3984 User Local

User Local sells text-analysis tools and a chatbot, ChatAI, that lets Japanese companies and governments use generative AI safely. Nine-month revenue rose 17% and operating profit rose 24%.

▲ Big public customers like Kyoto Prefecture and AEON now use ChatAI, and the company keeps 48 yen of every 100 yen of sales as profit.  ▼ Its older web-analytics tools could be replaced by AI-native rivals, and the company does not say how much revenue the AI products actually bring in.

The company has collected over 340 billion records of Japanese text, which its AI products learn from. But it reports as one segment, so outsiders cannot see each product's numbers.

▲ Every new contract adds data, and each employee generates ¥40.9 million of revenue — more than peers.  ▼ Microsoft, Google, and Amazon bundle chatbots with things companies already buy. With no churn or product figures disclosed, nobody can prove customers are locked in.

Founder-CEO Ito owns 38%. Cash of ¥9.4bn — a third of the market value — grows about ¥900 million a year. In May 2026 management announced a buyback, a dividend raise, and a share cancellation.

▲ The May announcements show management heard the complaint about idle cash. The dividend payout stepped from 16% toward 25% of profit.  ▼ There is no standing rule for returning cash and no stated ceiling on the pile. Each year the company earns more than it gives back.

The business sells for 8.6 years of operating profit. Its capital earns 22.7%. Net cash is 33.0% of the market cap; 25.0% of profit goes out as dividends. Today's dividend yield is 1.3%. Even paying out all of its profit, the yield at today's price would be 5.4% — below the 6% floor, so the case rests on growth and the other squares. At the current payout, the cash pile alone equals today's market cap in about 16.7 years. How this valuation floor works →