Alex Zukin : Got it. And then, I guess, to the comments that you’ve made around being a little bit more conservative in your assumptions and giving the new sales heads time to ramp looking for — that all makes sense. If — should we assume that for the year, revenue from the — for customers that are spending over $5,000, does that go into the high 70s as a percentage of total? Because when you model it out, it still looks like even that cohort is going to dip to the low 20s percent growth. So just help us a little bit understand what’s happening there. And again, when that also kind of could start to bottom?
Tim Wan : Yes. I think — no, great question, Alex. I think you’re referring to the number being in the low 20s, right? So the way to think about it is we’re going to focus much more on the $50,000 and $100,000 cohort customers and pushing for much more moving upmarket than even just like slightly above $5,000 or the $5,000 to $10,000. So I do think like in aggregate, the $5,000 and above will continue to trend north as a percentage of our revenue, probably closer to like between 78% and 80% as a percent of our total revenue over time. But the focus is moving even kind of more upmarket towards $100,000 type of customers.
Operator: The next question comes from George Iwanyc of Oppenheimer.
George Iwanyc : And maybe following up on your comments on Goals. Can you give us a sense of what you’re seeing from workflow builder and automation and how that’s helping with the consolidation activity you’re seeing?
Anne Raimondi : Yes, George, thanks so much for that question. Maybe a good way to answer that is just an example with a customer that did consolidate. So a leading global vacation rental platform consolidated last quarter on Asana to really enable every employee to have a single, consistent place to collaborate and drive improved productivity and execution, and they’ve gone remote first. So the rules, the automation, the workflows are really helping to make sure that there’s no more siloed work for them that there’s improved accountability and it’s also providing more time for their teams to focus on innovation and improving customer experience for their millions of global customers. And so in fact, they have a dedicated center of excellence and an internal team partnering with our account team to really make sure they’re making the most of every aspect of Asana.
So we see those features all coming together. And now since their entire organization is on Asana, the ability to then implement and connect all of their company goals down all the way through the organization to an individual level, so the employees can come in and know exactly what matters and how their work connects to their company goals. And that’s especially important for this organization, again, because all employees are completely distributed around the world. And so they’re all just collaborating through technology and through Asana with one another.
George Iwanyc : And following up on that, with all the sales changes you’re making, can you give us some perspective on what you’re doing with the channel and system integrators?
Anne Raimondi : Yes, absolutely. So the way that we think about channel and then partners overall is because our focus is on growing with enterprise customers in our priority markets. We really want to ensure we’re building those relationships in a really strategic way. So for enterprise customers, strong partnerships with SIs and service partners actually are important, as well as our deep partnerships with best-of-breed software companies. Those are really important for our enterprise customers. With our channel partners, we really see them as important to helping us extend our reach in markets where we’re still early and don’t have our sales teams on the ground. So that’s the way that we’re approaching not just our channel strategy, but our overall partner strategy.
Operator: The next question comes from Robert Simmons of D.A. Davidson.
Robert Simmons : First, I was wondering, could you give us a little bit of a preview on what collaborative intelligence is? Or is that too early for that?
Tim Wan : Yes, absolutely. We’re really excited about the event coming up. We’ve made a lot of progress over the years in getting our customers to put their projects and portfolios and workflows into Asana. And collaborative intelligence is really about aggregating the information that we see across those and giving leaders and executives, more of that tops-down view on how work is progressing. So it really enables them to identify collaboration hotspots and make better, faster, data-driven decisions. So really excited about that. And we’ve been talking about AI a lot today. like Asana Intelligence, a different version of AI, but it’s also collaborative intelligence because really, everyone is in putting their own view of the work graph, but we’re able to provide views and insights that really take all those bits of information and put them into more of a coherent story.
Robert Simmons : Got it. That makes sense. And then kind of read between the lines in some of your comments, would it be fair to characterize the quarter as maybe a bit weaker on the SMB side, but actually pretty solid for your larger accounts customers, relatively speaking?
Tim Wan : Yes. Yes, Robert. I think that’s a fair statement.
Operator: The next question comes from Steve Enders of Citi.
Steve Enders : All right. Great. I guess I want to dig in a little bit about some of the comments in the — on the go-to-market side, talking about trying to drive 20% better kind of rep productivity kind of through the year. So I guess, how are you kind of thinking about the biggest levers that you can you can pull to be able to achieve that and the changes being made on that front? And then, I guess, for Tim, how are you kind of contemplating the productivity changes in the guide and the outlook here?
Anne Raimondi : I appreciate you asking that and on productivity specifically. So — there’s a couple of factors contributing to sales productivity. The first is about 1/4 of our sales team is still ramping. And the second is that the reduction in force we implemented in November did impact productivity as managers and teams and have adjusted to those changes. So our focus now really is on investing in several areas, certainly, the infrastructure, the tools and training needed to deliver repeatable and predictable lands and expands especially in our larger accounts. So that’s a lot about enablement. It’s also about our partnership internally with our enterprise technology team, investments in DevOps. So it’s all of that geared towards our enterprise selling motion. And we’re excited about the early traction on that front, but know that we have a lot of work to do. So those are the areas that we are really focusing on.
Tim Wan : Yes. In terms of the guide, I would say — Anne’s comments, I’m not sure if you all heard it, but we really talked about that 20% ramping at the end. So you can think of it as we’re making progress throughout the year. But I would say, to the degree that the reps actually — that our productivity and we hit that 20% early in the year, that would probably be upside to the model.
Operator: The next question comes from Fred Lee of Credit Suisse.
Fred Lee : It’s very encouraging to see the significant increase in incremental margins in the quarter and also implied in the guide. Tim, you talked about evaluating every investment to prioritize ROI — high ROI investments with shorter payback periods. Can you tell us a little bit about some of those high priority investments that make the cut and some of the projects that take a back seat?
Tim Wan : Yes. I mean I think at a very high level, it’s really kind of looking at our customer base and where we have penetration and the size of their employee base and where we think we can really make progress with those accounts versus smaller accounts where you may be capped at in terms of the number of employees. So even when you break out the NRR, you can really see the difference between the downgrade and the churn in the smaller paying customers, the SMB and the VSB. And then the higher paying accounts, which are many times are kind of the enterprise customers, where you don’t see logo churn and you really see more seat expansion — so I would say that’s an area where we’ve done a lot of focus and kind of shifted our — both our marketing spend and our sales capacity and trying to move upmarket.
Dustin Moskovitz : And now this is Dustin. I would just add, there’s also a regional angle to this. So we have different sort of CAC payback and LTV by country, and we focused a little more on where we already have strength in the market and where the market is, just a stronger economy and more buying power. And so we’ve shifted some of our attention more into our Tier 1, Tier 2 markets and less in emerging markets.
Operator: The next question comes from Jason Celino of KeyBanc Capital Markets.
Jason Celino : Just one question, and maybe I’ll just ask it plainly. But it sounds like you’ve built in some conservatism on the revenue guidance. How should we think about the conservatism or the aggressiveness of the operating margin framework given the so much improvement you’re expecting?
Tim Wan : I would say we’re committed to delivering free cash flow before the end of calendar ’24. We’ve made vast improvements in terms of the operating margin guide. And hopefully, we’ll continue to under-promise and over-deliver for you guys. That’s kind of how I would characterize the guidance.
Operator: And our last question comes from the line of Shebly Seyrafi of FBN Securities.
