Asana, Inc. (ASAN) Earnings Call Transcript & Summary

Okay. Great. Well, welcome, everybody, to day 2 of the Citi Technology Conference. Steve Enders, part of the Software Research team here at Citi. And with us today, we have Tim Wan from Asana. Tim, thank you so much for being here.

Thank you, Steve. Nice to be here.

Yes. Maybe just to start out, maybe just talk a little bit about Asana in the marketplace. Kind of what's the Asana differentiation and maybe some of the background for maybe those who are a little bit newer to the Asana story?

Yes, sure. Asana is a work management platform to help teams organize their work and collaborate together. I think what's really unique about Asana is the founder of the company, Dustin Moskovitz, was a co-founder of Facebook. And if you're familiar with Facebook, one of their core strengths was this concept called the social graph, which is essentially a data model. And Dustin brought that data model to the foundation of Asana in terms of how work is interrelated to one another, how that work is connected to different projects, to different portfolios and different goals. And that, in many ways, is the secret sauce of Asana. This architecture behind the scenes that allows teams to collaborate in a much more effective and more flexible way. And I think, going forward for us, it's going to be -- I think it's really going to be transformative for many of our customers because when you can -- when you layer on AI on top of the data model, what you can surface and what you can bring about in terms of value and effectiveness for team and highlights, I think our customers are really going to see the benefit of that.

Okay. Great. Yes, I think we'll definitely be digging into that a little bit more later on in the conversation here. I do want to ask about, just the most recent quarter reported 2 days ago now. How should we be thinking about the key factors that impacted demand in the quarter? And I guess what changed that, that led to, I guess, a little bit of the implied guide down in Q4 here?

Sure. I think we -- the things that change or things maybe that hasn't changed is the fact that we're continuing to see some macro pressure on the business. About 30% of our business is tech. And if you look at our business, tech versus nontech, you see a noticeable difference in terms of that -- the segments' growth between companies that are nontech. So we have been weighted down by this 30% on the business. And we think it will take time. It'll probably take some more time for the tech business to return. And hopefully, we are seat-based business. So both layoffs has impacted the expansion and the downgrades in our net expansion rate. So I would say, that's one, just continued macro headwinds. And two, we did bring on a new CRO, Ed McDonnell from Salesforce, and we wanted to -- we know he's going to make some changes. I think he's going to be a force for good for us. And we just want to make sure that we had adequate air cover to make the necessary changes for the long term.

Okay. So I guess with that view, is there like an added degree of conservatism that's been baked in from, maybe, before? Like if we think about the puts and takes of Q4, how much of it is continued weakness on tech that maybe was a little bit more outsized versus the changes that you're anticipating and making?

Yes. I mean I think to the degree that he can implement his changes sooner, I think then hopefully, things will end up being better than we expect. So I think it's really thinking about and framing the guidance in a way that gives him the air cover to do the necessary things to kind of make sure we're set up for FY '25.

Sure. Okay. Makes sense. Maybe just thinking about the outlook for 4Q exit rate. I think it's now kind of in the low teens area. Is this maybe -- how should we be thinking about the growth outlook going forward? And I guess as you think about the tech part in particular, recovery, and what does the shape of that look like as you start getting to the other side of the downgrade activity?

Yes, certainly, I hope that's not the case. I mean I think if we step back, when we even look at like our top 100 customers, we're still single-digit penetrated in many of them, less than 10% penetrated within their employee base. So we think there's still a lot of headroom to grow the business. And to the degree that -- I think one of the things that we -- for those that's not familiar with Asana, the company grew up primarily as a product-led business, meaning we didn't have a sales team. It was really a lot of product-driven sales motion. And then over time, we've evolved the sales motion to be product-led. And I think at one point, you can kind of say it was maybe more inside sales. And now we've really transitioned and pivoted, with Ed's onboarding, the company to be much more enterprise-led. Our largest deployment, we have over 200,000 seats deployed at one of the most valuable companies in the world. But we also have companies that are with a team of 10 using Asana. So there is this pretty wide spectrum of customer usage. But when you really kind of dig in, we're still very early [indiscernible], early penetrated in many of our customers.

