What happened
Shares of project management tool Asana (ASAN 0.96%) jumped 27.2% from last week's market close to Thursday's close, according to data provided by S&P Global Market Intelligence, after the company reported a solid quarter. Shares have given up some of those gains and are up 19.9% for the week as of 11 a.m. ET, but that's still a great week.
So what
Quarterly revenue was up 34% to $150.2 million, which beat the $145.2 million that analysts expected, but Asana still had an operating loss of $99.2 million, or 66% of revenue.
From a cash-flow perspective, which excludes extremely high stock-based compensation expenses, Asana had negative $31.1 million in operating cash flow, which was better than the $39.3 million burned a quarter earlier.
There's clearly a lot of growth, but Asana isn't yet turning a profit. One person who thinks the company will eventually is CEO Dustin Moskovitz, who said he plans to buy up to 30 million shares of the company's stock.
Now what
Asana is starting to show some signs it is going to start exploiting the operating leverage it should have in the business. Revenue is expected to grow 17% to 18% to $638 million to $648 million while the non-GAAP (adjusted) operating loss is expected to fall from $207.3 million to between $120 million and $130 million.
Revenue is growing and losses are getting smaller. Those are steps in the right direction that the market is cheering for today. It's a long road ahead, but this could be a great stock if management can keep costs under control.
