Q2 2024 Recruit Holdings Co Ltd Earnings Call

November 8, 2023

Only I am musical Shin group manager of Intramuscular relations and public relations and joining me today is Julie Jedi Executive Officer, Corporate planning Division the first quarter financial results presentation video and its transcript were uploaded to the IR website at three P. M. Today. So all 50 minutes of today's session will be used to have a Q&A session. At this time, we decided to start the call at four P. M, which is one of our earlier.

Then in the past this change is intended to speed up the process of uploading the Japanese English transcripts of the call it for the benefit of global investors.

Thank you very much.

And I appreciate your attendance today.

We uploaded the IR website.

The transcript at three P M. Today.

So I think you have seen it already.

Yeah.

Let me briefly summarize.

So for the consolidated full year outlook.

The numbers I will still be not disclosed.

Because market environment is still unforeseeable, many things could happen. So we will not disclose the outlook.

On the other hand.

In the financial results briefing in May we said, we expect both revenues and profit to decline.

Revenue declined will remain unchanged, but the adjusted EBITDA.

Will be a slight decline or flat.

And the net profit.

All of us.

Some one off.

An extraordinary losses are.

Incurred in the fourth quarter are we.

Will.

Keep of the net profit unchanged.

And the segment views were also expressed but HR technology.

Full year.

Outlook.

We will not be disclosed because it's still unforeseeable.

But when I E. The cobalt.

Talk.

In may.

If the U S dollar basis, Oh Gosh 20.

20% what will the margin be.

Well, we said probably mid twenties.

Martin can be possible, we said.

Yeah.

But we have tight cost control.

Yeah.

And the result is shown in the first half results.

Yeah.

So we'll get into the second half outlook.

The mid.

It will be more like upper Twenty's, then mid Twenty's. So we are changing our forecast do that but to repeat myself.

We're not saying that the revenue forecast is minus 20%.

Even if not something happens in the fourth quarter results plunge.

We can.

Generally that level of profit.

So let me repeat that message.

And in the short term.

Second quarter results.

Yeah.

We just announced and.

The each segment.

Outlook and the consolidated outlook were shared with you for the third quarter.

Now as we continue our dialogues matching and solutions and marketing solutions revenue.

Yeah.

The disclosure was not done for a long time, but on a biannual basis, we will now give the revenue breakdown.

In line with our business strategy.

Yeah.

So that is one special item at the time.

So we shared that information with you one hour ago.

Including H topics, we will be happy to answer your questions.

Kinder.

Yes.

Yeah.

Well first of all UBS Securities Sugiyama from please go ahead.

Yeah.

Okay.

I believe I'm on mute. It now can you hear my voice, yes, we can thank you.

Animal waste.

And are we really appreciate reconsidering the disclosures. So one question from me is related to the changing the pricing model of indeed after a six month, especially in the U S. How.

How much has it penetrated.

And then regarding your customers, who have who have switched to a new pricing model.

Have there been any changes to how they consume their budget. Thank you.

Thank you for your question.

On attrition boys as we mentioned previously.

We believe it has been progressing steadily especially for existing customers.

And in terms of the pace of consuming budget, where we have been making multiple changes, although we cannot give you any uniform answer.

But if you look at our revenue situation.

Of course, there are economic drivers, but as we described.

There are multiple.

Factors for a paid job numbers are to increase excuse me to change.

Okay.

But as we mentioned previously.

Short term revenue.

Is not something we're going after by increasing the unit price significantly.

The same budget with the same impact or larger impact Ah is something we are trying to offer to our customers with this strategy.

So we are offering a incremental value.

And once it is promoted and understood.

Our revenue would be.

Somewhat neutral it will not decline.

And I would describe it as a very smooth transition.

You are regarding the unit price for a job and have not.

<unk> decreased is that the correct understanding.

I believe it was in the F. A Q or are in my script.

But we have revisited our minimum budget.

And on a program of Finfet.

There is overall a positive impact.

This is not only coming from the impact of P. P. S. A but it has been progressing smoothly. Thank you that was encouraging thank you.

Goldman Sachs Securities minute assemblies.

This isn't the Nevada from Goldman Sachs. Thank you very much.

A few questions. So juggle one by one.

You can say two questions first.

