partners continue to become increasingly more important component of, I think,
some of your sales process, it's not that they necessarily sell directly, but they seem to influence it. Are
you seeing anything different out of partners recently than maybe what you had in the past?

**Mark P. Mader**
_President, CEO & Director_

I'll start, Scott, by talking to -- a message I sent to -- a video message I did for the kickoff of one of
our global SIs who has one of their global practices building a set of workflows and solutions on the
Smartsheet platform. In this -- for this large global SI, every single M&A transaction and divestiture
within this industry practice is backboned by Smartsheet. Every single project they do is navigated with
Smartsheet. Every time they leave the customer site post that transaction being completed, Smartsheet is
left behind with the customer for it to continue in those operations.

So that is a few years ago, those types of discussions, those types of experiences never existed. It was
much more the midsized SI. We still have hundreds and hundreds of SIs in the middle range who are
contributing, influencing. We do as much co-selling with them as we do them closing deals independent
of us. But I would say the really notable ones, the ones that sort of give me the most confidence in terms
of high impact are those larger players who are developing practices around us. And that is not just one
global SI. We have 3 of those in play right now.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

Very good. Congrats on nice results this quarter.

**Operator**

Your next question is from the line of Robert Simmons with D.A. Davidson.

**Robert Edward Simmons**
_D.A. Davidson & Co., Research Division_

I was wondering, given the way valuations have generally come down and maybe stabilized a little bit
privately, what's your current thought for us on doing further M&A? And kind of how much cash do you
need to keep on your balance sheet? So kind of what's going in your capacity or bandwidth?

**Pete Godbole**
_CFO & Treasurer_

So we have a healthy cash balance. And our approach to M&A has been that we want to look for
adjacencies when they come up, but they have to be accretive relative to our margin model. So we're not
looking for visionary M&A that doesn't have a clear payback or a clear ROI. So that's been our strategy,
and we continue to pursue that aggressively.

**Robert Edward Simmons**
_D.A. Davidson & Co., Research Division_

Got it. And then talking about an existing one. Can you tell us about how it has been performing, a little
more quantitatively perhaps than you did before in terms of like a lot of -- like the actual performance?

**Pete Godbole**
_CFO & Treasurer_

So Outfit has performed to our expectation. It's done a really kind of effective job. The way we went
about Outfit was it really tags along with Brandfolder as a part of templating that you need when you're
doing Brandfolder deals. And we're seeing a good sort of, what I call, synergistic effect and the product
integration we're thinking about between Brandfolder and Outfit makes this even more compelling when
that comes through.

-----

**Operator**

Your next question is from the line of Jacob Roberge with William Blair.

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

Congrats on your results, especially on that profitability guidance. It was awesome to see. I understand
there was a slight degradation in close rates and sales cycles, but you're still seeing some pretty strong
new customer activity with new bookings and the user growth number. I know those customers start
small, but were there any particular segments or industry verticals that stood out on that front?

**Pete Godbole**
_CFO & Treasurer_

I think if you look at the segments that come out for us, which are very strong, in that new user, et cetera,
we've launched essentially a lot of new activities with customers. And what we're seeing is our largest
customers that come in from the largest companies, new nodes within companies coming forward, they
seem to be really resonating with our product. And what they're hearing is capabilities can be launched
earlier. We still do deals with Advance, which surprises sometimes us internally that says it's a new
customer, they start with the brand. That's somebody deciding that they don't want the primitives as they
get started. They just want to start with what gets them the lift in productivity that they need.

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

Okay. Great. And then would love to just touch on what you're seeing in the market from a competitive
perspective. It seems like some of your competitors are calling out some headwinds and undergoing some
fairly large risks, while you're obviously continuing to execute pretty well. Have you started seeing any
competitive benefits in the pipeline as a result of those changes?

**Pete Godbole**
_CFO & Treasurer_

So what we are seeing is -- 2 things happening. First is the market for hiring talent has obviously gotten
better, which is a macro statement about everything we've done. And then the one thing we are finding
is on the marketing side, the competition for [indiscernible], et cetera, is proving to be easier. The cost is
dropping over there. So we're benefiting on those 2 fronts.

**Mark P. Mader**
_President, CEO & Director_

I think in terms of the teams in our pursuit, the large opportunities that we pursue, where we have
established footprints, those are very rarely highly contested. It's really us demonstrating value and
seeking greater investment from our client. It's pretty rare that one of our large existing customers that's
growing quickly that they're in the process of reconsidering -- considering a platform change. So it's -- we
really haven't seen that manifest or the median sales cycle for us.

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

Great. Congrats again on the great results.

**Operator**

Your final question comes from the line of Steve Enders with Citi.

**Unknown Analyst**

This is George on for Steve. I guess on the macro, if you could discuss the degree of linearity you saw
through the quarter, it sounds like things may be progressively got worse on the conversion rates and
sales cycles. So just any comments there. And then what you've seen in February and March so far?

-----

**Pete Godbole**
_CFO & Treasurer_

So as we looked at the quarter and how it played out, the build through the quarter had some element of
what I call, degradation that took place between November, moving into December and January, that you
could describe as the elements I described before, that macro degradation was a function of like elongated
sales cycles and what I call some degradation of the close rate that we saw. We saw that play out as we
progressed through the quarter. So that's first part of it.

What have we observed so far in February, I think we've got to a February start, which is consistent with
the first month of the quarter. But essentially, the trend we expected to have continue, which is a part of
our guide. It's built out. We have seen the close rate and what I call sales cycles, not sort of improved,
they stayed sort of marginally a tad bit sort of worse than [indiscernible]. So that's how they played out.

**Unknown Analyst**

Got it. That's helpful. And then one quick follow-up on the margin guidance in your sales and marketing
spend. I just wanted to kind of understand if there are any kind of KPIs that you would see that might lead
you to sort of turn on that investment flow? Or is this kind of all sort of according to plan and regardless
of what you see in the macro side, you're kind of going forward with this ramp sales force that you have
today?

**Pete Godbole**
_CFO & Treasurer_

I think, George, our model is based on sort of reading the signals and seeing what comes out. So I would
describe it to you is if we see a macro opportunity, as long as the ROI and the payback is there, we will
continue to invest, which sort of provides the stability in op margins, but allows us to accelerate revenue
on one side of it. We'll do the same thing with -- for example, things we generate internally, we see
something that has [indiscernible] and it's driving to good ROIs, we'll continue to invest behind it. That's
the approach we're taking.

**Operator**

At this time, I will now turn the call back over to Mr. Aaron Turner.

**Aaron Turner**
_VP of Investor Relations & Treasurer_

Great. Thanks, everyone, for joining us this quarter, and we'll talk to you again next quarter.

**Operator**
Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now
disconnect.

-----

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END DOCUMENT 1

BEGIN DOCUMENT 2:
##### 04-May-2023
 (TEAM)
## Atlassian Corp.

##### Q3 2023 Earnings Call

##### Total Pages: 18

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

### CORPORATE PARTICIPANTS

Corrected Transcript

04-May-2023

Martin Lam
Head-Investor Relations, Atlassian Corp.

Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Joe Binz
Chief Financial Officer, Atlassian Corp.

Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.

Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

......................................................................................................................................................................................................................................................

### OTHER PARTICIPANTS

Gregg Moskowitz
Analyst, Mizuho Securities USA LLC

Brent Thill
Analyst, Jefferies LLC

Keith Weiss
Analyst, Morgan Stanley & Co. LLC

Fatima Boolani
Analyst, Citigroup Global Markets, Inc.

Michael Turrin
Analyst, Wells Fargo Securities LLC

Kash Rangan
Analyst, Goldman Sachs & Co. LLC

Michael Turits
Analyst, KeyBanc Capital Markets, Inc.

Keith Bachman
Analyst, BMO Capital Markets Corp.

Frederick Havemeyer
Analyst, Macquarie Capital (USA), Inc.

Ryan MacWilliams
Analyst, Barclays Capital, Inc.

Adam Tindle
Analyst, Raymond James & Associates, Inc.

Peter Weed
Analyst, Sanford C. Bernstein & Co. LLC

Ari Terjanian
Analyst, Cleveland Research Co. LLC

Jake Roberge
Analyst, William Blair & Co. LLC

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

### MANAGEMENT DISCUSSION SECTION

Corrected Transcript

04-May-2023

**Operator: Good afternoon and thank you for joining Atlassian's Earnings Conference Call for the Third Quarter**
of Fiscal Year 2023. As a reminder, this conference call is being recorded and will be available for replay from the
Investor Relations section of Atlassian's website following this call.

I will now hand the call over to Martin Lam, Atlassian's Head of Investor Relation.
......................................................................................................................................................................................................................................................
##### Martin Lam
Head-Investor Relations, Atlassian Corp.

Welcome to Atlassian's third quarter of fiscal year 2023 earnings call. Thank you for joining us today. Joining me
on the call today, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes;
our Chief Revenue Officer, Cameron Deatsch; and Chief Financial Officer, Joe Binz.

Earlier today, we published a shareholder letter and press release with our financial results and commentary for
our third quarter of fiscal year 2023. The shareholder letter is available on the Atlassian's Work Life blog and the
Investor Relations section of our website, where you will also find other earnings related materials, including the
earnings press release and supplemental investor datasheet.

As always, our shareholder letter contains management's insights and commentary for the quarter. So, during the
call today, we'll have brief opening remarks and then focus our time on Q&A.

This call will include forward-looking statements. Forward-looking statements involve known and unknown risks,
uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results expressed or implied by the forward-looking
statements we make. You should not rely upon forward-looking statements as predictions of future events.
Forward-looking statements represent our management's beliefs and assumptions only as of the date such
statements are made and we undertake no obligation to update or revise such statements should they change or
cease to be current.

Further information on these and other factors that could affect our financial results is included in filings we make
with the Securities and Exchange Commission from time-to-time, including the section titled Risk Factors in our
most recently filed annual and quarterly reports.

In today's call, we will also discuss non-GAAP financial measures. These non-GAAP financial measures are in
addition to and are not a substitute for or superior to measures of financial performance prepared in accordance
with GAAP. A reconciliation between GAAP and non-GAAP financial measures is available in our shareholder
letter, earnings release and investor datasheet on the IR website.

Please keep in mind that we'd like to allow as many of you to participate in Q&A as possible. To facilitate that,
we'll take one question at a time. Please rejoin the queue if you have another question or a follow-up and we'll do
our best to come back to you later in the session.

With that, I'll turn the call over to Scott for opening remarks.
......................................................................................................................................................................................................................................................

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

##### Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Corrected Transcript

04-May-2023

Thank you for joining us today. As you've already read in our shareholder letter, we delivered another solid
quarter of financial results, and continue the steady drumbeat of innovation to help our customers transform the
way they work. We've just wrapped Team '23, our annual Atlassian conference, where we gathered with
thousands of customers and partners.

The Atlassian community has never been stronger and the enthusiasm for our product announcements was
unmatched. We introduced Atlassian Intelligence, a virtual teammate which uses generative AI technology and
leverages the Atlassian platform to accelerate customers work in a way that is tailored to them. With 20 years of
knowledge reflecting how hundreds of thousands of software, IT and business teams plan, track and deliver work,
Atlassian Intelligence is like a floodlight, lighting up new customer insights. We're excited to see how AI will
unleash our customers potential and strengthen our competitive advantage.

In addition to Atlassian Intelligence, we also announced exciting new features and platform enhancements,
including Confluence in whiteboards and databases, supports up to 50,000 users in our cloud, and Beacon, our
new threat detection and mitigation product, just to name a few. It's incredibly exciting to think about the
opportunities we have in front of us. With unique features and capability for Atlassian Intelligence and the platform
innovations we're delivering, customers are more enthusiastic than ever to migrate to the cloud, and we look
forward to helping them on that journey.

With that, I'll pass the call to the operator for Q&A.
......................................................................................................................................................................................................................................................
### QUESTION AND ANSWER SECTION

**Operator: We will now begin the question-and-answer session. [Operator Instructions] Your first question comes**
from Gregg Moskowitz from Mizuho Securities. Gregg, your question please.
......................................................................................................................................................................................................................................................
Gregg Moskowitz
Analyst, Mizuho Securities USA LLC
# Q

Okay. Thank you very much for taking the question. Good afternoon, everyone. You mentioned in the shareholder
letter that the Q4 guide includes an assumption of increasing headwinds for churn and for premium addition
upsells, even though you yet to see a significant impact in those areas, and I think that's prudent. But wondering if
you could contextualize this a bit more for us, for instance, are you basing in a modest incremental headwind, or
would you say that it's more substantial in that?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks, Gregg. Really no change to our guidance approach that we took back in February when it comes
to the cloud guidance specifically. That cloud guidance range assumes the macroeconomic environment gets
worse in Q4 and year-to-date trend lines continue into Q4. You're right to call out the fact that the low-end of that
range not only assumes continued weakness in the two drivers that we've seen to-date around paid seat
expansion at existing customers and free-to-paid conversions, but it also does include some macro impact to
areas that have held up well year-to-date, like churn, upsell and migrations.

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

So, we do expect and have built in pretty substantial macroeconomic headwinds at the low-end of that range. The
other thing I'd call out really quickly is, if you take that Q4 guidance, it puts our full-year FY 2023 cloud guidance
at 37% year-over-year. That's squarely within the range of the 35% to 40% we provided in February. So really no
fundamental change overall in our cloud outlook or our approach to guidance.
......................................................................................................................................................................................................................................................
Gregg Moskowitz
Analyst, Mizuho Securities USA LLC
# Q

Thank you, Joe. It's helpful.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Brent Thill from Jefferies. Brent, your question, please.**
......................................................................................................................................................................................................................................................
Brent Thill
Analyst, Jefferies LLC
# Q

Joe, EMEA grew 22% this quarter, I think last quarter was 30%. It seems like you had some weakness in the
region. Can you just give us a sense what happened there, and maybe, I'm just reading too much into the
numbers, but anything to call out there?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Awesome. Thanks, Brent, and great to hear from you. I'll start and then I'll let Cameron chime in. In EMEA,
revenue trends tend to be quite volatile quarter-to-quarter than the US. And the reason for that is pretty simple.
EMEA has been slower to adopt the cloud. So there is more data center revenue in the EMEA sales mix. And DC,
as you know, is inherently more volatile for two reasons. One is revenue recognition. 20% of DC license value is
recognized upfront. And then secondarily, customer purchasing behavior around data center pricing changes also
create some volatility. So, I wouldn't read too much into that. It's typically just a function of quarter-to-quarter
volatility,

But I'll pass it to Cameron for more on the customer insight.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. Repeating what Joe said there. But I would like to speak just to the cloud adoption in EMEA. Obviously, we
do see cloud adoption lagging behind the US and the Americas. But, in general, over the last year, as we've done
things like data residency in Germany, as well as higher requirements for [ph] ban fee (00:07:27) for financial
services organizations, we've been able to see more and more of our larger customers in Europe choosing to go
to cloud. We actually worked with a very large European bank over the last few months, getting them signed up
for cloud and we're starting to migrate them today. So, I will say that, although they're lagging, we are seeing that
adoption continuing to increase more in line with the US numbers.
......................................................................................................................................................................................................................................................
Brent Thill
Analyst, Jefferies LLC
# Q

Thank you.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Keith Weiss from Morgan Stanley. Please go ahead.**
......................................................................................................................................................................................................................................................

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Keith Weiss
Analyst, Morgan Stanley & Co. LLC

Corrected Transcript

04-May-2023

Excellent. So, I'm going to sneak in two questions. One, kind of more tactical and short term in nature and one
longer term. On the short term – and this is going off of Gregg's question. I think what a lot of people are trying to
understand is what the shape of the quarter was and how demand held up through the quarter, and whether that
influenced sort of the more conservative Q4 guide?

So, maybe if Cameron, give us a view on kind of like how the quarter progressed?

The longer-term question comes from sort of – I think the debate that all of us are having around like large
language models and generative AI, whether they're going to be disruptive or complementary to a lot of existing
businesses? You guys have already rolled out functionality when it comes to [indiscernible] (00:08:43) the ITSM
side of the equation. So, how do you guys think about that question, sort of the risk of being displaced by people
utilizing these new technologies versus your ability and what's going to make you sticky and being able to benefit
from them?

And does that necessitate, at all, kind of changing the pricing model, moving away from the per seat pricing
model, mainly to better sort of account for the value that you're adding that doesn't take place with the agent itself,
but takes place on the platform actually doing a lot more of the work?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Thanks for the question, Keith. This is Joe. I'll take the first part with Cameron, and then Mike will chime in on the
second. In terms of the linear nature of the quarter, we did not see anything unusual about the linearity of our
billings in the quarter nor did we see anything unusual in the month of April where trends were consistent with Q3.
Cam?
......................................................................................................................................................................................................................................................
Keith Weiss
Analyst, Morgan Stanley & Co. LLC
# Q

Perfect.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. I'd say, the only thing is, as all of you know, we did a price change on our server and data center license in
mid-February. That, of course, caused us some behavior throughout the quarter, but nothing significant
throughout the quarter beyond the reaction to the price changes. Mike?
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Yeah. Thanks, Keith. Great question. Look, quite clearly, what I can say from Atlassian's point of view, we think
that AI, large language models, as you mentioned, is a huge opportunity for us as a business. If you look at our
fundamentals, we've always tried to solve human problems, not technology problems, all right, which means, we
have a lot of customer knowledge and data entrusted to us over the last two decades. We have a fantastic
platform to build on top of that connects that knowledge together, and we have a fantastic R&D team to build
features on top of these things. So, AI allows our customers to be significantly more efficient to get to our mission
of unleashing the potential of every team. That's what we believe what we did.

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

So, from our point of view, we think our best opportunity to grow our business through the Atlassian Intelligence
feature set, is to drive customer growth, right. We have a goal of, in the long term, winning a Fortune 500,000, not
a Fortune 500, and we think these technologies will help us get there. That's why we're including the features in
all additions, rather than as a separate SKU. It's not a good customer experience, and we think it will slow
adoption to put it that way around.

We also obviously have a major trend [indiscernible] (00:11:15) migrations to the cloud in our business. Our
largest customers [ph] in data center (00:11:21) have the most amount of knowledge and data built up over time,
which means they can get the most amount of efficiency. And with this feature set being only available in the
cloud, it's a further reason for them to migrate or bring forward their migrations. And as we know that the migrated
customers have really great economics for Atlassian, faster expansion rates, et cetera. So, that's the reason we're
looking at it that way. Fundamentally, yes, a huge advantage for our customers, which is why we're in this
business in the first place. And secondly, that's how we're looking at growing Atlassian's business through the
Atlassian Intelligence feature set.
......................................................................................................................................................................................................................................................
Keith Weiss
Analyst, Morgan Stanley & Co. LLC
# Q

Awesome. Appreciate the color.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Fatima Boolani from Citi. Please go ahead.**
......................................................................................................................................................................................................................................................
Fatima Boolani
Analyst, Citigroup Global Markets, Inc.
# Q

Well, good afternoon. Thank you for taking my questions. Mike, maybe for you or Scott, on the Jira Service
Management product where a lot of the activity in action is really boosting the use cases that you think can be
deployed in specifically around external customer support use cases, and we're familiar with certain vendors in
that market. So, I'm curious what else needs to happen to really drive more monetization scale in JSM and
particularly, in the context of some of your very large customers, who are working through the head count
retrenchment process, where JSM can be very [indiscernible] (00:12:51) investment? And then a quick follow-up
for Joe, if I may.
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Sure. I can certainly take that for you, Fatima. Look, we remain incredibly bullish on our position in the ITSM and
ESM spaces, and obviously, Jira Service Management is a huge part of that. I think as customers naturally are
looking to be more efficient with their spend in a more turbulent economic time, that would lead to advantages. In
Jira Service Management, we'll continue to push those. We've invested heavily with Atlassian Intelligence feature
sets and virtual agents and all sorts of other technologies that make customers more efficient, make agents more
efficient, fundamentally allow them to process more requests per day, per hour with, hopefully, greater customer
fidelity as well. So it's one of the reasons we're incredibly bullish at the moment.

Second is, Jira Service Management, just to remind people, it lands predominantly in IT teams, but it does have a
great expansion story to other parts of the organization in terms of like HR, finance, marketing, legal areas which
are fundamentally service-driven parts of an organization that have their customers being other parts of the
organization. That has long been our thesis.

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

Again, our fundamental philosophy is that there are far more agents, we believe, inside a company than other
companies, I think and the other vendors think, because we're not just targeting the IT team. That said, obviously,
we have a wonderful landing spot through the development and IT organization and expansion, and we continue
to see that throughout the quarter as customers increasingly use Jira Service Management outside of IT teams
and that's a long-term growth vector for us.
......................................................................................................................................................................................................................................................
Fatima Boolani
Analyst, Citigroup Global Markets, Inc.
# Q

I appreciate the detail. And, Joe, the question for you is just on the cloud trajectory. I know a lot of us have been
grappling with how that segment is digesting and absorbing the pretty meaningful moderation you've seen in seat
expansion. And I know you alluded to in your shareholder letter that churn levels necessarily have not increased.
But can you help us sort of understand or at least maybe put some sort of a downside cap on how you're thinking
about that dynamic where you're really actively trying to manage gross seat churn in order to support that growth
in that segment?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks for the question, Fatima. When we look at the churn rates, especially customer churn, it's been very
consistent and stable throughout the year. That suggests there's nothing that's changed from our structural
competitive position. Customers continue to come to our site, try our products, our monthly active users, our free
instances. All of that seems very healthy and strong. So, churn has not been a big issue for us.

The primary driver of the pressure that we're seeing in that cloud segment is really around paid seat expansion at
existing customers and the free-to-paid conversion rates that we've talked about. The remainder of the business,
whether it's migrations or upsell or cross-sell, pricing, all those drivers continue to be very healthy from our
perspective. So that's really been the core issue that we've been working through.
......................................................................................................................................................................................................................................................
Fatima Boolani
Analyst, Citigroup Global Markets, Inc.
# Q

Thank you.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Michael Turrin from Wells Fargo. Please go ahead.**
......................................................................................................................................................................................................................................................
Michael Turrin
Analyst, Wells Fargo Securities LLC
# Q

Hey, great. Thanks. Good afternoon. Appreciate you taking the question. Maybe one for me on margin. We
entered the year expecting mid-teens operating margin. You just delivered a second consecutive quarter of 20plus-percent. Maybe, Joe, if you can speak to what's driving that uplift?

And then as a second part, at the investor session, there was a comment around fiscal 2024 as a year of
continued investment. So any color in helping us square that with just anything else you're doing to help optimize
on the cost side, as we're thinking through the puts and takes of margin trajectory and some of the offsets you
have within your control? Thank you.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

Yeah. Great question. Thanks for asking. If you look at our operating margin performance in the quarter, we did
outperform our expectations by 6 percentage points to 7 percentage points. 5 points of that was driven by lower
operating expenses and better operating leverage. Those operating expenses were – favorability was driven in
two primary areas. First, we have less- than-expected payroll-related costs from lower bonus expenses and head
count, including about $10 million in savings related to our restructuring. And then secondarily, we have less-thanexpected discretionary costs in areas like professional services and T&E is part of our plan that we discussed
earlier in the year to be responsive to the macro impact on our business and align our cost structure with revenue
growth.

I'll let Scott talk to the comments at Team '23. The last point I would make just is, the focus for the team has been
around maximizing the return on every dollar spent, making disciplined prioritization of resource allocation calls,
and driving operational efficiencies. And I really believe the team has done a really good job this year of executing
across those three things, and that's what you see showing up in that operating expense favorability. Scott?
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Yeah. Just to reiterate what you'd mentioned, Michael, for those that weren't at our investor call or at our TEAM
Conference that, yeah, we did say that we see FY 2024 being a continued investment year. We still see huge
opportunities out there in those areas. We talked about migrations, enterprise, ITSM that we're being aggressive
in investing behind, and we expect those investments to continue through FY 2024, of course, taking into account

[indiscernible] (00:18:49).
......................................................................................................................................................................................................................................................
Michael Turrin
Analyst, Wells Fargo Securities LLC
# Q

Thank you.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Kash Rangan from Goldman Sachs. Please go ahead.**
......................................................................................................................................................................................................................................................
Kash Rangan
Analyst, Goldman Sachs & Co. LLC
# Q

Hi. Thank you very much. Just a quick couple of introspective questions here. The cloud growth rate is certainly
looking to reset for deceleration in Q4. As you look at next year, is there any reason to believe that cloud growth
rate could reaccelerate at some point in fiscal 2024 based on your assessment of timeline of migrations and the
product readiness?

And also, as it relates to generative AI, I'm wondering if you can – and it's been hard to get clarity out of company
management because it's such a nebulous topic. To the best of your abilities, can you prognosticate if this will
mean that you will need fewer developers and fewer service people and, therefore, there is the idea of a shrinking
TAM, but then you gain share relative to the TAM, because your technology will allow to displace workers that do
not have generative AI capability, or is it that it actually grows the pie because a number of developers will
actually grow, because the barrier to software development comes down, so people like me can start to develop.
Hopefully, that should not the case. But how should we think about the TAM implication from a head count
perspective as a result of generative AI and what it does for developers and service people? Thank you so much.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

Hey, Kash. This is Joe. Thanks for the question. Obviously, we aren't providing specific quantitative guidance on
FY 2024, but I would offer up the following how to think about it directionally, specifically as it relates to the cloud
space. But the big caveat I always offer here is, on revenue, there's a lot of moving parts, but the biggest being
the macroeconomic outlook, which is highly uncertain. And as you've seen in FY 2023, that can have an impact
on our business. We're not immune to those factors.

Beyond macro, I'd have you think about the following. Mathematically, we will have easier comps as we move
through the next year. We will have a significant event in the second half of the year with the Server end-of-life,
and our focus there is really on migrating those customers to either our cloud preferably, or data center offerings.
We'll also have some benefit from pricing as prior price increases and less loyalty discounts layer into the model.
And then lastly, the decisions that we've made this year around rebalancing and reprioritization to reinvigorate
revenue growth will begin to land and have positive impact as we move through FY 2024. So, in the end, macro is
going to play a big role and we'll see what that ultimately brings, but hopefully, that helps you think through some
of the other dynamics that will relate to cloud revenue in FY 2024. Mike?
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Yeah. Kash, I can chip in if you're looking for prognostication. That's probably my column. I would answer two
ways personally. Firstly, the software world, if you want to think about it, you asked if there's going to be less
developers, et cetera. My view and our house view, I suppose, is no, right. The simple answer to that is software
is not demand constrained, it is supply constrained. We are constrained by the supply of developers in the world,
not the demand, the number of ideas for pieces of software we could create. So, when you create tooling that
makes it possible for efficiency of any form, you will suck up more of that demand with the existing supply. Ergo,
the supply won't go down. And number of developers, I don't think goes down. It's not the way sort of human
creativity, which is ultimately the way the software works.

Secondly, when you make software developers more efficient, if you're talking about artificial intelligence or large
language models with cognitive systems and writing code, et cetera or creating parts of software, that makes far
more software. The more software there is in the world, that's good for Atlassian in a generalized sense. We're
not necessarily working on individual developers. Again, in Jira Software, there are about a quarter of the
audience are software developers. The more software you have, the more need you have for still designers and
program managers, and making sure that we have the right software that we're building.

You now have a lot of software to operate, run, and manage. So the more software there is in the world, that's
generally, I think a good thing for Atlassian. There will be puts and takes across this world as it flows through. But
those would be my two fundamental points. We maintain incredible optimism for artificial intelligence, and what it
can do for us as a business to help unleash the potential of our customers, to help them create and manage more
software in that market [indiscernible] (00:23:47).
......................................................................................................................................................................................................................................................
Kash Rangan
Analyst, Goldman Sachs & Co. LLC
# Q

Thanks, Mike. I will learn to code. Thanks.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Michael Turits from KeyBanc. Please go ahead.**
......................................................................................................................................................................................................................................................
Michael Turits
Analyst, KeyBanc Capital Markets, Inc.
# Q

##### 10

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

Hey, guys. I wanted to just talk about data center versus cloud. You're saying that some of those impacts on
expansion, free-to-paid impacting cloud. Data center upbeat in the quarter. It sounds like you're talking for only a
minor decel in data center going into next quarter. So, could you tell us what's supporting that growth on a relative
basis versus cloud?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks for the question, Michael. This is Joe. You're right, data center had another strong quarter of
revenue growth that accelerated to 47% and was better than we expected. And that was primarily driven by two
things; stronger-than-expected renewals and better-than-expected seat expansion for existing customers. We
were helped a little by the pull forward resulting from the price change in February, but it was largely consistent
with prior year and only slightly higher than our expectations, and certainly not nearly as significant or pronounced
as it was two years ago.

