Asana Inc (NYSE: ASAN) shares dipped 14% to $8.68 on Friday following second-quarter results that beat earnings estimates but featured softer-than-expected third-quarter guidance.

Despite the near-term sell-off, several Wall Street analysts raised their price targets for the collaboration software company, citing strong core business metrics and improving retention trends.

Q2 Financial Highlights

Asana reported second-quarter fiscal 2027 revenue of $216.43 million, surpassing analyst estimates of $214.12 million and growing 10% year over year. Adjusted earnings per share came in at 10 cents, beating the nine-cent consensus.

Dan Rogers, CEO of Asana, stated that the core business continues to strengthen with improving retention and accelerating growth in its upmarket motion. He noted broad-based momentum across industries and geographies, particularly in the technology sector which returned to year-over-year growth for a second consecutive quarter.

Guidance Misses Expectations

The positive quarterly results were overshadowed by a cautious outlook for the third quarter. Asana guided for third-quarter revenue between $217 million and $219 million, missing the estimate of $218.16 million. Adjusted earnings guidance for the quarter was set at eight cents per share, falling short of the nine-cent expectation.

For the full year, the company raised its revenue guidance to a range of $858.5 million to $863.5 million, up from estimates of $860.90 million. It reaffirmed its full-year adjusted earnings outlook of 37 cents per share, which was in line with market estimates.

Analyst Reactions

Following the earnings announcement, multiple analysts maintained their neutral or sector-perform ratings but increased their price targets:

• Piper Sandler analyst Billy Fitzsimmons raised the price target from $7 to $9.
• UBS analyst Taylor McGinnis raised the price target from $8 to $10.
• RBC Capital analyst Rishi Jaluria raised the price target from $8 to $9.5.
• Baird analyst Rob Oliver raised the price target from $9 to $10.
• DA Davidson analyst Lucky Schreiner raised the price target from $8 to $9.

What the Numbers Show

The divergence between the strong Q2 execution and the weak Q3 guidance suggests near-term headwinds despite management's confidence in long-term retention trends. While the company raised its full-year revenue view, the specific miss in the immediate next quarter's top-line and bottom-line forecasts indicates potential seasonality or demand uncertainty in the upcoming period. Investors penalized the stock heavily for this near-term visibility gap, as the Q3 EPS guidance miss was more significant proportionally than the revenue guidance miss.

AI Momentum and Product Strategy

AI products, specifically AI Studio and AI Teammates, contributed significantly to growth, driving 25% of net new annual recurring revenue (ARR), up from 17% last quarter and above the 15% full-year target. More than 25% of customers spending over $100,000 have now purchased these AI products. This adoption is driving improved net retention rates, with overall net retention improving to 97% and core customer net retention reaching 98%.

Management highlighted the transition to consumption-based AI pricing through the new Agentic Work Management (AWM) platform, launching in mid-September. This shift is expected to impact revenue timing but not overall growth potential. The transition creates a $1.2 million revenue timing impact in the second half, split roughly between Q3 and Q4, as subscription value shifts from ratable recognition to consumption-based recognition.

Operational Headwinds

Chief Financial Officer Aziz Megji identified two primary headwinds affecting the guidance:

• PLG Headwind: Lower product-led growth bookings continue to compound, creating approximately 100 basis points of pressure on revenue growth in Q3, increasing to 150 basis points in Q4.
• Packaging Transition: The move to AWM includes a base level of AI requests without changing tier pricing, seeding usage deliberately to drive adoption. This creates approximately 150 basis points of gross margin pressure across Q3 and Q4.

Despite these headwinds, remaining performance obligations (RPO) grew 10% year over year to $522 million. Excluding a large multi-year contract from the prior year comparison, current RPO growth accelerated to approximately 11% from 8% last quarter.

Piper Sandler analyst Billy Fitzsimmons raised the price target on Asana (NYSE: ASAN) from $7 to $9.

The firm maintained its Neutral rating on the work management platform company.

Analyst Action

Piper Sandler updated its valuation for Asana, citing no change in its overall stance on the stock. The price target increase reflects the analyst's current assessment of the company's prospects.

The adjustment indicates a modest upward revision in the fair value estimate, though the Neutral rating suggests the stock is currently viewed as fairly valued or lacking a clear directional bias for investors.