First there both on HR Tech.

First is on your first a minimum budget.

I don't really understand your intention so I'm.

Sorry to ask you the basics budge.

What is the advantage for the clients.

And my second question is also on HR Tech.

Third quarter outlook Y O Y U S dollar basis, 18% revenue decline in Q on Q also revenue decline.

And operating expenses in yen amount is about the same as Q2 is edge in terms of the unknowns.

Q3 margin will decline against Q2, maybe because of seasonality or any planned investment.

Thank you very much.

Thank you for the question.

So let me answer your second question first.

Minus 9% quarter on quarter.

And at minus 18% year on year.

Yeah.

And as I mentioned in October.

Year over year.

Minus 18%.

So these are the numbers we presented.

Okay.

And the expenses as I mentioned at the outset, we are controlling our stringently.

And so a flat including natural turn.

A negative.

A slight negative on that basis.

Margin forecast is 27%.

But given the October status.

We're seeing around 27%, but.

But we think.

The 27% is a bit conservative for us.

So.

As a new vendors or are things, we have not communicated with you or new investment.

It's not that we are expecting any new investments or on other costs that we have not communicated to you.

So did I answer your second question, yes. Thank you.

So to your first question about the minimum budget.

So when the minimum or lower floor is said Ah Ah.

Lower at the result will not be produced.

It does not mean, indeed is not functioning properly it means that the budget setting is not appropriate.

So per job.

We by setting minimum budget per job the expectation and the outcome will be more aligned and more desirable outcome will be produced.

And we know that that will be the case, that's why we are setting this minimum budget.

So the clients who pay the money.

Are receding a positively.

I see.

So are you visualize the appropriateness of the budget setting I understand thank you so of course.

$25.

Oh, it will it will be around that level.

1% to $25 Budge.

Budge.

Lion skin choose not to pay that isn't just beef reliant.

And such clients.

We'll have the return of room not changed.

So.

If.

They returned maybe that much lower.

So the return on what you pay will become clearer.

More visualized.

I understand thank you.

Have you ever really isn't it over him. Please.

I'm sure. It goes on we'll ask questions about the Pie chart.

Up to how many questions may I ask all my name's not all of your basic <unk> up to two questions out of time understood. Then my first question is on matching our solutions.

The third quarter.

Outlook.

I would like to know your view.

Well when we look at matching solution from a slightly different view the third quarter is stunning beauty travel.

Considering their seasonality.

I can imagine that the revenue could be a pretty sizable in this quarter.

And the margin is planned at 23%.

So as the revenue grows.

Margin.

Could expand proportionately.

But.

What is the context of setting 23% as the margin outlook that is my first question. Thank you.

Thank you.

We are also looking at the past numbers, but are the margins, let me find the third quarter. However, there isn't.

The significant difference over the past.

Two years.

Of course, it could be much lower in the following quarters, but it doesn't necessarily mean that we have exceptionally high margin in the third quarter. For example in 2019 are pre COVID-19.

The first quarter.

Was 26, 8% the third quarter is 27, 4%.

Last year, the first quarter was 17, 4% of third quarter was 65%.

The second quarter is a slightly lower but there is no significant did or junk.

So.

23% doesn't imply or anything, but it's just what we not really.

Reached.

Understood. Thank you My second question is on the Pie chart page nine. Thank you. Thank you for that question.

So it's on page nine.

Well I would like to make some basic clarification. This dark blues beauty E travel dining and sound solutions altogether.

But can I assume that there are specific revenue figure it and this is a phone yes.

Okay.

Then.

Obstructing saw solutions alone I mean don't you orientation, but can I assume that it will be around 10 billion yen in five Ah well at least the value as a result of the.

Uh huh.

Subtraction.

And can I assume that fall solutions, our business is now.

A meaningful five.

In other areas, we are fortunate to have sizable.

Businesses so what.

Is sizable.

That is a different question, but I can understand your impression as a result of the subtraction exercise you've done I.

I see the revenue of our solutions is a clearer now although I really appreciate this disclosure I think it very much I will ask another question later.

Sticky Securities you remember that on lease.

Hello. This is Citigroup securities Yamamoto speaking thank you.

I have two questions.

First is HR tech.

