User Local, Inc. (3984) AI Stock Analysis

• Market Cap: ¥32.34B
• Dividend Yield: 0.73%
• Average Volume (3M): 63.91K
• Price to Earnings (P/E): 21.2
• Beta (1Y): 1.11
• Revenue Growth: 17.86%
• EPS Growth: 21.52%
• Country: JP
• Employees: 102
• Sector: Technology
• Sector Strength: 88
• Industry: Information Technology Services
• EPS (TTM): 26.98
• Shares Outstanding: 16,229,900
• 10 Day Avg. Volume: 50,620
• 30 Day Avg. Volume: 63,906
• PEG Ratio: 1.05
• Price to Book (P/B): 3.50
• Price to Sales (P/S): 6.65
• P/FCF Ratio: 19.71
• Enterprise Value/Market Cap: N/A
• Enterprise Value/Revenue: N/A
• Enterprise Value/Gross Profit: N/A
• Enterprise Value/Ebitda: N/A
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 80 Outperform
• Price Target: ¥2,251.00 ▲(17.12% Upside)

The score is driven primarily by very strong financial performance (high profitability, debt-free balance sheet, and solid cash generation). Offsetting factors are a mixed technical picture (neutral momentum with slightly negative MACD) and a moderate valuation that is not especially cheap, with only a modest dividend yield.

Positive Factors

Strong Financial Performance

User Local, Inc. demonstrates strong financial performance with high profitability and robust revenue growth, indicating a solid market position and operational efficiency.

Debt-Free Balance Sheet

A debt-free balance sheet enhances financial stability and reduces risk, allowing the company to invest in growth opportunities without the burden of interest payments.

Cash Generation Ability

Strong cash generation exceeding net income indicates high earnings quality, providing flexibility for reinvestment and shareholder returns.

Negative Factors

Deceleration in Revenue Growth

A slowdown in revenue growth could signal challenges in maintaining market expansion, potentially impacting long-term growth prospects.

Margin Softening

Softening margins may indicate rising costs or pricing pressures, which could affect profitability if not managed effectively.

Free Cash Flow Conversion Dip

A dip in free cash flow conversion suggests increased cash uses, which may limit the company's ability to fund growth or return capital to shareholders.

User Local, Inc. Business Overview & Revenue Model

Company Description

User Local, Inc. develops various analysis tools for website creators and marketers. The company engages in the research and development of big data analysis systems. It also provides Web marketing support tools under the User Insight name; social media analysis tools under the Social Insight name; and media analysis tools under the Media Insight name, as well as manages artificial intelligence chat bot. In addition, the company offers text mining, emotion and face recognition, future prediction, and automotive image processing AI services, as well as automatic summarization tools, AI comment systems, personal information anonymization filters, and duplicate aggregation tools. The company was incorporated in 2005 and is based in Tokyo, Japan.

How the Company Makes Money

User Local, Inc. makes money primarily through the sale of its AI-powered analytics tools and solutions. These products are offered as subscription services to businesses looking to leverage data-driven insights for digital marketing, customer engagement, and strategic decision-making. The company also generates revenue through partnerships with other technology firms and enterprises, providing customized AI solutions tailored to specific industry needs. Additionally, User Local may engage in consultancy services, offering expertise in implementing AI technologies across various business sectors.

User Local, Inc. Financial Statement Overview

Summary

User Local, Inc. exhibits strong financial health with robust revenue growth and high profitability. The balance sheet is particularly strong with no debt and a solid equity base. However, recent cash flow figures, particularly operating and free cash flow, require further investigation to ensure ongoing financial flexibility and operational efficiency.

Income Statement

User Local, Inc. demonstrates strong financial performance with impressive growth rates and margins. The company's TTM gross profit margin is 90.8%, and the net profit margin is 30.4%, indicating high profitability. The TTM revenue growth rate is 8.1%, showing consistent business expansion. EBIT and EBITDA margins are also robust at 44.1% and 44.8%, respectively.