Okay. That makes sense. I want to come back to the changes that Ed is making in a minute. But just last question on, I guess, the outlook and some of the downgrade behavior. I think you talked about net retention coming down a bit more. I guess what are the implications of customer downgrade behavior on renewal cycles? And how should we be thinking about where net retention can bottom from here and the factors that will then lead to expansion after that?

Yes. I think one of the things that we've seen, especially in tech is even in Q1 -- and some of the Q1 customers this year where they thought they would actually grow their business. And instead of growing their business, those companies actually had a layoff. So in anticipation of, like maybe, you're growing 250, you end up laying off 250. Instead of getting that renewal at 100, we're now getting the renewal of 250 less seats. So I think we're going to have to work through some of those renewals. I think peak layoff probably was Q1 of this year when Salesforce and a couple of other large companies did their layoffs. And I think we'll have to kind of go through that trough. And then I think after that, I think we can kind of expect things to kind of rebound from there. I think -- the thing that I think will help our net expansion rate over time is we're -- if you -- I think we mentioned this on the call, we have an investor as well as a customer event where we'll be launching new packaging on October 3. I think that one will be a really strong catalyst for getting teams to really think about Asana and deploy Asanas in a different way. Two, I think with some of these functionality that we're incorporating to the packages, the AI will help with adoption. So I think that will be another accelerant. And three, I think certainly, the changes that hopefully -- that we'll see on our sales team will also help. We saw some early indication in EMEA where productivity started to stabilize and actually improve on a year-over-year basis. We're really encouraged by that. And I think the changes we've made there, hopefully, will translate to next year. And I expect some of those changes will be happening as well in North America for us.

Okay. All right. That's great to hear. Maybe we can kind of dovetail off of the EMEA positive trends there. I guess what was it that you necessarily changed in that market that's helping lead to this recovery? Is it more about the market itself recovery? Or is it something that was in your control? And then kind of on top of that, what are the learnings there that maybe Ed can apply to some of the other regions here?

Yes. We've had a new leader there now for about 9 months, Sanj, who came from Salesforce. I think he was like a 12-year veteran from Salesforce. I think he just implemented a lot more disciplined, a playbook that's much more focused around not just inbound but in also an outbound motion. I think he was just -- predictability is very important to him. So just really working on the pipeline in a disciplined way and holding our reps much more accountable than they've been used to before. And I think that's just an evolution of some of the -- we also updated -- transitioned out some talent and upgraded some managers in each of the countries. So I think all those things cumulatively showed up the team and helped the team kind of see this productivity increase on a year-over-year basis, yes.

Okay. And so with Ed now coming in also from Salesforce.

Also from Salesforce.

A lot of head at Salesforce, apparently.

A lot of -- yes.

How should we think about the changes in what he's going to end up doing as he comes in and what that means strategically for the go-to-market function?

Yes. I mean I think -- I don't think it'll be dramatically different than what Sanj has been doing. One, I think certainly, I think he'll be upgrading the talents or -- and updating some of the management teams beneath him. I think he's going to have a lot more focus around the outbound motion. The one thing that's really changed over the last 1.5 years is we had this motion where the buyer or the user or the champion was the budget owner, meaning a marketing director or marketing VP can add their whole team, and the spend with Asana sat with that person. And I think over the last 1.5 years, what's happened is while they can be a champion, they no longer control their budget. The budget on a line item moved to the CIO. And I think one of the things that Ed has really focused on is, how do we speak to the CIO? How do we sell into the CIO organization? How do we value sell and prove ourselves in a different way than where we focus much more on the end user? They're an important voice, but I think the dollars now reside with a different part of the company, and learning to sell into that part of the company and understand their needs is going to be much more important.

Okay. So I guess, functionally, what does that mean for the actual go-to-market? Like how does it change going from the person who loves Asana to the person who now is controlling the [indiscernible]?