North America, and non North America.

Our status is my first question.

Looking at your numbers North American weakness is supported by the regions outside of North America strength is.

Does this COVID-19 or <unk>.

With P. B S a a per penetration or the minimum budget setting.

Settings.

Does that have an impact could you elaborate that's my first question.

Second question is.

In the past indeed, and N S resource was consolidated and the advertisement office was unified utilize the system to have for the advertisement in the right media more efficiently.

In the U S. Indeed office.

Do you buy a plan to integrate U S. Indeed office with Japan or not.

And any upfront investment this fiscal year.

Okay.

Thank you very much.

Thank you for the question.

So let me answer your second question first.

Yeah.

So the full year of business direction the view.

At that point.

Upfront investment was not considered a like you said you might have on of course, we have many plans.

But we do not have a full year a plan that includes your point.

There are many possibilities so.

We cannot clearly say this is not included this is included but.

We are thinking of the most possible most promising measured for our business and the biggest contributor to a better business efficiency.

So we're thinking of various measures and try to judge whether it works or not as we move forward. So it's not that something will happen today or tomorrow, but as you rightly said we will continue.

Pursuing a more product productive efficient.

Better job for our clients.

So that was your second question to your first question.

Our market compared to our market share in the U S. A the other overseas businesses are there are some countries, where our competitors are very strong.

Europe.

Environment is as difficult as the U S.

Yeah.

But there is still a big room for growth.

So there are some European countries. Many countries in Europe, where we are acquiring market share now on a dollar basis.

And local currency basis.

The <unk>.

Situation is different and we look at both.

So in some cases.

Overseas business.

On a local currency basis Nee theme.

Seen stronger revenue may be growing more.

And so it seems more flat.

Yeah.

Understood.

Does this answer your question.

Thank you.

So we want to talk more about individual non U S countries, it will be clearer, but.

Because the dollar is strong.

Non U S business is like this.

And we like it we like how things are thank you.

Yes.

I mean, the whole securities gives you microphone. Please go ahead.

This is Chris Motl speaking thank you for your explanation.

I have one big question within Omnichannel solutions I have a question about HR solutions.

According to the financial risk.

The old <unk>.

All the comments there.

Mizuho Shen: Translation is provided for the convenience of investors only. I am Mizuho Shen, Group Manager of Investor Relations and Public Relations. Joining me today is Junichi Arai, Executive Officer of the Corporate Planning Division. The Q1 financial results presentation video and its transcript were uploaded to the IR website at 3:00PM today. All 50 minutes of today's session will be used as a Q&A session. This time we've decided to start the call at 4:00PM, which is 1 hour earlier than in the past. This change is intended to speed up the process of uploading the Japanese and English transcripts of the call for the benefit of global investors. Thank you very much, and I appreciate your attendance today. We uploaded to the IR website the transcript at 3:00PM today, so I think you have seen it already. Let me briefly summarize.

and translation is provided for the convenience of investors only. I am Mizuho Shin, Group Manager of Inter-Vestor Relations and Public Relations. And joining me today is Junichi Arai, Executive Officer of the Corporate Planning Division. The first quarter financial results presentation video and its transcript were uploaded to the IR website at 3 p.m. today. So all 15 minutes of today's session will be used as a Q&A session. This time we've decided to start the call at 4 p.m., which is one hour earlier than in the past. This change is intended to speed up the process of uploading the Japanese and English transcripts of the call for the benefit of global investors. Thank you very much.

And in terms of the attributes or industries.

Can you give us any colors on all of the the hiring situation of the company's recently and in the third quarter.

2% growth is projected for HR solutions.

And in the second quarter, some clients were hesitant to hire and maybe E. Such clients are expected to increase or is it going to be a high hurdle to achieve a year over year growth.

Junichi Arai: Thank you very much, and I appreciate your attendance today. We uploaded to the IR website the transcript at 3:00PM today, so I think you have seen it already. Let me briefly summarize.

So what is the assumption for the momentum changed from the third to the fourth quarter. That's my Big question.

We uploaded the IR website, the transcript at 3 p.m. today. I think you have seen it already.

Thank you for your question.

As we explained.

For the second quarter. We are initially explained the the revenue projection and the result is slightly lower than that and the third quarter is around 2% growth is being projected so in terms of growth rate. It is a more moderate.

