Nulab: Collaboration software trading at a discount — But Can It Scale?
With revenue accelerating, low-churn, and an international strategy just getting started, it’s a business with serious upside optionality—and a margin of safety built in.
“Someday, when I’m sitting in a bar in San Francisco, I want to hear the person next to me talking about our company.”
It’s not every day you come across a Japanese SaaS company that talks like a West Coast startup and operates like one too. But that’s exactly what you get with Nulab—a Fukuoka-based software company founded in 2004 with a mission to "make work fun" through collaborative tools. The company was listed in 2022 on the Tokyo Growth Market, and while it may not yet be a household name like Asana, Figma, Monday.com or Smartsheet, it’s quietly carving out a strong niche in project management, diagramming, and security-led collaboration.
What Does Nulab Do?
At the heart of Nulab's product suite lies Backlog, its flagship project and task management platform, which accounts for over 90% of sales and 79% of paid contracts. But scratch a little deeper, and you’ll find a compelling expansion story unfolding, driven by thoughtful capital allocation, disciplined pricing power, and an emerging ecosystem effect through products like Cacoo (collaborative diagrams) and Nulab Pass (enterprise security suite).
Backlog: A team-centric project management solution tackling the messiness of shared files, unclear responsibilities, and tool sprawl. Think of it as a Monday.com competitor built for the Japanese market and increasingly beyond. Importantly, it supports unlimited users per plan, allowing for viral growth inside organizations.
Cacoo: A cloud-based diagramming tool, somewhere between Figma and Lucidchart that enables remote teams to ideate visually. Over 3 million users globally use Cacoo, including many free-tier users.
Nulab Pass: A security and governance layer enabling centralized ID management, audit logs, and SSO for enterprise clients using Nulab’s tools. Since launching new enterprise features like "audit logs", contract growth has exploded—up 11x since Aug’20.
There’s also Typetalk, a Slack-like business chat, but it’s being sunsetted by December 2025. This appears to be a strategic cleanup move, freeing resources to double down on where the company sees real leverage.
Ownership and Incentives: Who’s Behind It?
The founding team still runs the show. Nulab is helmed by CEO Masanori Hashimoto, who co-founded the company in 2004. He and the leadership team hold a significant ownership stake, aligning their interests closely with shareholders.
Hashimoto began programming as a hobby when he was just 10 years old using Famicom BASIC – a keyboard and cassette recorder that acted as a developer kit for Nintendo’s original 8-bit console.
So far, capital allocation has been highly rational: Nulab has grown slowly but steadily, with high user engagement and minimal churn (monthly revenue churn is just 0.41%). Instead of chasing growth at all costs, Nulab has focused on product-led growth (PLG). Roughly 74% of new users come through referrals, and a spontaneous user community has formed—textbook signs of a sticky product with a low CAC model.
While it took 13 years for Nulab to close its first external fundraise, Hashimoto said the company is already considering if it should tap further investment. “We are discussing whether 100 million yen [the amount from East Ventures] is enough. But our aim is to create as much growth with as little money as possible.”
Importantly, the management team appears to understand the balance between reinvestment and profitability. After years of investing in infrastructure and building PLG momentum, the company now generates free cash flow at a 17% yield (LTM), with plans to reallocate savings from personnel and server costs into targeted marketing to sustain growth.
Compensation details are limited, but from publicly available filings and shareholder presentations, it’s clear incentives are tied to long-term performance—growth in ARR, user engagement, and international expansion—not vanity metrics.
Capital Allocation: Quietly Impressive
This is where things get interesting.
Despite its modest size, Nulab has demonstrated consistent high-quality capital allocation:
ARR growth from ¥2.7B in 2022 to ¥4.1B in 2024 (a ~23% CAGR)
Free Cash Flow positive, even after accounting for large AWS prepayments
Lean cost structure with plans to plow operational savings back into growth
Their pricing strategy is particularly elegant: Backlog charges by organization, not user, encouraging viral adoption. Then, upsells like Nulab Pass and Cacoo are layered on top. This model has turned Backlog into a true cash cow: from 13,772 paid accounts in 2022 to 14,583 in 2024, its share of total contracts has actually increased from 74% to 79%.
