Asana, Inc. Q3 FY2021 Earnings Call

Good afternoon, and thank you for joining us on today's conference call to discuss the financial results for Asana's third quarter fiscal year 2021. With me on today's call are Dustin Moskovitz, Asana's Co-Founder and CEO; Tim Wan, the company's Chief Financial Officer; and Chris Farinacci, the company's Chief Operating Officer and Head of Business. Today's call will include forward-looking statements pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding our financial outlook, market condition and growth opportunities. Forward-looking statements involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. Forward-looking statements represent our management's beliefs and assumptions only as of the date made. Information on factors that could affect the company's financial results is included in its filings with the SEC from time to time, including the section titled Risk Factors in the prospectus filed by the company in connection with its direct listing. 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 is available in our earnings release, which is posted on our Investor Relations web page at investors.asana.com.

Thanks, Catherine. Welcome, everybody, and good afternoon. We had an excellent first quarter as a publicly traded company. And as you can see from the results, our business is fundamentally strong. In Q3, we added approximately 7,000 net new customers and reported revenue of $58.9 million, up 55% year-over-year. In addition, the number of customers spending $5,000 or more on an annualized basis was up 58% year-over-year, and revenue growth from those customers was up 80% year-over-year. Last quarter, we mentioned that we saw short-term headwinds from COVID and long-term tailwinds. Now we see that the short-term headwinds have diminished. Our churn rates have reverted to pre-COVID levels and markedly improved from their peak in April. Beyond COVID, we're seeing promising signs of continued durable growth in these 3 trends: one, acceleration in customer additions; two, faster deployments in some of our existing customers; and three, some of our largest enterprise expansions to date. Success we've experienced in Q3 marks a moment in time. It's grown from years of investment in our culture, our product, our strategy. We're a mission-critical platform that enables the world's teams to work together effortlessly. In a world where there's a fire hose of information, proliferation of collaboration tools, and an increasingly distributed work environment, it's critical to have clarity about what's most important and what each team member should focus their attention on. The pandemic and work from home has accelerated this need. And in fact, the cooperation market is expected to be a $32 billion market by 2023 according to IDC. We believe the world's 1.25 billion global information workers would benefit from a platform like Asana, and we've penetrated less than 3% of the employees at our own customer base. This is a relatively new software category. Let me explain how we view the landscape and where Asana fits in. Effective team collaboration requires the 3 seats: content, which includes cloud storage and file sharing; communication, which includes chat and video conferencing; and coordination, which is where Asana is focused. Teams have invested heavily in technology for the first 2. But in most cases, they haven't invested in the Asana layer, the coordination layer. That's our third seat. Coordination is about clearly answering the question of who is doing what by when. Historically, teams have had to resort to sticky notes, emails, spreadsheets, and status meetings to coordinate work. And with Asana, they have a better solution. Companies work best when everyone in the organization has clarity on the company's mission, its objectives, the projects and workflows needed to achieve those objectives and who's responsible for each individual task. This enables every team member to achieve focus and flow and have clarity about how their work contributes to the organization's mission. When there's clarity, teams spend less time coordinating work, more time actually doing work and, quite simply, are more productive. Asana solves the problem of team coordination and gives teams clarity. The Asana work graph is the data model that makes this team coordination possible. It enables a complete, fully connected, accurate, and up-to-date map to work in your organization. The Asana work graph represents all of the units of work, like tasks, ideas, goals, agenda items, information about that work with relevant conversations, files, and status information, and how it all fits together, but importantly, who's responsible for each piece. It's a living system of clarity for work that emerges in real-time and expresses a team's past state, present status, and future plan. This is one of our biggest competitive differentiators so I'm going to spend a few minutes on this call and on the next couple of earnings calls talking about different aspects of the Asana work graph and the customer benefits it enables. Today, let's double-click on multi-homing, which is a feature of the Asana work graph that enables teams to manage complex work in a simple and intuitive way. Multi-homing gives people the ability to host a single task in multiple projects at the same time. This feature is unique to Asana, and it is what allows Asana to serve as a single source of truth for customers working across projects, processes, and functions. For example, we used multi-homing to prepare for this earnings call. We created an Asana task to finalize approvals for the earnings call script, and that task had all the pertinent details for the call and served as our single source of truth. The task was simultaneously in several different projects, putting Investor Relations, communications, legal review, and in my personal My Tasks. This flexibility allows each of those constituents to manage the work within their normal context and workflows without needing to make their own individual copy of the task. And each time a team member multi-homes a task, a cycle of chaos is avoided. Without multi-homing, one of two things happens: either you miss a unit of work and one of its relevant contents and work falls through the cracks, or teams waste time in email threads and meetings just to communicate status and reconcile changes. Multi-homing gives customers confidence that what they're seeing is the single source of truth across all teams. You might think this is too subtle and unchecked for customers to pick up on, but this is one of the aha moments that customers rave about. For example, BoxMedia says, 'Before Asana, it was like the wild west in BoxMedia. Information didn't flow smoothly between teams and key details and deadlines were lost in email and chat. Now with Asana, we can add a task like a legal review for a client campaign to multiple projects with just a click. This way, the legal team, for example, doesn't have to sift through all the other campaign work. They're able to consolidate all of their review tasks in one place. And when they complete the review, the update is automatically synced across all of the projects.' Multi-homing is so powerful that it's used by 97% of our customers that spend $5,000 or more on an annualized basis, and the volume is remarkable. Customers have multi-homed hundreds of millions of Asana tasks, and this is just one of the unique capabilities enabled by the Asana work graph. From an R&D perspective, we're investing aggressively in the Asana work graph and the features it enables. This year, we released more than 130 new features, including approvals, status, goals, dashboards, and platform integration with Zoom, Jira, Slack, Microsoft Teams, Tableau, Power BI, and more. We're also moving quickly towards our product vision of becoming the navigation system for organizations, which we described at our Future of Asana event last quarter. Some of those product investment areas include these areas. First, the Asana work graph, visualizations, and reporting. This will give teams real-time data and insights across their organization. Second, the workflow store and builder. This will democratize workflow creation and automation and enable best practice sharing across teams and organizations. And next, goals. We're extending our goals product to allow organizations to manage all their org, team, and individual goals for every employee in the company. This enables customers to map their work graph top to bottom, aligning work from the atomic level of detailed tasks all the way up to the highest-level objectives of the organization. In addition, two weeks ago, we previewed some of the themes around our enterprise platform. We're building out even more enterprise platform capabilities, including enhanced admin controls, permissions, licensing, security, and integration to serve the world's largest companies. Stay tuned for new product announcements in these areas and more over the next several quarters. Now I'm going to turn it over to Chris to talk about Q3 from an operational perspective and share more details on how our customers are using Asana.