Having said that, migrations from data center to cloud remain very healthy. Year-to-date, over 50% of cloud
migrations are coming from data center, and that's up from about a third a year ago. So, we've got good progress
there as well. And then in terms of the guidance, we do expect growth rates there to moderate a little bit in Q4 and
beyond. And that's really driven by increasing migrations from data center and server to cloud, as we remove
migration blockers and add compelling features and value to our cloud offering.

And then secondly, in the data center, we are starting to lap strong prior year comparables in Q4. And so, that's
another factor in the growth guidance that we've given.
......................................................................................................................................................................................................................................................
Michael Turits
Analyst, KeyBanc Capital Markets, Inc.
# Q

Thanks.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. This is Cameron. I'll just add a little bit on the data center side. Just largely basically talking to customers,
we were at Team '23 roughly a few weeks ago, where many of our largest customers are there, and many of
those customers are still on data center, have been on data center for many years. Got to say, just the tone with
those customers over the last few years, I'd say, last Team a few years ago, three years ago, was always about
like why should I move to cloud? What are the capabilities? Are you going to get to my data privacy
requirements? You name it. I'd say that tone this year, just talking with all those customers is okay, how do I get
there? Right. You deliver the new AI. We have this new functionality. We're bought in. Now help us guide us
through this plan. And I just think that overall total shift has been super positive and helping get more data center
customers moving to cloud going forward.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Keith Bachman from BMO Capital Markets. Please go ahead.**
......................................................................................................................................................................................................................................................
Keith Bachman
Analyst, BMO Capital Markets Corp.
# Q

Hi. Thank you. My question relates to what Cameron was just talking about. As you think about just
philosophically in FY 2024, would you expect data center to continue to outgrow cloud or [ph] do they compare
with (00:26:46) some of the other feature set things you're just talking about?

##### 11

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#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

And then underneath that, you've talked pretty consistently about cloud is getting the benefit of 10 points of
growth associated with conversions. As you think about what happens with that 10 points as you anniversary or
get beyond the server date, which is mid-Feb, a year away from now? Does that cloud conversion go to zero, or is
there continued benefit as you migrate longer term from data center to cloud when you, in fact, perhaps move to
enterprise versions? In other words, is there still a longer-term benefit of cloud conversion or is that 10 points go
to zero? Thank you.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Thank you. So, this is Cameron. I'll talk to just largely the customer choice ahead of us and you're absolutely right.
So, Server end-of-life goes into effect February of next year, and we still have a variety of server customers still
sitting out there on a variety of sizes that effectively need to make that choice between now and February, and
many are doing it month by month. Obviously, many are going to wait for the last minute to make that choice. And
they do have two choices.

Now, obviously, we're going to lead and try and get as many of those customers to choose cloud. But, obviously,
we have data center as a very strong capable version for them going forward. So, I see that continued

[indiscernible] (00:28:10) we still have a sizable data center customer base on which to continue to migrate
customers to the cloud. So this migration journey that we are on does not stop February of next year. It is a multiyear journey, as we continue to get all of our on-premise customers eventually to the cloud.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks, Cam. And I would say, nothing more to add to that beyond, we continue to invest to grow and
accelerate that migration to the cloud where we're removing blockers. We're making migration easier through
tooling and support investments. We're also closing the gap on pricing between advantage pricing on DC and
cloud with our overall pricing strategy. And just overall, the cloud platform provides the best experience, whether
it's analytics or automation or AI or collaboration and better TCO. Those factors will only increase over time. And
then just to reiterate what Cameron said, there's a lot of runway left on that cloud migration story, and we expect
to continue to see that even after the Server end-of-life.
......................................................................................................................................................................................................................................................
Keith Bachman
Analyst, BMO Capital Markets Corp.
# Q

Okay. Perfect. Many thanks.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Fred Havemeyer from Macquarie. Fred, please go ahead.**
......................................................................................................................................................................................................................................................
Frederick Havemeyer
Analyst, Macquarie Capital (USA), Inc.
# Q

Hi. Thank you very much. I wanted to ask about Beacon. Actually, it caught my attention in your shareholder letter
offering – it's, of course, an early access product, but shifting and focusing a bit on cybersecurity as it relates to
just Atlassian's Cloud ecosystem seems an interest adjacency here. I'm curious, with this early access program,
are you seeing signs that there's demand across your customer base for just a broader set of cybersecurity
solutions? Is this something that you think is specifically monetizable? And is there any sort of scale of customer
that is particularly applicable to?
......................................................................................................................................................................................................................................................

##### 12

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#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Corrected Transcript

04-May-2023

Thanks for the question. Scott here. Just a reminder, so firstly, there's a big demand for these sort of products
from Atlassian – from our customers, particularly at our user conference. And just customers are excited by this.
And if you think about moving to the cloud, customers want to make sure that their data is secured and the things
that we can do and OS that we can do and we can see the shape of usage of our products that allow us to work
with our customers on flagging things that might be of interest to them.

I just want to remind that this is not a generic security product. This is across our data and our cloud. Now, we
have advantages because we have one platform in the cloud and we can offer Beacon across most of our
products. So it's an advantage there from a sort of consolidation perspective. And from an IT admin play, in a
similar way, you've seen us to access on the user authentication side, but this is really a product to help
customers be very comfortable with how their data gets used in the cloud. And in most cases, what we can offer
here is again ahead of what other customers could do themselves in a behind-the-firewall setting. And so, this is
just yet another example of how the cloud is overall better for our customers than what they can do themselves
and another reason for them to migrate.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Alex Zukin from Wolfe Research. Alex, please go ahead.**
......................................................................................................................................................................................................................................................

# Q

Hey, guys. This is [indiscernible] (00:31:41) on for Alex Zukin. I just wanted to ask you a financial question. If I
think about the shape of NRR through the quarter, I know this isn't a metric you guys report to, but just to better
understand the growth that you're seeing in the business, can you just, at a high level, talk about what that shape
looked like through the quarter and through April?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks for the question. Unfortunately, no specifics to share with you today on the NRR. Given the macro
pressure and headwinds, we do see on space seat expansion, it is trending lower. There was nothing unusual
about that trend in Q3 relative to Q1 and Q2. Those trends just continued into Q3. And I'd say, lastly, the
underlying fundamentals in our business remain very strong. We see no change to our structural competitive
position. So, we do expect those retention rates to recover once the macro picture stabilizes and improves.
......................................................................................................................................................................................................................................................

# Q

Got it. Okay. And just as a quick follow-up, appreciate the color on the guide for Q4 of cloud growth benefiting 10
points from migrations. Just so kind to have the numbers correctly here, do you mind just kind of telling us like
what that exact benefit was in this quarter in the last two quarters or so? Thank you.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. We've consistently said we're getting, overall, approximately 10 points of revenue growth in the cloud
business from migrations. That hasn't changed dramatically throughout the year.
......................................................................................................................................................................................................................................................

##### 13

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#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

**Operator: Your next question comes from Ryan MacWilliams at Barclays. Ryan, please go ahead.**
......................................................................................................................................................................................................................................................
Ryan MacWilliams
Analyst, Barclays Capital, Inc.
# Q

Thanks for taking the question. Just on the vertical standpoint, any verticals worth pulling out that may have
impacted the quarter or the guide? And, at this point, do you have a sense maybe what percentage of server
customers might choose to remain on server, even past the end-of-life for a couple of quarters after? Thanks.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. This is Cameron. I'll take that. Yeah. Just from a customer perspective, as we mentioned, with over
250,000 customers and across all industries, geographies with a sizeable type, we see that we can have a
massive competitive differentiation for Atlassian, giving us plenty of growth opportunities across the customer
base for quite some time. Of course, the trends we've seen in seat expansion slowing down is broad based
across the entire customer base that we see today. One advantage we have is that, as every company starts
bringing in more and more technology to deliver value to their customers, we obviously had to take advantage of
that as we are helping companies with technology teams and business teams work better together going forward.

Oh, and then the second part on the Server end-of-life thing. Largely, most of those customers we see, there will
be some that have a professional license. There will be some customers we believe that most will choose cloud.
Some will go to data center and, obviously, some will continue to use the server licenses unsupported. Just about
every customer size that I speak to, largely is under a compliance requirement or just general IT guidance
internally that they do not run unsupported software, and that will be choosing cloud or data center post the endof-life. So, I really see that as a very small portion of the customer base.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Adam Tindle from Raymond James. Adam, please go ahead.**
......................................................................................................................................................................................................................................................
Adam Tindle
Analyst, Raymond James & Associates, Inc.
# Q

Okay. Thank you. Maybe one for Mike or Scott. I was going back to my notes from this time last year where you
announced free editions of cloud products. And you talked about it echoing an approach from 2008-2009 where
you brought in your customer base by offering a $10 starter license. So, if we fast forward one year later, your
customer account is still growing, so you're certainly broadening the base like you did in 2008-2009. The question
would be, maybe take us back to the upsell motion from the starter license and compare and contrast that to
upselling from the free cloud, what you learned then and what you can apply now to improve cloud upsell?
Thanks.
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Hi. Scott here, Adam. Great question. And so, just a reminder for those who haven't followed the Atlassian story
for such a long time that back in the 2008-2009 financial downturn, we introduced free versions of our behind-thefirewall products back then, and $10 data, I guess, was really what we introduced back then where you had to pay
$10 and you got 10 users of our products, down from what was a couple of thousand dollars with our lowest price
at that time. So, very disruptive pricing changes. And that was a long-term play for us, because we left a lot of
money on the table. People who were previously paying us thousands of dollars are now paying us $10 to get a
version of our software.

##### 14

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#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

And the good thing about that is it opens a funnel up to a whole bunch of companies that otherwise would not
have considered our products. And over the long term, they go from 10 to 11 to 12 users and then start paying us

[indiscernible] (00:36:44). So, echoing that, in the COVID time period a couple of years ago, we introduced
basically free versions of products down from $10 a month in the cloud down to $3. And soon, we saw that open
the funnel at the top of our customer acquisition side of things. And so, I mean, natural questions asked, well then
how do you convert more of those free customers to paid and how do you change that cycle?

That is something we do, yeah, but honestly, most of our free-to-paid is based on usage and based on customer
value and changing from 10 to 11 users. And you could – one of the advantage [indiscernible] (00:37:26)
business model is that customers pay us as they start using more of our features, and we don't even spend a
huge amount of energy trying to call them, trying to encourage them. You could waste a lot of money in a sales
machine doing that. And so, what we do is spend a lot of time looking at the levels at which we charge for things,
and make sure that is the appropriate gates, and make sure we provide value to our customers. And so, as they
use our products more and more, we get the value as they increase their usage.

Now, not only have we done free at the start of COVID when we saw a couple of months ago more interesting
macroeconomic signs, we decided to go harder on ITSM, on our JSM offering where we made it cheaper at the
low-end on hand for competitive migration, so people that were switching out from other higher-priced offerings.
And so, Adam, last thing we talk sometimes about the price rises that come through various parts of our cycle, but
we also spend a lot of time looking at how do we make it cheaper in other areas, like in order to more
aggressively get market share. And so, for us, it's a long-term play about getting market share, and not really a
short-term [indiscernible] (00:38:38) trying to convert those free customers to paid in any particular given time
period.
......................................................................................................................................................................................................................................................
Adam Tindle
Analyst, Raymond James & Associates, Inc.
# Q

Makes sense. Thank you so much.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Peter Weed from Bernstein. Peter, please go ahead.**
......................................................................................................................................................................................................................................................
Peter Weed
Analyst, Sanford C. Bernstein & Co. LLC
# Q

Thank you. I guess, there's two parts to this, kind of both focused maybe on a follow-on even with new customers.
You certainly had a nice uptick this last quarter relative to the prior one on net new customers. And I guess,
there's two parts of there. One is, we were backing out in our model, what portion of the kind of new revenue
growth was coming from the two? And it looked like you were probably seeing kind of flat quarter-over-quarter
revenue contribution from kind of new customers over the trailing 12 months. And most of the headwinds are
really coming from existing customers. So, does that seem about right that the new customers were probably kind
of like flattening and it was mostly the existing customers' expansion that that had been the issue?
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. This is Cameron. I'll speak to the net new customer number. So, as we said before, the new customer
number does jump around from quarter-to-quarter for a variety of reasons. That said, very glad to see the
increase from Q2 to Q3 with over 6,500 net new customers. It's showing that there's continued demand for what
we have, that we still can convert those free customers to paid customers, and it's nice to see the quarter-onquarter increase.

##### 15

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

However, I do want to call out that that challenge that we've been mentioning for the last few quarters of our
conversion rate from free plans to paid plans is still lower than it was historically before we saw this
macroeconomic headwinds. As far as net new customers impact into our short term revenue, it is minimal. And
today, where we always focus on the net new customer, overall number is really a better guide for our long-term
portion of our business.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Ari Terjanian from Cleveland Research. Your question, please.**
......................................................................................................................................................................................................................................................
Ari Terjanian
Analyst, Cleveland Research Co. LLC
# Q

Hi, all. Thanks for taking the question. Just a question on the cloud growth and expectations here. One, given the
strength in data center, you called that out as better than expected in the quarter. Does that suggest potentially
that future migration to cloud may not be quite as pronounced, given customers are renewing on data center more
than you expected.

And second, I believe in the shareholder letter, it was called out, for the first time, there was an impact from seat
count reductions. Do you believe that's more reflective of layoffs that are being occurring today or more reflective
of the layoffs that we saw last year? Thank you.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Multi-part question here. This is Joe. I'll take part of it, and then Cam will chime in. I'd say in terms of the
data center to cloud migrations, not at all. We expect those to continue to be strong for the foreseeable future.
Cam spoke earlier about the multi-year journey we're on. We continue to add a ton of value in the cloud. We
continue to invest in migration tooling and customer support. We continue to invest in data residency and
scalability and certifications and extensibility, and all the things that are going to enable more customers in that
data center category to move to the cloud. So, we remain very bullish on that opportunity.

Cam, you want to take the next part?
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. I'll just clarify the – just we see customers using data center as further investment in Atlassian and our
multi-year journey of getting customers to the cloud is very much on track with our expectations, and we
increasingly improve our ability to migrate customers every single day. As far as your mention on the seat count
reduction, in general, I'd say, the biggest issue that we focus on is the paid seat expansion. And customers are
still expanding their seats. It's just not at the same rate that we saw before the macroeconomic headwinds.

Of course, there are a subset of our customers, a very small subset, that have reduced their employee count over
the last few months. And when their renewals come up, they're renewing at a lower tier than what they previously
renewed, because they have less new users in their business. But overall, that is a small overall percentage of
our customer base. The bulk of where we focus is really the paid seat expansion.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Jake Roberge from William Blair. Jake, please go ahead.**
......................................................................................................................................................................................................................................................

##### 16

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Jake Roberge
Analyst, William Blair & Co. LLC

Corrected Transcript

04-May-2023

Yes. Thanks for taking my questions. Just wanted to double click on the data center strength you saw in the
quarter. Is that more a result of new customers starting to land there or upsells within existing customers? Or is
that really just the server migrations going more towards DC than you expected to cloud? And then more of a
high-level one, but what's driving the seat expansion for DC versus the headwinds for cloud? Is that primarily a
result of the enterprise focus in DC?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks for the question. This is Joe. As we discussed earlier, when you look at that DC strength and
resilience, it's really driven by two things; better-than-expected renewals; and then paid seat expansions at
existing customers. Cam?
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. I have to say, just in the quarter, we have to remember, we did do a price change on data center and that
causes customers to make a choice, whether they – if they're thinking about adding users in the future, then it's a
good compelling event for them to choose data center. But, once again, we see that past the data center. We
proved it again and again. We have the ability to move data center customers to the cloud. Over the last year, half
of the seats we moved to cloud are from data center customers. So, we see this as – within the quarter, it's
fantastic. People choose data center, so that's great. We can eventually get them to cloud and we're proving that
every day.
......................................................................................................................................................................................................................................................

**Operator: Thank you. And that concludes our question-and-answer session. I will now turn the call over to Mike**
for closing remarks.
......................................................................................................................................................................................................................................................
##### Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

I just wanted to say, thank you, everyone, for your questions. Thank you to those who came to our Analyst
Function at Team '23. And I hope you all have a fantastic rest of your day.

##### 17

-----

#### Atlassian Corp. (TEAM)
Q3 2023 Earnings Call

Corrected Transcript

04-May-2023

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##### 18

-----
END DOCUMENT 2

BEGIN DOCUMENT 3:
##### 03-Aug-2023
 (TEAM)
## Atlassian Corp.

##### Q4 2023 Earnings Call

##### Total Pages: 17

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

### CORPORATE PARTICIPANTS

Corrected Transcript

03-Aug-2023

Martin Lam
Head-Investor Relations, Atlassian Corp.

Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Joe Binz
Chief Financial Officer, Atlassian Corp.

Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.

Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

......................................................................................................................................................................................................................................................

### OTHER PARTICIPANTS

Michael Turrin
Analyst, Wells Fargo Securities LLC

Sanjit K. Singh
Analyst, Morgan Stanley & Co. LLC

Arjun Bhatia
Analyst, William Blair & Co. LLC

Ryan MacWilliams
Analyst, Barclays Capital, Inc.

Kash Rangan
Analyst, Goldman Sachs & Co. LLC

Gregg Moskowitz
Analyst, Mizuho Securities USA LLC

Brent Thill
Analyst, Jefferies LLC

Ari Terjanian
Analyst, Cleveland Research Co. LLC

Michael Turits
Analyst, KeyBanc Capital Markets, Inc.

Alex Zukin
Analyst, Wolfe Research LLC

Frederick Havemeyer
Analyst, Macquarie Capital (USA), Inc.

Peter Weed
Analyst, Sanford C. Bernstein & Co. LLC

Derrick Wood
Analyst, Cowen & Co. LLC

Austin Cole
Analyst, JMP Securities

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

### MANAGEMENT DISCUSSION SECTION

Corrected Transcript

03-Aug-2023

**Operator: Good afternoon and thank you for joining Atlassian's Earnings Conference Call for the Fourth Quarter**
of Fiscal Year 2023. As a reminder, this conference call is being recorded and will be available for replay from the
Investor Relations section of Atlassian's website following this call.

I will now hand the call over to Martin Lam, Atlassian's Head of Investor Relation.
......................................................................................................................................................................................................................................................
##### Martin Lam
Head-Investor Relations, Atlassian Corp.

Welcome to Atlassian's fourth quarter of fiscal year 2023 earnings call. Thank you for joining us today. Joining me
on the call today, we have Atlassian's Co-Founders and Co-CEOs, Scott Farquhar and Mike Cannon-Brookes;
our Chief Revenue Officer, Cameron Deatsch; and Chief Financial Officer, Joe Binz.

Earlier today, we published a shareholder letter and press release with our financial results and commentary for
our third quarter of fiscal year 2023. The shareholder letter is available on Atlassian's Work Life blog and the
Investor Relations section of our website, where you will also find other earnings related materials, including the
earnings press release and supplemental investor datasheet.

As always, our shareholder letter contains management's insights and commentary for the quarter. So, during the
call today, we'll have brief opening remarks and then focus our time on Q&A.

This call will include forward-looking statements. Forward-looking statements involve known and unknown risks,
uncertainties and assumptions. If any such risks or uncertainties materialize or if any of the assumptions prove
incorrect, our results could differ materially from the results expressed or implied by the forward-looking
statements we make. You should not rely upon forward-looking statements as predictions of future events.
Forward-looking statements represent our management's beliefs and assumptions only as of the date such
statements are made and we undertake no obligation to update or revise such statements should they change or
cease to be current.

Further information on these and other factors that could affect our financial results is included in filings we make
with the Securities and Exchange Commission from time to time, including the section titled Risk Factors in our
most recently filed annual and quarterly reports.

During the call today, we will also discuss non-GAAP financial measures. These non-GAAP financial measures
are in addition to and are not a substitute for or superior to measures of financial performance prepared in
accordance with GAAP. The reconciliation between GAAP and non-GAAP financial measures is available in our
shareholder letter, earnings release and investor datasheet on the IR website.

Please keep in mind that we'd like to allow as many of you to participate in Q&A as possible. To facilitate that,
we'll take one question at a time. Please rejoin the queue if you have another question or a follow-up, and we'll do
our best to come back to you later in the session.

With that, I'll turn the call over to Mike for opening remarks.
......................................................................................................................................................................................................................................................

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

##### Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Thank you all for joining us today. As you've already read in our shareholder letter, we delivered a strong quarter
financial results. We closed out FY 2023 with great momentum in cloud migrations, in enterprise and across all
our three markets. We generated over $3.5 billion in revenue this year and over 250,000 customers now power
their collaboration on our world-class cloud platform. Amidst a challenging year, we're extremely proud of all that
we've accomplished. We said we'd play offense in FY 2023, and that's exactly what we did. We migrated millions
of users to our world-class cloud platform. We built game-changing innovations such as Atlassian Intelligence,
launching new products like Jira Product Discovery, delivered increased scale on our cloud platform and unlocked
data residency in new locations like Germany and Singapore for our global customer base.

Working deeply with our customers, we're more and more excited about the value Atlassian Intelligence will
deliver by leveraging the latest advancements in large language models combined with each customer's unique
data and our world-class cloud platform with our two decades of data-driven insights into how teams work, we'll
be able to further unleash each of our customer's potential across all our three markets. Today we're seeing our
bets pay off and that's strengthening our conviction in our strategy. As we enter FY 2024, we're eager to get after
those large opportunities and believe we're well-positioned to come out of the year even stronger.

With that, I'll pass the call to the operator for Q&A.
......................................................................................................................................................................................................................................................
### QUESTION AND ANSWER SECTION

**Operator: We will now begin our question-and-answer session. [Operator Instructions] Your first question comes**
from Michael Turrin from Wells Fargo Securities. Please go ahead.
......................................................................................................................................................................................................................................................
Michael Turrin
Analyst, Wells Fargo Securities LLC
# Q

Hey. Great. Thanks. Appreciate you taking the question. Joe, given it's your first full year guide, maybe you can
start by walking us through the process there, the visibility into and confidence in framing those cloud targets for
fiscal 2024. And there's some commentary in the letter just around the proportions you're expecting between data
center and cloud and just some details in there I think it's useful to bring to the front of the call. So anything on just
the signals you're watching and how the end-of-life event is taken into account, all very useful. Thanks.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Great. Thanks for the question. I think I'd just start with our cloud revenue guide of 25% to 30%. That assumes
the macro headwinds in FY 2023 persist into FY 2024 and that migrations from server and data center will
continue to be strong contributors to cloud growth, approximately 10 points. So we do expect the momentum that
we've seen in 2023 on that front to continue. The low end of our cloud guidance range assumes continued macro
weakness throughout FY 2024, as well as some macro impact areas that have held up really well in FY 2023, like
churn, upsell and migrations. Finally, we do expect cloud revenue growth rates to gradually improve throughout
the year, driven by the easier prior-year comparables that we have in the second half of the year.

Now, you mentioned data center. In terms of data center, we do expect decelerating revenue growth rates in FY
2024 driven by a few things. First and foremost, lower migration from server following the server end of support.

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

We do expect greater migrations from data center to cloud as we remove migration blockers and enhance our
cloud offering. And then of course, data center has difficult prior-year comparables in the second half of the year.

And then finally, we expect a steep decrease in our server revenue up to end of support in February 2024, at
which point we'll no longer recognize any further revenue. So that's a general outline of how we're thinking about
that for next year.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Keith Weiss from Morgan Stanley. Please go ahead.**
......................................................................................................................................................................................................................................................
Sanjit K. Singh
Analyst, Morgan Stanley & Co. LLC
# Q

Thank you for taking the questions. This is Sanjit Singh for Keith. One of the challenges of the last couple
quarters is really the – this free-to-paid conversation, the letter suggests that was still sort of an impact again, this
quarter. As we go into next year, just wanted to get a sense of what it would take to sort of reignite growth in that
segment of the customer base. Is it simply just a better macro or there's things on the funnel side, the sales side
and the execution side that could help reinvigorate growth in that side of the business.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yes. This is Cameron. I'll speak to the new customer number. So in Q4, we definitely saw that continued
downward pressure on our free-to-paid conversion that we've been speaking about largely through the last four
quarters or so. Although we do continue to increase the total number of free customers out there in the pool and
serve those customers year-on-year, simply those customers are slower to take up the credit card and purchase
our software, which is fine. We can be patient and convert them over a longer period of time.

The bigger shift that we saw between Q3 and Q4 was actually due to something that we had full control of as we
look to our budgets, and we're very diligent with all of our budget this year, but we really went into our marketing
campaigns then and marketing campaign budgets and looked at ROI of those investments. Based off a deep dive
of that analysis we were actually able to redirect some of our top-of-funnel spend towards higher value, longerterm customers. The result here was that we got less customers overall in the funnel and converted to paid
customers in Q4. But the customers we did bring in will be by the higher, longer-term value, higher ROI customers
for that marketing spend.

Going forward, as Joe already mentioned, we do continue to believe that the macroeconomic pressure against
the free-to-paid will continue. But we will always be optimizing our marketing spend for the highest ROI possible.
And where we see good ROI, we will put more investment behind it.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Arjun Bhatia from William Blair. Please go ahead.**
......................................................................................................................................................................................................................................................
Arjun Bhatia
Analyst, William Blair & Co. LLC
# Q

Hey. Thank you guys for taking the questions. Maybe one for Cameron or Joe. Just as you're thinking about how
fiscal 2024 plays out, how should we think about the cadence of the migrations that are left as we approach the
February end of life? And maybe this one's more for Cameron, but who are the customers that are still left on
server, do they tend to skew smaller or larger? Anything you can give us there would be super helpful. Thank you,
guys.
......................................................................................................................................................................................................................................................

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Joe Binz
Chief Financial Officer, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Yes, Arjun, this is Joe. I'll take it first, and then Cam can chime in at the end. As you mentioned, we had support
for our server products in February 2024. Our focus there is obviously on migrating our remaining server
customers to either our cloud or data center offerings. We expect that there will be uncertainty in quarter-toquarter variability based on when and how our server customers ultimately choose to migrate. For now, we are
assuming the trends we saw in FY 2023 with respect to how many server seats migrate and where they migrate
to will continue in FY 2024 directionally through end of support. And that at end of support, we expect most of the
remaining server seats that migrate will migrate to data center and we've also built appropriately prudent
assumptions for customers who will choose not to migrate in FY 2024 into our guidance. And we'll be able to
share more on quarter-to-quarter assumptions related to that server end-of-support dynamics when we provide
our Q2 guidance next quarter. Cam?
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. Just adding to that, I just want to highlight that this entire transition since we announced the end of server
support almost three years ago has been a multi-year journey and a multi-year investment across all factions of
Atlassian, whether it's go to market or getting closer to our customers, whether it's R&D teams, eliminating cloud
blockers, delivering scale, certifications, you name it. And of course, the variety of programs we've rolled out from
price changes to loyalty discounts and of course this large compelling event with the end of service support
coming up in February.

So like I said, it's been a multi-year journey and as we've been saying, we're very consistent and very happy with
our performance along the way. We were able to retain a very large portion of our server customers while getting
our customers to choose cloud or data center appropriately.

That said, we have about six months more as we come up to February. We have a significant server customer
base still out there. They are of all shapes and sizes, I have to say. But they're the ones who waited the last – to
the latest to make this choice, which is perfectly fine. The good part there is we are in a better position than we've
ever been to help those customers make the right choice for their company and transition as quickly as possible.
Obviously, we'll incentivize our customers to choose cloud first and foremost in all those conversations, but data
center of course is there and honestly a great option for some customers out there who simply are still not ready
to move to cloud.

As far as who will choose what, as Joe said, we largely see that customer choice falling in line with what we've
kind of seen over the last year. And of course, the customers who wait for the last minute definitely will have data
center as a easy migration path for them if they want to stay on prem.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Ryan MacWilliams from Barclays. Please go ahead.**
......................................................................................................................................................................................................................................................
Ryan MacWilliams
Analyst, Barclays Capital, Inc.
# Q

Thanks for taking the question; two part question here on 4Q cloud results. Could you maybe provide some
context around what the contribution was from migration to cloud growth in the quarter? And how should we also
think about the contribution from the expiration of the loyalty discount program to that fourth quarter cloud growth?
Thanks.
......................................................................................................................................................................................................................................................

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Joe Binz
Chief Financial Officer, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Yeah. Thanks for the question. The first part of the question in terms of migrations, the migrations contribution to
growth in the quarter was very consistent with what it's been in the past. I think we've talked about it being
approximately 10 points in FY 2023. That was a similar outcome in Q4.

In terms of outperformance to the revenue guide, the outperformance was driven by stronger than expected
purchasing in June and primarily in enterprise ahead of the expiration of our loyalty discount program. And that
came in the form of both more deals and higher contract value per deal, and it drove strong results in migration,
seat expansion and upsell to premium and enterprise versions of our products across both our cloud and data
center businesses. And that drove the outperformance there.