Yes. I mean I think from the -- from how we market to how we sell will change. So I think if you go back a couple of years, you'll see a lot of our marketing much more focused around the end user. The marketing will be much more focused around the buyer. There will be much more executive events, getting CIOs into the room and having dinner with Dustin and having Dustin sell a little bit more. The messaging, just what you see will be much more targeted at the budget owner. And then on the sales side, I think there will be 2 things. In addition to upgrading the talent, certainly, I think there will be some verticalization, meaning how we verticalize the motion within different segments. Potentially down the road, you see something like a health care team and then a financial services team. And I think like more -- those are like the types of things that you'll see us focus on.

Okay. With the idea of verticalization of the go-to-market, does that mean there might need to be some verticalization of the product itself? Or yes, how do you think about the use cases?

Yes. I actually think like the product is like when we -- when even I actually, like do -- prepare for earnings like, the amount of use case is so broad and so deep, it's actually quite -- we already have a lot of biotech companies. We have health care companies already using the product. We have financial services using our product. We have like some of the top professional services using the product. So I think what we haven't done a good job of is like creating that playbook within those verticals and just having it be a repeat -- rinse, repeat type process. And I think Ed is much more focused on like, okay, now that we have these wins, 5 of the top 10 retailers, how do we translate that from the top 5 to like the top 20.

Got you. Okay. Okay. That makes sense. With the idea of the CIO becoming a little bit more in control of this category, what does it mean for consolidation opportunities out there? And how prevalent is that currently taking place in the market?

Yes. Yes. So maybe for -- just for clarity, when we talk about consolidation, it doesn't necessarily always mean wall-to-wall. Consolidation can also mean on consolidation within a department. So we're seeing more consolidation, but I don't -- I wouldn't say enough where it's like a material number in our billings. But we recently had a very large win with a large cybersecurity company. And we're -- there's still room to grow even within that account. They consolidated off of 7 different applications. I think they had -- my understanding is they had monday, Airtables, Smartsheet, Workfront, Wrike kind of like spread out all across their company. And I think in this environment where the CIO, when they look across their software spend, and they've identified, hey, we have 4 or 5 vendors essentially kind of doing the same thing but across different departments, how do we consolidate onto that, one? And two, what -- who is the vendor that we want to pick that's going to grow with us, that's flexible enough to grow with us and serve all these different constituents across my organization? And we generally win in these scenarios, primarily because, one, the usability of the product, the cross-functional nature, the Work Graph really helps with that. I think certainly, I think, like scalability, the fact that we can demonstrate we -- our large deployment is 200,000. I think that helps. And then I think like our road map, certainly, like when we demonstrate -- when we talk about our road map to this customer, I think they were really encouraged by what they're seeing.

Okay. So I guess within this example, specifically, I mean is it fair to say the trigger point was a budget question or budget concern that then led to them deciding it made more financial sense to bring it all under one vendor? Or I guess what was it that led to this?

Yes. I think like in this environment, there's certainly a -- maybe not budget but maybe a sprawl that if they didn't address it now, it would only get worse. So maybe it's a combination of those 2 things. Some combination of budget and sprawl, I think. We've gone through it ourselves just as buyers of a lot of software. And even when we ask the team, hey, give me a list of all the SaaS companies across Asana, it's over 100. And you find that, oh, we have 3 marketing e-mail platform, like tools, and like, okay, like how do we rationalize this, like this doesn't scale. So I think it's really out of those -- that type of intention. The budget is one element, but it's really, like, this doesn't make sense. You can't like scale with multiple vendors across the company.

Sure. Sure. I guess in these deals with, I guess, the macro sensitivity that's out there, how much is price becoming a factor in the purchase decision? Or like what is it about Asana that differentiates and maybe insulates a little bit from some of those pricing discussions?

