Asana to lay off 9% of workforce to improve operating costs

Joining other technology companies that are laying off workers to battle global economic headwinds, work management software provider Asana on Tuesday said it was laying off nine per cent of its total workforce in order to cut operating expenses.

The vendor’s chief operating officer Anne Raimondi took to LinkedIn on Tuesday to announce that the company was reducing the size of its global workforce, estimated to be over 1,600 employees.

“Today, Asana announced the difficult decision to reduce our force, impacting about nine per cent of the global team, as part of a restructuring plan intended to improve our operational efficiencies and operating costs and better align Asana's workforce with current business needs, top strategic priorities and key growth opportunities,” an Asana spokesperson told Computerworld when asked about the reason behind the layoffs.  

During an earnings call with analysts discussing second quarter results, Asana had said that the company had increased expenses for many of its customer facing roles in the first half of the year in order to service growth in the second half and that it had already had started to throttle back on hiring.

“We front loaded many of our customer facing roles this year to build sales capacity and infrastructure for the second half and beyond,” Tim Wan, global head of finance at Asana, had said, according to an earnings call transcript from Seeking Alpha.

During the same call, Wan said that the company had been taking initiatives, including moderating headcount growth, to improve operational efficiency.

“We’ve moderated headcount growth significantly and you’ll begin to see it manifest in the GA and RD expenses first. We’ve already slowed headcount growth from 13 per cent sequentially in Q1 to five per cent in Q2, showing a change in momentum and highlighting our commitment to expense management,” Wan said.

Wan went on to say that as a result of changes in the macroeconomic environment, the company was taking steps to ensure that the already-hired salespeople were closing more deals to support growth.

Software providers such as Asana also have been facing extension of deal cycles due to uncertainty in economic conditions. While responding to a specific question on the elongation of deal cycles during the earnings call, Raimondi said that deals with large enterprises were seeing more decision-makers getting involved.

The involvement of more decision-makers could be read as a strategy by enterprises to put a tighter clasp on expenditures. However, the company’s careers section continues to list several openings. In a statement to Computerworld, the company said that it will continue to hire for critical roles at this time.

For the quarter ended July, the company had reported a net loss of US$62.6 million despite reporting a 51 per cent increase in revenue.

As per the company’s financial outlook, the company expects to report a third-quarter operating loss between US$66 million to US$63 million on the back of $138.5 million to $139.5 million in revenue.

During September, the company’s co-founder and CEO Dustin Moskovitz had purchased approximately 19 million shares of Class A common stock at $18.16 per share, infusing $350 million in the company.