The server outperformance in the quarter was driven strictly by stronger than expected renewals and larger deal
sizes. And then finally, marketplace outperformance was driven by our pull-through on the stronger cloud and
data center sales I noted earlier; hope that helps.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. And this is Cameron. Just from a customer perspective, I just want to say that none of this was really a
surprise for the customers. We've been very open along the way for over the last few years about how the loyalty
discount program would be staging down over three years and going away entirely on July 1. And it's that
openness that these customers – largely we've been working with them for many months, sometimes with these
bigger customers for years knowing that this date was out there and giving a large, compelling event to make that
choice. Of course, as I already mentioned, we still have another big date out there with next February, and we'll
continue to work with our customers who still remain on server between now and then.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Kash Rangan from Goldman Sachs. Just go ahead.**
......................................................................................................................................................................................................................................................
Kash Rangan
Analyst, Goldman Sachs & Co. LLC
# Q

Hi. Thank you very much. I was curious if you could just comment on the transition. We've had a transition of
sorts in the company and with the CRO transition, how are you approaching the next year's planning? Are you
looking for a new leader within the company, are you hiring somebody outside? What are the considerations on
that transition? Thank you so much.
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

It's Scott here. I just want to say a huge thank you to Cameron for his 11 years at Atlassian. And Cameron's done
every job at Atlassian. He's done marketing presales and now eventually, what he's at, running all of our sales
and marketing, and he's done an incredible job. And when we chatted about this, it's been the right time for
Cameron to step back because the cloud migrations and end of life of server are going so well. So it turns out
that's the right time for Cameron to spend a bit of time on skiing given he lives up in Tahoe at the moment.

In terms of what happens going forward, Cameron has some really strong leaders under him inside the business,
particularly on the sales side, he's got a leader that runs most of the sales organization at the moment and so we
expect there to be a strong continuity of that leadership.

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

At this stage, we're not saying exactly how that role will be replaced or refilled, but I don't expect there to be
significant changes from what we've done in the past.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Gregg Moskowitz from Mizuho Securities. Please go ahead.**
......................................................................................................................................................................................................................................................
Gregg Moskowitz
Analyst, Mizuho Securities USA LLC
# Q

Okay. Thank you for taking the question and best wishes to Cameron. For Michael or Scott, you were very clear
at the Atlassian summit in April that Atlassian Intelligence would be embedded in all of your cloud additions and
be free of charge. But since that time, we've seen several software companies, GitLab, to name one of them,
announce specific pricing for their Gen AI tech. And so, I'm curious to hear your thoughts on the direct
monetization plans that are developing in the industry. Also, if Atlassian Intelligence delivers the value to
customers that you think it can, could all of this potentially make you rethink your approach at some point?
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Yeah. Hi, Gregg, it's Mike here. Thanks for the question. Look, I would start with our philosophy here and longterm thinking as a company. We clearly believe that Atlassian Intelligence and AI and new models are a huge
opportunity for us. We think that software is supply-constrained, not demand-constrained, that will enable the
creation of far more software. We are a content, text-based business and anything that allows you to manipulate,
generate, parse, understand text is very good for us as a company that targets collaboration and knowledge
workers. We have a huge amount of data across our set of products and connections to third-party products and
the best-of-breed products in the world.

That is incredibly value for us.

So we are huge believers in AI and the potential of Atlassian Intelligence to drive significant value change for our
customers. Secondly, our philosophy is to lead with R&D, to build and then customer value before thinking about
monetization. I know there may be others in the industry who go the other way around it and announce a price,
then build something, then work out if customers care. We don't work that way. We go in the other direction.

So you've seen us execute that plan and that play many times over two decades, and that's exactly what we're
doing in terms of the Atlassian Intelligence. We are super excited and I believe you're at TEAM 2023, one of the
best feature set customer resonances we've had at the announcement and the launch of what we demonstrated
to customers, huge customer excitement. Our job now is to turn that into actual customer usage in a huge manner
first, and that is exactly what we're doing. Those features are now in the hands of the order of thousands of
customers, and we are working every single day to make sure that those features deliver customer value and are
actually used first.

We do believe they'll drive significant product competitiveness and unleash the potential of every team, which is
what we're here to do. There are a number of ways we believe, as we've said before, that we gain economically
from the Atlassian Intelligence feature set. Again, first and foremost, we do believe it will continue to drive
significant momentum in migrations of customers from server and data center products to the cloud. Atlassian
Intelligence features only exist in the cloud and can only exist in the cloud. So anything that is a carrot to further
improve that migration flow is a good thing for us economically as a business.

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

Secondly, we do believe it'll drive product competitiveness and improve our new to new customer conversion
rates and our win rates against competitors in all markets. Worth saying that we have built Atlassian intelligence
leveraging our cloud platform, which is both world-class and quite unique. It is a great example of why we spent 5
to 10 years building this cloud platform, because we can ship Atlassian intelligence features in every product, in
every category that we're in, every market, to improve our competitive standing across the board. And we think
that will come back in new customers and competitive wins over the medium to long term.

And thirdly, some Atlassian intelligence features enhance and leverage features that are packaged into premium
and enterprise editions. So we do believe that it will drive some additional movement as customers go from free to
standard and standard to premium and premium to enterprise. Some features do exist in enterprise levels. For
example, the Atlassian Analytics features that exist in the enterprise edition, very powerful set of features to be
able to use Atlassian Intelligence to generate queries for you is one of the resonant features, but that will
hopefully drive more enterprise edition upgrades.

So we do believe there is monetization opportunities for us in Atlassian Intelligence in summary, but
philosophically we're starting with R&D and building a deep set of core capabilities we believe we can scale for
the next 5 to 10 years as this wave takes over all software. And secondly, we are focusing on delivering customer
value first. We are doing it every single day and we remain incredibly bullish about this area of the company.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Brent Thill from Jefferies. Please go ahead.**
......................................................................................................................................................................................................................................................
Brent Thill
Analyst, Jefferies LLC
# Q

Thanks. Joe, on the operating margin, you're guiding down 200 basis points year-over-year and I think in the
shareholder letter, you expect that trend to reverse. Can you just walk through that the next couple-year cadence
and how you're thinking about the investments you're going after and then maybe tie that into that expansion and
how you're thinking about how that plays out. Thanks.
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

It's Scott here, I'll take the first part about that and Joe can get in with the details. And just to remind those who
might be new to Atlassian's story, well, I think we've run a very successful and highly profitable business over a
really long period of time [indiscernible] (00:22:11) free cash flow, has great margins. And about 18 months ago,
we identified a set of opportunities where we wanted to invest heavy arm behind those opportunities than we had
historically. And the three opportunities we articulated to you, our investors – at our Investor Day, were investing
heavier in enterprise cloud, investing heavier in our cloud migrations and investing more in our ITSM set of
products.

And on all three, I mean super happy with the returns we've been getting, migrations were – continuing at the
pace that we thought. We were – ITSM, particularly in this time of consolidation and people looking to get off highpriced legacy vendors, we've seen a lot of competitive switch-outs, and in enterprise cloud, you're seeing now
some of the numbers now $0.5 million, $1 million deals in our shareholder letter like we're seeing a great uptick in
our enterprise segment as well. So all three of those are going really well.

Now, you, as investors have rightly asked, well, what does the shape of that investment look like? How many
years are we doing that for? And in our investor letter this year, just that we – just came out today, we shared that

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

we expect the FY 2024 margin profile to be the sort of lowest point in our margin and we expect them to climb
over the coming years back to towards our historical norms. Joe, do you want to add any more color to that?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks, Scott. Brent, I'm just going to walk you through some of the mechanics. So in the FY 2024, we do
expect operating margins of approximately 18.5% as Scott mentioned. That's lower than this year and it's driven
by the strategic high-priority areas we're investing in that Scott and Mike have both highlighted, including the
areas of innovation like AI. Keep in mind, in FY 2024, we'll also be lapping the H2 benefit of restructuring savings
and lower bonus expense that we had in FY 2023.

In terms of FY 2025, what's happening there is we do expect continued healthy revenue growth in FY 2025
combined with our expectation of improving operating leverage as operating expense growth moderates, as Scott
mentioned, particularly in the big areas of investment like cloud migrations. And we will continue to drive general
efficiency improvements with scale. So that's some of the mechanics underneath the philosophy that Scott
articulated.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Ari Terjanian from Cleveland Research. Please go ahead.**
......................................................................................................................................................................................................................................................
Ari Terjanian
Analyst, Cleveland Research Co. LLC
# Q

Thank you for the question and congrats on the results, Cameron. I know you're leaving at the end of the year, but
congrats on a great run. I guess, question for you, a lot of strength here in the quarter on enterprise size. If you
could double click, what do you think has changed from a go-to-market perspective, investments into enterprise
advocates and the partner side that helped drive some of these larger deals and do you feel like Atlassian's at a
steady state now in terms of the investments on a go-to-market side or is there more to come here as you think
about the future? Thank you.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Thank you for the question. And yes, we're very happy with the results we had in Q4 and the strength we continue
to see in migrations and enterprise. But like I said, none of this happened overnight and none of this was
specifically just because the go-to-market tends to focus more on enterprise. This really has been a multi-year
investment from Atlassian, largely with the commitment to get closer to our largest customers and deliver –
honestly to become the strategic partners that they want us to be.

Now, this starts with R&D, and you see us deliver massive investments in scale. We have 50,000 users in our
cloud products today, certifications, extensibility, and largely just understanding our enterprise customers' unique
needs much more closely. And then of course, we match that investment and go to market by including our
enterprise advocates, our technical account managers, our customer success managers and so on. And as we
got closer, we've been able to get larger deals, longer term commitments, and become the strategic partner that
customers want.

However, we've been able to do this all through evolution, as we said, not revolution. And you see that today in
our sales and marketing spend. So we've been able to actually get closer to our largest customers to do these
larger enterprise transactions, all while maintaining largely-industry leading sales and marketing expense,
something that I'm exceedingly proud of and something that I'm very happy with my team will continue to do going

##### 10

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

forward is have that great balance of understanding our flywheel and product-led growth and all those great
principles that Mike largely laid out earlier of how we're even thinking about AI. But then, of course, when we're
ready, go to our largest customers and bring those solutions to them. And of course, get value in return for that.

So we will continue to get closer to our largest customers but we will absolutely continue to maintain our
incredible efficient go-to-market structure going forward.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Michael Turits from KeyBanc Capital Markets. Please go ahead.**
......................................................................................................................................................................................................................................................
Michael Turits
Analyst, KeyBanc Capital Markets, Inc.
# Q

Thank you. Hey, guys. Good evening. So you said in a couple of places that migrations are strong, but you talked
about them both to data centers as well to cloud. I was wondering if you could drill down specifically on the
migrations to cloud. Scott mentioned things like data residency that were obstacles that were being removed. But
are we in a position where whether it's because macro feels better people are okay on TCO or some other reason
that the actual migrations from let's just call it on-prem whether it's from data center or server to cloud are
improving at this point, s that sustainable?
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

This is Cameron here. So the migration plan like I said is a multiyear program we put in place and as the
customers choosing cloud choosing data center has been very much in line with what we've expected as we
eliminate cloud blockers, whether that's data residency, scale, extensibility and to be perfectly honest, we have a
public roadmap where we show all of our customers, here's all the things that we are shipping down the road so
they can make the appropriate choices going forward. It's a combination of all those things that have allowed us to
get these large customers choosing to move to cloud.

Of course, as we've said, there are still plenty of customers out there that aren't ready for cloud, would prefer to
stay on premises and are choosing data center. And we will continue to see, I think a large portion of customers
going over the next year choosing data center as that option. But that's not a dead end. We largely see that
investment in data center as a further commitment into Atlassian and we've proven again and again that we can
move data center customers to the cloud with half of our migrated seats coming from data center customers. So
once again, we provide the optionality for the customers throughout, if they choose data center, that's great. We'll
continue to work with them on moving them to cloud and getting the most value from Atlassian long-term. Mike,
you got anything to add?
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Nothing Cameron. I think you nailed it. Just re-emphasizing that half our migrated seats coming from data center
is a really important milestone for us as we continue this long-term journey.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Alex Zukin from Wolfe Research. Please go ahead.**
......................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

##### 11

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

Hey, guys. Thanks for taking the question. Maybe just first, if we look at the cloud revenue growth number and we
look at – we try to decompose net new ARR into net new versus migration versus expansion, you've talked a little
bit about the migration dynamic, but how much – like if we look at the – if we just ask you like a cloud NRR metric
and how much was coming from expansion, it'd be great to understand that particularly as we're getting into the
later innings of the migration. And then maybe just as a follow-up, you talked about healthy top line growth for
fiscal 2025, you gave the 25% to 30% growth range for 2024, which we really appreciate, by the way.

Is that a durable kind of growth rate? It's obviously a wider range, given the macro uncertainty, but is that growth
rate likely to stay durable, particularly as maybe the migration tailwinds start to add a little bit as we get past the
server end of life?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Yeah. Thanks for the question, Alex. I'd say starting with your last question, in terms of FY 2025, we're obviously
not giving any guidance on that. To your broader question, I do believe it's durable. The value that we're adding to
the products that cloud brings, it's very specific, the value it delivers to customers, I think there's a lot of
opportunity for tailwind in that business. And so, directionally speaking, we should continue to see very healthy
growth as I mentioned for FY 2025 that will be driven primarily by cloud as the server revenue base goes away
and increasingly data center customers migrate to the cloud.

In terms of your first question on net retention rates, I would just say paid seat expansion and free-to-paid
conversions continue to be impacted by the economic headwinds that we've seen that would impact that area of
the business. In terms of a specific expansion rate, as you know, we don't share quarterly retention and
expansion rates. Having said that, we've talked about the macroeconomic pressures and the underlying
fundamentals in our business outside of that remain very strong, however, and we see no change to our structural
competitive position. So we do expect those retention rates to improve once the macro picture stabilizes and
begins to improve.

And then as you talked about earlier, I'd also highlight other key aspects of our business, like migrations and
cross-sell and upsell and monthly active usage. Those all remain very healthy and speak to the highly valuable
and mission-critical nature of our products. And those will also feed future expansion rate improvement. So our
outlook is very positive on that going forward.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Fred Havemeyer from Macquarie. Please go ahead.**
......................................................................................................................................................................................................................................................
Frederick Havemeyer
Analyst, Macquarie Capital (USA), Inc.
# Q

Hi. Thank you very much for the question. Firstly, actually, another thank you for introducing a dark theme as well
to – for people like me is greatly appreciated, especially when I'm on with some of my colleagues in Australia late
at night. The question right now is really focusing on the migration tooling that you have as you're looking at and
kind of reviewing the learnings that you have and the investments you've made into your migration tooling, just
how confident are you that at this point you have the server to either data center or a cloud migration tooling on
ramp capabilities really solved versus are there any significant risks you still see for some of those larger
enterprise customers post server end of life to need to wait a little longer to have additional tools built out. Thank
you.
......................................................................................................................................................................................................................................................

##### 12

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Hey, Fred, I can take that. It's Mike. And thanks for the kudos on dark theme in Jira. It's actually a good example
of the amazing R&D team we have. It's done properly with design tokens and all sorts of things across our cloud
platform using Atlaskit. So it will be coming to other products shortly. It's already in a handful of products but you'll
see it all across the area. We have a huge focus on accessibility, which has kept us into migrations. Dark theme is
quite challenging to do in an accessible way that works to meet all of the standards required for people who have
accessibility issues when it comes to software.

Gets to some of the migration tooling questions that you've asked. Our migration tooling continues to improve
quarter-on-quarter. We work really hard on the tools to make that as self-service as possible. And largely what we
are doing is continue to work on the scale and speed of the tools to move huge amounts of data faster and faster.
The repeatability of those tools, our customers don't do one-shot migrations, especially the larger ones. They will
migrate their data across, test it, migrate it again, and do that multiple times so the tooling becomes incredibly
important to be repeatable and reliable.

And lastly, we work with customers who have lots of edge cases. Some of them have 10 to 20 years of JIRA
family or Confluence data on prem. They may have edited their own database. They may have done a whole lot
of things that we have to take as edge cases to move them across. We continue to work on how to do that as we
get bigger and bigger customers and we encounter more and more edge cases, more of the tooling is self-service
and repeatable. And lastly, we are continuing to work with app vendors and our amazing marketplace community
to make sure that their app data and the apps themselves can be migrated as they move from our on-premise
extensibility and plugin systems to connect and forge in the cloud. That's quite a unique migration challenge.

I would say, every quarter we get better and better at doing this. We can use less human power to do migrations.
We can do bigger migrations. And really proud of how the team is going on managing all of that tooling. So
continuing to improve. I don't know, it's – your question was around, is it solved? It will get better every single
quarter as it has done for the last three years and we will continue to do that as we migrate more and more server
and data center customers over time.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Peter Weed from AllianceBernstein. Please go ahead.**
......................................................................................................................................................................................................................................................
Peter Weed
Analyst, Sanford C. Bernstein & Co. LLC
# Q

Thank you and great to see IT service management growth called out in the note. It was top of mind for us too.
We see it as a really large opportunity for you going forward. Obviously it already is a large business. Really
impressive to see the 45,000 customers and 80% year-over-year growth. Kind of looking forward how should we
think about the total upside from here? Like, what are the profiles of the companies that are the largest
opportunity going forward that will drive more growth? And how much additional headroom do you see in this over
the coming kind of three-ish years?
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Thanks, Peter. Scott here. Look, I think we have a huge opportunity for durable growth over such a long period of
time. We operate in three very large markets. And so, take them one by one. You talked about Jira Service
Management and ITSM, the opportunity there is we're the challenger in that particular market and, there's plenty

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#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Corrected Transcript

03-Aug-2023

of large incumbents there and plenty of unhappy customers in those large incumbents. And so there's just
massive opportunities for us to take market share in that particular space.

In our migrations – well, actually let me talk about work management's role, there's definitely huge opportunities
there, that's a very large market. And if you look at the stronghold we have around developers and around
development teams and when I talk to CEOs these days around the world, like the biggest asks – one of the
biggest issues is how do they make the development teams productive, how do they get more out of development
teams? And when we look at customers consolidating around what work management for all items, they throw out
other vendors, but they can't get rid of the tools that power their engineering teams. And so we have a huge
opportunity for consolidation in our work management for all market.

And then if I look at the innovations that we're bringing to our traditional Agile and DevOps market, we're a large
player there, but there's just so many different customer problems that we can be solving for them. And you saw
us launch Jira Product Discovery to target product managers. So if we start tackling more and more personas
across there, there's just so much customer value that we can produce. And so I'd say huge opportunities in every
market that we have at the moment. And so I don't really see any limit there. Migrations of our customers from
server to the cloud is just a stepping stone for us to be able to keep delivering huge value and increased cloud
revenue.
......................................................................................................................................................................................................................................................
Cameron Deatsch
Chief Revenue Officer, Atlassian Corp.
# A

Yeah. And Cameron here, I'll follow up just speaking with customers as well, the IT service business – as we
mentioned, 80% growth in our largest enterprise customers with Jira Service Management last year, which shows
that, hey, we've struck a vein here with the customers where you look at the trends in the market, customers are
trying to consolidate vendors and save money. Jira Service Management for existing Atlassian customers is a
great opportunity. Customers also want their development teams and IT teams to come closer together to work on
a common platform. Jira Service Management provides that absolute capability, and customers want more
flexibility, quicker time to value of their investments. They don't want to spend 6 to 12 months rolling out these
tools. They want to be able to purchase software, get it running and start delivering value to their end users, in
days, weeks at most and Jira Service Management once again delivers value here.

So, in the IT service management market broadly, I think we have a very unique offering with a very unique value
prop at a very unique price point. And all three of those reasons are the reasons why customers continue to look
to us and invest in Jira Service Management.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Derrick Wood from TD Cowen. Please go ahead.**
......................................................................................................................................................................................................................................................
Derrick Wood
Analyst, Cowen & Co. LLC
# Q

Oh, great. Thanks. I guess, Joe, this is for you. I wanted to ask about some of the expansion headwinds being felt
upmarket. I think with your smaller customers, I know a lot are on monthly contracts. So, perhaps, net expansion
rates normalize quicker, but within your enterprise customers, you often have multiyear contracts. Customers
would historically buy seats for growth to take advantage of pricing. And we've heard from other seat-based
models that as growth in the tech world has slowed, expansions on renewals can be a lot more challenging. So
just curious, is that something you're seeing and do you think we still need some time quarters ahead to fully cycle
through this with kind of longer enterprise contracts?
......................................................................................................................................................................................................................................................

##### 14

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Joe Binz
Chief Financial Officer, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Yeah. Thanks for the question. Let me just talk a little bit about the differences between SMB and enterprise, and
I think it will get to your question. The SMB segment of our business is the most sensitive to macro, and it has
been the most impacted over the last year by the macroeconomic headwinds. We also do see the impact of
changes in SMB in our cloud revenue sooner than in enterprise, simply given the mix of monthly cloud billings that
we have in SMB. So I do expect SMB to be an area that will most benefit in our portfolio if macro improves and
we'll see that impact in a fairly timely way in our revenue and P&L when it occurs.

Now, as you point out, enterprise has slightly different dynamics. It's been less macro-sensitive over the last year,
still impacted by macro, but not to the same degree as SMB. And as you pointed out, enterprise also benefits
from the investments we've made to unblock cloud migrations and improve enterprise capabilities, including
premium enterprise SKU value. And they purchase that value through a higher percentage of annual and multiyear contract billings, and that reduces the quarter to quarter revenue variability to some degree. So you will see
that play out over time and it does take longer for us to see that goodness from enterprise fully reflected in the
P&L as a result of that.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Austin Cole from Citizens JMP Securities. Please go ahead.**
......................................................................................................................................................................................................................................................
Austin Cole
Analyst, JMP Securities
# Q

Yeah. Thanks for taking my question. Congrats on the results. So just cash now exceeds $2 billion on the balance
sheet, kind of a milestone there. I was wondering if you guys could share anything on how you guys are thinking
about M&A strategy at this stage.
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Well, yes, thanks for the question. I'll talk a little bit just in general about our capital allocation philosophy, which
really hasn't changed. The first priority is investment to drive the long-term growth of our business, both from an
organic R&D and sales and marketing perspective, as well as, as you point out, mergers and acquisitions and
strategic investments. And from there, we typically look to opportunistically return capital to shareholders as we're
currently doing through the share repurchase plan.

So Atlassian has always done M&A as part of its growth strategy and that continues to be part of it going forward
as well. Scott?
......................................................................................................................................................................................................................................................
Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

I don't think there's any change to our philosophy irrespective of what our balance sheet numbers look like, we've
always been a company that thinks about the long term in terms of our investments. And it's not going to change
as a result of having a large or a small cash balance out there. We look at the right things – [indiscernible]
(00:44:01) from a acquisition perspective [indiscernible] (00:44:06) we're willing to sit around and wait for
something that really fits us and really provides value to our customers. And so, for us, we're always on the
lookout for great value assets and we'll do them when the time is right, not irrespective of our bank balance.
......................................................................................................................................................................................................................................................

**Operator: Your next question comes from Fred Havemeyer from Macquarie. Please go ahead.**

##### 15

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

Frederick Havemeyer
Analyst, Macquarie Capital (USA), Inc.

Corrected Transcript

03-Aug-2023

Hey, I'm back. Thank you. I wanted to also ask on the ITSM side of the business as well in Jira Service
Management, just the enterprise growth in particular, I think you noted about 80% year-over-year is looking quite
impressive. Just hoping to better understand what's really started to work there to be able to turn on that
enterprise growth within service management?
......................................................................................................................................................................................................................................................
Joe Binz
Chief Financial Officer, Atlassian Corp.
# A

Cameron here. I'll call out the bits – what's driving the enterprise success and IT service management; largely
comes off the back of many of our enterprise investments [ph] broadly (00:45:08) at the Atlassian Cloud platform
level, whether that was data residency, whether that's certifications, all the same benefit that we had for driving
migrations in large enterprise automatically gets translated to Jira Service Management.

However, the Jira Service Management team has also been exceedingly focused on knocking down the specific
IT requirements of those larger customers and you see that largely show up the validation of that as we are in the
leadership quadrant in the Gartner IT Magic Quadrant, which basically shows that, hey, yeah, we check all the
boxes that those customers require while maintaining that unique value of bringing dev and IT together at a get a
relatively competitive price point. So it's really the investment across the board in IT service management, as we
said a few years ago, now we're going to double down this area. And as we've paid off those R&D investments
and focused our go-to-market efforts, as we reach out to our larger customers and we talk to them about
migrating the cloud, we're not just talking about getting what they already have over to the cloud, we talk about
expanding the overall Atlassian value prop as we move to the Atlassian Cloud platform. And that's also helped us
expand the Jira Service Management offerings. Mike?
......................................................................................................................................................................................................................................................
Michael Cannon-Brookes
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.
# A

Yeah. I just wanted to add on one thing I was talking to an enterprise customer maybe a month, month-and-a-half
ago, and one of the things that was coming through to them was the value of the Atlassian platform and one of
the reasons why they opted for JSM. In particular in this case they used Atlassian in their Agile and DevOps, the
Jira software and other products. The combination of development teams and IT change is increasingly important.
We have an incredibly unique value advantage there as every customer, every company becomes a software
company, that connectivity between development teams and IT teams is incredibly important. That's powered by
our investments in the Atlassian platform over time. You're seeing that come through in Atlassian Intelligence and
a whole host of other ways. But it's really gratifying to us to see that resonating with customers, especially the
large customers and it's a big differentiator.

The same actually applies on the connectivity between IT and service teams in an organization and the work
management space. So on the other side of our market combinations, as enterprise service management
continues to roll out, our virtual agent technologies using Atlassian Intelligence, I think will be a huge boon to
larger enterprises in trying to take service management more broadly from IT into HR, finance, marketing and
other capabilities. This all relies on the power of the Atlassian Cloud platform. It'll continue to drive migrations of
our largest customers there and I think be a differentiator in the ITSM space.
......................................................................................................................................................................................................................................................

**Operator: Thank you. That's all the questions we have time for today. I will now turn the call over to Scott for**
closing remarks.
......................................................................................................................................................................................................................................................

##### 16

-----

#### Atlassian Corp. (TEAM)
Q4 2023 Earnings Call

##### Scott Farquhar
Co-Founder, Co-Chief Executive Officer & Director, Atlassian Corp.

Corrected Transcript

03-Aug-2023

Thank you everyone for joining our call today. As always, we appreciate your thoughtful questions and continued
support and a special thank you to the Atlassian team for your resilience and closing the year with strong
momentum. Also want to say a special thank you to Cameron; that was his last earnings call. I want to say a huge
thank you for the revenues you've given to Atlassian so far. Thank you all. And I'll see you next quarter.

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##### 17

-----
END DOCUMENT 3

BEGIN DOCUMENT 4:
##### 08-Mar-2023
 (ASAN)
## Asana, Inc.

##### Q4 2023 Earnings Call

##### Total Pages: 22

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

### CORPORATE PARTICIPANTS

Corrected Transcript

08-Mar-2023

Catherine Buan
Head-Investor Relations, Asana, Inc.
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.

Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
Tim M. Wan
Chief Financial Officer, Asana, Inc.

.....................................................................................................................................................................................................................................................................

### OTHER PARTICIPANTS

Annick Baumann
Analyst, Jefferies International Ltd.
Jackson E. Ader
Analyst, SVB MoffettNathanson
Alex Zukin
Analyst, Wolfe Research LLC
Andrew DeGasperi
Analyst, Berenberg Capital Markets LLC
Rob Oliver
Analyst, Robert W. Baird & Co., Inc.
Brent A. Bracelin
Analyst, Piper Sandler & Co.

George Iwanyc
Analyst, Oppenheimer & Co., Inc.
Robert Simmons
Analyst, D.A. Davidson & Co.
Steven Enders
Analyst, Citigroup Global Markets, Inc.
Fred Lee
Analyst, Credit Suisse Securities (USA) LLC
Jason Celino
Analyst, KeyBanc Capital Markets, Inc.
Shebly Seyrafi
Analyst, FBN Securities, Inc.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

### MANAGEMENT DISCUSSION SECTION

Corrected Transcript

08-Mar-2023

**Operator: Good afternoon, and thank you for attending today's Asana Fourth Quarter and Fiscal Year 2023**
Earnings Call. My name is Danielle and I'll be the moderator for today's call. All lines will be muted during the
presentation portion of the call with an opportunity for questions and answers at the end. [Operator Instructions]

It is now my pleasure to pass the conference over to our host Catherine Buan, Head of Investor Relations.
Catherine, you may proceed.
.....................................................................................................................................................................................................................................................................
##### Catherine Buan
Head-Investor Relations, Asana, Inc.

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana's
fourth quarter and fiscal year 2023. With me on today's call are Dustin Moskovitz, Asana's Co-Founder and CEO;
Anne Raimondi, our Chief Operating Officer and Head of Business; and Tim Wan, our Chief Financial Officer.

