Freshly public workflow management software provider Asana (NYSE:ASAN) recently announced its first quarterly earnings report as a public company, and it was a smashing success. Revenues topped expectations. So did earnings. The guide came in ahead of expectations, too. Asana stock popped about 15% in response to the strong print.

Zooming out, Asana’s strong first earnings report broadly underscores the long-term bull thesis on ASAN stock.

That thesis goes something like this.

Employees waste a lot of time doing busy-work. Covid-19 has given enterprises an opportunity to rethink workflows and optimize productivity. One obvious way to do so is through virtualizing, automating, and optimizing workflow management. Asana does just that, with a market-leading workflow management platform. Over the next several years, as more and more enterprises virtualize, Asana adoption will soar. Revenues will run higher. So will profits. And ASAN stock.

Asana’s third-quarter numbers — which included 50%-plus revenue growth and 150 basis points of gross margin expansion — simply underscored that this long-term bull thesis on ASAN stock remains alive and well.

So don’t be afraid to chase ASAN stock here. It’s a long-term winner with plenty of upside potential left.

The Asana Stock Bull Thesis

The bull thesis on ASAN stock all comes down to one thing: Most of the time you spend at work is wasted.

Information workers – or employees who use a smartphone, PC, or tablet at least one hour every week for work (the modern “desk” job) – only spend about 40% of their work-time actually working.

What’re they doing the other 60% of the time? Answering emails (28%). Gathering information (19%). Communicating internally (14%). All the busy work that’s totally necessary to get actual work done, but which isn’t part of the job description.

That’s all according to a new survey from McKinsey, which broadly found that because of inefficient workflow management and communication tools at the enterprise, employees are wasting most of their work time.

Insert Asana, whose market-leading workflow management platform streamlines and automates all that busy work so that employees can spend their work time, you know, actually working.

Sure, there a plenty of workflow management platforms out there. But Asana stands out for a few reasons.

For starters, it’s built on a freemium business model, in a market dominated by exclusively paid models, which helps the company attract new customers. On top of that, Asana has an exceptionally intuitive and friendly user interface, features an unparalleled number of integrations, and is mobile-first (which is big, because everything is shifting to mobile these days).

It’s no wonder that Asana has been named a leader in this market by Forrester, or that the company has 89,000 paying customers across 190 countries, or that ~70% of the Fortune 500 uses Asana, or that revenues grew 85% last year.

Asana is the best workflow management software platform in the market.

Demand for these platforms is going to surge in the coming years, as enterprises increasingly virtualize and optimize their workflows. Asana will see demand surge. Revenues and profits will run higher. So will the ASAN stock price.

Strong Earnings Underscore Fundamental Strength

All Asana’s third-quarter earnings report did was broadly underscore that the aforementioned bull thesis on ASAN stock remains as robust today as ever before.

The company added 7,000 paying customers in the quarter, the most it has added in any single quarter this year. Year-to-date, Asana has increased its paying customer base by 14,000, or nearly 20%.

In that growing base, more and more of Asana’s customers are upping their spend. The percent of customers that are spending more than $5,000 on Asana on an annualized basis has risen from 54% in the fourth quarter of 2020, to 56% in the first quarter of 2021, to 58% in the second quarter, to 59% in the third quarter. At the same time, Asana’s dollar-based net retention rate clocked in at 115% in the quarter.

More customers plus bigger spend per customer equals healthy revenue growth. That’s exactly what you’re getting out of Asana. In Q3, revenues rose 55% year-over-year.

Of equal importance, the business model is scaling into profitability. Gross margins rose 150 basis points in the quarter. They are now a stones throw away from 90% — giving the software company plenty of room drive positive operating leverage and produce sizable profits over the next few years.

Big picture: Asana is adding tons of customers, getting those customers to spend more on its platform, and rapidly improving its profitability profile.

Those winning attributes comprise the building blocks of a long-term winner. That’s exactly what ASAN stock is — a long-term winner.

Tons of Upside Left for Asana Stock

Looking out long-term, ASAN stock has tons of firepower left to shoot way higher.

There are over a billion knowledge workers in the world today. That number is rapidly growing, because technology is quickly being integrated into every job and workflow. By the end of the decade, you could easily see that number swell to over two billion knowledge workers.

Yet, as of July 2020, Asana only had about 1.3 million paid users. That represents just 0.1% of all knowledge workers in the world.

Clearly, Asana has a long runway ahead to grow its paid user base. Concurrently, average revenue per paid user in 2019 was less than $15 per month. We could easily see increasing demand and inflation push that number above $20 in the long run.

Connecting those dots, Asana very reasonably projects as a 20%-plus revenue grower for the foreseeable future. The 90% gross margin profile lends itself to sizable operating margins at scale. I wouldn’t be surprised to see margins come in above 20% by the late 2020s.

Assuming so, my modeling says that Asana is on track to do about $2 in earnings per share by 2030. Based on a 35-times forward earnings multiple and an 8% annual discount rate, that implies a 2020 price target for ASAN stock of $35.

Bottom Line on Asana

Asana’s first earnings report as a public company was a smashing success. It broadly underscores that Asana is a long-term winner at the overlap of secular work-from-home and enterprise virtualization tailwinds. Over the next several years, this hypergrowth company will remain in hypergrowth — and red-hot ASAN stock will only get hotter.