Yes. I mean I think I wouldn't say price is the most important thing, but it's certainly a driver. And generally, like when I look at the RFPs, even for many of the wins that we had this past quarter, price is 1 of 10 things that they look at. I feel like really scalability and security are kind of the things that a lot the buyer, especially in the CIO, care deeply about and then admin controls, like who can see what and how I can deploy certain things. Price is one element, but I feel like price predictability is the piece that they care deeply about because I think many times, they expect a larger footprint over time, especially if they're -- generally, we're -- even in the company that might be 15,000 and we're selling 2,000 or 3,000 seats, they recognize that the cross-functional nature of work, we're going to be adding more seats. So what we've learned from some of these CIOs now is like, hey, you have to give me some predictability around the next tranche of seats we're going to deploy. And they care deeply about that. But I wouldn't say, we're not going to lose a deal on price, but it's certainly -- we feel like we can also hold firm, relatively speaking, to our competitors on price.

Okay. We're getting to about halfway through, and I do want to make sure that there are audience questions that we're able to get to those. So if there's anything, raise your hand, and we'll make sure to get to you here. I guess on the go-to-market side, kind of coming back to the enterprise execution because that still continues to be really strong for Asana. What has underpinned that success at market? How much of it is just more focus on go-to-market to target that versus maybe some of what you're doing on the product side to really capture those large opportunities?

Yes, it's probably a combination of both. I mean we -- I feel like when I -- when we look back at the functionality and many of the launches this past year from the product team, they were really driven from what our customer -- our enterprise customers wanted. So I think that's one. Two, I think it's just a much heavier focus on moving up market for the company. On the lower end of the market, we've diverted a lot of our resources and marketing. Either we cut that spend, or we diverted those resources back on like, hey, we want to move upmarket. And I think that's helped kind of focus the team on helping companies move up and expand. Larger companies move up and upgrade from either premium to business or business to enterprise because when we look at our enterprise segment, even within our business, that's the business that's actually growing north of -- like north of 30% and growing the fastest.

Sure. Sure. So looking at the quarter in particular. I mean the business here, enterprise here, I think, accounted for more than the incremental dollars on the revenue line. How should we be thinking about this? Is it primarily about really strong conversion rates and people are recognizing the value of the tier? Or is there maybe more of a lower market is a little bit tougher and upper market is just performing better in this environment?

Yes. Lower market is less of a focus. So maybe -- yes, maybe it's tougher. It's generally -- when I look at the data, like the unit economics, it's the more high churn -- higher churn, lower unit economics. So we focused much less on that. So I think even if you look at the dollars on our premium SKU, I think it either didn't grow or was -- went backwards a little bit. But I think if you look at the growth of our business and enterprise here, which is also a good proxy for like our enterprise business, that grew north of 30%. And that's been the strength. That's really been the strength of the business.

Okay. Okay. That makes sense. Maybe shifting gears a little bit. You talked earlier about AI and the Work Graph kind of coming together and that really being a driver of the value proposition for AI. So I guess, first of all, where does the AI strategy sit today? And kind of what is the future of Asana and AI together kind of look like?

Yes. So as you know, Dustin is probably one of the earliest investors in many of these AI companies. And he's been thinking about this for a long time and is -- so it's a passion for him. I think we'll share more on Investor Day on October 3, but it's essentially -- it's, I think, like if he was here, I think he would tell you he now thinks he can accelerate the product road map much sooner than he ever thought. And I think that's really exciting. And the value that we can deliver to our customers, much earlier than we have thought. So I think it's going to be critical to everything we do. We recently did a reorg also in our R&D organization and stood up a separate AI team. And the goal is to have this team really quickly launch AI functionality, test it, refine it over time. We'll take them back into the core platform team and then rotate other engineers into this AI. So almost an AI training ground, if you will, for an R&D organization. And we haven't had an R&D reorg this big in many, many years. I think it really shows how deep and how passionate Dustin's thinking about this.

Okay. Interesting. I guess maybe from an engineering perspective, I understand the -- I guess, the AI training ground, if you will. But how much is AI changing your own internal efficiencies? And how much are you able to drive productivity, drive margin out of the business because of how AI could be changing things operationally for Asana?

