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Work management platform provider Asana (ASAN) edged past Q2 EPS and revenue estimates as the company signed a record number of multi-year deals, but its soft guidance for Q3 and FY25 is overshadowing the quarterly results and dragging shares sharply lower. The company's disappointing outlook stands in contrast to Monday.com (MNDY), which delivered an impressive beat-and-raise Q2 earnings report on August 12, signaling that ASAN lost some ground to one of its main competitors.

• During the earnings call, CEO Dustin Moskovitz disclosed that the company saw some deals get pushed out during the quarter but added that they remained in the pipeline. In particular, ASAN is experiencing weakness in the technology sector, where ongoing budget scrutiny and longer sales cycles continue to act as a headwind. To add some context around the impact of these headwinds, ASAN's Q2 revenue growth was in the mid-teens, excluding the technology vertical, compared to its reported revenue growth of 10.3%.
• Another metric that illustrates the negative effects of the weakness in technology is ASAN's dollar-based net retention rate. In Q2, the overall dollar-based net retention rate slipped to 98% from 100% last quarter as the company experienced some large seat adjustments during the quarter. On the positive side, ASAN believes that its dollar-based net retention rate is at a stabilization point and that the worst of the seat adjustment headwinds are now in the rearview mirror.
• However, since trends haven't reaccelerated yet, ASAN slightly adjusted its FY25 revenue guidance to be more conservative in the back half of the year. After previously guiding for revenue of $719-724 mln, the company is now forecasting revenue of $719-$721 mln. 
• Looking beyond the current weakness in the technology sector, ASAN's innovations in AI could provide the company with a meaningful growth catalyst in the coming quarters. In October, ASAN plans to launch its Asana AI Studio product, which allows customers to build, deploy, and enhance workflows with AI teammates taking over some of the workload. Additionally, AI will enable ASAN to launch new licensed add-on products, such as Resource Planning, which is currently under development.

The main takeaway is that ASAN's Q2 earnings report didn't meet the high standard set by competitor MNDY a few weeks earlier as the company contends with stiff headwinds in the technology vertical. Although the downward revision to its FY25 revenue guidance was modest, slowing growth concerns are top of mind for investors right now, making ASAN an easy target for selling.