The company hasn’t grown at breakneck speed, but that’s by design. When it does invest—such as in new features or overseas expansion—it’s done incrementally and data-backed.
Why Now? What’s the Opportunity?
The Japanese SaaS space remains underpenetrated relative to the US or Europe. Tools like Backlog and Cacoo are becoming the digital infrastructure of collaborative work across Japan—and increasingly in Asia and beyond. There’s plenty of low-hanging fruit left:
Enterprise expansion: Nulab Pass is opening doors to bigger contracts with governance-conscious customers. Pricing revisions in Q4 will boost ASPs.
Cross-sell flywheel: Once Backlog is in place, Cacoo and Nulab Pass are natural adjacents. This has only just begun—Cacoo could very well become an alternative to Miro, Figma, and other wireframing tools.
Global push: The company is testing overseas waters. Given their PLG motion and affordable pricing, international SMBs could be a meaningful growth lever.
There’s also a longer-term bet in the form of Nu Source, a crowdsourced innovation program launching April 2025. By inviting outside developers to build using Nulab’s infrastructure, they’re quietly laying the groundwork for a platform play—a way to increase lifetime value and deepen product lock-in.
What Makes Nulab Interesting?
Growing ARR and Sticky Revenue: From FY2022 to FY2024, Nulab’s ARR grew from ¥2,712 million to ¥4,094 million — a CAGR of ~22.4%. Churn remains low, with monthly revenue churn at 0.41%, suggesting strong customer retention.
Attractive Valuation: The current EV/ARR multiple is just ~0.71x, well below global peers. Even modest ARR growth with a slight re-rating to historical peer medians (1.5–3.0x EV/ARR) could yield 30%+ CAGR over the next 3 years.
Capital Efficiency Improving: Free cash flow yield has improved, now sitting around 19% in 2024. The company also made a one-time AWS prepayment in FY2023, which skews comparisons — but adjusted figures show a structurally improving margin profile.
Expanding Growth Vectors:
Cross-selling into existing Backlog users with Cacoo and Nulab Pass.
Enterprise-focused upselling: License volume for Nulab Pass has increased 11x since launching audit logs.
Product-led growth driving organic referrals (74.2% of new users), reducing CAC.
Nu Source initiative (2025): Crowd-sourcing new product ideas to increase product-market fit and long-term lock-in.
Risks and Things to Watch
While the setup looks attractive, investors should remain aware of the following risks, drawn both from Nulab’s situation and cautionary tales from peers:
1. Limited Top-Line Acceleration
Recent growth is healthy but not explosive — ARR CAGR has slowed from ~22% to a base-case ~7.6%.
Companies like Asana and Smartsheet also saw growth deceleration once initial PLG tails faded.
2. Dependence on a Single Product
Backlog still accounts for ~79% of all paid contracts. Attempts to cross-sell Cacoo and Nulab Pass are early.
If Backlog stalls, the broader business lacks diversification to offset.
3. EV/ARR Multiple Compression Risk
Global SaaS multiples have compressed since the 2021 peak. While Nulab looks cheap at 0.71x EV/ARR, some companies remain cheap for a reason — e.g., high churn, lack of scalability, or failure to monetize.
4. Execution in the Enterprise Segment
Nulab is shifting toward enterprise sales — a space that requires more complex go-to-market motions, longer sales cycles, and dedicated success teams.
Atlassian faced similar challenges when moving upmarket and had to invest heavily to transition.
5. Japanese Market Dynamics
The domestic B2B SaaS adoption curve in Japan remains years behind the US. Expansion may be slower than anticipated.