Thanks, Dustin. We're very excited about our performance in Q3 with top-line revenue growth of 55% year-over-year, led by revenue from customers with over $5,000 in annual spend, which was up 80% year-over-year. In Q3, we again saw notable improvements across many of our key metrics, including record top-of-funnel traffic and sign-ups, accelerated incremental paying customers, and expanding deal sizes. Let me discuss each in a little more detail. As you might remember from Q2, our top-of-funnel volume and sign-ups was elevated due to work from home, and it not only remained elevated but even expanded in Q3. We also accelerated the number of new paying customers in the quarter, adding approximately 7,000 to reach over 89,000 total paying customers to date. The increase in new paying customers in Q3 was almost as large as the volume in both Q1 and Q2 combined. Third, we saw a move to bigger deals across the board. In particular, we saw traction in large enterprises, and our large deal trends reflected this. We saw the number of customers expanding more than $50,000 with us annually increase 104% year-over-year, with the corresponding revenue contribution more than doubling. And we saw very strong growth in very large enterprises in Q3. We are continuing to invest in our enterprise offering. Last month, we unveiled new and expanded integrations with Microsoft Teams, Slack, Jira, and Zoom video, reinforcing our unique role in enabling enterprise work orchestration. In Q3, we saw customer wins broadly across industry verticals. Let me talk about a few notable wins. Asurion, a leading provider of electronic device insurance with 300 million customers worldwide, has been an Asana customer for over 2 years. In Q3, Asurion upgraded to our enterprise solution for our enterprise-grade security and strong integration capabilities and expanded to more departments across the organization, including HR, the B2B revenue division, retail, and their IT architecture team. VSP, a leading provider of access to eye care and eyewear for their 94 million members around the world, chose Asana as their enterprise solution, bringing together marketing teams from 5 lines of business into a single platform. With Asana, what used to be a manual process combining email, SharePoint, spreadsheets, and Jira will now be automated. VSP chose Asana because they needed an organizational-wide solution that could replace email with an automated approval process, be customized for the business workflows, and provide strategic visibility across the organization for leadership. Zoom Video, a leading provider of video-first unified communications, began using Asana in mid-2019 to help manage their work. In Q3, Zoom expanded their use of Asana to more teams across the business. Now they can see project progress in real time and ensure responsibilities are clear, which is critical when you're moving as fast as Zoom is to serve their growing customer base. Education everywhere has been hit hard by COVID-19. The bigger the school, the harder it can be to stay aligned and responsive to change. At the University of California, Santa Cruz, Asana is becoming the backbone for a number of administrative units, supporting their teleworking experience and empowering employees to organize their work, delegate responsibility, and drive accountability. For example, the Office of Research is using Asana to run some of its COVID-19 testing operations. The procurement department is actioning inbound requests and approvals in Asana to streamline the process with other departments. I also want to highlight that 4 of our biggest customer expansions in the quarter were with Fortune 50 companies, including expanding one of our largest customers to tens of thousands of seats. So as you can see, while our enterprise motion is still in its early stages, we are clearly starting to see our strategy bear fruit. We are helping some of the most visionary companies in both traditional and disruptive industries and expanding rapidly around the world. Our growth levers remain intact, and we are progressing successfully, acquiring new customers, customer expansion, cross-company use cases, and product innovation. In September, I shared with you some of the opportunities in front of us to drive future growth. I'd like to revisit these growth drivers through the lens of what we saw in Q3. I'll start with new customer acquisition. We remain focused on acquiring new customers through word of mouth, marketing, and our self-serve product. This is a fast-growing emerging category, with the vast majority of global information workers without work management tools and suffering from a lack of clarity. For new teams, Asana is fundamentally a broad horizontal product. We see customer use cases within and across virtually all functions and departments, often including collaboration externally with suppliers, partners, and customers. As you heard from Dustin, in Q3, we added approximately 7,000 net new customers. We continue to see a large expansion opportunity in our existing base of now over 89,000 paying customers. Our direct sales team is armed with department-specific solutions for our customers. We continue to see strong traction in marketing and creative, sales and account management, and strategy and operations teams, as well as in product and design and HR and IT teams. We believe we have the right strategy, the best solutions, and now is the time to ramp up our sales capabilities and invest in marketing to take advantage of the $32 billion market opportunity. Third, we see a large incremental opportunity to support company-wide use cases. Starting with our recent launch of integrated goals and OKR management, as we power the Asana work graph within companies, Asana is uniquely suited to empower company-wide clarity and engagement use cases. Internationally, we are expanding both our footprint and our product reach. In Q3, we opened an office in Singapore to expand our footprint in Asia and ultimately to be closer to our fast-growing ASEAN customer base. We will also be announcing support for more languages and localizations in the coming months. And finally, we continue to innovate and expand our market-leading offering to bring the Asana solution to more teams and increasingly larger enterprises and organizations. Our product and go-to-market strategies work hand-in-hand to meet the increasing customer demand for work management solutions and drive our long-term growth.

