What happened
Shares of Asana (NYSE: ASAN) lost substantial ground in the last week of trading. The work-management software company's stock price closed out the period down 23.8% compared to the previous Friday's market close, according to data from S&P Global Market Intelligence.
Asana published fourth-quarter and full-year results on March 9, and the stock lost ground following the release despite sales and earnings coming in ahead of the market's expectations. The company posted a non-GAAP (adjusted) loss per share of $0.25 on revenue of $111.9 million. Meanwhile, the average analyst estimate had called for an adjusted loss per share of $0.28 on revenue of $105.2 million.
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So what
Asana's sales climbed 64% year over year in the fourth quarter, and the performance pushed its full-year sales to $378.4 million, up 67% on an annual basis. The company closed out the year with an adjusted loss per share of $0.92.
Following its fourth-quarter earnings release, Asana joined the ranks of software stocks that have recently posted better-then-expected quarterly performance and still seen big stock sell-offs. The market has been becoming more risk-averse and moving away from companies that aren't posting substantial profits. Less-than-stellar forward guidance has been causing sell-offs in the software industry lately, and Asana's targets prompted investors to move out of the stock.
Now what
In conjunction with its fourth-quarter earnings release, Asana issued guidance for the current first-quarter and full-year periods. For Q1, the company is guiding for sales to come in between $114.5 million and $115.5 million, representing roughly 50% year-over-year growth at the midpoint of the target. The company expects full-year sales to come in between $527 million and $531 million, suggesting annual growth of roughly 39.5% at the midpoint of the target. Meanwhile, the average analyst estimate had called for Q1 sales of $110.9 million and full-year sales of $506 million prior to the publication of the company's earnings report.
Unfortunately, the company's earnings guidance appears to have underwhelmed the market. Management expects the business to post an adjusted loss between $0.35 per share and $0.36 per share in the first quarter. Meanwhile, the previous average analyst estimate had targeted an adjusted loss per share of $0.27.
Asana now has a market capitalization of roughly $6.6 billion and is valued at approximately 12.5 times this year's expected sales.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool owns and recommends Asana, Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