Today's call will include forward-looking statements, including statements regarding our expectations for free cash
flow, our financial outlook, strategic plans, our market position and growth opportunities. Forward-looking
statements involve risks, uncertainties, and assumptions that may cause our actual results to be materially
different from those expressed or implied by the forward-looking statements. Please refer to our filings with the
SEC, including our most recent annual report on Form 10-K and quarterly report on Form 10-Q, for additional
information on risks, uncertainties and assumptions that may cause actual results to differ materially from those
set forth in such statements.

In addition, during today's call, we will discuss non-GAAP financial measures. These non-GAAP financial
measures are in addition to and not a substitute for or superior to measures of financial performance prepared in
accordance with GAAP. Reconciliation between GAAP and non-GAAP financial measures and a discussion of the
limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings
release, which is posted on our Investor Relations webpage at investors.asana.com.

And with that, I'd like to turn the call over to Dustin.
.....................................................................................................................................................................................................................................................................
##### Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.

Thank you, Catherine, and thank you all for joining us on the call today. Despite a challenging year, we finished
our fiscal 2023 with strong growth, driven by our continued success serving enterprise customers and meaningful
progress towards profitability.

Q4 revenues grew 34% year-over-year and fiscal year revenue grew 45% year-over-year. This growth was fueled
by some of the largest companies in the world, who are Asana customers and represent industries such as
media, automotive, professional services, manufacturing, healthcare, transportation, logistics, telecommunications
and financial services.

During the fiscal year, we closed deals with three of the world's largest automotive manufacturers, four of the
largest telecommunications and internet service providers, several large professional services companies, five of
the largest media conglomerates, a top-five shipping and logistics company, and six financial services firms.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

Overall, 8 out of the top 10 tech companies are Asana customers and 80% of the Fortune 100 use Asana. And in
a moment, Anne will share more of our specific Q4 wins.

When you segment our customer base by those with more than 2,000 employees, an even more precise look at
our enterprise penetration, we have well over 1,500 enterprise customers. Our seat penetration in most of these
accounts is significant, but still in the single-digit percentages on average. So, there is a large opportunity for
future growth.

Some of the most strategic companies in the world are partnering with Asana to define what work management at
scale looks like. We have several Asana customers who have over 10,000 paying seats. We now have more than
139,000 paying customers as demand for our work management solution continues to increase.

Customers with over $100,000 annualized spend grew 49% year over year. As these customers continue to grow
with Asana their dollar net retention rate continues at a very strong pace at over 135%. Revenue from this cohort
grew 80% for the fiscal year and represents about a quarter of our total revenue.

Despite more budget scrutiny in enterprises, our win rates remain strong. We are winning more consolidation
deals and are seeing an increase in large multiyear commitments, as customers grow their investment in Asana.

In Q4, the momentum in our non-GAAP operating margins turned the corner and we expect to continue positive
momentum over the next several quarters. We expect to drive significant improvement in non-GAAP operating
margin this coming year as we focus on operational efficiency and growth, which Tim will talk about more.

As we look towards fiscal 2024, we're focusing even more on our go-to-market strategies. We'll be scaling our
winning playbook across the entire sales organization, increasing operational excellence and discipline, and
ensuring we have proven enterprise talent to lead.

While we expect the current challenging macroeconomic environment to continue for the near term, we're
encouraged by the way the longer term trends are playing out. The need for digital transformation isn't going
anywhere. Customers are making multiyear commitments with Asana as they look to disrupt the status quo and
get measurable ROI and time to value for their investments. And when companies want to consolidate their spend
on work management, we are winning.

We're fortunate to serve and learn from some of the most innovative organizations in the world. Working with
companies across major sports leagues, financial services, media, multinational consumer goods, and
manufacturing has also given us unique insights into potential growth opportunities in the areas where we need to
evolve in the coming years. I'm excited that Asana has reached a stage where these investments can be
leveraged to create value across many more large enterprise customers.

Core to serving these customers is the way our product has evolved as well. We believe Asana has the most
scalable architecture and data model and can support the most users, the largest volume of work, and incredibly
complex workflows. The Asana platform is quickly becoming the work management solution of choice for large
organizations looking to transform the way they work. There are four areas where we've seen recent traction in
the enterprise: Goals, cross-functional collaboration, compliance, and integrations.

Asana Goals was already the number one goal product, according to the G2 Enterprise Objectives and Key
Results software market. The vast majority of our $100,000 or more customers use Goals and over 90% of the

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

ones that do connect them to work. Companies are moving goal management from standalone OKR vendors into
Asana, and CIOs are recognizing our product as a consolidation opportunity.

Our customers continue to realize value from Asana's cross-functional capabilities, which allow people from
multiple teams to work together seamlessly. In order to run their business processes, cross-functional
collaboration is not a thing businesses do, it's everything they do. Asana is a critical platform that allows
companies to work the way things get done. As we have mentioned before, virtually all of our customers use
Asana cross functionally.

If you look at the nature of the work within each customer, the majority of their work in Asana is cross-functional
collaboration, in contrast to other applications that track single projects for single teams. This number is even
higher for customers spending more than $100,000. We see an even higher proportion of this cross-functional
collaboration in the features we've built as we've moved up-market, including Goals and Portfolios.

For compliance, our newly launched HIPAA offering is enabling customers to bring more of their patient care
management workflows into Asana. We have dozens of customers using our HIPAA solution just four months
after its release, and we continue to see opportunities open up in healthcare and healthcare insurance related
deals.

We're also seeing traction as more and more companies build integrations with Asana. Integrations help
customers make better use of existing investments and improve the productivity and quality of work across their
applications. These include HubSpot, Rules integrations with Gmail, PagerDuty, and Twilio. Salesforce for Goals
is our first out-of-the-box integration for Asana Goals and it was just rolled out to customers this quarter.

We're already seeing an over 50% increase in Salesforce integration from our top-100 customers. When work
happens in Salesforce, the progress of linked goals in Asana is automatically updated, making it easier to monitor
impact and make informed decisions.

On March 28, we will be hosting our first event of the year, Asana Forward. This virtual program will feature
cutting-edge research and real-life insights from Asana customers Amazon Web Services, Zoom, T-Mobile, Live
Nation, and Morningstar. Attendees will hear why these companies chose work management software and how
they're doing change management, supporting new revenue streams, and using IT to drive process excellence.

Those attending will also learn first-hand about Collaborative Intelligence, the next phase of Asana's proprietary
technology, the Work Graph. Just as Asana led the way in defining the work management category, we're taking
the next step to shape the future of work.

Before I close, I want to mention some of the industry recognition Asana has recently been given. In Okta's most
recent Businesses at Work Report for 2022, Asana is the fastest-growing app in our category among the top-50
most popular apps on the Okta platform.

Also, Asana was named as a Leader in The Forrester Wave Collaborative Work Management Tools Q4 2022
report. The report specifically differentiated Asana for how our Work Graph data model connects information,
people, and objectives that drive work through the organization, and how our goal management structure helps
organizations connect disparate teams with a common focus.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

Asana was also recognized as a top 100 in Glassdoor's Best Places to Work Award for the fourth time. And by
Newsweek in cooperation with Plant-A Insights Group, Asana was awarded one of America's Greatest
Workplaces for Diversity 2023.

I also want to highlight the release today of our fourth-annual Anatomy of Work Global Index, an in-depth analysis
into how work has evolved during this time of rapid volatility. Conducted by GlobalWebIndex on behalf of Asana,
the 2023 Anatomy of Work Global Index surveyed the behaviors and attitudes of more than 9,000 knowledge
workers across the United States, the UK, Australia, France, Germany, and Japan to understand the impact of
cross-functional collaboration, including what's working and what's not.

The report highlights that successful cross-functional collaboration helps organizations tackle challenges more
effectively, leading to more revenue growth and adaptability for business and how clear goals contribute to
business success by boosting collaboration, innovation, and employee engagement. This report is another
example of how Asana continues to serve as a thought partner to our customers on the future of work.

There are three things I want to reiterate before handing it over to Anne. First, we're building a long-term
sustainable business, focused on both growth and profitability. In Q4, we improved our non-GAAP operating
margin by over 14 percentage points year-over-year. And as you can see from our guidance, we're expecting to
improve our non-GAAP operating margin by 19 percentage points for the full fiscal year in 2024. This would be a
50% improvement versus fiscal year 2023 through a combination of efficient investment and growth.

Second, we're planning for pricing and packaging opportunities in the future to better match price to value for our
enterprise customers. This is another area where larger deployments help us understand where we can evolve
and add more value. We also expect this work to generate better leads for seat expansion and new opportunities
in the future to upsell using add-ons.

And third, as I mentioned before, we are launching Collaborative Intelligence, the next phase of Asana's
proprietary technology, the Work Graph. Our virtual event will be on March 28, featuring Amazon Web Services,
Zoom, T-Mobile, Live Nation and Morningstar.

In fiscal 2024, we're aligning our actions to optimize for serving enterprises well, which will be our key driver of
growth, new use cases within existing customers and use cases that drive new lands. We've already been making
progress in this direction and are now well positioned to become the category leader, with consistently high
reviews from users and analysts, and the largest existing deployments in enterprise.

The future of work is every organization working from a shared system of clarity and accountability, built on the
Asana Work Graph. Our strategy is focused on bringing that future to life.

Now, I'll turn it over to Anne.
.....................................................................................................................................................................................................................................................................
##### Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.

Thanks, Dustin. The macro headwinds continue to impact our expansions and created longer sales cycles in Q4
and will continue to impact us going into fiscal year 2024. Top-of-funnel demand remained stable in the fourth
quarter. Our free-to-paid conversion rate was also stable and helped feed our total customer number. We added
4,000 customers in Q4, consistent with the previous quarter.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

The softness in Q4 was somewhat offset by overachievement in our enterprise and strategic accounts. Our
largest customers really tell the story of the kind of value and ROI Asana delivers and how much potential
opportunity there is in the market. We have invested heavily in our enterprise products over the years and we will
further build our organizational go-to-market muscle in fiscal year 2024 for the growth opportunity ahead. We
expect to see those investments fully materialize by the end of this year.

Beyond the macro headwinds, I also believe that this is an important time for us to be building for longer term
success. There are areas where I know we can do even better. We have identified additional opportunities for
execution improvement, especially ramping sales reps, and increasing productivity across the field and sales
operations. We also recently reorganized territories and teams and rolled out new messaging in order to better
position us for the next few years. And there is still more work to be done to execute consistently and broadly in
all regions around the world.

When I look back, we had some significant highlights and momentum that will carry our business forward. Looking
at our largest customers, they continue to grow with us for multiple years. There are a number of strategic use
cases that drive these long-term investments.

Digital transformation projects are our largest. One of the world's largest consumer and industrial electronics
manufacturers and IT service providers has been undergoing a company-wide digital transformation. Asana is
being used by thousands of users across their transformation office, designers, marketing, business planning, and
business systems project teams to gain more visibility and clarity into their cross-functional working processes so
they can execute and make business decisions faster.

Another strong use case for Asana is global client and campaign management. One of the world's largest global
consulting firms signed a global MSA which cements Asana as the worldwide work management provider of
choice for every office.

Also, Asana Goals has proven to be a significant differentiator in the market, so setting and tracking goals across
teams in the organization is a very compelling use case. In fact, a revolutionary carbon transformation company is
using Asana Goals to help achieve their mission to eliminate global emissions and build a fossil-free future. And
as Dustin shared, the vast majority of our cohort of customers with $100,000 or more annualized spend use
Asana Goals and connect them to work.

Many of these long-term investments are multiyear agreements of which we have started to see more of. Another
theme this quarter was vendor consolidation. As organizations look to simplify and streamline their vendors,
Asana is winning vendor consolidation decisions.

One of the largest marketing and advertising agencies in the world had a significant expansion with Asana in Q4.
They signed a multiyear contract for our enterprise solution expanding to 13,000 seats across 13 agencies. Their
agencies around the world use Asana as part of a strategic initiative to more effectively manage their clients'
media and marketing campaigns to help grow their businesses and gain market share.

Coupa, the platform transforming the way businesses manage their spend, signed a multiyear agreement for our
enterprise solution in Q4. Across Coupa, customer-facing teams, marketing, IT, business operations, finance and
engineering rely on Asana to manage large strategic projects tied to company goals as well as their daily work.
Eric Tan, CIO at Coupa said, we consolidated on Asana recognizing the importance of building a common
platform for our employees and customer communities to work together to drive meaningful results.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

One of the world's most recognized brands in short-term vacation rental platforms chose our enterprise solution
via a strategic, multiyear agreement as their foundational collaboration platform in their consolidated tech stack.
This will enable the organization to create a consistent method for managing workflows across the business and
to have a system of record for all work in the organization. This consolidation onto Asana will help them drive
efficiencies now that the company is remote-first. Plus, it will improve accountability and alignment across the
company so employees can focus their energy and effort on innovation and delivering the best experience for
their customers.

And we're seeing expansions broadly across several diverse industries, as we continue to expand beyond our
leadership in the tech industry. We're seeing continued growth within the financial services industry. For example,
one of the world's largest European exchanges significantly expanded their use of Asana in Q4 to thousands of
seats. Asana is now heavily used within their product, data, engineering, analytics, and machine learning teams to
manage their roadmaps and project execution. We were the only work management platform that met their
stringent security and compliance requirements.

For those of you that love pizza, we saw a great expansion with PizzaExpress, the British multinational pizza
restaurant and food retail chain with 360 locations across the UK and 100 overseas in Europe, in Q4. They began
using Asana in Q2 within their innovation team and will now be implementing Asana across all of their operations,
including front-line employees, to drive growth in the business.

In summary, we are seeing more multiyear deals, winning more vendor consolidation decisions and continuing to
diversify our enterprise success across more and more industries. All this said, we can do more. Looking forward,
we have a number of big initiatives in fiscal year 2024.

First, our strategic accounts initiative. The goal of this initiative is to ensure that we are focused on our most
leveraged account opportunities. We've already reviewed our top accounts by region to identify where our
investments would be highly leveraged, and with this initiative, we can focus even further on our account
management, customer success, and R&D resources where we will likely see growth opportunities and high ROI.

These accounts represent some of the largest names in technology, telecom, professional services, retail,
manufacturing, consumer goods, media, and financial services. And we've already seen some proof of success.
Our enterprise customers, which we define as organizations with over 2,000 employees, was our fastest growing
customer segment.

Second, my goal is to increase average productivity per sales rep by 20% by the end of the second half of fiscal
year 2024. We'll continue to improve our sales enablement capabilities and lead generation initiatives targeted at
enterprise accounts. We'll also be elevating our sales playbook to focus primarily on high ROI workflows, quick
time to value use cases, digital transformation, Goals and Reporting and ensuring that customers understand and
experience that Asana is a must-have.

Third, we will further build our enterprise leadership bench strength. In EMEA, Sanj Bhayro has recently joined as
our new General Manager of EMEA. We also brought on board Shannon Sullivan Duffy as our new Chief
Marketing Officer. And Neeracha Taychakhoonavudh has joined us as our new Head of Global Customer
Experience.

Together, these new leaders have over 70 years of combined experience in enterprise sales and marketing
management and scaling fast-growing businesses from companies such as Salesforce and Oracle. We're also
actively recruiting for a new Chief Revenue Officer who will help lead and accelerate our move further up-market.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

And with that, I'll hand it over to Tim.
.....................................................................................................................................................................................................................................................................
##### Tim M. Wan
Chief Financial Officer, Asana, Inc.

Thank you, Anne. Q4 revenues came in at $150.2 million, up 34% year-over-year. Revenue from the US grew
40% year-over-year, accounting for 61% of our total revenue. International grew 26% year-over-year, accounting
for 39% of our revenue. Currency impacted our international growth rate by roughly 300 basis points and the
overall growth rate by about 100 basis points. International growth would have been 29% year-over-year and total
revenue growth would have been 35% year-over-year without the impact of currency.

Revenue from customers spending $5,000 or more on an annualized basis grew 42% year-over-year. This cohort
represented 73% of our revenues in Q4, up from 69% in the year-ago quarter. We have 19,432 customers
spending $5,000 or more on an annualized basis, up 26% year-over-year. Our largest customers remain our
fastest-growing cohort. We have 506 customers spending $100,000 or more on an annualized basis and the
customer cohort is growing at 49% year-over-year.

As a reminder, we define these customer cohorts based on annualized GAAP revenues in a given quarter. Our
dollar-based net retention rates were lower, but remained healthy across every cohort. Our overall dollar-based
net-retention rate was over 115%.

Among customers spending $5,000 or more, our dollar-based net-retention rate was over 120%. And among
customers spending $100,000 or more, our dollar-based net-retention rate was over 135%. As a reminder, our
dollar-based net retention rate is a trailing four-quarter average calculation.

We continue to see stable gross churn rates overall and across the cohorts and low churn in our large accounts,
demonstrating the value we deliver for our enterprise customers. However, we expect our overall dollar-based net
retention rates to trend lower as companies remain mindful of the near-term economic challenges.

As I turn to expense items and profitability, I would like to point out that I will be discussing non-GAAP results in
the balance of my remarks. Keep in mind, non-GAAP results exclude stock-based compensation and the onetime restructuring costs that we incurred in Q4.

Gross margins came in at 90.5%. Research and development was $51.6 million or 34% of revenue. Sales and
marketing was $93.2 million or 62% of revenue. G&A was $28.6 million or 19% of revenue, an improvement from
28% a year ago.

Operating loss was $37.4 million and the operating loss margin was 25%, representing a 14 percentage point
improvement versus a year ago. The improvement in our operating margin demonstrates our ability to drive more
efficient growth and manage our operating expenses with increased discipline. Net loss was $33.2 million and our
net loss per share was $0.15.

Looking at the highlights from the full fiscal year. Fiscal year revenue grew 45% year-over-year to $547.2 million.
We added almost 4,000 customers spending $5,000 or more on an annualized basis during the year. And we also
added 166 customers spending $100,000 or more on an annualized basis during the year. Revenues from
customers spending $100,000 or more on an annualized basis grew over 80% year-over-year. This cohort
represented 25% of our revenues for the full year.

-----

#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

Moving on to the balance sheet and cash flow, cash and marketable securities at the end of Q4 were
approximately $529.3 million. Our remaining performance obligations, or RPO, was $299.2 million, up 37% from
the year-ago quarter. 84% of our RPO will be recognized over the next 12 months. That current portion of RPO
grew 36% from the year-ago quarter. Total deferred revenue at the end of Q4 was $233.6 million, up 34% yearover-year.

Our free cash flow is defined as net cash from operating activities, less cash used in property and equipment and
capitalized software costs, excluding the non-recurring items such as costs related to restructuring. In Q4, free
cash flow was negative $26.5 million or negative 18% on a margin basis, an improvement from the negative 37%
from the year-ago quarter. We ended the fiscal year with 1,782 employees.

Moving to guidance, for Q1 fiscal 2024, we expect revenues of $150 million to $151 million, representing growth
rates of 24% to 25% year-over-year. We expect non-GAAP loss from operations of $40 million to $38 million, and
we expect net loss per share of $0.19 to $0.18 assuming basic and diluted weighted average shares outstanding
of approximately 215 million.

For the full fiscal year 2024, we expect revenue to be in a range of $638 million to $648 million, representing a
growth rate of 17% to 18% year-over-year. We expect Non-GAAP loss from operations of $130 million to $120
million, operating margin of 19% at the midpoint of guidance, a 50% improvement from fiscal year 2023. And we
expect net loss per share of $0.59 to $0.55, assuming basic and diluted weighted average shares outstanding of
approximately 219 million.

Our guidance assumes the macro environment continues to create headwinds, especially in the first half of fiscal
2024. I'm also baking in some assumptions that our new leaders will need some time to execute on our strategies.

From an expense management standpoint, we implemented a number of initiatives to improve our operating
margins, which you saw begin to manifest as early as Q4. First, we reduced our global head count as part of a
restructuring designed to better prioritize our resources on moving up-market and improve operating efficiency for
the long run. This reduction resulted in non-recurring restructuring charges of $9.3 million in Q4, which will be
excluded from our non-GAAP results and free cash flow per our definition.

Second, we are continuing to evaluate every investment ensuring that we prioritize the highest ROI investments
with shorter payback periods and aligning with our focus on moving up-market And third, we are continuing to
evaluate our spend with every vendor, consolidating where there might be overlap and renegotiating our contracts
to better match the value we are realizing with these providers. We expect these expense-related initiatives will
drive measurable improvements in our operating margins in fiscal year 2024 and beyond.

Our guidance implies that operating expenses grow in the low-single digits or essentially stay flat to the previous
year. Despite the uncertainty with the macro environment, we have increased confidence in our ability to be free
cash flow positive before the end of calendar 2024, while balancing growth and profitability.

With that, I'll hand it back to Dustin, for some final remarks.
.....................................................................................................................................................................................................................................................................
##### Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.

Thanks, Tim. One thing I want to add to my formal comments is that I'm planning to enter into a 10b5-1 trading
plan on March 9, 2023 to purchase up to 30 million shares of our Class A common stock, subject to the required
cooling off period. I'm doing this because I personally believe Asana shares are undervalued, given the scale of

##### 10

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

the opportunity I see in front of us. The work management market is an enormous underpenetrated market that I
believe we're well positioned to lead, especially in enterprise.

Working alongside some of the most strategic leaders in the respective industries gives us unique insights into
their complex enterprise needs and various business models. This helps inform our product strategy and positions
us well to understand the future of work and helps solve our customers' most critical challenges over the longterm.
.....................................................................................................................................................................................................................................................................
##### Catherine Buan
Head-Investor Relations, Asana, Inc.

Thank you, Dustin. And before I open it up to Q&A, I want to note that Mr. Moskovitz's statements regarding his
trading plan to purchase shares of our Class A common stock may be considered forward-looking statements that
are subject to risks and uncertainties, including that his trading plan may be modified, suspended or terminated by
him at any time, and there can be no assurance that the price and volume parameters of his trading plan will
result in purchases of shares of our Class A common stock, in line with his expectations in such forward-looking
statements.

And with that, operator, we can open it up for Q&A.
.....................................................................................................................................................................................................................................................................
### QUESTION AND ANSWER SECTION

**Operator: Certainly. [Operator Instructions] The first question comes from the line of Brent Thill of Jefferies. You**
may proceed.
.....................................................................................................................................................................................................................................................................
Annick Baumann
Analyst, Jefferies International Ltd.
# Q

This is Annick Baumann on for Brent Thill. Dustin, in the face of decelerating top line, which is undoubtedly
macro-led, what continues to give you faith that you will ultimately win the enterprise and what is left to do to
solidify that position?
.....................................................................................................................................................................................................................................................................
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

Yeah. Thanks for the question. There are a lot of things that I think are really positive signs for us. I think that the
thing that I feel most excited about is just the strength of the really impressive customers that we have and how
healthy those accounts are. So, even though, we've seen headwinds in the form of longer sales cycles that we
talked about this quarter and last quarter, we know that there is still really high utilization even when the deals are
stalled, we know those customers aren't going to competitors and we have a lot of signs from them that they
intend to expand with us over time. And so, we feel really great about the places where we've landed already,
especially in the Fortune 100 and other enterprises. And we think there is just a ton of room to expand there.

And we know that when we do see consolidation conversations and customers looking to really take the next step
and commit to a partner, we're really well positioned. We often win those, thanks to the strength of the Work
Graph and the way it facilitates cross-functional use cases, the fact that it's loved across many functions instead
of specializing into one, and the credibility we have not just from having the existing deployments, but also from
the high ratings we get from analysts that are focused on the enterprise segment.

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

**Operator: Thank you. The next question comes from Jackson Ader of SVB. Please proceed.**
.....................................................................................................................................................................................................................................................................
Jackson E. Ader
Analyst, SVB MoffettNathanson
# Q

Great. Thanks for taking my questions, guys. The first one, Anne, I think it was you that mentioned some
opportunities on pricing and packaging, specifically in the enterprise. I'm sure these are like still in the works, but
any kind of specifics you can give us, like ideas that are kind of bouncing around and also why just focus on the
enterprise?
.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Hi, Jackson, thanks so much for your question. Yeah, the updates we're exploring are really focused on aligning
value for our customers and they're deeply informed by both existing enterprise customers as well as prospects
we're speaking with and market analysis. Our priorities – as you might imagine, we are exploring a whole number
of options. I think Dustin mentioned add-ons. But really what we're thinking about there is making sure that our
enterprise customer needs are met and we're delivering for them and they're realizing value as they scale and
grow with us. And so, that's why we're focusing on that particular segment. Our current pricing and packaging
plans have evolved over the years specifically for the existing base and with the growth in enterprise, that's why
we're laser focused on pricing and packaging for those customers.
.....................................................................................................................................................................................................................................................................
Jackson E. Ader
Analyst, SVB MoffettNathanson
# Q

Okay. Great. Thanks. And then a quick follow-up. So, actually, just on those, like the multiyear deals that you sign
with these Fortune 100 companies, do the contracts – do they have like minimum seat ramps that go up through
the multi-years? Is it adoption-based or are they buying like a big pool of seats where they might create some
shelfware? I'm just curious how those multiyear deals are layered in.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. Hey, Jackson. This is Tim. I would say, the common theme that we see across these multiyear
consolidation plays is, one, the fact that these customers want to consolidate on a scalable enterprise platform.
So in many cases, we are being deployed and they're lowering their spend across some of the other work
management players. So, that's one. Two, given the macro, most companies are being very mindful of how many
seats they buy. So, they are buying up to their usage. So, these are all very healthy accounts. Now, to the degree
that companies are growing, many times what we see is that they do ask for tranches on how they buy the next
set of seats. So, it does give them some flexibility to move up with some price certainty.

.....................................................................................................................................................................................................................................................................

**Operator: Thank you. And the next question comes from the line of Alex Zukin of Wolfe Research. Please**
proceed.
.....................................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

Hey, guys. Can you hear me okay? Guys, can you hear me?
.....................................................................................................................................................................................................................................................................

##### 12

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Tim M. Wan
Chief Financial Officer, Asana, Inc.

Corrected Transcript

08-Mar-2023

Yes.
.....................................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

So, maybe just a few for me. One kind of generative AI question, which is par for the course right now for most
investors, and then one financial one. Dustin, I guess, long term, when we've kind of talked about visions for
Asana, I think one of the visions you've always had is that ultimately Asana, based on the corpus of knowledge
and interactions and cross-functional data that you have, when an individual comes to work, they could kind of
ask your platform, what's the next – what should I do today, right? And then it assigns – it could assign
theoretically those next actions.

What's the right way to think about unlocking the value of generative AI in the Asana product, platform, vision?
And how do you see this evolving? How do you monetize this? Is it just table stakes that every work management
vendor has? Would love to kind of get your thoughts on that, and then I'll ask a couple of math questions.
.....................................................................................................................................................................................................................................................................
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

Yeah. Great question. Obviously, it's a really exciting time in AI. We've been following really closely. I also like to
point out we're really close to the OpenAI team in particular. We share a board member in Adam D'Angelo and
the CEO, Sam Altman, actually led our Series C a few years back. So, we've been able to talk to them about the
best ways to leverage GPT in Asana and how they think about the future.

And to your question about leveraging the unique value of the Work Graph, just to step back, there is a sort of
larger arc AI story for us that involves multiple kinds of technology, not just the ChatGPT style language models.
And we've been working with machine learning for a while now. We actually have some data-driven experiences
in the product today and we're continuing to build on that direction. We are also prototyping things internally with
the language models and have a lot of exciting ideas there.

In terms of the generative stuff, I actually think that the exact use case you gave, I think you might be able to use
language models for that. I think the other machine learning approaches may be better suited and we'll try both.
But I do think that there's a lot of other possibilities with generative models, like summarizing long threads for you,
writing up status updates, trying to just aggregate all the information in a project and pull out the highlights,
summarizing meeting transcripts. We're already seeing a lot of that from other SaaS products already, and we're
students of the space. So, we'll incorporate the best ideas.

But I think whether or not, for the use case you suggested of really understanding the corpus of data, the structure
of data, what's important to that particular end user, I think whether you're using a language model or another AI
approach, the structure inherent in the Work Graph and just the information that users are putting into our system
just give us a leg up. We have more data for those models to read and understand and create insights and help
direct users to the most important work. So, I think the Work Graph actually ends up being an advantage, but
definitely expect to see AI used across a variety of products.
.....................................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

That's awesome. I'll put in the joke about no more TPS report.

##### 13

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.

Corrected Transcript

08-Mar-2023

Exactly. No more hand-written ones anyway.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Andrew DeGasperi of Berenberg. Please proceed.**
.....................................................................................................................................................................................................................................................................
Andrew DeGasperi
Analyst, Berenberg Capital Markets LLC
# Q

Thanks for taking my question. Just maybe back to the sales reorganization or, the changes you're making in the
sales motion. Can you let us know what led you to do this kind of drastic shift? What did you learn over the last
year or two since you've ticked off on the enterprise side? And then, generally, how would this reflect in the next
few quarters in terms of the growth? I know you're baking in some conservatism in the guidance, and just
wondering how should we think about this proceeding as we move through the year.