Yes, it's a great question. I think there are -- different parts of the departments are at different phases, if you will. An example, like our SDR team is already using ChatGPT to craft their the outbound e-mails and customize it. And like something that would have taken them 2 hours, it's taken them like 2 minutes now. And they can quickly get a lot of e-mails and communication out. I think the engineering team is -- I think they're testing like how to write code faster. I think that will help. I think in finance, I think we're still honestly kind of learning our way on how we think it can help. It's kind of weird because in finance, we've been big proponents of outsourcing for a long time, especially in G&A organization, like find a low-cost center. And now there's like this other solution where you may not have to outsource that, actually may be more efficient, and we actually have to rethink, okay, well, if we don't use an outsource provider, how will we actually get this work done? So it remains to be seen, but I think the team is like, we have projects internally for the finance team to even think about that.

And I guess as we think about the efficiencies in the model, I mean, I think you're showing a ton of scale right now and really kind of closing the gap to get towards breakeven. Can you maybe walk us through, like what have been the biggest changes that you've made so far since this bigger push? And how many more levers are there to really pull until you kind of reach that breakeven target?

Yes. So the thing that I think we really -- one of the things -- we made some hard trade-offs about our go-to-market about maybe 1.5 years ago. We were still aggressively pursuing the lower end of the market. So I think we made a hard decision in terms of like, hey, we're going to redeploy those resources. I think we're not going to spend the money or we're going to deploy resources and focus much more on the higher end. And I think you saw that sales and marketing, it might have been in this high 70s before, but now it's probably like maybe 50% or 52% of our revenue. We still have work to do. Obviously, I think given our growth rate, I think -- I don't think anybody is happy. Hopefully, we can reaccelerate, and then we will feel good about the investment. I think R&D and G&A, we still have some room. I think you can expect -- on R&D, I think, over time, I think with AI, I think you'll see more efficiency, and I think you see the same with G&A. But we've made pretty good progress, I would say, this past year on sales and marketing and G&A. And then I would expect kind of the next lever to be R&D contributing more over time.

Okay. Maybe on free cash flow, I mean, really strong in the quarter. I know that there are maybe some onetime things in there that impacted that. So I guess walk us through what happened in 2Q, how we should be thinking about free cash flow through the rest of the year and maybe into the back half.

Yes. I wouldn't call it a onetime thing. I mean we'll certainly have this customer pay us again next year at this time. Our largest customer signed a large deal with us in Q1. It's for one of our -- it's for our largest deployment. We collected that money in Q2. We're having expansion conversations with them. And certainly, it was outsized from a billings perspective for us. But I think if you look at our free cash flow margin and then if you look at our operating margin, you've seen about a 40 points improvement. And I think you can kind of expect that to narrow over time. And we committed again to being free cash flow-positive by the end of next calendar year, and we feel like we're on track to do that.

Okay. I guess I think we already talked a little bit about like some of the changes in the model that we'll need to kind of hit to get there. But as we think about breakeven, what is the path, I guess, beyond that look like? And how do you think about the balance of growth and profitability and kind of how all that will coalesce once you're kind of at a breakeven level?

Yes. I mean I think -- yes, I have to go back and look at our -- the listing. But I think like our gross margins are 90%. We think, over time, R&D will be in the 20s. And then I think it really depends on what we think the growth rate will be. And we think G&A obviously will continue to kind of trend down. But I think it really comes down to the growth rate of how much we invest in sales and marketing. And I think that's the lever that we're going to be working on over the next -- this year, next year and understanding like, hey, what's the longer-term trajectory? But we certainly believe the free cash flow margin that we kind of shared with folks at the direct listing hasn't really changed. Like our idea of where the long-term model is really hasn't changed.

Okay. Okay. That makes sense. Maybe shifting gears a little bit to the competitive environment. I know that consolidation, we have already kind of touched on that, and how much is going on in the marketplace. But as you get into those opportunities where that is happening, how much is the Work Graph -- like a real differentiator, or like how much does that come up in the conversations with those customers? Or I guess what are the other factors that are contributing to Asana becoming the winner there?