Foreign expansion is a stated goal, but localization, competition, and brand awareness could be barriers.
6. Unclear customer concentration
There is no detailed breakdown of customer concentration, but it's apparent that large clients, such as Toyota and Kirin, are significant players in their customer base.
7. Outpaced by competitors
Typetalk, which was launched in 2013, was eventually discontinued due to the emergence of newer technologies and platforms offering innovative features and enhanced security.
With only ~150 employees, the company faces limitations in adding new features, and scaling into new markets with different cultural needs could lead to customer attrition.
What Could Future Returns Look Like?
Current Valuation Snapshot (as of 2024/9)
Enterprise Value (EV): ¥2,894.44 million
Annual Recurring Revenue (ARR): ¥4,094 million
EV/ARR Multiple: 0.71x
This is very low for a SaaS business, especially one with stable growth, high gross margins, and recurring revenue. For comparison, global SaaS peers (even small caps) often trade between 3x and 10x EV/ARR, depending on their growth profile and profitability.
Future ARR
Based on historical growth rates and trends from the upward revised financials, we’ve modeled three cases for Nulab’s Annual Recurring Revenue (ARR) by FY2027:
Low Case (8% CAGR): ¥4,613 million
Base Case (12% CAGR): ¥5,145 million
High Case (18% CAGR): ¥6,017 million
These ranges reflect varying scenarios depending on how successfully Nulab executes on cross-sells (Cacoo, Nulab Pass), international expansion, and enterprise penetration.
Using a Monte Carlo simulation with 10,000 runs:
We modeled ARR growth with a mean CAGR of 12% and std dev of 3%
Average ARR by FY2027: ¥5,156 million
If an investor enters at this valuation and exits at the average FY2027 EV of ¥6,118 million, the expected annualized return (CAGR) over 3 years is 27.3%, assuming:
Average Enterprise Value (EV) in FY2027: ¥6,118 million. Future EV/ARR multiples were drawn from a normal distribution (mean: 1.15, std dev: 0.6), clamped between 0.40 (low) and 2.91 (high).
There's a significant spread of potential outcomes, with most scenarios delivering 20–40% CAGR over 3 years.
Upside scenarios (with strong ARR growth following accelerating revenues and high exit multiples) push returns beyond 50% CAGR over 3 years.
Here's the Monte Carlo simulation for potential investor returns, assuming a low case CAGR in ARR (2024-2027) of 7.6%:
The negative return outcomes in this low case are driven by the combination of two risk factors in the simulation:
Drawing a low exit multiple (EV/ARR ~0.40)
Pairing that with flat or slower-than-expected ARR growth
This doesn’t mean negative returns are likely — just that there’s a realistic downside scenario, especially if Nulab doesn't deliver on international expansion, Cacoo/NulabPass monetization, or its upsell strategy.
The Bottom Line
Nulab offers a rare combination in Japan’s SaaS landscape: a profitable, sticky collaboration software platform with an attractive valuation and embedded optionality via PLG and enterprise upsell. While growth has normalized, the downside appears modest and the upside compelling, particularly if Backlog continues to expand and new products like Nulab Pass and Cacoo achieve traction.
The company trades more than 10x lower compared to Western peers with similar growth or privately taken companies — if you're a long-term investor looking to back quality founders in an underfollowed market, Nulab deserves a spot on your watchlist.
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Please note, this is not investment advice.
Links:
https://www.disruptingjapan.com/japan-startup-masanori-hashimoto-nulab/
https://www.techinasia.com/nulab-fukuoka-japan-work-collaboration-global-startup
https://www.techinasia.com/nulab-funding-tiatokyo2017
https://finance.logmi.jp/articles/380782
https://www.reuters.com/markets/deals/pe-firms-vista-blackstone-buy-software-maker-smartsheet-84-bln-2024-09-24/
https://techcrunch.com/2020/12/01/salesforce-buys-slack/
nice find. what is its B/S , debt like?