.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Hi, Andrew. It's Anne. Thanks so much for that question. So, the way we're thinking about it is we're really
focused on building and scaling our enterprise selling infrastructure. So, we rapidly added to the sales team last
fiscal year. And now, we're frankly ensuring that all the operational systems and enablement support is scaling to
meet that investment. And really, what I'm laser focused on is to make sure our enterprise sales reps' time is
focused on landing and expanding with the right customers and delivering fast, measurable business value. And
we're doing that much more consistently and repeatedly in every market. So, that's the focus that you'll see that
we are committed to. And that's also the focus as we bring on great new sales leaders around the world. And
then, I think Tim will share a little bit more about the second part of your question.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Hey, Andrew, just adding on to Anne, I think Dustin mentioned this in the script. We do have over 1,500
enterprise customers. And when we look at the data, customers that are spending more than $100,000 with us,
their net expansion rate this last quarter was over 135%. And when we peel back the onion and look at the data,
those expansions aren't just through up-tiering. Many of those, the vast majority of that growth and expansion is
through seats and getting more deployment and across the company. So, that gives us a lot of confidence in
terms of the strategy that we're moving forward with. So, that's one.

And then two, in terms of the guidance, I think I mentioned this on the call, I think we're still seeing kind of there
is a lot of macro uncertainty. The Fed is still likely to raise rates. There's geopolitical issues kind of about. So, I
think we're trying to be really thoughtful in the first half being continued to see challenges and that our
customers, especially in the short term, will be very mindful of their spend.

We've also baked in some time, for our leadership changes to ramp up and for the strategies to take hold. So to
the degree that there will be out-performance, I think it will come from the enterprise that businesses start
releasing their budget and being much more thoughtful about investments. So, my approach, I think, if you ask
me about guidances, I don't think there is a lot of downside to the guidance and I would just not model or just be
cautious on not having a lot of upside in the model this early in the year.
.....................................................................................................................................................................................................................................................................

##### 14

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Andrew DeGasperi
Analyst, Berenberg Capital Markets LLC

Corrected Transcript

08-Mar-2023

That's helpful. And just on a math question that Alex didn't get to ask, in terms of the OpEx rising low-single
digits, ihow should we think about it, should it be R&D really kind of growing a little bit faster overall and you're
just taking a cut to sales and marketing? How should we think about the moving parts on that?
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. I think R&D as a percent of revenue will be relatively flat, and I wouldn't say sales and marketing is a cut. I
think the way to think about it is really a reallocation of where those resources were in prior years or even last
year, where we're still focused on the SMB, and we're redirecting many of those resources towards moving upmarket. So, I think you'll continue to see leverage, like you saw this last quarter in sales and marketing, and
you'll continue to see leverage in G&A. And then, I would expect R&D to be relatively flat on a year-over-year
basis.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Rob Oliver of Baird. Please proceed.**
.....................................................................................................................................................................................................................................................................
Rob Oliver
Analyst, Robert W. Baird & Co., Inc.
# Q

Great. Thank you, guys. Can you hear me okay?
.....................................................................................................................................................................................................................................................................
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

Yes.
.....................................................................................................................................................................................................................................................................
Rob Oliver
Analyst, Robert W. Baird & Co., Inc.
# Q

Hello. Good evening. Yeah. Great. Hi. Thanks. Thanks so much, guys. So, a question, Dustin, for you or for Anne.
It sounds as if the consolidation play is a nice change for you guys relative to last quarter and I know that, Anne,
you had mentioned last quarter that you guys were engaging more at the C level. So, can you talk a little bit more
about those vendor consolidation wins you guys have had? Are they seat expansion that's coming at the expense
of other vendors as people kind of do the same thing that Tim mentioned he's doing, which is rationalizing
vendors? And are these C level decisions, are they influenced by sort of the bottoms-up strength that you guys
have with users? Talk a little bit more about those consolidation wins, and then I just had a quick follow up.
Thanks.
.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Yeah. Hi, Rob. Thanks so much for your question. So, yes, we're seeing consolidation wins for Asana, especially
as CIOs are looking to drive consistency across their organizations and reduce the total number of applications
that they're supporting. So, a couple of factors in our favor specifically are our proven ability to scale to over
150,000 seats and growing, and then the power of our Work Graph architecture which really allows these
organizations to consolidate multiple divisions or functions. And to your point, it's really driven by the strong usage
and the love for the product that exists in the organization.

##### 15

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

A few other things that we've been seeing. Our Goals product enables executives to connect the company's top
priorities to all the work that's necessary to achieve those priorities. And so, they can do that all in Asana. The
majority of our $100,000-plus customers are using Goals and 90-plus percent of those are using Goals connected
to the underlying work. So, we're seeing that in this environment be especially valuable and impactful.
.....................................................................................................................................................................................................................................................................
Rob Oliver
Analyst, Robert W. Baird & Co., Inc.
# Q

Great. That's helpful. Thanks, Anne. I appreciate that. And then, Tim, just one for you. Really appreciate the color
around your thoughts relative to the cadence of the guidance through the year with Q1, obviously, being strong.
But it sounds like you're giving yourself some room there on the ramp with some of the new managers. How is
head count relative to where you think it needs to be on that guidance, both sales head count and general head
count within the firm? Thank you.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. Just from a head count perspective, we're pretty comfortable with where we're at right now. As we look
throughout the year, we'll be looking for signs where we can invest. So, to the degree that pipeline is stronger
than our expectation, productivity is increasing, deal cycle time is decreasing, all those things will inform us on
how fast we want to grow our heads. But at this point, I think we're fairly comfortable with what we have. We
want to demonstrate leverage in the business. Even if you look at our guidance, our operating margins are going
to improve by about 50% year-on-year. So, those are all the progress that we want to make sure that we're
delivering and we'll be very mindful throughout the year.

.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Brent Bracelin of Piper Sandler. Please proceed.**
.....................................................................................................................................................................................................................................................................
Brent A. Bracelin
Analyst, Piper Sandler & Co.
# Q

Good afternoon. I guess, love to see the focus on the enterprise and some of these multiyear deals. Maybe for
Anne or Tim, on the NRR, even with some of the multiyear deals, that NRR rate did downtick. It's a little bit
lagging, because it's trailing 12 months, but it did downtick. How much of that slowdown there is tied to just the
macro slowing the pace of expansions across the base of, it sounds like, 1,500 enterprises? Or are you also
seeing a drag or seat contraction with some of the broader layoffs that we're seeing in the tech space? Just
trying to parse out what those drags are you're seeing. I understand it's still very healthy. But in period certainly
down-ticked and would love to have a better explanation on what's contributing to that downtick in NRR.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah, sure. Hey. This is Tim, Brent. So, I would say that the color I would add to that is the NRR downtick is
driven really by two things. It's really driven by expansions being lower than historic, primarily because
companies aren't hiring as fast. And then the other piece is some downgrades within some of our customers
particularly in tech, who many of you know, have had layoffs. But when I look at the logo churn, those remain
healthy, especially around our $50,000 and $100,000 customers. There's virtually zero churn or logo churn
within those customer base.

So, in the short term, companies are kind of hunkering down a bit in terms of their spend, but they're still
deploying more seats. And to the degree that some of the companies that may have over-hired and have

##### 16

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

had layoffs, we do see downgrades with that customer cohort. But when we look at the data, the logo churn is
healthy. And for those companies that haven't had layoffs, some of these consolidation plays, those are all
seat expansions.
.....................................................................................................................................................................................................................................................................

Brent A. Bracelin
Analyst, Piper Sandler & Co.
# Q

Great. My last follow-up here is for Dustin. Now that ChatGPT has an API released, how quickly do you plan to
test and trial and embrace some of these LLMs and AI transformers out there? Thanks.
.....................................................................................................................................................................................................................................................................

Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

Yeah, this is Dustin. Definitely intend to test them right away. We've been prototyping things, but I don't have
anything to announce in terms of when we'll have customer availability on any of that.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question is from Alex Zukin of Wolfe Research. Please proceed.**
.....................................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

Hey, guys. So on those math questions I promised, I guess, first around the NRR, Tim, with the commentary
about customers in tech verticals kind of downshifting or right-sizing, how long do you expect those trends to
last? And the key question being, given it's a trailing four-quarter metric, it's exiting the year clearly lower than
115% in aggregate. Where is the confidence interval around where it troughs? And when do you feel like you're
going to be through the anniversarying of the primary cohorts that are downshifting? And then, I've got a quick
follow-up on just the revenue breakout for $5,000 up and $5,000 below.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. Sure, Alex. When you kind of look at the NRR, I would say, we will see some continued compression,
because it is a four-quarter trailing number. But I would expect Q3 and Q4 of this year to provide some better
comps for us on that NRR, because it's kind of Q3 and Q4 was when we started to see a lot more of the tech
verticals start right-sizing and having more layoffs. So, that's kind of the timing in terms of the NRR, Alex.

.....................................................................................................................................................................................................................................................................
Alex Zukin
Analyst, Wolfe Research LLC
# Q

Got it. And then, I guess, to the comments that you've made around being a little bit more conservative in your
assumptions and giving the new sales heads time to ramp, looking for a CRO, that all makes sense. Should we
assume that for the year revenue from the customers that are spending over $5,000, does that go into the
high-70s as a percentage of total? Because when you model it out, it still looks like even that cohort is going to dip
to the low-20s percent growth. So, just help us a little bit understand of what's happening there. And again, when
that could start to bottom?
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah, great question, Alex. I think you're referring to the number being in the low-20s, right? So, the way to
think about it is, we're going to focus much more on the $50,000 and $100,000 cohort customers and

##### 17

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

pushing for much more moving up-market than even just like slightly above $5,000 or the $5,000 to $10,000. So,
I do think, in aggregate, the $5,000 and above will continue to trend north as a percentage of our revenue,
probably closer to like between 78% and 80% as a percent of our total revenue over time. But the focus is
moving even more up-market towards $100,000 type of customers.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from George Iwanyc of Oppenheimer. Please proceed.**
.....................................................................................................................................................................................................................................................................
George Iwanyc
Analyst, Oppenheimer & Co., Inc.
# Q

Thank you for taking my question. Anne, maybe following up on your comments on Goals. Can you give us a
sense of what you're seeing from Workflow Builder and automation and how that's helping with the consolidation
activity you're seeing?
.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Yeah, George. Thanks so much for that question. Maybe a good way to answer that is just an example with a
customer that did consolidate. So, a leading global vacation rental platform consolidated last quarter on Asana to
really enable every employee to have a single consistent place to collaborate and drive improved productivity and
execution, and they've gone remote first. So, the rules, the automation, the workflows are really helping to make
sure that there is no more siloed work for them, that there is improved accountability. And it's also providing more
time for their teams to focus on innovation and improving customer experience for their millions of global
customers. And in fact, they have a dedicated center of excellence and an internal team partnering with our
account team to really make sure they're making the most of every aspect of Asana.

So, we see those features all coming together. And now, since their entire organization is on Asana, the ability to
then implement and connect all of their company goals down all the way through the organization to an individual
level, so employees can come in and know exactly what matters and how their work connects to their company
goals. And that's especially important for this organization, again, because all – employees are completely
distributed around the world. And so, they're all just collaborating through technology and through Asana with one
another.
.....................................................................................................................................................................................................................................................................
George Iwanyc
Analyst, Oppenheimer & Co., Inc.
# Q

And following up on that, with all the sales changes you're making, can you give us some perspective on what
you're doing with the channel and system integrators?
.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Yeah, absolutely. So, the way that we think about channel and then partners overall is, because our focus is on
growing with enterprise customers in our priority markets, we really want to ensure we're building those
relationships in a really strategic way. So, for enterprise customers, strong partnerships with SIs and service
partners actually are important, as well as our deep partnerships with best-of-breed software companies, those
are really important for our enterprise customers. With our channel partners, we really see them as important to
helping us extend our reach in markets where we're still early and don't have our sales teams on the ground. So,
that's the way that we're approaching not just our channel strategy, but our overall partner strategy.
.....................................................................................................................................................................................................................................................................

##### 18

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

**Operator: Thank you. The next question comes from Robert Simmons of D.A. Davidson. Please proceed.**
.....................................................................................................................................................................................................................................................................
Robert Simmons
Analyst, D.A. Davidson & Co.
# Q

Hey. Thanks for taking my questions. First, I was wondering, could you give us a little bit of a preview on what
Collaborative Intelligence is, or is that too early for that?
.....................................................................................................................................................................................................................................................................
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

Yeah, absolutely. We're really excited about the event coming up. We've made a lot of progress over the years in
getting our customers to put their projects and portfolios and workflows into Asana, and Collaborative Intelligence
is really about aggregating the information that we see across those and giving leaders and executives more of
that top-down view on how work is progressing. So, it really enables them to identify collaboration hotspots and
make better, faster, data-driven decisions. So, really excited about that, and we've been talking about AI a lot
today. This is kind of like Asana intelligence, a different version of AI, but it's also Collaborative Intelligence,
because really everyone is inputting their own view of the Work Graph, but we're able to provide views and
insights that really take all those bits of information and put them into more of a coherent story.
.....................................................................................................................................................................................................................................................................
Robert Simmons
Analyst, D.A. Davidson & Co.
# Q

Got it. That makes sense. And then, kind of reading between the lines between some of your comments, would
it be fair to characterize the quarter as a bit weaker on the SMB side, but actually pretty solid for your larger
accounts customers, relatively speaking?
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yes. Yeah, Robert. I think that's a fair statement.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Steve Enders of Citi. Please proceed.**
.....................................................................................................................................................................................................................................................................
Steven Enders
Analyst, Citigroup Global Markets, Inc.
# Q

All right. Great. Thanks for taking the questions here. I want to dig in a little bit about some of the comments on
the go-to-market side, talking about trying to drive 20% better rep productivity through the year. So, I guess,
how are you thinking about the biggest levers that you can pull to be able to achieve that and the changes being
made on that front? And then, for Tim, how are you contemplating the productivity changes in the guide and the
outlook here?
.....................................................................................................................................................................................................................................................................
Anne Raimondi
Chief Operating Officer & Head-Business, Asana, Inc.
# A

Yeah, thanks so much, I appreciate you asking that and on productivity specifically. So, there's a couple of factors
contributing to sales productivity. The first is about a quarter of our sales team is still ramping. And the second is
that the reduction in force we implemented in November did impact productivity as managers and teams
adjusted to those changes. So, our focus now really is on investing in several areas. Certainly, the infrastructure,
the tools and training needed to deliver repeatable and predictable lands and expands, especially in our larger

##### 19

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

accounts. So, that's a lot about enablement. It's also about our partnership internally with our enterprise
technology team, investments in RevOps.

So, it's all of that geared towards our enterprise selling motion. And we're excited about the early traction on that
front, but know that we have a lot of work to do. So, those are the areas that we are really focusing on.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. In terms of the guide, I would say, in Anne's comments, I'm not sure if you all heard it, but we really talked
about that 20% ramping at the end. So, you can think of it as we're making progress throughout the year. But I
would say, to the degree that the reps productivity – we hit that 20% early in the year, that would probably be
upside to the model.
.....................................................................................................................................................................................................................................................................
Steven Enders
Analyst, Citigroup Global Markets, Inc.
# Q

Okay. Perfect. That's helpful. Thanks for taking the question.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Fred Lee of Credit Suisse. Please proceed.**
.....................................................................................................................................................................................................................................................................
Fred Lee
Analyst, Credit Suisse Securities (USA) LLC
# Q

Hey. Good afternoon. It's very encouraging to see the significant increase in incremental margins in the quarter
and also implied in the guide. Tim, you talked about evaluating every investment to prioritize high ROI
investments with shorter payback periods. Can you tell us a little bit about some of those high priority investments
that make the cut and some of the projects that take a backseat? Thank you.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. I think at a very high level, it's really looking at our customer base and where we have penetration, and
the size of their employee base and where we think we can really make progress with those accounts versus
smaller accounts where you may be capped at in terms of the number of employees. So even when you break
out the NRR, you can really see the difference between the downgrade and the churn and the smaller paying
customers, the SMB and the VSB, and then the higher paying accounts, which many of the enterprise
customers, where you don't see logo churn and you really see more seat expansion. So, I would say, that's an
area where we've done a lot of focus and kind of shifted both our marketing spend and our sales capacity and
trying to move more up-market.
.....................................................................................................................................................................................................................................................................
Dustin Moskovitz
Chief Executive Officer, Co-Founder & Director, Asana, Inc.
# A

And this is Dustin. I would just add, there is also a regional angle to this. So, we have different sort of CAC
payback and LTV by country. And we focused a little more on where we already have strength in the market and
where the market is just a stronger economy and more buying power. And so, we've shifted some of our attention
more into our Tier 1, Tier 2 markets and less in emerging markets.
.....................................................................................................................................................................................................................................................................
Fred Lee
Analyst, Credit Suisse Securities (USA) LLC
# Q

##### 20

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

Great. Thank you for the color. Appreciate it.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. The next question comes from Jason Celino of KeyBanc Capital Markets. Please**
proceed.
.....................................................................................................................................................................................................................................................................
Jason Celino
Analyst, KeyBanc Capital Markets, Inc.
# Q

Hey. Thanks for fitting me in. Just one question and maybe I'll just ask it plainly, but it sounds like you've built in
some conservatism on the revenue guidance. How should we think about the conservatism or the
aggressiveness of the operating margin framework given so much improvement you're expecting? Thanks.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

I would say, we're committed to delivering free cash flow before the end of calendar 2024. We've made vast
improvements in terms of the operating margin guide. And hopefully, we'll continue to under-promise and overdeliver for you guys. And that's kind of how I would characterize the guidance.
.....................................................................................................................................................................................................................................................................

**Operator: Thank you. And our last question comes from the line of Shebly Seyrafi of FBN Securities. Please**
proceed.
.....................................................................................................................................................................................................................................................................
Shebly Seyrafi
Analyst, FBN Securities, Inc.
# Q

Yes. Thank you very much. So, can you talk about the linearity during the quarter? I noticed that receivables
grew by 39% sequentially, much more than 6% revenue growth. How was January like versus December? And
how is February, which also passed, how was it versus January?
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah. December is an odd one to compare to primarily because of the holidays. But we certainly had a very
solid finish to the fiscal year. And I would tell you we're encouraged by what we're seeing right now with the
conversations we're having with customers in February.
.....................................................................................................................................................................................................................................................................
Shebly Seyrafi
Analyst, FBN Securities, Inc.
# Q

Okay. And also, your seat growth was, according to my model, like 30%. Am I in the right ballpark? That was
much more than your customer growth. And importantly, in my model at least, your price per seat was flat year-toyear. And I'm wondering whether you're modeling flat, up, or down in 2024 for price per seat.
.....................................................................................................................................................................................................................................................................
Tim M. Wan
Chief Financial Officer, Asana, Inc.
# A

Yeah, I would say, your model's not too far off in terms of seat. I think we've talked on the call and even with what
we've done in person meetings that the focus is seat deployment and getting as many seats as possible within
these large enterprises. And that, over time, we view price as just another lever for growth and moving those
customers up as we deliver more value. So, you're not too far off in terms of how you're thinking about the
business and how you should model it.
.....................................................................................................................................................................................................................................................................

##### 21

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#### Asana, Inc. (ASAN)
Q4 2023 Earnings Call

Corrected Transcript

08-Mar-2023

**Operator: Thank you. And with that, we will conclude our question-and-answer session of today's call. I would**
now like to hand the call back over to the management team for closing remarks.
.....................................................................................................................................................................................................................................................................
##### Catherine Buan
Head-Investor Relations, Asana, Inc.

Thanks so much. Just a final thank you to everybody joining the call today. I know it's a busy season. We look
forward to seeing you out on the road this quarter and thanks again.
.....................................................................................................................................................................................................................................................................

**Operator: And with that, we will conclude today's call. Thank you for participating and you may now disconnect**
your line.

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##### 22

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END DOCUMENT 4

BEGIN DOCUMENT 5:
##### 01-Dec-2022
## Asana, Inc. (ASAN)

Q3 2023 Earnings Call

##### Total Pages: 22

-----

#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

### CORPORATE PARTICIPANTS

Corrected Transcript

01-Dec-2022

Catherine Buan
_Head-Investor_ _Relations,_ _Asana,_ _Inc._

Dustin Moskovitz
_Chief_ _Executive_ _Officer,_ _Co-Founder_ _&_ _Director,_ _Asana,_ _Inc._

Anne Raimondi
_Chief_ _Operating_ _Officer_ _&_ _Head-Business,_ _Asana,_ _Inc._

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

......................................................................................................................................................................................................................................................

### OTHER PARTICIPANTS

Andrew DeGasperi
_Analyst,_ _Berenberg_ _Capital_ _Markets_ _LLC_

Ittai Kidron
_Analyst,_ _Oppenheimer_ _&_ _Co._ _Inc._

Allan Verkhovski
_Analyst, Wolfe Research LLC_

Steven Enders
_Analyst,_ _Citigroup_ _Global_ _Markets,_ _Inc._

Brent Thill
_Analyst, Jefferies LLC_

Sophie Lee
_Analyst,_ _Morgan_ _Stanley_

Brent A. Bracelin
_Analyst,_ _Piper_ _Sandler_ _&_ _Co._

Jackson E. Ader
_Analyst,_ _MoffettNathanson_ _LLC_

Jason Celino
_Analyst,_ _KeyBanc_ _Capital_ _Markets,_ _Inc._

Robert Simmons
_Analyst, D._ _A._ _Davidson_ _& Co._

Patrick Walravens
_Analyst, JMP_ _Securities LLC_

Rob Oliver
_Analyst,_ _Robert_ _W._ _Baird_ _&_ _Co.,_ _Inc._ _(Broker)_

-----

#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

### MANAGEMENT DISCUSSION SECTION

Corrected Transcript

01-Dec-2022

**Operator: Good afternoon. Thank you for attending today's Asana Q3 Fiscal Year 2023 Earnings Call. My name**
is Bethany, I will be the moderator for today's call. All lines will be muted during the presentation portion of the call
with an opportunity for questions and answers at the end. [Operator Instructions]

I would now like to pass the conference over to our host, Catherine Buan. Please go ahead.

......................................................................................................................................................................................................................................................

Catherine Buan
_Head-Investor_ _Relations,_ _Asana,_ _Inc._

Hi. Good afternoon and thank you for joining us on today's conference call to discuss the financial results of
Asana's third quarter fiscal 2023. With me on today's call are Dustin Moskovitz, Asana's Co-Founder and CEO;
Anne Raimondi, our Chief Operating Officer and Head of Business; and Tim Wan, our Chief Financial Officer.

Today's call will include forward-looking statements, including statements regarding our expectations regarding
free cash flow, our financial outlook, strategic plans, our market position and growth opportunities. Forwardlooking statements involve risks, uncertainties, and assumptions that may cause our actual results to be
materially different from those expressed or implied by the forward-looking statements. Please refer to our filings
with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q for
additional information on risks, uncertainties and assumptions that may cause actual results to differ materially
from those set forth in such statements.

In addition, during today's call, we will be discussing non-GAAP financial measures. These non-GAAP financial
measures are in addition to and not a substitute for or superior to measures of financial performance prepared in
accordance with GAAP. Reconciliation between GAAP and non-GAAP financial measures, and a discussion of
the limitations of using non-GAAP measures versus their closest GAAP equivalents are available in our earnings
release, which is posted on our Investor Relations Web page at investors.asana.com.

And with that, I'd like to turn the call over to Dustin.

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief_ _Executive_ _Officer,_ _Co-Founder_ _&_ _Director,_ _Asana,_ _Inc._

Thank you, Catherine, and thank you to everyone for joining us on the call today. As you saw in the earnings
release, Asana reported strong Q3 revenue growth and notable operating margin improvement in the quarter.
Revenue in the quarter grew 41% year-over-year, or 43% when adjusted for foreign currency. Operating income
was over $11 million better than expectations, a credit to our revenue outperformance as well as our continuing
focus on managing our expenses.

We had 493 customers spending $100,000 or more in the annualized GAAP revenue, up 78% year-over-year,
and continue to be the work management solution of choice at some of the world's leading enterprises. In
addition, our largest deployment has now reached over 150,000 paying seats, further widening our significant
lead in enterprise deployments. Our enterprise business is growing more rapidly than our overall growth rate,
continuing to become a larger portion of our business over time. And the net retention rate of our customers
spending $100,000 or more continues to be very strong at over 140%.

-----

#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

Anne will talk more in a moment about some of these large customers who represent some of the world's leading
companies and best-known brands.

Looking back to fiscal 2021, we had accelerated revenue growth year-over-year, so we ramped up heavily in the
second half of fiscal year 2022 to increase capacity for what we believed could potentially be an even bigger year
in fiscal 2023. But last spring, the macroeconomic environment started to turn on our international business. So in
Q2, we slowed head count growth, started pacing investments in lower ROI geographies, and started taking
significant measures to manage spend. By September, those conditions became even more challenging,
including for our US business.

Based on all of these factors, we made the difficult decision last month to reduce the size of our overall
organization by 9%. We also adjusted our full-year outlook to capture these impacts. Our current expectation is
that these factors will persist through the fourth quarter and into the next fiscal year.

While the macroeconomic trends have been dynamic, it hasn't changed the size of our market opportunity and our
product strategy. Asana's work management platform is now a strategic choice as organizations look to
successfully navigate these uncertain times.

I've been on the road recently meeting with customers. We're fortunate to work with some of the most innovative
companies in the world; companies that have successfully deployed Asana to tens of thousands of users. This
scale and their perspective has given us unique insights into how enterprise organizations are thinking about their
current and future software needs.

With that, there's three things to note. First of all, while buying decisions are being considered carefully by the Csuite during this macroeconomic cycle, they're still investing in solutions that help them do more with their tech
stack, offer time to value and focus employees on work that matters. This is a long-term tailwind that will likely
continue in the years to come.

Second, we're seeing a similar strategy in more traditional industries where there's real urgency to digitally
transform and disrupt the old ways of working. Companies in automotive, financial services, professional services,
healthcare, manufacturing and shipping and transportation are automating their workflows with Asana. We're
even seeing cross-pollination from organization to organization as Asana advocates take on roles at new
companies. A few years ago, the term work management didn't even exist; and today, it's approaching the
mainstream.

And third, especially in this macroeconomic climate and during the season of annual planning, we're repeatedly
hearing how critical it is for leaders to have visibility and accountability. This helps to ensure that the work delivers
on business priorities. When work is connected to goals in Asana, it creates a dynamic constellation of where
things are successfully aligned and where the hotspots are. With this bird's eye view, leaders can take action,
pivot quickly, and be more competitive.

Asana is honored to be recently recognized for our goal-oriented approach that drives greater enterprise
adoption. The Forrester Wave[TM]: Collaboration Work Management Tools, Q4 2022 evaluation has named Asana
a Leader in its assessment of the top 13 vendors in the market. The new report specifically calls out our strategic
differentiation in two areas. First, for how our Work Graph data model connects information, people, and
objectives that drive work through the organization. And second, for how our goal management structure helps
organizations connect disparate teams with a common focus. Asana's recognition as a leader in the Forrester
Wave follows its #1 ranking in the G2 Grid[Ò] Report for Objectives and Key Results (OKR) providing strong,
customer review-based validation of product and competitive differentiation.

-----

#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

Early data from our recent Q3 enterprise product announcements has been strong. We're seeing higher quality
leads with larger customers at later stages in the funnel. Companies are moving goal management from
standalone OKR vendors into Asana, and CIOs are recognizing our product as consolidation opportunity of key
goals and work management.

One of our customers has been celebrated for its rapid growth after quickly and successfully shifting strategies.
The need for this kind of agility is why they made a Q3 move from their standalone OKR solution to Asana, where
they can connect the work that matters to company goals. Some of the big enhancements to goals that we
introduced this year have been driving adoption.

For example, since launching Goals with Universal Reporting last quarter, we've seen goal creation has almost
doubled in each customer year-over-year across our $100,000 or more cohort.

Our newly HIPAA-compliant offering opened new doors this past quarter with companies that store, consume,
and transmit personal health information. And even though it was just released, we've already closed multiple
deals across healthcare and insurance around the world. Our HIPAA offering will enable them to bring more of
their patient care management workflows into Asana.

And we've seen large customers in Australia and Japan migrate their work data into our new regional data
centers, a testament to their continued usage of and investment in Asana.

As we look to fiscal year 2024, we'll continue to build out Asana's Work Graph as a critical navigation system for
companies. I'm excited alongside customers to share much more on how the power of collective intelligence will
accelerate organizations during our next marketing event in Q1. This means our customers get data-backed
insights as well as turn-by-turn directions that help them address real business challenges.