Yes. It's interesting you bring this up because I think the Work Graph doesn't come out of our customers' mouth. Like they're not telling us, "Oh, I love the Work Graph." But now with AI, we -- in the EBCs and in the customer conversations, the -- what we're hearing is the term like, oh, that common data model; oh, what the AI is being trained on this common data structure; oh, okay, I get it now. So I think like their understanding of the importance of how the data -- how the models are being developed and trained and what we're using is adding like a new level of sophistication with the customers. The Work Graph by itself doesn't like -- it just manifests itself in different ways. Like the cross-functional nature of how we show the work is being completed for one user to an executive, like those things are really -- especially at the executive level, where they can see the reporting, like those things, like they understand this role, like, oh, this project is only 80% complete, and I can drill down, and I can see what team has done what. They understand that. And I think more and more, they're understanding the Work Graph, especially with kind of like the whole AI backdrop.

Sure. I think one of the things that comes up when we have conversations with investors and, I think, comes up pretty frequently as people think about the space is Microsoft in the collaboration area. I guess how are you viewing how Microsoft kind of fits in with everything they're doing with Teams, with Loop, with other parts of the collaboration stack? I guess how does that maybe change with the relationship with OpenAI and how they work in the AI ecosystem?

Yes, it's a great question. I think we've always -- Microsoft is always out there. I think their -- I think any productivity app, if you don't have somebody and the investor doesn't ask you about Microsoft, then you're not important enough, I guess? I think the one thing for us is people or investors and customers need to understand that we're the coordination layer for the work. And to -- and the surface area is quite broad and quite wide, right? To really do this well, you need to have a common data model. And I think with Office, Loop, Projects, Planner, Teams, there isn't necessarily a common data model in the back end. Now that's not to say Microsoft can't do it. I mean they're incredibly talented. But you have to have a point of view. You have to be organized in the right way as a company. And we feel like this is something Dustin and the team has been thinking about for the last 10 years since the founding in terms of this data model and architecture. We think it's going to give us enough runway. But you just -- who knows? Microsoft has a lot of cash and a lot of engineers. If we feel like we have a product that our customers love, we feel like we have traction with some of the largest enterprise and the most valuable companies in the world and, to a degree, we continue to do that, we think that we can create distance.

Okay. That makes sense there. Maybe going back to some of the product side. And again, we talked about premium in business or business and enterprise doing really well in the market. What tends to be the trigger that leads to somebody going from some of the base functionality in Asana to then go it up to the higher tiers? And how should we think about AI kind of coming in and helping further monetize that?

Yes. I think a lot of -- it's maybe less triggered, more use case. I think when it's much more cross-functional, those users or those teams say, "Oh, I actually need to move to business or enterprise" because they need more projects, they need portfolio, they need resource planning, they want goals. So I think those -- generally, when you're going beyond just your immediate team and you're going into other parts of the organization, you want more different controls and different reporting functionality. And I think that's -- those are generally the triggers. And then from business to enterprise, it's really driven by security and admin controls and single sign-on and things like that.

Okay. How much is those wall-to-wall deployments and the cross-functional deployments happening within the Asana customer base today?

Yes. I mean wall to -- we've had wall-to-wall, but I would say, there -- we generally -- we probably see more wall-to-wall like in the mid-market, like 500-employee type/size company. We're much more -- like in some of these larger enterprise, the wall-to-wall is more around a consolidation within a department, a very large marketing department, yes.

Okay. Got it. Makes sense. We're coming up on about 5 minutes left here. I just want to see if there's any questions in the room. And we can make sure to get those. No? Okay. I do want to ask on the guidance a little bit here, a little bit deeper. How should we be thinking about the various elements of conservatism that's being baked in either from the top line perspective or from some of the margin assumptions you're making here?