Mizuho Shen: For the consolidated full year outlook, the numbers will still be not disclosed because market environment is still unforeseeable. Many things could happen, so we will not disclose the outlook. On the other hand, in the financial results briefing in May, we said we expect both revenues and profit to decline. Revenue decline will remain unchanged, but the adjusted EBITDA will be a slight decline or flat. The net profit, unless some one-off extraordinary losses are incurred in Q4, we will keep the net profit unchanged. The segment views were also expressed. HR Technology full year outlook will not be disclosed because it's still unforeseeable. When I and Idekoba talked in May, if the US dollar bases fall 20%, what will the margin be?

So for the consolidated full year outlook, the numbers will still be.

Junichi Arai: For the consolidated full year outlook, the numbers will still be not disclosed because market environment is still unforeseeable. Many things could happen, so we will not disclose the outlook. On the other hand, in the financial results briefing in May, we said we expect both revenues and profit to decline. Revenue decline will remain unchanged, but the adjusted EBITDA will be a slight decline or flat. The net profit, unless some one-off extraordinary losses are incurred in Q4, we will keep the net profit unchanged. The segment views were also expressed. HR Technology full year outlook will not be disclosed because it's still unforeseeable. When I and Idekoba talked in May, if the US dollar bases fall 20%, what will the margin be?

because market environment is still unforeseeable. Many things could happen, so we will not disclose the outlook.

That's what the numbers tell you.

Some clients are cautious, but other clients are active.

A job board.

In the financial results briefing in May, we said we expect both revenues and profit to decline.

Or they go into post ads.

Or are they going to go to placement.

Revenue decline will remain unchanged, but the adjusted EBITDA will be a slight decline or flat, and the net profit

Service and what is the category of the clients are looking for that is the that makes a lot of difference in the future is unclear.

some one-off, and extraordinary losses are incurred in the fourth quarter. We will keep the

Hmm.

Type of programming or engineers are will continue to have high demand regardless of industry or the type of clients.

And of course.

Service business demand will continue to be high on the other hand and fostering.

Maybe weaker.

and the segment views were also expressed, but HR technology...

So depending on the industry. It's true that there are differences in colors so to speak.

Yeah.

But job or.

outlook will not be disclosed because it's still unforeseeable. But when I am Ilekova

Rise of there is a strong demand who is a mixture.

Understood. Thank you.

So toward the fourth quarter do you think this trend is go into continue I'm, sorry, I'm asking about the future.

If the US dollar base is 20%, what will the margin be? We said probably mid-20s. Margin can be possible, we said. But we have tight cost control.

Well because of the given situation.

Mizuho Shen: We said, probably mid-20s margin can be possible, we said. We have tight cost control, and the result is shown in the H1 results. Given the H2 outlook, the mid will be more like upper 20s than mid-20s. We are changing our forecast to that. To repeat myself, we're not saying that the revenue forecast is -20%. Even if not something happens and the Q4 results plunge, we can generate that level of profit. Let me repeat that message. In the short term, Q2 results we just announced and the outlook for each segment and the consolidated outlook were shared with you for the Q3.

Junichi Arai: We said, probably mid-20s margin can be possible, we said. We have tight cost control, and the result is shown in the H1 results. Given the H2 outlook, the mid will be more like upper 20s than mid-20s. We are changing our forecast to that. To repeat myself, we're not saying that the revenue forecast is -20%. Even if not something happens and the Q4 results plunge, we can generate that level of profit. Let me repeat that message. In the short term, Q2 results we just announced and the outlook for each segment and the consolidated outlook were shared with you for the Q3.

Yeah.

Our full year.

Projection is less than what we originally is closed.

So I would like to I'll make my decision only off of trucking between fourth and the third quarter.

Macquarie Securities in Yokohama.

Thank you. This is when you go from Macquarie.

Thank you.

will be more like upper 20s than mid-20s. So we are changing our forecast to that. But to repeat myself, we're not saying that the revenue forecast is minus 20%.

One question HR Tech.

Sorry, if you already explained this but.

You've been doing good cost control in a in a jar in the elegance and of the advertisement.

even if something happens and the fourth quarter results plunge, we can generate that level of profit. So let me repeat that message and in the short term.

