Nulab Inc. Q4 FY2025 earnings call

• Company Overview

  • Nulab is a Japan-based SaaS company providing subscription-based collaboration tools, with three core products: Backlog (project and task management), Cacoo (visual collaboration), and Nulab Pass (enterprise security and account management). It has domestic locations in Fukuoka, Tokyo, Kyoto, and overseas subsidiaries in New York and Amsterdam (Singapore subsidiary was liquidated in September 2024).
  • The company is currently valued at a lower PSR compared to peer SaaS companies, which management attributes to market undervaluation of its growth prospects after recent revenue growth slowdown. Management targets returning to 20% CAGR to increase enterprise value.

• 2025 Fiscal Year Growth Strategy Progress

  • Expanded awareness of Backlog among non-engineering roles through co-selling Nulab Pass with new Backlog contracts, exhibiting at back-office trade shows, and publishing articles in major economic and publishing media, with steady incremental progress.
  • Rolled out multiple customer-driven feature updates across all three products starting from April 2024.

• Three Pillars of Long-Term Growth Strategy

  1. Sustained growth of existing products: Maintain organic referral-driven growth, strengthen the sales organization to expand the user base, and continuously improve customer experience via AI-powered feature enhancements.
  2. Growth through new products: Expand product lines for cross-selling to existing customers, accelerate R&D investment for new product development, and open new revenue streams.
  3. Discontinuous growth via M&A: Target 3 strategic acquisitions over the next 3 years with expected synergy, to strengthen the business portfolio. The medium-term target is to reach 10 billion yen in total revenue.

• Growth Model and Product Enhancement

  • Adopt a hybrid growth model combining product-led and sales-led growth: Focus sales efforts on the enterprise segment targeting high-value plans to complement organic product-led growth, balancing the advantages of both models.
  • Aggressively integrate AI into existing products to improve product value, automate work processes, and improve efficiency, aligned with the company's mission of making creation simpler and more enjoyable.

1. Backlog: Full year revenue is 3.83 billion yen, accounting for 93.1% of total full year revenue. Q4 2025 revenue is 975 million yen, accounting for 92.7% of total Q4 revenue. Paid contracts reached 14,763 units as of end-March 2025, beating the initial plan; paid users hit 1.45 million, an increase of 170,000 from the prior year end; revenue-based monthly churn rate was 0.44%, in line with historical average. 2. Cacoo: Full year revenue decreased 0.6% year-over-year, dragged by insufficient resource allocation for strategy execution in the 2025 March fiscal year. 3. Nulab Pass: License count exceeded 69,000 as of end-March 2025, with steady growth driven by sales team outreach to new Backlog customers. Overall full year 2025 total revenue is 4.112 billion yen, up 12.3% year-over-year, in line with the revised plan; gross profit is 2.96 billion yen; operating profit is 640 million yen, up 92.8% year-over-year, beating the revised plan. Q4 2025 total revenue is 1.052 billion yen, up 7.1% year-over-year; operating profit is 78 million yen, in line with expectations.

• For the 2026 March fiscal year, management guides total revenue of 4.603 billion yen, representing 12% year-over-year growth, and targets 20% growth in Backlog paid contracts. This represents no upward revision from prior implicit targets, and formalizes the 12% topline growth target for the fiscal year.
  • 2026 fiscal year operating profit is guided at 300 million yen, down 53.1% year-over-year; net income is guided at 223 million yen, down 59.6% year-over-year. The large downward revision from 2025 profit levels comes from intentional aggressive investment for long-term growth, positioning 2026 as a

• Revenue growth has slowed to 7.1% year-over-year in Q4 2025 and 12.3% full year 2025, down from the historical 21% CAGR, leading to lower market valuation on the company's stock. If the company fails to return to 20% annual growth, its enterprise valuation may remain depressed.
  • Cacoo has underperformed with a 0.6% year-over-year revenue decrease, caused by insufficient resource allocation to the business, which may limit its contribution to overall growth if the planned 2026 resource injection does not deliver expected results.
  • Sales-led growth expansion requires upfront hiring and training investment, with a time lag before new sales personnel start contributing to revenue, leading to near-term profit compression with uncertain medium-term returns.
  • Formal full mid-term management plans are still in preparation, so there is near-term uncertainty around long-term financial and strategic targets, which may lead to continued market undervaluation.

Q: What are the expected profit and margin levels for the 2028 March fiscal year, and when will a formal mid-term management plan be released? / A: Management declines to provide specific numerical targets for 2028 profit at this time, but states profit will increase alongside revenue growth and targets improving the current margin level. Margin improvement is expected from three sources: scale economies that reduce the relative share of fixed costs as revenue grows, synergy from M&A that cuts combined operating and development costs, and improved sales and marketing investment efficiency as the business matures and drives more repeat and upsell revenue. Management is currently preparing the mid-term plan, including updating M&A and financial strategy and finalizing departmental business plans, and will publicly release it once preparations are complete.

Q: How do you plan to improve the current low valuation of your business? / A: Management recognizes the current low PSR valuation and plans to address it with three initiatives. First, it will drive sustained high growth in the core business via investment in sales expansion, AI-powered product development, and new market expansion to return to 20% annual growth and deliver measurable results that will lead the market to revalue Nulab's growth prospects. Second, it will use M&A to accelerate growth, expand into new markets, and improve profitability via synergies, while deploying its large cash holdings to improve capital efficiency. Third, it will optimize shareholder returns by actively considering share buybacks alongside dividends, balanced with the needs of M&A and growth investment.

Q: How can you achieve 20% paid contract growth in 2026 with only a 2% increase in advertising spending? What is the early outlook for sales-led growth? / A: Nulab has historically grown via product-led expansion without heavy reliance on advertising, and will continue this baseline approach. The 20% growth target will be achieved through four efficient initiatives: accelerated onboarding and ramp-up of newly hired sales personnel, stronger upselling and cross-selling to existing customers, improved onboarding support for new users to reduce conversion friction, and product differentiation via feature expansion (especially AI) to lower churn and increase new signups. While the sales team is still being built and no quantitative results are available yet, management reports positive early momentum. Near-term costs will precede revenue from this expansion, which is a strategic investment to build a durable future revenue base, and revenue is expected to grow steadily once new hires are fully productive.