Yes. I mean I think the top line, again, I think it's -- we wanted to create enough cover for it to make the necessary changes. And to the degree that some of the changes accelerates and they are a -- they're positive this year, I think there's upside. And to the degree that some of those changes will take longer to manifest, it could create -- I don't expect -- I wouldn't expect any upside then. I think on the bottom line, I think, we've generally had a history, I think, of trying to -- to the degree that we beat, drop that as much as we can to the bottom line. And we've committed to get into free cash flow. And I think you see it in the operating margin, even with this quarter's free cash flow margin being positive. But I think, if you look at the operating margin, it's a pretty substantial, measurable improvement from last year. And I think you can kind of expect that improvement to continue. Maybe not as great. Primarily, we've made such -- so much headway already. But I think you can expect that trend to kind of continue.

Okay. I guess as we think about that, how much of that is coming from, maybe like, slower hiring or reprioritization of hiring? Or I think marketing used to be a pretty big spend category for you. Like what have been the areas where maybe you pulled back some of the spending that have really driven that margin improvement?

It's a combination of probably marketing spend and -- but maybe 2/3 of it would probably be like headcount-related and just refactoring, and just essentially, every headcount is scrutinized in the company at this point.

Okay. And for the new dollars coming in, new ARR, how should we think about the attribution of that from performance marketing versus some of the investments you've made in sales headcount and especially that push up market?

Yes, I would say we have less salespeople today than we did a year ago, primarily because we did the RIF back in November. And we're looking to like RIFs -- looking at sales capacity now for FY '25. So in many ways, I would say it's starting to stabilize on the sales-led and -- the sales-led motion. And then the PLG, even with the even with the cuts that we've made to marketing, I'm actually kind of surprised how well it's held up. And I think that just really speaks to the virality of the product and network effect. And we -- what we've learned is to have the team not necessarily focus on small companies but on teams at larger companies, even if they're just a team of 5.

Okay. Back on sales productivity, I think you laid out a goal to exit the year at kind of like a 20%-ish improvement in sales productivity rates. I guess how is that kind of trending versus your original expectations, especially in some of the framework of the guidance we've had now?

Yes. Yes, I think it was always about the exit. And we didn't feel like we needed to hit that to hit the guidance. I would say in the -- outside of the U.S., we are not fully at 20%, but we're seeing noticeable improvement on productivity across kind of in Europe and Asia Pacific and Japan. I think in the U.S., we have some work to do. We have some work to do. We haven't seen the same progress, and we also have new leadership. So -- but I would expect that we will see progress in a short amount of time.

Okay. Do you still see like, I guess, line of sight to the potential for that? Or is there maybe a different view kind of years by now?

I think it's going to be mixed by geography, maybe not as across the board as I had hoped.

Okay. And then on the new leadership you brought in, new CMO, new CRO and new...

C -- Chief Customer Officer, yes.

What's been the progress outside -- we've already talked about CRO. But what's been the progress of the other 2 new hires since they've come in?

Yes. I mean I think Shannon has been amazing. She's the CMO. And if you all join us for October 3, you'll get to meet her. She'll be there. I think she's much more focused on just how we message and the events that we bring is much more -- we won't do any Dreamforce-level type of event, but just bringing executives on -- bringing executives to the table, focusing much more on the buyer, helping the team move upmarket versus, I would say, like the prior marketing was much more end-user focused. So I would say that's one. And then the CXO is much hyper-focused on customer success and scale, helping customers scale as quickly as possible.

Okay. In the last a few seconds here before we have to go, just what should we be expecting from the analyst event? And what are the highlights here to talk about?

Yes. I mean I think come and meet our customers. I think it's always hard for me to sometimes talk about Asana. And I encourage investors to talk to our customers. I think that will tell you the level of enthusiasm and how much they really enjoy using the product, one. And then two, come and meet the new executive team from Salesforce. All of them actually are from Salesforce. And that we're really committed to moving upmarket and building this muscle.

Okay. Perfect. Well, we'll leave it there. Tim, thank you so much for being here today. And thank everybody in the room as well.

Thank you.

Thanks.