Mid-cap Software company Asana is down -10.3% during this morning's trading session, while the S&P 500 moved -0.7%. With last year's reported gross margins at -70.1%, you might be wondering if today's drop is an opportunity to pick up shares of a profitable company at a discount.
Gross margins give insight into the basic economics of the company' product line and its pricing power in the target market, yet it's essential to balance this with a review of Asana's operating margins. Operating margins take into account the company's fixed overhead costs, in addition to the cost of revenue used to calculate gross margins.
| Date Reported | Revenue ($) | Cost of Revenue ($) | Gross Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-01-31 | 378,437,000.0 | 38,897,000.0 | 89.72 | 2.72 |
| 2021-01-31 | 227,004,000.0 | 28,741,000.0 | 87.34 | 1.49 |
| 2020-01-31 | 142,606,000.0 | 19,881,000.0 | 86.06 | 4.98 |
| 2019-01-31 | 76,770,000.0 | 13,832,000.0 | 81.98 | n/a |
| Date Reported | Total Revenue ($) | Operating Expenses ($) | Operating Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2022-01-31 | 378,437,000.0 | 643,621,000.0 | -70.07 | 9.4 |
| 2021-01-31 | 227,004,000.0 | 402,571,000.0 | -77.34 | 7.81 |
| 2020-01-31 | 142,606,000.0 | 262,237,000.0 | -83.89 | -23.82 |
| 2019-01-31 | 76,770,000.0 | 128,783,000.0 | -67.75 | n/a |
The table above tells us that, on average, Asana has not been profitable over the last four years, which should be a warning sign to prospective investors. Indeed, the company's operating margins are sinking at rate of -2.2%