In the shorter term, we're specifically focused on helping leaders across operations move faster and continuing to
build for the enterprise at scale. Asana gives strategy and ops a single source of truth to track requests across
email, chat, documents, and other frequently used applications. They're able to maximize efficiency and pivot
work to achieve critical organizational goals. We're also giving IT the needed roles-based guardrails to scale up
onboarding and manage faster and more successful deployments.

Before I hand it over to Anne, I want to again acknowledge that we're making decisive moves to improve our
margin profile. With over $545 million in cash, we believe we're fully funded to execute on the current strategy and
achieve free cash flow positive by the end of calendar 2024. We're not satisfied with our performance and we'll be
focused on driving growth and enhancing our global go-to-market execution. I believe Asana is uniquely
positioned to help companies through these current challenges, and we'll continue to invest conscientiously, while
maintaining our leadership and product innovation.

Now, I'll turn it over to Anne.

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _&_ _Head-Business,_ _Asana,_ _Inc._

Thanks, Dustin. As Dustin mentioned, we noticed increasing pressures on our customers at the end of
September, when the budget tightening and longer deal cycles became more apparent in the US. The
macroenvironment was having an impact on some of our customers' ability to increase headcount. As a result,

-----

#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

some of our expansion activities slowed, especially in mid-market and smaller accounts. By the end of the
quarter, we made the hard decision to restructure and realign our business. Despite the macro backdrop, we
continue to see thousands of organizations and large enterprises realizing the value of work management and
choosing Asana.

While the SMB and very small business markets are softer, we continue to see strong traction in the enterprise
organizations and larger deployments. The category is large and we are still in the early innings, so the
competitive dynamics in the market are unchanged. At the same time, the number of multiyear deals went up
sequentially and on an annualized basis. More customers are making longer-term commitments with Asana.

I spend most of my time with our teams and our customers, and this is what I'm hearing. There's increased
scrutiny on deals globally. Executives want higher and faster ROI from their investments. There's increased
participation of executives in deal and work management investments are being elevated to the CIO/CFO level
more than they have ever been.

During the dynamic macroeconomic periods like now, organizations are looking to be able to set goals and
increase accountability across their business and to make quick resourcing decisions as things shift. The buying
environment is more measured but budget impacts vary across industries and Asana is well-positioned in these
conversations.

In the third quarter, we continue to gain traction in healthcare. Norton Healthcare, the hospital and health care
system that has 340 locations throughout Kentucky and Southern Indiana expanded their use of Asana in Q3. My
favorite use case of theirs is how they onboard new physician providers in Asana year round.

Previously, they managed this complex process manually and important documentation like medical certifications
and licenses was easily lost in long e-mail threads. Today, they run this whole process in Asana via a purposebuilt workflow that includes a checklist of every step to ensure it's done accurately and successfully. You could
liken this workflow to onboarding a whole new business unit to a company. This is not only made the process
much more efficient so they can scale quickly, but also helps them automate steps and save cost.

As Dustin mentioned, the HIPAA compliance announcement this fall is opening doors even further. The product
has only been available for over a month and we have already closed a number of HIPAA-compliant deals.

Macroeconomic factors and currency fluctuations have driven up costs, but several industries have benefited and
are accelerating the speed at which they deploy their capital into digital transformation. For example, we've seen
major Japanese manufacturing companies investing in digital transformation to secure competitive advantage,
enhance operations and processes with a focus on the supply chain and improve profitability through better
management with cross-functional visibility. For Asana to be used like this in both innovation centers and core
manufacturing departments, it's a testament to our product's deep value and flexibility.

Sonder, a leading next-generation hospitality company that operates in over 40 cities across 10 countries, uses
Asana to make decisions rapidly and adapt quickly to changing factors. They use Asana across the entire
company, from property managers, to maintenance teams, to the strategic initiative team, and upgraded to our
enterprise solution this quarter for the enhanced security functionality.

Another innovative customer using Asana to help manage their supply chain is HelloFresh, the world's leading
meal kit provider. Headquartered in Germany and serving 17 countries, HelloFresh's strategic procurement and
ingredient development teams use Asana to manage their ingredient-sourcing and inventory workflows. Their old

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

way of working wasn't efficient or scalable. Now, HelloFresh is able to more quickly develop and launch new
seasonal recipes that meet their customers' preferences across 30 different recipes offered each week.

In Q3, we continued to see companies in media and financial services expand with us. These are just a few
examples of leading companies who are choosing Asana because the Work Graph is the most scalable platform,
connects schools to the work across the organization and provides quick, measurable business ROI. We are
continuing to see broad cross-industry adoption with significant traction in Fortune 100 customers, of which 80%
use Asana.

These successes are just the beginning and we have a lot of work ahead. The key to success for us is to
continually improve our ability to address our customers' needs and drive growth across our large customer
base. We're making strategic changes in our organization to better realign resources for long-term high-leverage
growth. Our key areas of focus include: taking our success with our largest customers and making it a replicable,
scalable process across our entire go-to market motion; serving our smaller customers in a more scalable way by
further leveraging our product-led capabilities; maximizing data from product-led motion to better support the
sales-led process and customer lifecycle; and bringing in new leadership to elevate our enterprise success to the
next level.

With that, I'll hand it over to Tim.

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

Thank you, Anne. Q3 revenues came in at $141.4 million, up 41% year-over-year. This puts us at an annualized
quarterly revenue run rate of $566 million. Revenue from the US grew 47% year-over-year, accounting for 61% of
our total revenue. International grew 33% year-over-year, accounting for 39% of our revenue. Currency impacted
our international growth rate by roughly 500 basis points and the overall revenue growth rate by about 200 basis
points. International growth would have been 38% year-over-year and total revenue growth would have been 43%
year-over-year without the impact of currency.

Revenue from customers spending $5,000 or more on an annualized basis grew 52% year-over-year. This cohort
represented 73% of our revenue in Q3, up from 68% in the year-ago quarter. We have 18,700 customers
spending $5,000 or more on an annualized basis, up 32% year-over-year. Our largest customers remain our
fastest growing cohort. We have 493 customers spending $100,000 or more on an annualized basis and the
customer cohort is growing at 78% year-over-year. We believe this metric is a good proxy for our enterprise
business. As a reminder, we define these customers' cohort based on annualized GAAP revenue in a given
quarter.

Our dollar-based net retention rates remained strong across every cohort. Our overall dollar-based net retention
rate was over 120%. Among customers spending $5,000 or more, our dollar-based net retention rate was over
128%. And among customers spending $100,000 or more, our dollar-based net retention rate was over 140%. As
a reminder, our dollar-based net retention rate is a trailing four-quarter average calculation.

We continue to see stable churn rates across the cohorts and low churn in our large accounts, demonstrating the
value we deliver for our enterprise customers. However, as Anne mentioned, we did see customers pausing
growth or hiring more slowly, and the expansion in our business slowed as a result. We expect our overall dollarbased net retention rates to trend lower during this economic cycle.

As I turn to expense items and profitability, I would like to point out that I will be discussing non-GAAP results in
the balance of my remarks. Gross margins came in at 89.6% from 90.7% in the year-ago quarter. Research and

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#### Asana, Inc. (ASAN)
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01-Dec-2022

development was $50.2 million, or 36% of revenue. We continue investing to win and fuel innovation in our
proprietary technology, which will help us deliver on our vision. Sales and marketing was $98.5 million, or 70% of
revenue. And G&A was $30.6 million, or 22% of revenue.

Operating loss was $52.6 million, and operating loss margin was 37%. The improvement in our operating margin
demonstrates our ability to drive more efficient growth and manage our operating expenses with increased
discipline. Net loss was $52.4 million, and our net loss per share was $0.26.

Last month, we reduced our global head count by approximately 9% as part of a restructuring designed to better
manage the business with a balance towards growth and profitability. This reduction will result in a non-recurring
restructuring charge of $9 million to $11 million, which will be excluded from our future non-GAAP results. We
expect the charges to be incurred primarily in the fourth quarter of fiscal 2023 and our restructuring efforts to
ultimately result in annualized savings of roughly $40 million for the company going forward.

Moving on to the balance sheet and cash flow. Cash and marketable securities at the end of Q3 were
approximately $545.4 million. Our remaining performance obligations, or RPO, was $271.6 million, up 43% from
the year-ago quarter. 86% of our RPO will be recognized over the next 12 months. That current portion of RPO
grew 43% from the year-ago quarter. Total deferred revenue at the end of Q3 was $214.8 million, up 39% yearover-year.

While we don't normally comment on calculated billings*, since currency fluctuations continue to have an impact
this quarter, I want to call out that currency impacted calculated billings growth by over 400 basis points, and thus,
31% when adjusted for the FX impact. Our free cash flow is defined as net cash from operating activities less
cash used in property and equipment and capitalized software costs excluding non-recurring items. In Q3, free
cash flow was negative $48.5 million or negative 34% on a margin basis.

Moving on to our outlook. For Q4 fiscal 2023, we expect revenues of $144 million to $146 million, representing
growth rates of 30% year-over-year at the midpoint. We expect non-GAAP loss from operations of $60 million to
$57 million, and we expect net loss per share of $0.28 to $0.27 assuming basic and diluted weighted average
shares outstanding of approximately $215 million.

For the full fiscal 2023, we expect the revenues to be in the range of $541 million to $543 million, representing a
growth rate of 43% year-over-year. We expect FX to negatively impact our full-year growth by approximately 200
basis points. Excluding the currency impact, our growth would have been 45% year-over-year. We expect nonGAAP loss from operations of $230 million to $227 million. And we expect net loss per share of $1.15 to $1.14,
assuming basic and diluted weighted average shares outstanding of approximately 200 million.

We're being very measured with our guidance with several factors in mind. Our outlook assumes that currency
doesn't change, and macroeconomic factors will continue to drive a more tempered buying environment and
increased scrutiny on purchase decisions. And we assume this persists into the next fiscal year. Despite the
uncertainty with the macroeconomic environment, we still expect to be free cash flow positive before the end of
calendar 2024 while balancing growth and profitability.

With that, I'll hand it back to Dustin for some final remarks.

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief_ _Executive_ _Officer,_ _Co-Founder_ _&_ _Director,_ _Asana,_ _Inc._

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#### Asana, Inc. (ASAN)
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Corrected Transcript

01-Dec-2022

Before we go to questions, I wanted to summarize by noting, like many of our peers, we're operating in a very
challenging macroeconomic environment, so we're actively managing to mitigate the impacts to the bottom line
and taking the opportunity to elevate and further build our enterprise business. While we are de-risking for the
short term, I continue to focus on the long-term opportunity.

When I meet with customers, I recognize that we have a unique perspective collaborating with some of the largest
and most innovative companies in the world, including the 80% of the Fortune 100. I'm further reminded that work
management is an enormous and underpenetrated market. The underlying business trends remain intact, and I'm
excited about Asana's position.

......................................................................................................................................................................................................................................................

Catherine Buan
_Head-Investor_ _Relations,_ _Asana,_ _Inc._

Thank you, Dustin. And with that, I'll turn it back to the operator for the Q&A session.

......................................................................................................................................................................................................................................................

### QUESTION AND ANSWER SECTION

**Operator: Thank you. We will now begin the question-and-answer session. [Operator Instructions] Our first**
question comes from the line of Andrew DeGasperi with Berenberg. Please go ahead.

......................................................................................................................................................................................................................................................

Andrew DeGasperi
_Analyst,_ _Berenberg_ _Capital_ _Markets_ _LLC_

# Q

Thanks for taking my question. I guess, we're clearly seeing similar kind of weakness across most software
categories. I was just wondering in the conversation that you have with investors, is there anything that they're
telling you differently in terms of work management and how they prioritize it relative to other software categories?

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Hey, Andrew. It's Anne. Thanks so much for that question. I'll tell you that what we're seeing is certainly more
increased scrutiny on spending on technology overall. Executives want higher and faster ROI from their
investments. What we're really seeing is more just a pause on the decision making versus deprioritization of the
category, just as they evaluate where they're going to make those investments.

In these periods what we're excited about though and positive about is executives are looking to be able to set
goals and increase accountability across their business. As Dustin mentioned, goals in particular is really
resonating. So the fact that we've been increasing our investment there has been helpful in these conversations,
because they are looking to get faster decision making rolled out through the company as they're facing these
changes. But overall, I would say, mostly, what we're seeing is more a pause in decision making than anything.

......................................................................................................................................................................................................................................................

Andrew DeGasperi
_Analyst,_ _Berenberg_ _Capital_ _Markets_ _LLC_

# Q

That's helpful. And then, maybe on the restructuring, I was just wondering, what does that translate in terms of the
timeline to breakeven, I guess, from a profitability point of view, from a free cash flow point of view, is there
anything you can comment on that?

......................................................................................................................................................................................................................................................

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Tim M. Wan
_Chief Financial_ _Officer,_ _Asana,_ _Inc._

Corrected Transcript

01-Dec-2022

Yeah, Andrew, as I commented on the call, no change in terms of timeline from a go-forward basis, the
savings from the restructuring was about $40 million on a go forward basis. But we're holding and committed to
delivering free cash flow before the end of calendar 2024.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Ittai Kidron with Oppenheimer. Please go ahead.**

......................................................................................................................................................................................................................................................

Ittai Kidron
_Analyst,_ _Oppenheimer_ _&_ _Co._ _Inc._

# Q

Thanks. Hey, guys. I guess, I want to go into the head count reduction. Can you give me a little bit more color on
how this 9% spreads across the functions? And I guess, the associated question with this, how do I think about
how this cut catches up to you? Meaning, clearly, there's some sales functions that are part of this as well. And
how do I think about the capacity loss or the points of growth in a quarter growth eliminated through this as we
think about fiscal 2024?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

Yeah. Thanks. I'll start off. This is Dustin. So just thinking about where we reduce roles, a lot of how we structured
our hiring plan for fiscal 2023, we frontloaded quite a lot of hiring, especially in sales and marketing, and
especially, in talent acquisition, to help us do the frontloaded hiring. And so – and then we had an ambitious plan
for R&D as well, but we had it more paced throughout the year and we ended up really moderating and then
pausing hiring fairly early in the year.

So when we came to think about the risk, we really looked at it primarily through the lens of sort of unwinding the
over-investment we made in the first two categories, and really, rightsizing it to the amount of demand we were
seeing in the market. And so I feel comfortable with the staffing we have now and the people that we have in
these roles are ramped and ready for fiscal year 2024 and able to serve our best customers. And anything you
want to add to that, Anne?

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. On the sales side, in particular, I'll just add that that as we did the restructuring, we were really focused on
better aligning our teams with where we see growth, which is in enterprise. So with a softening in SMB due to the
macro conditions, we made adjustments there to ensure we could increase efficiency and productivity, and really
make sure that the team we have here can be set up to be successful. So some other things, in particular, we're
doing are increasing our focus on delivering scaled and efficient programs for those smaller customers without
sacrificing the quality of their experience. But a lot of the focus is ensuring we're well-staffed for enterprise growth.

......................................................................................................................................................................................................................................................

Ittai Kidron
_Analyst,_ _Oppenheimer_ _&_ _Co._ _Inc._

# Q

Okay. Maybe as a follow-up, Dustin, what is it that you need to see for you to feel comfortable re-accelerating
hiring again? Like, what is the key KPI that you're watching for? Because I'm pretty sure, I mean, clearly, you
don't want to be behind, right? So the tricky part is to try and put your finger on what would be the right thing to
look for to get the green light to go ahead a little bit more aggressively. Can you give us some insight as to what it
is that you're looking forward to make that decision?

##### 10

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

Corrected Transcript

01-Dec-2022

Yeah. That's a great question and certainly one top of mind. I think that a lot of what we're looking at is really
macro signal and signal from customers in the conversation. So, Anne talked about some of our best customers,
they haven't deprioritized digital transformation, but they do have things a little bit on pause. They themselves are
– in many cases, are just reacting to changing macro landscape for themselves and trying to re-evaluate and get
their footing again and decide – regain confidence to start increasing their deployments.

And so to some extent, you will be seeing that happen. So having the customers get back into a place of wanting
to expand their deployments more rapidly. And I think, in turn, they will be looking to changes in the market,
obviously changes in interest rates, and changes in their own customer demand.

Now, that said, a lot of our customers are still growing. We would have loved to have had even more growth this
quarter, but it's still quite a lot of growth. And so another thing that could happen is just that that growth continues
and we grow into our OpEx footprint, and then that would be more of a sort of gradual turn back towards investing
and hiring again on our side. And so, yeah, it might be quite acute or it might be more gradual. And I think in both
cases – well, in the first case, it will depend on changes in the macroenvironment, which I do think could happen
quickly, but they might not. And then, in the second case, just the sort of re-evolving of the customer relationships
and category growth.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Alex Zukin with Wolfe Research. Please go**
ahead.

......................................................................................................................................................................................................................................................

Allan Verkhovski
_Analyst, Wolfe Research LLC_

# Q

Hey, there. This is Allan Verkhovski on for Alex Zukin. Thanks for taking the question. I really appreciated the
color that you guys provided with respect to the impacts you're seeing from the macro. Can you just dive into the
trends you saw on a per month basis through November around expansion trends, free-to-paid conversions, and
just general top-of-funnel activity? I think that'd be really helpful.

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

Hey. This is Tim. I would say, like, where we had talked about in Q2 about the macro impact in Europe. And I
would say, starting kind of in September, maybe towards the end of September, we started seeing some of those
same trends and same conversations happening – same conversations happening in the US.

I think what I'm really encouraged about is, when we go deep into the data, one of the things that's really continues
to be strong is, if you look at our $5,000 customer, that revenue base continues to grow at a very healthy clip. You
look at our logo retention, our logo retention is stable, and we continue to have high NRR for our customers that
are above $50,000 or $100,000.

But I do think the conversations that we're seeing, the types of engagement that we're having is while the pipeline
isn't going away, I think many of our customers are just, like, taking a beat and saying, hey, what's going on in the
market? Everyone is trying to right-size their own cost structure, trying to understand their own outlook based on
the macroenvironment. But we do expect many of these customers to re-engage over the next few months and
create opportunity for us.

......................................................................................................................................................................................................................................................

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Allan Verkhovski
_Analyst, Wolfe Research LLC_

Corrected Transcript

01-Dec-2022

Okay. Got it. And then just as a follow-up to that point, like, for the disaggregates, the expansion business and the
net new business. I would assume expansion deals are a little easier to get over the line in this environment, but
that's kind of an inconsistent thought depending on other SaaS providers in the space. So what are you hearing
from your reps about these areas? And how does that affect your strategy for next year?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

Maybe I'll start. I mean, it's a little of both – and it depends on the segment. So probably, in the smaller segments,
SMB and midmarket, maybe a little more pressure against conversion and jumping into something new, a new
category they haven't been spending on before, but not too dramatic. And then, expansion more at the enterprise
customers, it's not even necessarily that they aren't expanding, but maybe they're just being a little more modest
about it. There are a couple of cases where customers were taking some of the roles that were eliminated had
licensed seats and they simply repurposed them to actually expand usage in other parts of the company.

And so in some sense, they were expanding. It just wasn't necessarily translating into dollars for us. And then,
similarly, all of the currency headwind really shows up of what turns out to be negative renewals even if the seats
are still there. And we're still heavily driven based on those trends and just on seat expansion. So I don't think
there's anything that stands out too much. When I think of where our internal forecasts were most of it was in
those more modest expansions relative to what we were hoping for.

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. the only thing that I'll add to that is our champions are still quite engaged with us on those expansions. And
so a lot of the focus in the discussions really is where can we make the highest impact and deliver the highest ROI
and in the shortest amount of time. So some of it is just re-evaluating together where we expand the deployment
and which cross-functional use cases.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question is from the line of Steve Enders with Citi. Please go ahead.**

......................................................................................................................................................................................................................................................

Steven Enders
_Analyst,_ _Citigroup_ _Global_ _Markets,_ _Inc._

# Q

I want to ask on the expansion within that largest customer now expanding up to 150,000 seats. I guess, just
wondering – as we think about that account, what were kind of the incremental either use cases or areas that
you were beginning to see that expansion take place in? And I guess, how should we think about kind of the
further scalability that you could capture within that account there?

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. Thanks so much for that question. I think what we're actually seeing in that account is expansion across
many different divisions and departments. It's a large global organization. And so we are deployed in across many
functions, many business units. And what we're seeing that drives that growth is that it's really how many of the
organizations work and how they onboard new employees, how they train their employees, how they deploy their
end customers. And so they're codifying essentially how they intend collaboration to work within the organization.

So it's not so much sort of one specific use case, but rather that we are now part of the stack of collaboration in

##### 12

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#### Asana, Inc. (ASAN)
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Corrected Transcript

01-Dec-2022

that organization. And we're excited to see that, because that really is a playbook that we feel we can replicate
in a lot of our large enterprise customers that are starting to see that similar behavior where it's across multiple
departments, it's across multiple divisions, and it's really facilitating those cross-team initiatives that are so
critical right now.

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

I just want to jump in to add to the question about future potential. I think this is really sort of indicative of a few of
our large customers where, again, they're the – in this environment, the company wants to have more control over
the pace of deployment and how spend happens. But underneath that, there's quite a lot of organic demand in
this account and others, and they're almost being held back from adoption, so that the company can pace in an
intentional, controlled way. And that's fine. We'll work with them, but we're excited to embrace that sort of latent
demand and work with them when they're back into a place of spending more budget to embrace it and license it.

......................................................................................................................................................................................................................................................

Steven Enders
_Analyst,_ _Citigroup_ _Global_ _Markets,_ _Inc._

# Q

Got it. Okay, that's helpful. And then, you made a comment in there around – well, in the prepared remarks about
kind of taking the lessons you're learning from the largest customers and trying to apply that to kind of the rest of
the go-to-market strategy to drive enterprise adoption. I guess, what are kind of the key things that you've learned
so far and kind of what are the things that you can control that can drive that expansion notion into other large
potential accounts here?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

Yeah. Two great lessons. One plays off of what I was just saying. These companies want to really control how
Asana is deployed and be able to automatically manage thousands of accounts at a time and have that synced
up with other things they're doing with the organization. So integrate it with their other ways of managing people
and licenses, be able to have a lot of great visibility into how people are using the product and what kind of value
they're getting. And so we're translating that straight into the kinds of views we give in our admin console, how we
talk to the customer directly and what kind of data we're able to sort of provide from them ad hoc.

And then, the second big thing that we really piloted with this larger customer is more customized in product
education. So being able to really speak their language, have the assets that teach them how to use Asana in that
company culture really at the ready. And that can really accelerate adoption, and that's something we're excited to
bring to other large customers.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Brent Thill with Jefferies. Please go ahead.**

.....................................................................................................................................................................................................................................................

Brent Thill

_Analyst, Jefferies LLC_

# Q

Dustin, investors want a faster path to profitability, but we know you have to balance the long-term and the
potential to take share could be greater in a downturn. So I'm just curious how you're thinking about weighing the
short term versus the long term and how you're thinking through that desire from investors to make the quick turn
here?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

##### 13

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

Well, yeah, as Tim said, we're still committed to the timeline that we provided last quarter, so I think that's really
the overarching picture – we need to balance it. In the short run, I always have heartburn around the category
changing and moving on without us, but I'm also just cognizant of the fact that if the customer demand isn't there,
then it's easy to spend the money inefficiently.

And so the easiest place to turn up and down the throttle there is with programmatic marketing spend. And just
from a math basis, we know that the payback is getting longer and the immediate ROI you get on that is
changing and we should react to that. So we're relatively well aligned when the market's ready to grow, when our
customers are ready to grow, that's the right time for us to be spending more aggressively. But there are also
things that play out over longer cycles, like how our product roadmap works. And so there it's more of a judgment
call on what's the right pace. But you can see that we've been getting leverage throughout this year in R&D as a
percent of revenue. And I think that will continue.

And we'll just be looking at exactly what is the shape of that trend line and when do we have a little more capacity
to reinvest there and reinvest in head count and programmatic spends elsewhere in the company.

......................................................................................................................................................................................................................................................

Brent Thill
_Analyst, Jefferies LLC_

# Q

Quick follow-up for Tim. Is there a way to split SMB versus enterprise as a mix, just a ballpark, I think, through
that allocation of revenue to each of those buckets?

......................................................................................................................................................................................................................................................

**Operator: Our next question comes from the line of Josh Baer with Morgan Stanley. Please go ahead.**

......................................................................................................................................................................................................................................................

Sophie Lee
_Analyst,_ _Morgan_ _Stanley_

# Q

Hi. Thanks for taking my question. This is Sophie Lee on for Josh Baer. I guess, my question is, when you say
you expect NRR to be continued to be pressured going forward, what kind of churn and expansion dynamics are
you kind of thinking about? Are those more related to less seat expansions? Or are you implying more lower
dollar expansions as customers downgrade to cheaper plans? Just curious what you're thinking about there?

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

Yeah. Let me try to answer Brent's question first. I think I was on mute and then I'll jump back into this churn
question. Brent, your question about how to think about the two segments of the business, I would

##### 14

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

look at our business like the sub-$5,000 as one part of our business and the above $5,000 as another part of the
business.

And if you look at that, if you break up our sub-$5,000 business, it grew at about 18% year-on-year and our
$5,000 cohort grew north of 50%. And that cohort also has much stronger NRR than the sub $5,000. And that's
been the way we've been running the business and like how do we move these $5,000 customers up into
$25,000, $50,000, $100,000. And that's really been the motion that we're focused on and will continue to invest
in.

Now back to the churn question or the net expansion rate question, I would probably prioritize it as one, we're not
seeing logo churn. Logo churn is actually quite stable, so customers are not churning off Asana, that's one. Two,
there's probably some component, but I think it's relatively small of downgrades, meaning some customers have
pre-bought into thinking that they would grow into a certain size, and given the macroenvironment, they've decided
to downgrade during their renewal. So we see some of that.

I think the bigger impact primarily has been kind of the expansion rates. And the expansion rate is just a
combination of customers taking a pause right now, given the macro, to try to understand how fast they want to
grow their head count, how much hiring they want to do over the next 12 to 24 months, and just have a lot more
certainty around their own business before making that investment.

So as I mentioned earlier, the pipeline hasn't changed. The conversations are still happening. But I would say,
we did see some noticeable pause in some deals where customers are trying to reflect on their own plans before
moving forward.

......................................................................................................................................................................................................................................................

Sophie Lee
_Analyst,_ _Morgan_ _Stanley_

# Q

Sounds good. And a quick follow-up, what are the incentives for customers to sign on to a multi-year deal despite
a more challenging budgetary environment?

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

I would say most of these larger deals are negotiated. So there's some combination of pricing that gets
discussed, if customers are willing to move into a multi-year deal. And then, the other lever for customers – and
especially in this environment, I think customers are looking for this. And it impacts billing as they're asking for
different payment terms, a different structure in terms of how the timing of which they'll pay us. So those are
generally the two things that I would say that customers are kind of looking at. And we did actually saw a
noticeable increase in our multi-year deals this quarter versus last quarter, which is really encouraging as well.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Brent Bracelin with Piper Sandler. Please go**
ahead.

......................................................................................................................................................................................................................................................

Brent A. Bracelin
_Analyst,_ _Piper_ _Sandler_ _&_ _Co._

# Q

Good afternoon. Maybe I'll start here with a question for Anne or Tim here on the industry vertical breakout. We've
seen several software companies that have gained popularity with digital natives and tech and Internet names
that are really starting to see their growth being pressured. And so from an industry vertical perspective, what
portion of the revenue today is tied to tech, Internet, software? And the pause that you're talking about here, is it

##### 15

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

predominantly in just tech? Or are you seeing the pause in both the tech Internet space and other areas as well?
Any thoughts there would be helpful.

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. Brent, thanks for that question. We have been traditionally very strong in tech, but it's the plurality not
necessarily the majority globally. So certainly some of what we're seeing comes from what's happening to our tech
customers as they pause hiring or in some cases had layoffs. But as we continue to broaden across industries,
we're definitely seeing strong fit with media, automotive, financial services, along with professional services,
healthcare, consumer goods and retail.

So consistent themes in those verticals are the desire for speed in their digital transformation initiative and being
able to respond quickly in this macro. We really feel like our value proposition well-suited to these companies
that are looking at transformation to better compete and drive efficiency. So yes, tech, we're seeing that. But as
we diversify across verticals, really seeing some of those other industries actually embrace transformation more
quickly.

......................................................................................................................................................................................................................................................

Brent A. Bracelin
_Analyst,_ _Piper_ _Sandler_ _&_ _Co._

# Q

Got it. So it sounds like they're really pause in tech. But in these other areas that you talked about, there isn't a
pause that you're flagging at this point.

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

I guess, it's really hard to answer that in a blanket way. I think when we were talking about our Q2 results, we
were talking about some similar dynamics in Europe, which was a blend of industries. And then, this time like tech
is a factor. But that is where a lot of these pauses are. But again, in some cases, those customers are deploying
more aggressively and we're still signing new multi-year deals, and going wall to wall in those customers.

