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Company Overview & Core Strengths

• Nulab is a SaaS collaboration tool provider offering subscription-based services, with 3 domestic locations and 2 international subsidiaries, focused on the mission "To make creating simple and enjoyable".
• Core strengths include 15,000+ total contracts, 1.45 million paid users, a 0.44% low churn rate demonstrating high customer satisfaction, product-led growth supported by Backlog's unique unlimited-user licensing, 3 billion yen in cash and equivalents, and a stable financial base from the advance subscription model.

Three-Pillar Growth Strategy

• Sustained expansion of existing products: Maintain natural growth via referrals while strengthening the sales organization to expand the user base, and continuously improve customer experience through AI-powered feature enhancements.
• Growth via new products: Expand the product and service lineup for cross-selling to existing customers, accelerate R&D and investment for new product development to open new revenue streams.
• M&A to support non-continuous growth: Target 3 strategic acquisitions over 3 years targeting synergetic companies to strengthen the business portfolio, with a medium-long term target of 10 billion yen in total revenue.

AI Product Development Progress

• The overarching long-term vision is the "Nulab AI Agent", which analyzes operational data accumulated in Nulab products to recommend optimal milestones, task settings, and staffing to support project managers, acting as a trusted AI team member.
• Backlog AI Assistant: Scheduled for full release in early 2026, this feature solves common project pain points via four core functions: information organization, automatic report/document generation, natural language conversational support, and delay risk detection. The beta version launched 3 months after concept development and is already used by over 100 monitoring companies, with positive early results including 70-80% accurate answers to user queries and 50% reduced document creation time.
• AI Backlog Sweeper: Co-developed with ABEJA, this feature automates task creation from meeting conversations, transcribes meeting notes, classifies new/existing tasks, integrates with chat tools like Slack, and recommends task structures based on past similar projects. It aims to free managers from administrative work to focus on core team management.

Operational Efficiency Gains

• 40 planned new hires in the current fiscal year are on track, and increased use of referral hiring has lowered overall hiring costs. Progress in AI product development enabled capitalization of software development costs, boosting profitability relative to plan.

• The current fiscal year is positioned as a "year of seeding" with aggressive investment to return to the long-term target CAGR of 20% growth, after a period of slowed revenue growth from mature existing business. Management accepts temporary profit declines to invest in future growth, targeting a return to previous profit levels by 2028 and a structure that continuously updates record profits.
• Full-year profit is expected to come in above the original plan, but will not reach the threshold for an upward revision; lower H1 profit is forecast for the second half due to expected increases in advertising expenses.
• Management expects that investments in sales expansion and product development will begin to impact revenue after a lagged lead time, with growth accelerating in coming periods, and plans to shift to a structure that delivers both profit and sales growth starting from the next fiscal year.
• Medium-term, the company targets a return to 20% annual growth, which management believes is directly tied to increasing corporate value.

Nulab operates three product segments, with Backlog as the core revenue contributor, accounting for the majority of total revenue.

1. Backlog: As of the end of the second quarter, Backlog had 15,231 paid contracts (surpassing 15,000 total contracts), approximately 1.43 million paid users, and a revenue-based churn rate of 0.42%. The 20,000 user decline from the end of March was driven by the removal of terms-of-service violating users, which does not impact core revenue due to Backlog's unlimited-user pricing model for standard plans and above.
2. Cacoo: A visual collaboration tool with over 4 million total users including free users globally; no separate revenue figure was provided in the transcript.
3. Nulab Pass: A security and account management add-on service that continued strong growth, adding 9,000 licenses in the quarter to surpass 87,000 total licenses as of September end.

Consolidated results: Q2 2026 revenue was 1.087 billion yen, up 6.5% year-over-year, with Q2 operating profit of 110 million yen. First half (H1) consolidated revenue was 2.153 billion yen, up 6.7% year-over-year, with H1 operating profit of 229 million yen, reaching 76% of the full-year operating profit plan of 300 million yen.

• Revenue growth has slowed significantly relative to the long-term 20% CAGR target, with 6.7% H1 year-over-year growth, driven by maturation of the existing business that has made new customer acquisition more challenging.
• The company's focus on acquiring large enterprise accounts with higher average contract value has longer closing lead times, so current sales investments have not yet translated into realized revenue growth, creating a lag between investment and revenue impact.
• The company is currently in an investment phase that will deliver temporary profit declines, and there is uncertainty around the timeline for returning to target growth and profit levels.

Q: With 6.5% year-over-year revenue growth versus the 20% CAGR target, and a 43% year-over-year drop in operating profit driven by higher SG&A that is not yet contributing to growth, how does management balance profit and growth going forward? / A: The large decline in profit is an intentional result of proactive upfront investment for future growth. Two key factors explain the current dynamic: first, high-value enterprise plans have long lead times from initial outreach to closing, so current sales and marketing investment will only flow to revenue after a time lag. Second, the company is in an investment phase to hit the 20% CAGR target, with aggressive investment in hiring and development to build future revenue capacity. Management will allow near-term margin compression, expects investment results to flow to revenue progressively, and will shift to a structure that delivers both profit and sales growth starting next fiscal year, while strengthening investment ROI monitoring. (412 characters)

Q: Backlog was last repriced in 2022. Considering ongoing domestic inflation and increased product value from recent development, are there plans to review pricing again? / A: Pricing is recognized as a key management priority, but no final decision is ready for public announcement at this time. The company is internally evaluating pricing from multiple angles, considering inflation, ongoing product value improvements, and the productivity gains delivered to customers. Any formal decision will be announced to shareholders and investors promptly once it is finalized. (267 characters)

Q: The company has 3.5 billion yen in cash against a 5 billion yen market capitalization, giving an extremely high net cash to market cap ratio versus domestic SaaS peers. Will the company start paying dividends, considering corporate governance expectations for cost of capital and share price-focused management? / A: Nulab's core capital policy prioritizes maximizing medium-long term corporate value, and the company is still in a growth phase focused on establishing competitive advantage in the SaaS market. Management believes allocating cash to growth investments (product development, hiring, marketing, and strategic M&A) delivers higher capital efficiency than dividends, which is the best path to meet shareholder expectations. Cash is retained to pursue strategic M&A opportunities to acquire new technology and customer bases. The company already conducts share buybacks as a capital return tool, and will continue combining growth investment and share buybacks to maximize shareholder value. (462 characters)

Q: Revenue growth remains slow but profit is coming in above plan, even though the company said this year would be an investment year with lower profit. Does this above-plan profit mean investment is not progressing as planned? / A: Growth investment is on track per plan. The profit upside comes from two positive factors: first, strategic AI development investment qualified for software capitalization under accounting rules, which reduced current period expenses relative to original forecasts, and this is evidence that core strategic investment is progressing. Second, hiring has proceeded as planned, but referral hiring has cut hiring costs lower than budgeted. The company will continue executing on measures to restore sales growth while maintaining strategic investment for long-term value improvement. (401 characters)