Asana, the hot productivity software startup valued at $1.5 billion, just filed to go public via a direct listing

• Asana, the productivity startup founded by Facebook cofounder Dustin Moskovitz, filed its paperwork for a direct listing on Monday.
• Asana plans to list on the New York Stock Exchange.
• Asana's revenue grew 82% between fiscal year 2019 and fiscal year 2020, but the company has lost money every year since its founding in 2008.
• It was last valued at $1.5 billion in November 2018, and has raised $213.5 million to date according to Pitchbook.

Asana, a buzzy workplace collaboration startup created by one of Facebook's cofounders more than a decade ago, filed paperwork Monday to become a publicly traded company through the novel "direct listing" process.

The move will make Asana only the third major tech company to go public through a direct listing, following in the footsteps of Spotify and Slack. And it means that Asana, which has lost money every year since its founding in 2008, will not raise any capital in the move.

The San Francisco-based company, founded by Facebook cofounder Dustin Moscovitz, lost $119 million in its most recent fiscal year, more than double its $50.9 million net loss in the prior year, according to Asana's S-1 filing. Revenue in fiscal 2020 grew roughly 82% from the previous year, to $142.6 million.

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Like many recent tech startups seeking to inspire employees and investors, Asana describes its business in grandiose terms, declaring itself on a "mission to help humanity thrive by enabling the world's teams to work together effortlessly."

"We left Facebook and created Asana to address our own pain: We love working on big ideas, but we loathe the annoying busywork required by their execution," Moskovitz and Asana cofounder Justin Rosenstein wrote in a "letter" included in the company's S-1 filing Monday.

The company describes its namesake product, which has free and paid versions, as a "system of record for work" that allows employees to collaborate and keep track of different projects.

Asana said it has more than 75,000 paying customers and more than 1.2 million paid users as of January 31, 2020.

Asana plans to list its stock on the New York Stock Exchange, which is also were Slack and Spotify hosted their direct listings last year. Moskovitz has significant control of the company through a dual stock structure that gives him special shares with 10 votes per share.

A look at Asana's financials

Monday's S-1 filing is the first official look at Asana's financials, after the company announced in February that it had confidentially filed an S-1 with the SEC. It was last valued at $1.5 billion in November 2018, and has raised $213.5 million to date according to Pitchbook. However, Asana has been trading on the secondary markets for around $5 billion, according to a recent report from Bloomberg.

In its fiscal 2020 year, 41% of the company's revenue came from customers outside the US. Asana has also been focused on targeting larger customers. Its enterprise and business level subscriptions for large businesses made up 42% of its revenue during the first quarter of FY 2020, an huge leap from the 11% it made up in the first quarter of FY 2019.

Asana uses a freemium model like Dropbox, Slack, and Zoom, so people can use a slimmed down version of the product for free. Although Asana said it has increased the conversion rate of free to paid users, it does not expect to be profitable in the near feature. It says it has "incurred net losses in each fiscal year since our founding," and as of April 30, 2020, had an "accumulated deficit of $365.6 million."

Asana says its large losses reflect "the significant investments we made to develop and commercialize our platform, serve our existing customers, and broaden our customer base."

Asana has a dual class share structure, similar to Google, and it gives more voting power to early investors and employees who joined when the company was getting started. Under that structure, Moskovitz has the most voting power of all Asana's shareholders at 39%. His cofounder Justin Rosenstein has 17.5% voting power. It's not clear how many shares each is planning to sell. Notably though, Moskowitz's total compensation for FY 2020 was $1.

"This structure results in a large portion of voting power being held by the founders and the two of us commit to managing this power the way we always have: by listening to others and engaging sincerely with their perspectives," Moskovitz and Rosenstein wrote in the founder letter included in the paperwork.

By going public through a direct listing, Asana will not raise any capital. Instead, existing shareholders, such as employees and VC investors, will begin selling their shares directly to the public when the stock begins trading. Asana isn't the only company to pursue a direct listing this year, over the more traditional IPO route. Palantir is also planning to go that route.

Growing the company

Both Moskovitz and Rosenstein worked at Facebook before leaving to found Asana in 2008. In an interview with Business Insider in 2018, Moskovitz said the enterprise tech business has a lot more of a "straightforward business model where you create something valuable for companies and they pay you for it," than a consumer tech company like Facebook.

As Asana prepares to go public, its also looking at taking its product to the next level. It plans to go from a tool that allows people to get clarity about what their colleagues are working on, to becoming a full "navigation system" for organizations. "When details and data about work are linked to and tracked in our database, Asana can serve as a powerful, intelligent tool in service of individuals, teams, and organizations—from optimizing how work should be done to predicting bottlenecks and suggesting ways to alleviate them," Moskovitz and Rosenstein wrote.

Companies entering the public markets via direct listings don't hire banks as underwriters, but Asana said Morgan Stanley, J.P. Morgan, Credit Suisse, and Jefferies are serving as its financial advisors.

Asana did not say what its ticker symbol would be on the NYSE.

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