And in some non-tech cases, there's a pause. And my mental model on the economy is that it's sort of hitting the
sectors in waves. I'm a little reluctant to say the whole problem is tech and then next quarter, it's a different
sector that's kind of feeling the impact. So it's really a mix. But that said, I think in America, it's a larger plurality,
still not the majority and it's more represented in our very largest customers.

In terms of the strategic accounts expanding a little more modestly, I think it's fair to say that that trend is more
concentrated in tech, and it's not something I expect to be ongoing. I think that they're mostly reacting in an acute
sort of shocked way to what happened in the market and really in this particular timeframe.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Jackson Ader with SVB Securities'**
MoffettNathanson. Please go ahead.

......................................................................................................................................................................................................................................................

Jackson E. Ader
_Analyst,_ _MoffettNathanson_ _LLC_

# Q

Great. Thanks for taking my questions, guys. First, Dustin, maybe on the over-hiring of talent acquisition and new
sales that you were talking about. Outside of the macroenvironment, I'm just curious, do you feel like it was working
and when things start to turn more positive in the macroenvironment, you feel like you have a good playbook just to
spin that motion back up? Or is it more like you have some learnings that, say, I'm not really sure if that was the way
to go anyway?

##### 16

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

It's a complex hypothetical question. I think some things we're working, some things we revisited, as we always
do when we're sort of executing in the wild. But for the most part, I think that the rising tide of the category was
continuing and we were investing into that trend. And so that just in like the 20,000-foot view, I'd expect it to
continue. I think it's still working. We're succeeding in our move up market to enterprise and especially just seeing
a lot of learnings there on exactly how to make customers successful very, very quickly; and, again, reintegrating
that straight into the product experience.

So all of that I think will be the strengths that we build on before we start hiring again. There's still quite a lot of
Asanas here, quite a lot of customers growing. And it's a little hard for me to think about it because it almost
sounds like, oh, we stopped the whole engine, which isn't the case. We're just taking a beat ourselves before we
step on the gas again in the future.

......................................................................................................................................................................................................................................................

Jackson E. Ader
_Analyst,_ _MoffettNathanson_ _LLC_

# Q

Okay. All right. Got it. And then, as my follow-up, Tim, why wouldn't $40 million in annual savings bring the timing of
the free cash flow breakeven – even if you don't want to put a date on it, shouldn't $40 million of annual savings
bring the timeline in a little bit?

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

Yeah. I think a lot of this is really about trying to understand and assess what the macro is going to look like and
the growth rate over the next two years. To the degree we grow faster, I absolutely believe that we'll be able to
pull it in. But if the economy actually gets worse, and sitting here today, there are just like no signals that things
will be better yet. I'd rather be more cautious and conservative as we continue to provide both guidance and
outlook on kind of the financials.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Jason Celino with KeyBanc Capital Markets.**
Please go ahead.

......................................................................................................................................................................................................................................................

Jason Celino
_Analyst,_ _KeyBanc_ _Capital_ _Markets,_ _Inc._

# Q

Hey. Thanks, everyone, for putting me in. I guess, just a couple Q4 guidance questions. I totally understand the
macro challenges, and I think, Tim, in your prepared remarks, you said that you're assuming the environment to
kind of remain the same for Q4. But when I look at the sequential growth, it's much less than what we found Q3.
How conservative is this Q4? And are there any other factors that we might not be thinking about?

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

I would say we are being extremely thoughtful and conservative in terms of how we provided the Q4 guidance.

......................................................................................................................................................................................................................................................

##### 17

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Jason Celino
_Analyst,_ _KeyBanc_ _Capital_ _Markets,_ _Inc._

Okay. Perfect. I think let's leave it at that then. I'll pass it on.

Corrected Transcript

01-Dec-2022

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

Okay. Thank you.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Robert Simmons with D.A. Davidson. Please go**
ahead.

......................................................................................................................................................................................................................................................

Robert Simmons
_Analyst, D. A. Davidson_ _&_ _Co._

# Q

Hey, thanks for taking my question. So one of the things you mentioned in the script was maximizing data from
the product-led motion. And I'm wondering if you could give us some more details on what that means, is that
something along the lines of get them up and running quickly and that's sort of thing or is there more to it?

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. Thanks so much for that question. I think we are excited about that on a number of fronts both in larger
accounts, where there is team adoption across the board. And how do we get that information more quickly to our
sales team with the context on which teams, what's the usage, how they're already collaborating with other teams
and departments that are fully deployed. So certainly, product data in existing accounts as well as product data in
new accounts and new sign-ups, how we can do a faster, more intelligent job with the scoring of that product
usage early in their journey and pass those more quickly to sales to have really relevant and rich conversations
early on.

A lot of times, what we see is if we can get customers set up early on and talk to them about the total potential of
Asana, that growth is accelerated. So we just want to do more of that, leveraging the rich insights and data we
have in our product platform.

......................................................................................................................................................................................................................................................

Robert Simmons
_Analyst, D. A. Davidson_ _&_ _Co._

# Q

Got it. That makes sense. And then, on the HIPAA compliance, you've mentioned that it helped you close some
deals. Was that important for Norton and then any color on that would be helpful.

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. And we're excited about it because we're early in it. We've only had it for a month and it was important in
Norton and a number of other deals. We had a nice expansion with a global healthcare customer as a result. So
there's been a number of, I'll call it, smaller deployments within healthcare and healthcare technology
organizations who've been excited for us to become HIPAA-compliant to really unlock more opportunities. We
feel like we're early on that, but it's been really helpful, including Norton as well as a number of other global
healthcare customers.

......................................................................................................................................................................................................................................................

##### 18

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

**Operator: Thank you. Our next question comes from the line of Fred Lee with Credit Suisse. Please go ahead.**

......................................................................................................................................................................................................................................................

# Q

Hi. This is Tim Jausovec on for Fred Lee. Thank you for taking my question. To what degree do you see
achieving your calendar 2024 free cash flow target entirely within your control versus dependent on the
macroeconomic environment, or differently, how broad is the range of macroeconomic scenarios under which you
will achieve the target?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

Hey. This is Dustin. I think that we feel comfortable, given the current macro context, that we can achieve free
cash flow on the timeline we laid out, and that we're fully funded to achieve it importantly. But it's been a really
volatile year, and there have been a lot of surprises. And there could be new things that happen in the future. And
so it's really hard to promise that we have complete control over things because there's a lot that we're at the
effect of.

I've been saying that I'm the CEO of the Asana company, but lately Jay Powell has been CEO of the stock price
and a lot of the sort of business inputs. But that doesn't mean we can't react to things that change. And we're
always behind the wheel. If new surprises show up, then we may have to make new decisions and reaction. But
we still feel pretty good about being able to achieve that timeline.

......................................................................................................................................................................................................................................................

# Q

Thank you.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Patrick Walravens with JMP Securities. Please**
go ahead.

......................................................................................................................................................................................................................................................

Patrick Walravens
_Analyst, JMP Securities LLC_

# Q

Oh, great. Thanks. So, look, very big picture maybe for Dustin, but if anyone else wants to chime in. If you take a
current stockholder today and we look forward three years, how do we win and what would make us lose?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

So from a stockholder perspective, it's the business succeeding – obviously achieving the free cash flow
milestone, but also achieving a lot of top line growth. And the way we win is by moving up market and being the
category leader, especially in enterprises. And again, we're talking a lot about the sort of blended overall growth
rates for the business. But when you look underneath the hood, there are a lot of signs of strength in the larger
segments, we still have 140% net dollar retention across our very largest customers.

We have very large individual deployments, including 150,000 seats. We're in the leader circle from Forrester –
2.5 million paying seats, so we see that we're deploying very quickly into these organizations, into the greenfield
opportunity that is the work management category. And so that’s continuing is the way to success. There's a lot
of ways that competitors might monetize differently in the short run or specialize into different niches. But the

##### 19

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

Asana strategy is to be the leading pure play work management platform for enterprises. And I think we're on a
great path there. And that's how we win. I'll leave it at that.

......................................................................................................................................................................................................................................................

Patrick Walravens
_Analyst, JMP Securities LLC_

# Q

What do you think is the most likely way you end up losing?

......................................................................................................................................................................................................................................................

Dustin Moskovitz
_Chief Executive Officer, Co-Founder_ _& Director,_ _Asana, Inc._

# A

Well, the common advice is not to focus on the wall, which is not there. But the most common way to lose – I am
worried about other macro surprises. And we're definitely keeping an eye on the war, on inflation, on the situation
in China – we think that's least absorbed into the global economy right now. And those will affect everybody. But
if they slow us down, then that can have an asymmetric impact on us versus the rest of the field, and might
advantage certain players in certain ways. So we'll see what happens. And that's really the primary thing I think
about.

We have a lot of opportunities to capitalize on in terms of further widening our lead in terms of our product
differentiation, and making it clear to the market. And I'm not satisfied with how clear it is right now. I think it's very
clear to our large customers, because they're living it and getting the value proposition and experiencing the
increasing returns to scale. But we need to be able to replay that story for investors and for new customers and
for analysts. And we're getting better at it all the time but there's a long way to go there. And our competitors
have a vested interest in trying to minimize those differences. And so that's part of the game as well. But I feel
confident in our ability to succeed in that way.

......................................................................................................................................................................................................................................................

**Operator: Thank you. Our next question comes from the line of Rob Oliver with Baird. Please go ahead.**

......................................................................................................................................................................................................................................................

Rob Oliver
_Analyst,_ _Robert W. Baird_ _& Co., Inc. (Broker)_

# Q

Great. Thanks. Good afternoon, guys. Thanks for squeezing me in here. Anne, my question is for you and I have
a follow-up for Tim. You talked in your prepared remarks, Anne, about the elevation of the buying decision to the
CEO/CIO level. And I know Dustin said there's no change in the competitive landscape. But when you get up to
that level, you're in the turf of some big incumbent legacy companies that have solutions that are trying to
compete with you guys very actively.

So how, if at all, does the strategy change? I mean, clearly, scalability is not an issue. Product is not an issue.
You guys have the best. But maybe we get into an environment where maybe the best doesn't win, how does the
strategy change when you're competing in some of those larger incumbents?

......................................................................................................................................................................................................................................................

Anne Raimondi
_Chief_ _Operating_ _Officer_ _& Head-Business, Asana,_ _Inc._

# A

Yeah. Thanks so much for that question, Rob. I think what we've been seeing is certainly in this environment,
CIOs, CFOs are part of the decision-making process for all sort of technology investment. To your question on
how we think about it if there's incumbent technology, I think what our teams are still doing is really focusing
deeply on understanding our customers' most pressing business problems and how Asana can differentially solve
those problems, because in the end that's where they want to make the investment.

A lot of the execs also recognize that those are not being adopted even if they're available. So in the end, the

##### 20

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

adoption of the technology and then the ROI on that is what they're focused on. And there's just in this
environment just greater scrutiny to double-check that investment and tie it to KPIs. And so that's what a lot of our
team is focused on, is making sure we understand that upfront, making sure we align on the KPIs, and then most
importantly, delivering on those as we deploy and move forward with them.

......................................................................................................................................................................................................................................................

Rob Oliver
_Analyst,_ _Robert W. Baird_ _& Co., Inc. (Broker)_

# Q

Okay. Great. Yeah. That's helpful. You want to help a CIO and CFO avoid the decision to buy shelfware that their
users don't want when they want you guys. That makes a lot of sense.

Tim, a follow-up for you. Dustin alluded to marketing budgets earlier and clearly the marketing budget is a big line
item for you guys. As you guys push more into enterprise successfully, albeit with the pause that you guys have
talked about here. Does that give you more leverage on that line item in terms of less focus on that SMB customer
or that freemium branding that maybe you had needed to do earlier on? Thank you.

......................................................................................................................................................................................................................................................

Tim M. Wan
_Chief_ _Financial_ _Officer,_ _Asana,_ _Inc._

# A

I do think as we move up market, we'll generally get more leverage in the business, I'd agree on marketing, but
also on R&D and really across all functions. So that's a big part of why we're doing it. But I do think marketing still
has a really important role to play in reaching enterprises, including in our existing deployments. I mentioned that
we have a lot of organic growth that sometimes the company is holding back. But some of the way that organic
growth happens is supported by our marketing efforts as well. So I think we get similar amounts of ROI in
enterprise through some of that spend.

And then I'd also just point out that the world's a big place and we have different levels of category maturity and
Asana presence in the market in different countries. And we'll need to apply marketing dollars in different ways to
build that awareness in places where we're less deployed or less present.

......................................................................................................................................................................................................................................................

**Operator: Thank you. That concludes the question-and-answer session. I would like to pass the conference**
back to Catherine Buan for any closing remarks.

......................................................................................................................................................................................................................................................

Catherine Buan
_Head-Investor_ _Relations,_ _Asana,_ _Inc._

Yes. Just want to thank everyone for joining the call today. We know it's a busy week, and we really appreciate
your time and you covering Asana. As always, please feel free to call me if you have any follow-up questions.
And we will be out at the various conferences, so we look forward to seeing you on the road. Thanks very much.

......................................................................................................................................................................................................................................................

**Operator: That concludes today's conference call. I hope you all enjoy the rest of your day. You may now**
disconnect your lines.

*************************************************************************************
*Calculated Billings

We define calculated billings as total revenue plus the changes in deferred revenue in the period.

##### 21

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#### Asana, Inc. (ASAN)
Q3 2023 Earnings Call

Corrected Transcript

01-Dec-2022

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##### 22

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END DOCUMENT 5

BEGIN DOCUMENT 6:
# Smartsheet Inc. NYSE:SMAR

## Earnings Call

_Thursday, December 1, 2022 9:30 PM GMT_

### CALL PARTICIPANTS 2

 PRESENTATION 3

 QUESTION AND ANSWER 7

-  Capability needed to view estimates data. Please contact your account
manager.
................................................................................................
....................................................................
**WWW.SPCAPITALIQ.COM**

-----

## Call Participants

....................................................................................................................................................................

**EXECUTIVES**

**Aaron Turner**
_VP of Investor Relations &_
_Treasurer_

**Mark P. Mader**
_President, CEO & Director_

**Pete Godbole**
_CFO & Treasurer_

**Michael Bird**

**Pinjalim Bora**
_JPMorgan Chase & Co, Research_
_Division_

**Richard David Poland**
_RBC Capital Markets, Research_
_Division_

**Robert William Dee**
_Truist Securities, Inc., Research_
_Division_

**Scott Randolph Berg**
_Needham & Company, LLC,_
_Research Division_

**Unknown Analyst**

**ANALYSTS**

**Brent John Thill**
_Jefferies LLC, Research Division_

**David E. Hynes**
_Canaccord Genuity Corp.,_
_Research Division_

**Ethan Bruck**

**Fred Lee**

**George Michael Iwanyc**
_Oppenheimer & Co. Inc., Research_
_Division_

**Jacob Roberge**
_William Blair & Company L.L.C.,_
_Research Division_

**John Stephen DiFucci**
_Guggenheim Securities, LLC,_
_Research Division_

**Joshua Phillip Baer**
_Morgan Stanley, Research Division_

**Kyle Diehl**
_MoffettNathanson LLC_

-----

## Presentation
....................................................................................................................................................................

**Operator**

Ladies and Gentlemen, thank you for standing by. My name is Brent, and I will be your conference
operator today. At this time, I would like to welcome everyone to the Smartsheet Third Quarter Fiscal
2023 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to turn today's call over to Mr. Aaron Turner, Head of Investor Relations. Sir, please
go ahead.

**Aaron Turner**
_VP of Investor Relations & Treasurer_

Thank you, Brent. Good afternoon, and welcome, everyone, to Smartsheet's Third Quarter of Fiscal Year
2023 Earnings Call. We will be discussing the results announced in our press release issued after the
market closed today.

With me today are Smartsheet's CEO, Mark Mader; and our CFO, Pete Godbole.

Today's call is being webcast and will also be available for replay on our Investor Relations website at
investors.smartsheet.com. There's a slide presentation that accompanies Pete's prepared remarks, which
can be viewed in the Events section of our Investor Relations website. During this call, we will make
forward-looking statements within the meaning of the federal securities laws. We have based these
forward-looking statements largely on our current expectations and projections about future events and
financial trends. These forward-looking statements are subject to a number of risks and other factors,
including, but not limited to, those described in our SEC filings available on our Investor Relations website
and on the SEC website at www.sec.gov.

Although we believe that the expectations reflected in the forward-looking statements are reasonable, our
actual results may differ materially and adversely. All forward-looking statements made during this call
are based on information available to us as of today, and we do not assume any obligation to update these
statements as a result of new information or future events, except as required by law. In addition to the
U.S. GAAP financials, we will discuss certain non-GAAP financial measures.

A reconciliation to the most directly comparable U.S. GAAP measures is available in the presentation that
accompanies this call, which can also be found on our Investor Relations website.

And with that, let me turn the call over to Mark.

**Mark P. Mader**
_President, CEO & Director_

Thanks, Aaron. Hello, and welcome to our third quarter earnings call for fiscal year 2023. Today, I'd like
to focus on 3 topics: our solid performance in the quarter, how we're improving our operational efficiency
in the current macro environment; and how delivering measurable ROI for customers drives our durable
long-term growth. While Pete will provide additional details, I want to call out some of our strong financials
from the quarter.

Revenue for the quarter was $199.6 million, up 38% year-over-year. We added $56 million in annual
recurring revenue, bringing our total ARR to more than $792 million. We added many new customers in
the quarter, such as recruiting software providers seek out, Monster Energy, the social good empowerment
platform, Bonterra and Arizona Beverages. And we expanded Smartsheet's footprint significantly at Picasa,
AGC Biologics and Seattle Children's Hospital, among others.

Our strong expanded climb motion within our customer base continued with 235 customers expanding
by $50,000 or more and 79 customers expanding by $100,000 or more. We also now have 40 customers
with ARR over $1 million. And we ended the quarter with more than 11.7 million Smartsheet users. Last
quarter, we discussed how our new sales reps were ramping more slowly than sales reps from previous

-----

years. This quarter, we saw improvements in quota attainment and pipeline generation from our newest
reps. We exited the quarter with a record pipeline, improved after macro-related softening in Q2. We
also made significant improvements to our profitability in Q3. Our Q3 non-GAAP operating loss was
negative $4.3 million significantly better than our guidance and a 7 percentage point sequential margin
improvement from Q2. This improvement is a function of the adjustments we've made to our hiring plan
for the year, a heightened focus on operational rigor and financial policies and inherent economies of scale
in our business model.

We expect these margin benefits to persist, allowing us to improve our non-GAAP operating income and
free cash flow guidance for the year and beyond. The growth we experienced in the quarter came in
large part from Smartsheet's ability to provide measurable ROI for customers as they navigate the macro
backdrop. For example, in Q3, a Fortune 50 healthcare company expanded its Smartsheet investment by
over $0.5 million, bringing their total Smartsheet ARR to nearly $2 million.

Since moving to Advance Gold a year ago, they've seen a 56% increase in license growth as more teams
across the organization leverage advanced capabilities to manage programs and processes at scale. Their
Data Shuttle usage has increased almost 300% over the past year, and they now have 85 workflows
powered by our Bridge integration product. One of the biggest benefits this customer is seeing from
Smartsheet is improved efficiency, leading to a measurable ROI. For example, one team used a workflow
powered by Bridge to automate a complex manual process for managing staff changes and application
requests, decreasing the amount of time spent on it by more than 50%.

We also saw a leading provider of customs brokerage and logistics upgrade to Smartsheet's enterprise
licensing and Advance Gold platform after determining that advance would save them nearly 3,000
hours of labor each year. Those hours saved are delivering more than $300,000 in ROI for the company
while giving it the ability to handle a larger volume of quick win transactions and improve employee
engagement. In another Q3 advanced deal, the leading integrated reporting platform provider, Workiva
moved up to advance, so the professional services group could leverage Control Center and the
Smartsheet Salesforce connector to implement a new project and portfolio management solution.

They chose Smartsheet as their PPM platform because it offers both introductory and professional-grade
tools for project management that can scale to enterprise levels. This solution also gives project managers
insight into project risks and time lines and makes it easy for them to see all assignments in one view,
helping reduce project cost overruns. They estimate that in over 3 years, they will earn a 340% return
on their Smartsheet investment. On the innovation front, we launched several Smartsheet capabilities
and experiences at our September ENGAGE conference. where we welcome thousands of Smartsheet
customers and partners in person for the first time in 3 years.

It was incredibly energizing and gratifying to connect with customers face-to-face and hear their
Smartsheet stories. HP, Webex, AbbVie and many more presented during breakout sessions and shared
how Smartsheet is empowering them to solve tough problems, deliver on promises and drive tangible
results. At Engage, we launched portfolio WorkApps, which combines the power of control center for
managing large portfolios with the end user simplicity of WorkApps. A global food services company
recently chose portfolio WorkApps as the PPM solution for its global transformation initiatives.

The company has a complex global operating model and portfolio WorkApps gives its portfolio managers
the ability to create portfolio views tailored to specific organizational roles that span multiple regions,
countries and segments. By leveraging portfolio WorkApps, the company now has a clear line of sight into
any given initiative across a global matrix environment, allowing leadership to drive a strategic road map
and achieve KPI targets. We're also deepening our investment in the PPM space by launching new resource
management capabilities such as capacity view that gives resource managers increased visibility of their
capacity for planning and deploying talent. We're continually refining our governance and security controls
to meet customers' current and future needs. At ENGAGE, we shared details on data egress, a new layer
of control over how Smartsheet data can be exported outside of an organization. Such robust security
and governance capabilities, which protect confidential information via granular control are a key reason
many companies choose our platform. For example, in Q3, a large mortgage lender chose Smartsheet

-----

over another CWM solution when the competitor's solution was unable to comply with certain mandatory
requirements.

This customer was impressed with Smartsheet's enterprise-grade security and like how easy it was for
teams across various lines of business to start using the platform. Ultimately, they felt Smartsheet was
the best platform to help them meet their COO's goals for managing the business more securely and
efficiently. We also announced our new desktop application, which was enthusiastically received by people.
As worth of new ML-powered home and reimagined search functions. These investments streamline the
daily Smartsheet experience for all users by enabling them to find and act on their work quickly. On
last quarter's earnings call, I mentioned our acquisition of the Outfit brand management templating and
creative automation platform, which we have integrated with Brandfolder.

The synergy of the Brandfolder Outfit solution is already providing its value for customers in a meaningful
way. In Q3, we landed a $300,000 plus deal with a major appliance manufacturer that will be using
Brandfolder plus outfit as their single source of truth for digital asset management and production. Each
brand within the company will use Brandfolder to track and manage assets, helping reduce assets for all.
Outfit will provide a self-service model for building automated asset templates that they can distribute to
wholesalers and retailers to ensure consistent brand marketing. This Outfit powered content automation
solution will help the company reduce a 14- to 16-week creative and distribution process to 4 weeks,
driving a 400% faster time to market for their marketing campaigns. By providing transparent and
efficient content creation distribution and tracking capabilities. The new system allows the company to
utilize its existing in-house creative team while eliminating significant outside agency-related costs.

As you've heard today, despite the current macro environment, we had a strong quarter and remain well
positioned for continued growth. Just last month, in their Q4 2022 report, Smartsheet was named a leader
in the Forrester Wave for collaborative work management tools. The report recognized that Smartsheet
continues to provide an extremely broad set of use cases among the leaders in this Forrester Wave. And
that Smartsheet strengths are the extensive availability of work types, flexible use case creation and
end user automation capabilities. With people under greater pressure to choose the right CWM solution
for their needs, reports like this are important in helping guide their decision-making. In closing, Q3
was another solid quarter for our company, especially considering the global macro headwinds. With
our performance in the quarter, a continued focus on operational efficiency and the way we're delivering
ROI for customers, I remain confident in our ability to deliver long-term durable growth with improving
profitability.

Now, Let me turn you over to Pete. Pete?

**Pete Godbole**
_CFO & Treasurer_

Thank you, Mark, and good afternoon, everyone. As Mark mentioned, Q3 was a strong quarter that
reflected durable growth and improving profitability. We exceeded our guidance on both the top and
bottom line as customers continue to turn to Smartsheet for their diverse set of mission-critical work
management needs, and we benefit from improving economies of scale and an intense focus on
operational efficiency.

We saw particular strength among our enterprise customers as these customers continue to deploy our
capability-based products to streamline their most mission-critical workflows. Capabilities grew to 29% of
subscription revenue in Q3, aided by strong growth in our advanced offering and Brandfolder. I will now go
through our financial results for the third quarter. Unless otherwise stated, all references to our expenses
and operating results on a non-GAAP basis and are reconciled to our GAAP results in the earnings release
and presentation that was posted before the call. Third quarter revenue came in at $199.6 million, up 38%
year-over-year.

Subscription revenue was $186.1 million, representing year-over-year growth of 40%. Services revenue
was $13.5 million representing year-over-year growth of 12%.

-----

Turning to billings. Third quarter billings came in at $219.6 million, representing year-over-year growth
of 36%, approximately 92% of our subscription billings were annual with 4% monthly. Quarterly and
semiannual represented approximately 3% of the total. Multiyear billings represented less than 1% of total
billings. Moving on to our reported metrics.

The number of customers with ARR over $50,000 grew 43% year-over-year to 2,962 and the number of
customers with ARR over $100,000, grew 55% year-over-year to 1,346. These customer segments now
represent 60% and 46%, respectively, of total ARR. The percentage of our ARR coming from customers
with ARR over $5,000 is now 89%. Next, our domain average ACV grew 25% year-over-year to $7,951.
We ended the quarter with a dollar-based net retention rate of 129%. The full churn rate remains below
4% given the current macro environment, we expect our overall dollar-based net retention rate to be in
the mid-120s by the end of the year.

Now turning back to the financials. Our total gross margin was 81%. Our Q3 subscription gross margin
was 87%. We continue to expect our gross margin for FY '23 to remain above 80%. Overall, operating
loss in the quarter was negative $4.3 million or negative 2% of revenue, which represents a 7 percentage
point sequential margin improvement. The margin improvement was the result of cost-saving initiatives
we discussed in previous quarters, which included moderation of our hiring plan and cost rationalization.

Additionally, we led portion of our revenue outperformance dropped to the bottom line, demonstrating
the operating leverage inherent in our business model. Based on our improved gross retention, we also
moved to our 4-year amortization period for our commission base -- commission expense from a 3-year
amortization period. This accounting change contributed about 3 points of margin improvement in Q3.
Free cash flow in the quarter was negative $4.6 million.

Now let me move on to guidance. Before I go into the details, a few comments on our approach to
guidance. The macro environment dynamic, which impacts near-term visibility. We are, therefore, electing
to remain appropriately prudent as it relates to our top line performance. For the fourth quarter of FY '23,
we expect revenue to be in the range of $205 million to $207 million and non-GAAP operating loss to be
in the range of negative $2 to $0. We expect non-GAAP net loss per share to be negative $0.02 to $0.00
based on weighted average shares outstanding of 131.5 million. For the full fiscal year '23, we are raising
our billings guidance to $878 million to $885 million, representing growth of 33% to 34%. We are also
raising our revenue guidance to $760 million to $762 million, representing growth of 38%. We expect
services to be 7% of total revenue. We are improving our non-GAAP operating loss to be in the range of
$45 million to $43 million and non-GAAP net loss per share to be $0.31 to $0.30 for the year based on
approximately 130 million weighted average shares outstanding.
We are raising our free cash flow guidance for the year to $5 million. To conclude, Q3 was another strong
quarter. We continue to demonstrate our ability to drive durable growth with improving profitability as the
most demanding businesses in the world turn to Smartsheet for their mission-critical and data-intensive
work management needs. Now let me turn it back to the operator for questions. Operator?

-----

## Question and Answer
....................................................................................................................................................................

**Operator**

[Operator Instructions] Your first question comes from the line of John DiFucci with Guggenheim
Securities.

**John Stephen DiFucci**
_Guggenheim Securities, LLC, Research Division_

I wanted to dig in on your comment about improved pipeline conversion given the softening macro
backdrop. You raised billings guidance for the year modestly, which is certainly positive. As we think about
next year, are you assuming that pipeline conversion stays at current levels or improves throughout the
year? And how should we think about pipeline conversion relative to workforce productivity, some of the
investments you've made on the front and the sales force continues to ramp. Sorry for the long question.
That's my bad habit.

**Pete Godbole**
_CFO & Treasurer_

John, this is Pete. I'll take your question in parts. The first part of your question was pipeline conversion
essentially, what I talked about last time was ramping our new reps, we saw our pipeline conversions
related to rep productivity improve from that sense. And what we saw in terms of the physical view
closing and pipeline, October was a strong month for us as it relates to pipeline closing. So those are the
2 elements of dimension on sort of how pipeline conversion looked. One, from a rep standpoint, and the
other from the business deals and how they closed. Can you repeat the second part of your question you
asked about, so I just want to take them in sequence.