Thanks, Chris, and thank you to everyone for joining our call today. I know that earnings season can be an endurance test, and we appreciate your time and support. It was a great quarter across the board. Revenue in Q3 was $58.9 million, up 55% year-over-year and up 13% quarter-over-quarter, led by 80% year-over-year growth from our customers spending $5,000 and over. We added approximately 7,000 net new paying customers in the quarter and now have over 89,000 paying customers. We now have 8,938 customers spending $5,000 or more with us on an annualized basis, up 58% year-over-year. And we saw even stronger growth in our larger customers. We now have 318 customers spending $50,000 or more with us on an annualized basis, up 104% year-over-year. Subscriptions of $5,000 and over on an annualized basis represented 59% of our revenues in Q3 compared to 51% of our revenue in the year-ago quarter. Please note, this represents all customers $5,000 and over, including customers over $50,000. In Q3, our overall dollar-based net retention rate was again over 115%, consistent with Q2. As a reminder, our dollar-based net retention rate is a trailing 4-quarter average calculation. For customers spending $5,000 or more with us on an annualized basis, the dollar-based net retention rate was over 125%, also consistent with Q2. And for customers spending $50,000 or more with us on an annualized basis, it was over 140%, again, consistent with Q2. Before turning 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 88%, up from 87% in Q2 and 86% in the year-ago quarter. We're proud of our best-in-class software gross margins, driven primarily by our leading architecture. R&D was $28.2 million or 48% of revenue. We have 5 broad areas of focus, and we are investing heavily to continue innovating at a high velocity. Sales and marketing was $45.6 million or 77% of revenue. We have nearly doubled our sales team over the last year because we are confident as demand for work management continues to move mainstream. G&A was $15.1 million or 26% of revenue, reflecting both increased public company costs as well as building out our infrastructure for scale. As a result, total non-GAAP operating loss was $37.3 million. Operating loss margin came in at 63%. Non-GAAP net loss was $38.3 million, and non-GAAP loss per share was $0.34. Total cash and marketable securities balances at the end of Q3 were approximately $424 million. Free cash flow is defined as net cash from operating activities less cash used for property and equipment and capitalized software costs, excluding nonrecurring items such as the direct listing fees and expenses and the build-out of our San Francisco office. In Q3, free cash flow was negative $19.5 million. Our total Q3 deferred revenue was $90.1 million, up 56% year-over-year and up 20% sequentially. As you will see on our balance sheet, $88.9 million of deferred revenue was in current liabilities, while $1.3 million, which represents long-term deferred, was included in other liabilities. The $15.1 million incremental deferred revenue that we added from Q2 to Q3 was driven by a variety of factors, including strong sales execution, larger deals, and net new customer adds. In addition, in Q3 of last year, we had a price change and allowed customers to lock in existing prices and renew earlier, which elevated renewals and deferred revenue in Q3. So as you think about deferred revenue in Q4, it's important to note that we expect the usual seasonal trends associated with the holidays and fewer working days. Please note, we consider revenue growth to be the best leading indicator for the health of our business. And while we do recognize that investors look at other metrics such as RPO, deferred revenue, and calculated billings, we do not consider these metrics to be good leading indicators for our business trends. With our bottoms-up model, we engage new users with a low friction entry point package, and a material portion of our revenue base is on monthly contracts. Looking ahead to Q4, we are raising guidance for the next quarter and for the year. For the fourth quarter of fiscal year 2021, we expect the following: revenue of $62 million to $63 million, representing 43% to 45% year-over-year growth; we expect non-GAAP loss from operations of $42.5 million to $39.5 million; and non-GAAP net loss per share of $0.27 to $0.25, assuming basic and diluted weighted average shares outstanding of approximately 158 million. For the full fiscal year 2021, we now expect the following: revenue of $220.6 to $221.6 million, representing 55% year-over-year growth; we expect non-GAAP operating loss of $130.8 million to $127.8 million; and non-GAAP net loss per share of $1.24 to $1.21, assuming basic and diluted weighted average shares outstanding of approximately 106 million. Longer term, we believe that we can execute on our growth strategy and that our best-in-class gross margins will provide the leverage and flexibility to invest into the large market opportunity. We believe this investment will provide durable and sustainable long-term growth.