And in the full year content Baidu croissant.

Even if the underlying basis changes you can achieve the higher 20% margin.

But even if the top line does not drop that much.

You froze in the hiring and took other measures are will you resume all those measures.

outlook and the consolidated outlook were shared with you for the third quarter.

And if you resume your hiring what will be the trigger.

Thank you.

Mizuho Shen: Now, as we continue our dialogue, Matching & Solutions and Marketing Solutions revenue, the disclosure was not done for a long time, but on a biannual basis, we will now give the revenue breakdown in line with our business strategy. That is one special item this time. We shared that information with you one hour ago. Including each topic, we will be happy to answer your questions. Jason? Now first of all, UBS Securities, please go ahead.

Junichi Arai: Now, as we continue our dialogue, Matching & Solutions and Marketing Solutions revenue, the disclosure was not done for a long time, but on a biannual basis, we will now give the revenue breakdown in line with our business strategy. That is one special item this time. We shared that information with you one hour ago. Including each topic, we will be happy to answer your questions. Jason?

Now as we continue our dialogue, matching in solutions and marketing solutions, revenue.

In may.

Results call or in February.

The disclosure was not done for a long time, but on a biannual basis, we will now give the revenue breakdown in line with our business strategy.

Peter Cobos unsaid.

If the difficult situate it said that the difficult situation will continue for around one year more than one year.

And that is the case this year, so what will happen next year.

Calendar year 'twenty 'twenty four.

So I think that is what your question is coming from.

including each topic, we will be happy to answer your questions. Z corresponds,

So it's not just the fourth quarter numbers well beyond that.

We are trying to consciously ascertain the outlook.

Mizuho Shen: Now first of all, UBS Securities, please go ahead.

To communicate to you.

As of today.

The economy.

It does not seem to turn upward.

And lead to strong demand so.

Even if the fourth quarter, where our revenue becomes stronger than we anticipate it will not be substantial.

[Analyst] (UBS Securities): I believe I'm unmuted now. Can you hear my voice?

Kenji Fukuyama: I believe I'm unmuted now. Can you hear my voice?

I believe I'm unmuted now. Can you hear my voice? Yes, we can. Thank you. Thank you, as always. And we really appreciate reconsidering the disclosures. So one question for me is related to the change in the pricing model of Indeed after six months, especially in the US. How much has it penetrated?

So for now we will use our money to where we need to do and prepare for the next upturn.

Mizuho Shen: Yes, we can. Thank you.

[Analyst]: Thank you as always. We really appreciate reconsidering the disclosures. One question from me is related to the change in the pricing model of Indeed. After six months, especially in the US, how much has it penetrated? Regarding your customers who have switched to a new pricing model, has there been any changes to how they consume their budget? Thank you.

Kenji Fukuyama: Thank you as always. We really appreciate reconsidering the disclosures. One question from me is related to the change in the pricing model of Indeed. After six months, especially in the US, how much has it penetrated? Regarding your customers who have switched to a new pricing model, has there been any changes to how they consume their budget? Thank you.

Our behavior, our view remains unchanged.

So we don't know what the revenue will look like in the fourth quarter, but.

A short term margin, whether it hits 30, or 35%, we will keep that behavior.

And regarding your customers who have switched to a new pricing model, have there been any changes to how they consume their budget? Thank you.

In running our business.

So if that happens.

We don't know when it will happen.

Mizuho Shen: Thank you for your question. Penetration wise, as we mentioned previously, we believe it has been progressing steadily, especially for existing customers. In terms of the pace of consuming budget, well, we have been making multiple changes, so we cannot give you any uniform answer. If you look at our revenue situation, of course there are economic drivers, but as we described, there are multiple factors for our paid job numbers to increase, excuse me, to change. As we mentioned previously, short-term revenue is not something we're going after by increasing the unit price significantly. The same budget with the same impact or larger impact is something we are trying to offer to our customers with this strategy. We are offering incremental value, and once it is promoted and understood, revenue would be somewhat neutral.