**John Stephen DiFucci**
_Guggenheim Securities, LLC, Research Division_

As we think about next year, should we assume that pipeline conversion stays at the current levels, or
should we assume it gets better or who knows macro backdrop, maybe that changes for the worst, too.
How should we think about it? How do you think about it as it relates to guidance?

**Pete Godbole**
_CFO & Treasurer_

So we haven't come up with guidance for next year. But what I would tell you is 2 things, it's going to be
a function of sort of what the macro is because that's going to decide sort of the number of deals and how
those are progressing. We will go into the year with a sales team that's very ramped, and that's going to
be positive to conversion.

**Operator**

Your next question is from the line of DJ Hynes with Canaccord Genuity.

**David E. Hynes**
_Canaccord Genuity Corp., Research Division_

Congrats on the nice set of numbers here. Mark, one for you. I'm curious how, if at all, you've evolved the
go-to-market messaging in the current environment? I mean, obviously, ROI is important in any sale. You
mentioned it several times in your prepared remarks. I'm wondering if there are certain products or use
cases that get more emphasis in a tougher environment?

**Mark P. Mader**
_President, CEO & Director_

I think when you break it down in its most simplest terms, we're helping companies drive revenue or
achieve cost savings. And when you can apply a program or process, something is scaled to one of the

-----

things that they're trying to achieve and using plans speak like that, you typically have an opportunity to
have a conversation. So when we think about things like control center, Data Shuttle moving information
more quickly and efficiently across systems. We think about having fewer hands on things so you can
get shorter cycle times. These are all very hard ROI calculations you can make. So I think the shift, the
continued shift from the soft benefits in terms of employee engagement, which is super important, but
harder to calculate a benefit from. Customers are responding to how we've oriented ourselves into such
discussions. And I think that goes across not only selling seats to somebody, but also introducing our
capabilities, which are really the underpinning for a lot of those calculations.

**David E. Hynes**
_Canaccord Genuity Corp., Research Division_

Yes. That's helpful. And then as a follow-up, look, I mean, a strong quarter improving conversion rates,
record pipeline. Does it at all make you kind of rethink the moderation in hiring plans that we've talked
about? And I realize this stuff doesn't whip around in 90-day cycles. But I guess I'm getting kind of the
commitment to longer-term margin expansion based on what you're seeing?

**Mark P. Mader**
_President, CEO & Director_

I think we had a really robust start to the year. We brought on a healthy number of team members. And
we have not gone through a massive layoff in our company. So we have retained really good strength.
We've invested in ramping those individuals. And as Pete just said, I think going into the end of the
year with a ramp team, a larger ramp team than we had a year ago, that actually gives us quite a bit of
confidence to out and execute. So I think it would be in a different position had we finished the year with a
very [indiscernible] all of that great talent we brought on the beginning of the year. So I feel like we're still
the beneficiaries of some of those earlier in the year moves.

**Operator**

Your next question is from the line of Brent Thill with Jefferies.

**Brent John Thill**
_Jefferies LLC, Research Division_

Mark, you were in the CRO last time we went through the recession. Obviously, you're in a completely
different position. But any learnings parallels that you're seeing in KPIs you're monitoring going into
calendar '23?

**Mark P. Mader**
_President, CEO & Director_

Yes. I think one of the big lessons, Brent, is just being quick, and the another sole notion survival of the
quickest. I think you have to pair that, though, would be thoughtful. And it's like we're not just solving for
Q3, we're not just solving for Q4. FY '24 is right around the corner. Pete and I are started talking about FY
'25. So it's like these are all important dimensions. And I think one of the learnings is not to get too overrotated on that next 90-day window. And I think Pete has been a good partner to me in helping manage
some of that balance. So I think that's probably the largest takeaway.

**Brent John Thill**
_Jefferies LLC, Research Division_

Yes. I mean, Pete, just as a quick follow-up on the rep productivity. I mean, it's kind of counter to what
we're hearing at other companies. What do you think inverted the quota attainment for you, what changed
there? Was it something that happened in the demand environment? Was it one particular geography?
What -- was there anything you can put your pulse on because that's kind of counter to what we're
hearing in other companies right now?

**Pete Godbole**
_CFO & Treasurer_

-----

Yes, the rep productivity that I was describing was for our newer reps. We had a series of what I call welltimed and absolutely meticulously defined initiatives of how we would ramp the newer reps into territories
they had never managed accounts, they had never managed. And I think we're seeing the dividends of
that play. So we've seen the productivity of those reps client. Now remember, we had a significant class
that we ramped in. So when you're looking at the weighted average of the impact of that many people
getting ramped up with a systematic set of plays, that's what we're seeing.

**Mark P. Mader**
_President, CEO & Director_

I think it's also an important, Brent, to recognize that we're making a relative statement. We were not
pleased with where we were last quarter in terms of rep productivity on certain cohorts. We're seeing
improvement there. So heading in the right direction. I think that is a statement though against what we
saw last quarter as opposed to we are exceeding at all levels on all fronts. I think we still have a good
room to go to continue to improve.

**Operator**

Your next question is from the line of Pinjalim Bora with JPMorgan.

**Pinjalim Bora**
_JPMorgan Chase & Co, Research Division_

Congrats on the quarter. Mark, I just wanted to understand a little bit. I guess it's a great quarter. It
seems like numbers are great, but we are hearing a lot of consternation from other companies as well,
right? Last quarter was you had faced some difficulties. So I'm trying to understand how does the macro
feel for you? Is it the improvement that you did within some of these messaging plays that helped you this
quarter versus the normal discussions on a macro front. Is that kind of similar to last quarter? Or is it -does it feel a little bit better or worse?

**Mark P. Mader**
_President, CEO & Director_

I think it feels quite similar. I think the way we're engaging in those conversations are starting to produce
yield for us. But I would say that the tenor within the customer environment is quite similar. I would say
how we're responding to that has proven to be positive. And I think that is a function of reps feeling more
confident, thus being able to present these solutions in ways that resonate with them. But I would say it is
as much getting yourself higher in that priority list for customer consideration as opposed to the amount
of budget customers have starting to swell again. So I think it's really our placement in that stack rank,
that's helping us.

**Pinjalim Bora**
_JPMorgan Chase & Co, Research Division_

Yes. Got it. One follow-up. I wanted to ask you about WorkApps. We have some -- we have had some
conversations with some of your customers who are talking about consolidation, not just around work
management applications, but consolidation of other third-party apps, in-house apps, scheduling app or
something else, right, which are being built on top of WorkApps. Are you seeing that? Is that kind of a
driver for the enterprise plan at this point where people are trying to save money to more with less?

**Mark P. Mader**
_President, CEO & Director_

Yes. I think any time you have a -- the beautiful thing about the platform as opposed to a point tool is that
it can be utilized in a multitude of ways. And I think any time someone sees a set of technologies that they
can utilize across multiple use cases and drive a higher yield for an amount of spending. That's a good
thing. So I think WorkApps is a contributing for us there. I wouldn't say WorkApps is the tip of the spear.
It's one of a whole multitude of things that we're presenting to clients. I think in the coming years, I think
WorkApps will continue to gain steam, the release we had an ENGAGE by connecting it to control center,
which has been a really successful offering for us. Customers are really happy to see that.

-----

I think we'll see some benefits of that marriage between touch control center and WorkApps in the
quarters to come.

**Operator**

Your next question is from the line of Josh Baer with Morgan Stanley.

**Joshua Phillip Baer**
_Morgan Stanley, Research Division_

Congrats on a strong quarter. I wanted to ask one on macro and sort of in relation to guidance. We can
see the deceleration in the implied Q4 billings guidance and the commentary just around the decline in the
net retention rate. So I was hoping you could talk about some of the macro assumptions that's embedded
in that guidance? And when you talk about prudence, what does that mean if you could add some details
there?

**Mark P. Mader**
_President, CEO & Director_

Absolutely. So Josh, the growth decel implied in our billings guidance is a function of the strong comp
from Q4 from a year ago. And we've combined that with sort of a prudent outlook given the macro
environment, which includes an expectation of lower customer budget spending sort of compared to prior
periods. And that's what substantiates the macro in your question, which is we're seeing a macro that's
worsening. But the good news is when I gave you guidance a quarter ago, I gave you a composite guide
of Q3 and Q4 and we had projected that Q4 would be softer given a worsening macro that was built in. So
that's the basis of the assumption.

**Joshua Phillip Baer**
_Morgan Stanley, Research Division_

Okay. Great. That makes a lot of sense. And then if you could just add any commentary on the linearity of
sort of demand trends month-to-month throughout the quarter and into November. Have you been seeing
things get worse over the last months leading into Q4?

**Pete Godbole**
_CFO & Treasurer_

So the -- October was a strong month for us relative to the, what I call the close rates and the pipeline
close rates we saw. November turned out steady to our expectations. We expected the macro cycle to
be in play, and it produced results that are very consistent with our expectations. So remember, in Q4,
there is a great deal of business to be booked in December and January. So that's what's built into our
assumption as we've guided to the quarter.

**Operator**

Your next question comes from the line of Scott Berg with Needham.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

Congrats on good quarter and I guess that 2 questions here. First of all, Pete, you talked about capabilities
where I think it was 29% of revenues in the quarter. As the company continues to move upmarket more,
what does that mix look like at kind of, I don't know, peak levels? And then how should we think about the
ARPU lift that you're gaining from those customers that are adding on some of these capabilities today?

**Pete Godbole**
_CFO & Treasurer_

Still the, I think, a [ meta ] statement of sort of where we see capabilities. And I think when you talk
about a percentage of capabilities of total, it sort of implies that there isn't going to be as much growth
on the user license part of it. We see both as really solid drivers. We see the width of our use case, if you

-----

remember the information Mark provided on the latest reports, we have a wide variety of use cases that
drive what I call our expand motion. Think of capabilities as the client piece of it. We think of that number
as being -- as growing over time because they are fast growing relative to our core license business. And
we gave some guidance during our last Analyst Day on how big they could be but we're stretching the
surface on that part of it.

So I do feel like as customers start to unlock the scale that they need after they've deployed the solution,
you're going to see more and more customers small and large start to use them in the most demanding
way.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

Got it. That's helpful. And then from a follow-up perspective, maybe this is for Mark. I wanted to see if you
can talk about the competitive environment a little bit. And I asked the question in the framework. You
had a competitor report their results tonight that were not nearly as strong as yours we'll go with that.

Are you seeing anything different out there that might be driving the strength of your business versus
others maybe not continuing as well.

**Mark P. Mader**
_President, CEO & Director_

It's harder for me to make a relative statement, Scott. I think as I said earlier, I can share what customers
appear to be responding well to in our offering. And I think the capabilities alongside the core licenses,
that is a composite that people are responding to, and it manifests itself not only in growth but also
retention. If you have multiple value points that you can deliver to somebody, I think you have a healthier
relationship. And I think that's helping drive our business.

**Scott Randolph Berg**
_Needham & Company, LLC, Research Division_

Congrats on the good quarter.

**Operator**

Your next question comes from the line of George Iwanyc with Oppenheimer.

**George Michael Iwanyc**
_Oppenheimer & Co. Inc., Research Division_

Also my congratulations. Mark, maybe could you give us a bit of perspective on the desktop app and what
kind of feedback you're getting from this launch at this point?

**Mark P. Mader**
_President, CEO & Director_

Yes, George, I think one of the things that's always I find funny over the many years we've been doing
this is somehow software companies get so excited about the next most extremely high-value obscure
feature than someone says, but I really want the easy thing. And I think the desktop app is just such a
beautiful example of that where people want to see it in the tray on their machine. They want to be able
to get quick access to it. They don't want the tabs that represent all their work in Smartsheet co-mingled
with a bunch of other tabs in their Chrome or Safari browsers or Microsoft browser. So these are very
simple things that people respond to.

And I think when someone is living in your app and you can make their life easier, either through better
design, or more quicker access, they're thankful for it. I think some of our team members were surprised
at ENGAGE. And this is something which you just can't substitute with the digital conference. When you
look at the number of people queued up at a booth, wanting to learn about this thing versus many other
things, you really get that topical sense for [ how ] this matters. And the desktop app is one of those. It's
been something we've been working on for some time. Thousands of people, many thousands of people

-----

are using it today. I think it's still an EAP. It will be released shortly, broadly. So we'll continue to invest
behind that.

**George Michael Iwanyc**
_Oppenheimer & Co. Inc., Research Division_

And with that, maybe could you give some perspective on when people are in the app, are you seeing
them engage with multiple products in a more broad way with the overall platform?

**Mark P. Mader**
_President, CEO & Director_

When you say more products you mean more elements of our product or integrations with...

**George Michael Iwanyc**
_Oppenheimer & Co. Inc., Research Division_

Yes, more elements of your product.

**Mark P. Mader**
_President, CEO & Director_

Yes. And I think as we dovetail things like Brandfolder into the experience and our resource management
more into our core experience, by lowering that hurdle height for people to easily traverse, yes, we are
seeing that happen. The one thing that I'm quite looking forward to and I shared this on a prior call, as
we remove -- further remove the friction from people being able to explore our entire portfolio. As Pete
said a second ago, today a lot of those capabilities are really consultative sale. And what Praerit and the
engineering team are working on continue to let people discover, explore, realize the value and then
ultimately buy those in a self-directed manner. So I think in the coming 2 years, you're going to see a
much greater diversity in people using more things in our products because we're lowering that friction.

**Operator**

Your next question comes from the line of Alex Zukin with Wolfe Research.

**Ethan Bruck**

This is Ethan Bruck on for Alex Zukin. Congrats on the quarter. I wanted to ask, I appreciate the color for
where NRR will go next quarter. But as you think about looking to next year, is like mid-120 [ brings ] the
right way we should think about I guess where NRR would stabilize, and if you look to next year, it's high
20s growth the right way we should be thinking about it.

**Pete Godbole**
_CFO & Treasurer_

Ethan, we're not talking about next year because that's a part of the whole construct of how we see next
year. It's related to what we see bookings, billings, all those elements. So it's a little premature to talk
about sort of where that number will be. I think longer term, we see great capability for that number to
grow just based on our history and sort of the products we've got in the pipeline. So that's the way I'll
leave it.

**Ethan Bruck**

Great. And then congrats also on showing the great improvement in incremental margins improved
from like negative 20 to negative 3%. I guess is this the kind of the pace and rate we should think
about margin improvement going forward? And I guess how are you thinking about balancing, I guess,
improving this margin, [indiscernible] a little bit more? Can we expect a little bit more on the margin side?
And also, I just want to ask, is the 10% free cash flow margin for calendar '24 still on the table?

**Pete Godbole**
_CFO & Treasurer_

-----

So Ethan, I appreciate the question. We've made significant strides by really focusing on operational
improvements and moderating hiring. So we've seen that play out in the margins you've just seen. What I
would tell you is we're going to continue that effort by trying to go after efficient growth, and that's going
to be something we'll continue for several years as we go through it. That being said, we're not going
through specific callouts of how much margin improvement there is and what rate it clips at. There's a
little bit of work to be done before we get to that point.

**Ethan Bruck**

Congrats, again, on the good quarter.

**Operator**

Your next question comes from the line of Rishi Jaluria with RBC Capital Markets.

**Richard David Poland**
_RBC Capital Markets, Research Division_

This is Richard Poland on for Rishi Jaluria. I guess just in terms of the macro environment versus what you
saw 90 days ago, is there any way to kind of bifurcate what you're seeing between SMB and enterprise
and just kind of -- are there any pockets of either demand improvement or demand softening that you'd
call out within that?

**Pete Godbole**
_CFO & Treasurer_

So Richard, this is Pete. What we've seen is we've seen, if you would parse the segments of the market
differently. I would say in the U.S. mid-market, we've seen sort of global impacts more broadly so. I would
say we've had strength in the enterprise based on just the number of transactions we've been able to
book with these enterprises. So those would be like the texture on it. I think you're looking for that level. I
think in terms of verticals, we've seen strength in manufacturing, global energy architecture, construction,
if you will, and some of the weaker verticals for us have been technology, probably consumer good, and
media, if you will.

**Richard David Poland**
_RBC Capital Markets, Research Division_

Great. That's very helpful. And then just as I think about SBC, I mean, stock-based compensation came
down nicely in the quarter. Should we expect that to continue to trend down. Just kind of any update on
your thoughts around how you think about stock-based comp?

**Pete Godbole**
_CFO & Treasurer_

Yes. Stock-based comp is really important to us because it's a key element of how we look at the business.
I think you should expect a few things to happen. I'll answer your question right at the outset, do we
expect stock-based compensation in the future to decline as a percent of revenue? Yes, it should decline.
That's the way the results will come out.

Now when you think of stock-based compensation, think of it as a number of people times the how much
you offer them being the driver. We've essentially, going forward, moderated our hiring plan because
we don't need to hire the same pace. We're doing this very differently. So what you're going to see is
a positive impact on the number of people we're bringing in and the impact it has on stock comp. That
being said, stock comp is dictated by the history of what you've done in the past. So when you look at
it, you say large part of it is already set by the prior hires that we've put in place. But -- so those are the
2 effects that play into the total stock comp that gets created, and we're focused on making sure that it
goes down year-over-year as a percent of revenue.

**Operator**

Your next question is from the line of Terry Tillman with Truist Securities.

-----

**Robert William Dee**
_Truist Securities, Inc., Research Division_

This is Robert Dee on for Terry. Curious to get an update on the newer onboarding experience and some
of the other recent initiatives around helping users start quickly. Have you all started to see greater usage
and penetration with newer customers today versus newer customers from say a year ago, what have
been the specific drivers of that, if so?

**Mark P. Mader**
_President, CEO & Director_

Yes. We have a number of measures there, Robert. And one of the things that we've seen a nice uptick in
is the percentage of new participants who are successful in creating their first solution, the first thing that
they're starting to try and work with. We saw really nice improvements in that. That was one of the early
success factors that we were trying to solve for. There are a number of other designs and elements that
are being rolled in later this quarter targeted for Q1 and Q2, which I think will also have beneficial results
in terms of conversion rate. But really pleased with what the team has put out there in terms of improving
that experience.

One other really nice benefit from what the team put in, we have greater visibility into what somebody's
intent is and that can come on a few fronts. The more we understand someone's intent, the better we can
serve them, both in terms of consulting, advising templates to them, how we support them. So overall, it
helps us serve better, help someone get navigated and started better. So pleased with the improvements.

**Robert William Dee**
_Truist Securities, Inc., Research Division_

That's great. And just one quick follow-up. Hoping to dive a little deeper on Brandfolder, how attach rates
and penetration for the solution been performing relative to expectations? And what trends are you seeing
in the overall digital asset management market from a demand perspective?

**Pete Godbole**
_CFO & Treasurer_

So Robert, we were pretty pleased with our performance with Brandfolder. We're seeing broad resonance
as people look at the combined Brandfolder Smartsheet solution together. I think what's really helped is,
one, the customers' impact which comes from both those solutions together. And this year, we launched a
model where we basically turned on our core Smartsheet sellers to help in selling Brandfolder, that's paid
pretty good dividends for us as well. As far as the digital market and Brandfolder, I'll let Mark speak to that
a little bit.

**Mark P. Mader**
_President, CEO & Director_

I think there's still a huge opportunity for us to educate our customers and prospects about what's
available to them and I think, well we have examples that we can point to like this big appliance
manufacturer who's doing pretty impressive stuff in terms of content automation. A lot of times when we
share those stories with people, they're unfamiliar that, that's even possible.

So I think while digital asset management has been around and sort of many -- some customers are
fluent in it, the majority are not, and it's still in an education phase. I think with our -- as we talked about
ramp up reps, we talk often about our newest cohort. I also think about ramping in productivity with our
existing reps on new lines of business like Brandfolder and Outfit. And I think, I would say with the median
rep on our team who's experienced is much better suited today to speak to that value proposition. So
again, I think it's a very different phase in terms of stage, in terms of market understanding, and we're
leaning into it.

**Operator**

Your next question is from the line of Jake Roberge with William Blair.

-----

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

Congrats on the great results. Pete, you've talked a lot about cost rationalization and moderation of your
hiring plan helping on the margin front. Given you beat by over $16 million on the operating margin front,
could you dig a little more into the areas you're finding leverage in the model. And then when we think
about moderation in hiring, do you expect that to continue into next year when comparing it to this year's
hiring plan?

**Pete Godbole**
_CFO & Treasurer_

So the $16 million beat you're referencing is for the quarter, right? So I just want to make sure I answer
your question.

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

Yes, for the quarter.

**Pete Godbole**
_CFO & Treasurer_

Great. So I'd say the 2 elements of that beat are coming from -- I'll lay it out for you, probably half the
beat is coming from the revenue leverage that we've had as we've moderated and controlled costs. So
revenues have grown up. We've moderated our hiring and people-related costs that go with it. that's
produced sort of more than half the effect. About 3 points or 3 percentage points of it have come from
-- we've looked at the customer duration that's associated with a greater gross retention rate, and that's
meant a lower commission expense, that's accounted for about 3% of it. So that gives you some texture.
And the rest of it is just hard core operational cost containment. Looking at every dollar that you're
spending and asking whether it has value in terms of the priorities you've set up. That's the first part of it.

And the second part of your question was on hiring in the future. We don't expect to have a similar sized
hiring class coming on board and hiring expectations in the future will be significantly smaller. So we're
going to see the benefit that we've created this year in a continued manner next year as we think of the
operating leverage.

**Jacob Roberge**
_William Blair & Company L.L.C., Research Division_

That's really helpful context. And then some of your peers have called out some headwinds from a user
perspective, given slower hiring rates and some layoffs at tech companies. Have you seen any large
customers reduce headcount as a result of those headwinds, or just given your enterprise customer base
and that focus, are you more immune to those issues than some other peers?

**Mark P. Mader**
_President, CEO & Director_

I think for the last 5 years, our whole mindset about penetrating the enterprise has been what we call the
earned enterprise. So what we don't do is we don't go in and sell what we think at the time is a big air or
a deal and go wall to wall. We say, how can we mobilize, how can we deliver value and then we grow over
time with them because very few of our large customers are full wall to wall where your dollar retention is
reliant on the next person they hire. We're actually somewhat insulated from that. The other piece that's
helpful to us is because some of our ARR is grounded in value components that we call capabilities, it's
actually not tied out to a user license.

And if you want to keep benefiting from that, you will keep subscribing to it. But it is not hinged on that
next hire. And I think that's where our mixed model or hybrid model is turning out to be quite helpful.

**Operator**

-----

Your next question comes from the line of Steve Enders with Citi.

**Unknown Analyst**

This is George on for Steve. Just want to congrats on great execution in a difficult environment. I wanted
to circle back on the discussion earlier about rep productivity. I think when you were talking last quarter,
you were talking about expected improvement over the forward 3 to 6 month time frame. But I am just
curious, obviously we have seen improvements over these first 3 months. What are you thinking about -how are you viewing improvement potential in Q4? And is there any of that baked into the guidance?

**Pete Godbole**
_CFO & Treasurer_

George, this is Pete. I just wanted to quickly say, we are really pleased with how the field teams have sort
of gone about improving productivity of newer reps who have started. We've seen the benefits of it as
they've become productive. Our expectation is we will continue to see productivity improvements in those
reps because our plans involve multi-quarter changes and how we get them productive. That's baked
into our guidance. So you should think of our guidance as an overlay of improving new rep productivity,
combined with the macro that we have thoughtfully and prudently considered.

**Unknown Analyst**

Got it. That makes sense. And then just 1 quick follow-up on the billings upside came in quite ahead of -Are we still remodeling. I was wondering if you could just dig into kind of what drove that upside and if
there's anything unusual or onetime in nature that we should be aware of?

**Pete Godbole**
_CFO & Treasurer_

George, there was nothing unusual or onetime nature in those numbers. So it's organic bookings which
translates into billings.

**Operator**

Your next question is from the line of Michael Turrin with Wells Fargo.

**Michael Bird**

This is Michael Bird on for Michael Turrin. I wanted to dive into expansion rates again quickly, they have
been pretty nicely in the quarter. And I know the exit rate expectations are still the same. Maybe with a
discussion on potential seat expansion issue, you can walk us through the mix of seats versus capabilities
on driving that expansion rate number and if that's changed meaningfully over the past quarter or 2?

**Pete Godbole**
_CFO & Treasurer_

I'll start with the question. And then from a meta standpoint, Mark will chime in, in terms of how that's
operating. We're not seeing a big difference between the seats and the, what I call, capabilities. Obviously,
capabilities are still growing faster than the sear part of it, that is factored into the expansion rates we
see. We gave you some stats on capabilities. We said that they're 29% of revenue. And if you looked at
them sort of a year ago, they were 24%. So clearly, people are expanding with capabilities. but you're
seeing a healthy mix of people with seats as well in that mix. So that's kind of a meta point of like how
expansion rates are moving.

**Mark P. Mader**
_President, CEO & Director_

Yes, I think -- I don't think I have much to add to that.

**Operator**

Your next question comes from the line of Jackson Ader with MoffettNathanson.

-----

**Kyle Diehl**
_MoffettNathanson LLC_

This is Kyle Diehl on for Jackson Ader. Just to dig a little bit deeper onto that expansion kind of the time
line that you guys are seeing. Is the time line for expansion slowing at all? Or do you kind of see that
slowing in the near term future here? Or has that kind of remaining constant as to what you've seen
historically?

**Pete Godbole**
_CFO & Treasurer_

So the -- if you think of expansions and you convert them into its core fundamental, you're talking
about bookings and how quickly they materialize. Obviously, expansions are a key part of bookings and
billings. So you should think of it as being -- we've seen an elongation in sales cycles and we've seen deal
compression. So let's talk about how that actually plays itself out. The way we've seen elongations, people
just stay longer with a number of potential reviews that take place for any purchase, those are happening.
The second part of it is the deal compression. The way that would happen with these capabilities and
expansion is you can either buy a package, which is likely packaged up value in advance or you can still
buy pieces of it, we don't tell customers how they should buy it, but they buy a la carte capabilities that
hit a specific need, those represent if you buy the a la carte capabilities, you're getting a smaller bite
in bookings. Obviously, over time, you're going to get all the bookings, but it means a different size. So
that's how expansions play out.

**Kyle Diehl**
_MoffettNathanson LLC_

Okay. Great. That's helpful. And then I guess just in terms of next year's IT budgets, historically are you
able to attribute a decent or a majority of revenue growth to IT budget expansion? How do you see it
playing out if IT budgets kind of come down next year. Do you see that as having a meaningful impact on
the top line growth?

**Pete Godbole**
_CFO & Treasurer_

So I would say that the budgets for our funding. Remember if you're dealing with -- this isn't one
purchaser and 1 department. There are hundreds and thousands of people in enterprise who are buying
it. See you have as much of people with line of business budgets that are buying it as they are IT folks in
there. So I think it is fairly broad based in terms of budget.

**Operator**

Your next question comes from with line of Fred Lee with Credit Suisse.

**Fred Lee**

Very nice quarter, particularly in this environment. I was wondering if you were seeing any change
in behavior from your competitions, specifically privately held companies that might be slowing their
investment in market expense and then a quick follow-up after that.

**Mark P. Mader**
_President, CEO & Director_

No. Even given the thousands of transactions we do in the quarter, the median transaction is still really
helping if someone progressed from their status quo, which isn't grounded in a CWM player and getting
into CWM for the first time. So it's difficult for us to speak. It will not be really well grounded for us to
speak to these huge patterns that we see. We have seen -- you do see it manifest itself in some other
ways in terms of you definitely get a sense that those companies are hiring less. I think some of the
people who joined companies, would have now been let go, obviously talk to people in the community, and
I think there's less chatter around people considering going to such companies. I think that's one of the

-----

things that more established companies will benefit from in the coming quarters. In terms of what we're
seeing in market, nothing that we've really heard from customers on that front.

**Fred Lee**

And just a quick follow-up on the net retention metric eventually in the 20s by the end of the year, I was
wondering if you could drill down a little bit on what's contributing to the sequential decline in the metric?

**Pete Godbole**
_CFO & Treasurer_

So Fred, the net dollar retention rate metric is a full year look back. So we look at what happened over
the full year, if you will. So when you think of what comes into the calculation when we report out at the
end of Q4, is you're going to be replacing a very strong quarter with a macro that was very different,
expansion need that was very different without something that's in a different macro phase. So you're
just swapping out one quarter for the other, and that's where you see look back of a full year in expansion
rates dropping to where we've guided.

**Operator**

There are no further questions at this time. I will now turn the call back to Mr. Aaron Turner.

**Aaron Turner**
_VP of Investor Relations & Treasurer_

Great. Well, thank you for joining us, everyone, and we will speak with you again next quarter.

**Operator**
Ladies and gentlemen, thank you for participating. This concludes today's conference call. You may now
disconnect.

-----

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