User Local,Inc. FY2026 Q1 Earnings Report

Financial Highlights

• Net Sales: ¥1.27B
• Operating Income: ¥616M
• Net Income: ¥430M
• EPS: ¥26.98

Income Statement

Balance Sheet

Profitability Ratios

Year-over-Year Comparison

Share Information

Dividend Information

Full Year Forecast

Disclaimer

This data was automatically extracted from XBRL files. Please refer to the original disclosure documents for accuracy.

AI Financial Analysis

Executive Summary

User Local (3984) reported strong FY2026 Q1 results on a standalone JGAAP basis, with revenue of 1,267 million yen, up 18.8% YoY, underscoring solid top-line momentum. Operating income rose 22.3% YoY to 616 million yen, indicating operating leverage and cost discipline. Net income increased 23.6% YoY to 430 million yen, translating to a robust net margin of 33.9%. Gross profit was reported at 972.9 million yen, implying a high gross margin of 76.8% consistent with a software/subscription-heavy mix. Operating margin of approximately 48.6% highlights the scalability of the model and efficient SG&A control in the quarter. Ordinary income of 622 million yen suggests limited non-operating impact this quarter. The DuPont ROE decomposition shows a net margin of 33.94%, asset turnover of 0.128x, and financial leverage of 1.12x, yielding an ROE of 4.89% for the quarter, consistent with the reported figure. The balance sheet is conservative with total assets of 9.882 billion yen and total liabilities of 1.272 billion yen; implied equity ratio is about 88.9% (equity of 8.786 billion yen over assets) despite the reported equity ratio field being zero (unreported). Liquidity is very strong with a current ratio of 7.28x and sizeable working capital of 7.963 billion yen. Debt intensity appears low with an implied liabilities-to-equity of roughly 0.14x. Cash flow statements were not disclosed this quarter (zeros indicate unreported), so operating cash flow and free cash flow quality cannot be assessed from this dataset. EPS was 26.98 yen; shares outstanding were not disclosed in the XBRL snapshot. Dividend per share is shown as zero; payout and FCF coverage cannot be evaluated alongside unreported cash flows. Overall, the quarter reflects high growth and margin resilience, with ample balance sheet strength; however, the absence of cash flow disclosure and certain line-item details (e.g., D&A, cash balance, share count) limits the depth of quality-of-earnings and per-share trend analysis.

Profitability Analysis

ROE_decomposition: ROE 4.89% = Net margin 33.94% × Asset turnover 0.128 × Financial leverage 1.12 (quarterly snapshot). Implied equity ratio ~88.9% (equity 8,786m / assets 9,882m). margin_quality: Gross margin 76.8% (972.9m / 1,267m) is consistent with a software/SaaS mix and suggests low COGS intensity. Operating margin ~48.6% (616m / 1,267m) and ordinary margin ~49.1% indicate tight OPEX control and minimal non-operating drag. Net margin 33.9% confirms efficient tax and financing structure. Note: reported cost of sales (94.4m) does not reconcile arithmetically to the reported gross profit; we rely on the reported gross profit and operating income figures as the anchor due to potential classification differences. operating_leverage: Revenue +18.8% YoY while operating income +22.3% YoY, implying incremental margin expansion and positive operating leverage in Q1. High fixed-cost absorption likely contributed; sustainability will depend on hiring cadence, R&D intensity, and sales & marketing efficiency.

Growth Assessment

revenue_sustainability: Top-line growth of +18.8% YoY is healthy for a mature SaaS/analytics provider and consistent with high retention and/or new logo additions. High gross margin supports recurring revenue characteristics. profit_quality: Profit growth outpaced revenue (OP +22.3%, NI +23.6%), pointing to disciplined expense growth. Effective tax rate inferred at ~26.6% (155.8m tax / ~585.8m pretax), consistent with domestic norms. Absence of D&A disclosure limits EBITDA comparability; however, high OP margin provides a robust earnings base. outlook: With strong liquidity and low leverage, the company is positioned to continue investing in product and sales capacity. Key to sustaining growth will be net retention, upsell/cross-sell in enterprise accounts, and product differentiation in AI/analytics. Watch for any normalization of margins as hiring and marketing scale through the year.