And operator, while you're queuing the questions, I just wanted to jump in and first of all, thank everybody for joining us today. I'm going to try to keep the Q&A at a good pace.

Congratulations on a great report, especially being your first as a public company. It's wonderful to see. My first question is for you, Dustin. Considering the discussions you're having with C-level executives as organizations adapt to a new normal workplace, can you share the nature of those conversations? You mentioned a 3% penetration rate in your existing customer base on a user basis. Where do you see that heading in the next couple of years? What do you believe is the main strategy for unlocking that potential? How do you approach this?

Yes. I'll start this off, and then I think Chris can probably add some more color. But I would just point out, our customers are in a number of different positions. It depends a bit which industry they're in, in terms of whether they're being aggressive about expansion and hiring or more conservative. But generally, we're seeing the same sort of positive reaction we've seen to existing deployments in prior years as well. Asana was built to provide a great customer experience and facilitate success for initial teams, which helps spread the word to their peers and other teams and departments. That's the prevailing sentiment we hear from C-level executives: they're hearing from their teams that they’re getting a lot of value, and they’d like to expand that value proposition to other parts of the company. In terms of the 3% penetration, it's really just a reflection of the massive opportunity that’s left in a lot of our customers. In terms of where it goes in the long run, we obviously hope to achieve full penetration at 100%. I don’t know what pace that will be. Again, it varies with different customers and depends on the size. In some smaller enterprises, that figure may be a much higher ratio of employees and may represent entire departments or divisions. In very, very large organizations like the Fortune 5, it may be a smaller figure and might take us more years to achieve full coverage. Anything you’d like to add, Chris?