Balance Sheet

The balance sheet reflects an excellent financial position with no debt and a high equity ratio of 88.6%. The return on equity (ROE) is 16.1%, showcasing effective use of equity financing. The company maintains substantial cash reserves, further enhancing financial stability.

Cash Flow

Cash flow metrics show a mixed performance with a strong historical growth trajectory but some recent challenges. Historical free cash flow growth has been positive, but current TTM free cash flow data is unavailable, and operating cash flow is reported as zero. The company's capability to convert profits into cash needs closer examination.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	4.58B	4.58B	3.91B	3.29B	2.68B	2.09B
Gross Profit	4.12B	4.12B	3.57B	3.05B	2.48B	1.89B
EBITDA	2.02B	2.01B	1.76B	1.38B	1.10B	911.25M
Net Income	1.43B	1.43B	1.19B	954.35M	721.89M	615.47M
Balance Sheet
Total Assets	9.97B	9.97B	8.84B	7.21B	6.24B	5.28B
Cash, Cash Equivalents and Short-Term Investments	8.55B	8.55B	7.68B	6.37B	5.32B	4.70B
Total Debt	0.00	0.00	0.00	0.00	0.00	0.00
Total Liabilities	1.27B	1.27B	1.11B	871.51M	700.50M	571.26M
Stockholders Equity	8.70B	8.70B	7.72B	6.34B	5.54B	4.71B
Cash Flow
Free Cash Flow	0.00	1.55B	1.53B	1.29B	869.30M	676.74M
Operating Cash Flow	0.00	1.81B	1.55B	1.31B	911.55M	696.73M
Investing Cash Flow	0.00	-260.31M	-198.80M	-28.03M	-120.50M	-100.09M
Financing Cash Flow	0.00	-676.70M	-36.68M	-238.22M	-167.26M	64.99M

User Local, Inc. Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 1922.00
• 50DMA: Positive
• 100DMA: Positive
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Negative

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For JP:3984, the sentiment is Positive. The current price of 1922 is below the 20-day moving average (MA) of 1952.31, below the 50-day MA of 1933.75, and above the 200-day MA of 1873.55, indicating a bullish trend. The MACD of 25.17 indicates Negative momentum. The RSI at 69.08 is Neutral, neither overbought nor oversold. The STOCH value of 84.23 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for JP:3984.

User Local, Inc. Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
3984	80 Outperform	¥32.34B	21.23	―	0.73%	17.86%	21.52%
4396	76 Outperform	¥31.73B	20.13	―	1.70%	22.25%	31.88%
2349	72 Outperform	¥25.34B	10.75	―	1.21%	7.21%	0.30%
5574	71 Outperform	¥27.28B	56.12	―	―	29.61%	93.16%
3655	70 Outperform	¥58.91B	71.82	―	0.28%	8.64%	-23.20%
Sector *	61 Neutral	$37.18B	12.37	-10.20%	1.83%	8.50%	-7.62%
2158	55 Neutral	¥34.74B	128.66	―	―	-10.49%	―

User Local, Inc. Corporate Events

User Local, Inc. Reports Strong Q1 Financial Results, Indicating Robust Growth

User Local, Inc. reported a significant increase in its financial performance for the first quarter of the fiscal year ending June 30, 2026, with net sales and profits showing substantial year-on-year growth. This positive performance highlights the company’s strong market positioning and operational efficiency, suggesting a promising outlook for stakeholders and reinforcing its competitive stance in the technology industry.

User Local, Inc. Completes Disposal of Treasury Shares to Board Members

User Local, Inc. has completed the payment for the disposal of 50,000 treasury shares as restricted stock to its board members, following a resolution from its October 8, 2025, Board of Directors’ meeting. This move involves a total disposal value of 101,250,000 yen and is part of the company’s strategy to align the interests of its directors with those of its shareholders, potentially impacting its governance and market perception positively.