Financial Health

liquidity: Current assets 9,232m vs current liabilities 1,269m yields a current ratio of ~7.28x and quick ratio similarly high due to no inventories reported. Working capital is 7,963m, indicative of strong short-term solvency. solvency: Total liabilities 1,272m vs equity 8,786m implies liabilities-to-equity of ~0.145x and an implied equity ratio near 88.9%. Balance sheet risk is low. capital_structure: Minimal leverage; interest expense is unreported (zero in XBRL). Ordinary income tracks well with operating income, indicating negligible financing burden. The company retains ample capacity for investment without external financing.

Cash Flow Quality

earnings_quality: Core profitability is strong at the operating level, but the absence of cash flow disclosure this quarter prevents assessment of cash conversion. Effective tax rate appears normal (~26.6%), and ordinary income closely matches operating income, suggesting limited non-operating noise. FCF_analysis: Operating CF and investing CF are unreported; therefore, free cash flow cannot be derived. For a subscription-centric model, positive OCF would typically be supported by deferred revenue inflows; confirmation awaits disclosure. working_capital: Large working capital buffer (7,963m). Without receivable and contract liability breakdowns, we cannot evaluate DSO or deferred revenue dynamics. Monitor changes in accounts receivable and unearned revenue for signal on cash conversion and growth quality.

Dividend Sustainability

payout_ratio_assessment: Annual DPS is shown as 0; payout ratio 0% in the dataset. Given unreported cash flows and lack of historical payout detail here, we cannot assess payout sustainability quantitatively. FCF_coverage: Not assessable due to unreported OCF/FCF. Earnings coverage would be strong if a dividend were initiated, given current margins, but confirmation requires cash flow data. policy_outlook: With high growth and reinvestment needs typical for analytics/SaaS firms, retained earnings remain plausible. Any shift toward dividends would depend on sustained cash generation and capital allocation priorities (R&D, sales capacity, potential M&A).

Risk Assessment

Business Risks:

• Competitive intensity in AI/analytics and potential pricing pressure
• Customer concentration and large-account renewal risk
• Churn or lower net retention amid macro uncertainty
• Rapid technology shifts in AI models requiring continued R&D investment
• Data privacy/regulatory changes affecting analytics offerings
• Talent acquisition and retention for engineers and data scientists
• Potential seasonality or quarter-to-quarter volatility in bookings

Financial Risks:

• Cash flow visibility limited due to unreported OCF; timing of collections vs. billings uncertain
• Dependence on deferred revenue dynamics for cash conversion (if subscription-based)
• Single-entity (non-consolidated) reporting may omit risks at affiliates (if any)
• Potential capitalization policy for development costs under JGAAP (not disclosed here)

Key Concerns:

• Lack of cash flow statement disclosure in the quarter limits earnings quality assessment
• Inconsistency between reported cost of sales and gross profit suggests classification differences; need detailed notes
• Share count not disclosed in this snapshot constrains per-share trend analysis beyond EPS

Investment Implications

Key Takeaways:

• Strong Q1 growth with margin expansion: revenue +18.8% YoY; OP +22.3% YoY; NI +23.6% YoY
• High profitability profile: GM 76.8%, OP margin ~48.6%, NPM 33.9%
• Low leverage and very strong liquidity: implied equity ratio ~88.9%, current ratio ~7.3x
• ROE of 4.89% driven primarily by high margins; asset turnover is modest as typical for SaaS
• Cash flow data missing; confirmation of cash conversion and deferred revenue trends is a key near-term focus

Metrics to Watch:

• Net revenue retention (NRR) and churn
• Deferred revenue (contract liabilities) and billings growth
• Accounts receivable days and cash conversion
• Operating expense growth vs. revenue (sales efficiency, R&D intensity)
• Headcount/hiring pace and its impact on operating leverage
• New product uptake and AI feature monetization
• Effective tax rate stability and any non-operating gains/losses

Relative Positioning: Within Japanese software/analytics peers, User Local exhibits above-peer operating margins and a conservative balance sheet, indicative of a scalable model and prudent financial management; sustained growth durability and demonstrable cash conversion will be key to maintaining this relative strength.

Disclaimer

This analysis was auto-generated by AI. Please note the following:

• No Guarantee of Accuracy: The accuracy and completeness of this analysis are not guaranteed. For accurate financial data, please refer to the original disclosure documents published on TDnet or other official sources
• Not Investment Advice: This analysis is for general informational purposes only and does not constitute investment advice under applicable securities laws. It is not a recommendation to buy or sell any specific securities
• At Your Own Risk: Investment decisions should be made at your own discretion and risk. We assume no liability for any losses incurred based on this analysis