Yes, sure. So maybe I can add some value to your question just in terms of where we're seeing that value and that traction in those conversations. The conversations we're having are consistent with discussions we’ve had in the past regarding the business imperative for real-time clarity, alignment, and accountability in companies. This need has become clearer in this globally diverse environment over the last couple of quarters. While we're seeing broad traction, it is particularly strong in marketing and creative teams, sales/account management, and strategy/operation teams, where we already have departmental solutions. Additionally, there’s strong traction in adjacent areas like product design, HR, and IT. We’re also seeing traction across various industry verticals, especially in Q3 with new expansion examples such as Asurion, VSP in healthcare, Zoom in tech, and Santa Cruz in education, just to highlight the diversity of demand.

Yes. I think there's a couple of ways you can look at it. I think Dustin kind of alluded to this in the prepared remarks, we are definitely seeing churn diminish versus their peak back in the tail end of Q1 and part of Q2. I think we’re also being prudent, recognizing that we are in a world where there's a second surge. We do think that the net expansion rate is a 4-quarter rolling average, so you can kind of expect some of the cohorts to work their way through over the next couple of quarters. But the customers that are staying and thriving and expanding with us even in a pandemic likely will continue to strengthen over time. So we do think we’ll come out of this with a much stronger customer base over time, but there’s probably still a couple of quarters to work through the cohorts.

Yes. I can add some color. I think you had asked specifically about SMBs. So just building on what Tim said, although we don't break out our business by SMBs, I can tell you that the revenue growth rate for customers spending less than $5,000 annually accelerated in Q3 versus Q2. But broadly, I’d emphasize what Tim said regarding the strength in the quarter, which was primarily driven by secular trends and the growing business imperative for work management that have been ongoing. I think some of the recovery over time can add an additive layer, but it's the secular trends driving the business.

One for Dustin and a follow-up for Tim. Dustin, I’d love to get your view on this whole Salesforce-Slack deal. I appreciate that Asana is agnostic to all the video messaging channels. You've announced several new integrations. But that said, what is your view on Salesforce-Slack? And how may that or may that not impact your business going forward?

Yes, great. Thanks for the question. First of all, I just want to congratulate both companies. This is a huge moment for Stewart and Marc and their entire teams. Just to reiterate how we see the overall collaboration landscape: there are really about 3 big categories. The first is content, which includes cloud storage and file sharing; the second is communication, which includes chat and video conferencing; and the third is coordination, which is where Asana is focused. Coordination is about clearly answering the question of who’s doing what by when. From our point of view regarding coordination, it's essential that we integrate well with the products in the other 2 categories. So Slack, of course, is part of communications and it’s one of our best and most important integrations. In fact, it's something I use every day myself. We also have a great integration with Salesforce's CRM product. On top of that, we're mutual customers. We use Salesforce's CRM, and they use Asana, the same with Slack. We're looking forward to deepening our long-standing relationship with the combined entity to build the future of work, which strengthens us going forward.

Great question. I would say there’s not any one thing I can point to that drove that sequential jump. We have a bottoms-up business. I did talk a little about seasonality in Q3 related to billings and deferred revenue. One of the things we did last year was have a price change in Q3, allowing customers to lock in prices and renew early, so there's kind of this natural elevated deferred revenue or renewal cycle in Q3. So I’d suggest that you take a more muted approach to Q4 deferred. The secular tailwinds in the strength of the business really drove billings and deferred revenue growth.

And again, guys, congrats on the first public quarter and great results. I have a couple of questions. First, on the customer additions—clearly, a very strong number here. But can you tell us how much of this was catch-up from the previous 2 quarters? I would assume some customers delayed decisions due to COVID and perhaps felt more comfortable now. So I'm trying to split true business activity versus catch-up activity here. And then perhaps a question to Chris. You talked about bigger deals in the quarter, and you mentioned corporate functions where you’re seeing a lot of traction, a lot of marketing, and creative. Can you help me understand how much of this larger deal activity reflects more than one corporate function constituency adopting you right off the bat versus a single one that you focus on but is just making a bigger first step?

Sure. In terms of our net customer adds, we definitely saw strength in our top of funnel in both Q2 and Q3 during the COVID period. What's really changed is the decreasing churn rate we’re seeing. Many customers impacted by COVID either churned or paused their subscription at that time.

Sure. To answer your question, I just want to remind everyone about our hybrid self-serve and direct sales business model, which correlates to how customers adopt our product over time. Direct sales is built on top of that self-serve business, which maps to acquiring small free and paid teams in companies of all sizes. That sales-assisted motion corresponds to land and expand. So land typically establishes a champion or deploys a critical workflow with one or two teams, and then expansion typically engages IT and decision-makers to broaden usage. We don’t specifically break out revenue versus land versus expand, but I can tell you expansion almost always involves cross-functionality.

Tim, no one is going to have an endurance problem on our side if you keep putting up 55% growth. So I guess, regarding the digital component at 60% of your revenue, many are asking why such a big need for massive investments. Can you put this in the context of how you’re building the direct sales force and then other components to anticipate this back to more natural growth balance with profitability?

Sure. Why don't I start, and then Chris can add later. Our main focus is on acquiring customers—landing with those customers, helping them be successful and having them expand over time. We have 88% gross margins, which gives us the flexibility to build a great business. What we’ve seen with customers that are spending over $5,000 or $50,000 with us is that they not only naturally expand in seats, but they also expand moving up the tiers from premium to business and from business to enterprise. So growing the business is about landing with customers, and the category is relatively new with 1.2 billion knowledge workers. We're barely penetrating that opportunity. So it's about investing in this opportunity to drive growth and create leverage in the long run.

I don’t have much to add here. I’ll repeat that our hybrid self-serve/direct sales business model is intentional. Given the market opportunity, we’re investing in growth for both. Land grab mode has triggered customer acquisition, with most of the world lacking solutions. For future growth, we’re focused on landing new free/paid teams in all sizes of companies, investing in marketing and our self-serve business.

Sorry about that. I was on mute. Congratulations on a very strong quarter. Maybe a high-level question for me. As you look at the world settling into this new normal in 2021, how do you think Asana fits into the new patterns of collaboration that emerge as a result?

I think you’re referring to trends toward more distributed work. Before COVID, there was already a growing business imperative for increased clarity and alignment. Clarity is challenging for teams to achieve, even when in an office environment, and is particularly difficult with remote work. Going forward, we’ll see some companies return to the office, others continue remote work, and everything in between. Asana has a vital role in driving clarity for teams throughout this spectrum, and we’re happy to help customers.

In terms of new customer acquisition, we saw very impressive net additions this quarter. There’s also a combination of the improved logo churn rate and the success from our self-serve acquisition strategy.

I'll add my congrats on a very solid start. Tim, can you help us to try to understand how much of the $15 million deferred revenue increase would you say was unusual or seasonal relating to that price increase? And I understand you don't guide to it, but how does deferred revenue normally behave in a Q4?

If we look at deferred revenue before this Q3, it has generally grown anywhere between $5 million and $10 million on a quarter-over-quarter basis. However, in Q4, it’s usually a bit more muted, primarily because of the holidays in November and December. You can expect that usual seasonal behavior in growth rate from quarter to quarter.

I don’t think we typically break those out from a metrics perspective, but I can say that the revenue growth was driven by both seat expansion and potential ARPU growth. We’re keen on both aspects, but I cannot provide a precise forecast on their exact mix.

Regarding the enterprise business, it's still in its early stages but we're encouraged by what we see. Approximately two-thirds of the Fortune 500 are free or paid customers. In Q3, four of our biggest customer expansions were with Fortune 50 companies, but we’re still only 3% penetrated in the addressable employee base. So although we see strong traction, it’s early innings.

Really nice quarter. I'm curious—what portion of your bookings this quarter came from direct sales versus self-service? And how do you expect that to trend going forward?

I would say the mix hasn’t changed dramatically. Our business is generally in a 60%-40% range, where 60% is self-serve and 40% is sales-assisted. The sales-assisted portion has been nudging up over time.

Indeed, that’s correct. The enterprise market is still highly fragmented, and much of it remains untapped. We're utilizing this opportunity to deepen our marketing investments, help expand our self-serve business, and grow the sales-assisted side as well.

Just one to close it off, I guess, would be the integrations you've made with the communication layer like Slack, Zoom, and others. Can you share how many users have started using Asana with those tools?

I don’t think we have a specific metric we can share off the top of my head, but I do know that Slack is our most used integration, and the communications integrations as a category are very popular. It’s common to use work management side by side with those integrations.

As of now, Slack is the most popular integration, followed by Google, Microsoft, and Zoom.

Great. Thank you very much. And thank you, everyone, for joining us again today. As always, please feel free to reach out if you have any follow-up questions, and we are looking forward to talking to you again soon. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.