Junichi Arai: Thank you for your question. Penetration wise, as we mentioned previously, we believe it has been progressing steadily, especially for existing customers. In terms of the pace of consuming budget, well, we have been making multiple changes, so we cannot give you any uniform answer. If you look at our revenue situation, of course there are economic drivers, but as we described, there are multiple factors for our paid job numbers to increase, excuse me, to change. As we mentioned previously, short-term revenue is not something we're going after by increasing the unit price significantly. The same budget with the same impact or larger impact is something we are trying to offer to our customers with this strategy. We are offering incremental value, and once it is promoted and understood, revenue would be somewhat neutral. It will not decline. I would describe it as a very smooth transition.

Thank you for your question. Penetration, as we mentioned previously.

But if we can clearly see the bottom.

We may take such action.

But we don't know where the bottom will be.

We believe it has been progressing steadily, especially for existing customers.

So we're not thinking of protection yet.

Thank you.

Okay.

And in terms of the pace of consuming budget, well, we have been making multiple changes. So we cannot give you any uniform answer. But if you look at our revi-

Thank you the CLSA Securities Kudos I'm. Please go ahead.

This is Carlos speaking can you hear my voice, yes, Hello.

Hello.

So I also have a question on HR technology.

Of course, there are economic drivers, but as we described,

In the third quarter minus 18% as projected.

The second quarter is the same and also the same for October So in November and December I think the protection is also the same and last year's hurdle is going to be lower and it's about the our assumption works.

factors for paid job numbers to increase, excuse me, to change, but as we

P. P. F. A contribution is expected to be more resulting in 18% minus 18% what is your assumption here.

It's not something we're going after by increasing the unit price significantly.

As I responded earlier, an approximate model change is neutral.

the same budget with the same impact or larger impact is something we are trying to offer to our customers with this strategy.

Is the basic assumption.

Oh supply and demand imbalances going to the east and the economic situation continues to be tough. These are the two main factors.

We are offering incremental value and once it is promoted and understood, revenue would be

Understand.

And the bottom.

What is the Kpis for you.

Mizuho Shen: It will not decline. I would describe it as a very smooth transition.

Sure.

<unk>.

and I would describe it as a very smooth transition. Thank you. Regarding the unit price for a job, it has not decreased. Is that the correct understanding?

Maybe increased for three consecutive months of what is the keep you on for you.

[Analyst]: Thank you. Regarding the unit price for a job, it has not decreased. Is that the correct understanding?

Kenji Fukuyama: Thank you. Regarding the unit price for a job, it has not decreased. Is that the correct understanding?

Well macro economic into.

Indicators or something we're focusing on a vehicle button.

Mizuho Shen: I believe it was in the FAQ or in my script, but we have revisited our minimum budget. As Idekoba-san said, there is overall a positive impact. This is not only coming from the impact of PPSA, but it has been progressing smoothly.

Junichi Arai: I believe it was in the FAQ or in my script, but we have revisited our minimum budget. As Idekoba-san said, there is overall a positive impact. This is not only coming from the impact of PPSA, but it has been progressing smoothly.

I believe it was in the FAQ or in my script.

We were looking at those are indicators to to paint a picture of the future. So there is no one magic indicator that we are focusing on.

but we have revisited our minimum budget. And as Philipa Amazon said,

It is a combination of multiple factors that we take into account.

Of course, we have internal data.

This is not only coming from the impact of PPSA, but it has been progressing smoothly. Thank you. That was encouraging. Thank you. Goldman Sachs security. Please.

And we also have.

[Analyst]: Thank you. That was encouraging. Thank you.

Kenji Fukuyama: Thank you. That was encouraging. Thank you.

Public indicators like jokes.

[Equity Research Analyst] (Goldman Sachs Securities): Goldman Sachs Securities, Munakata-san, please. This is Munakata from Goldman Sachs. Thank you very much. I have two questions. Should I go one by one? You can say two questions first. First, they're both on HR Tech. First is on your firm's minimum budget. I don't really understand your intention, so I'm sorry to ask you the basics, but what is the advantage for the clients? My second question is also on HR Tech's Q3 outlook, Y-o-Y US dollar basis, 18% revenue decline and Q-on-Q also revenue decline. Operating expenses in yen amount is about the same as Q2 you said, in terms of amount. Q3 margin will decline against Q2, maybe because of seasonality or any planned investment. Thank you very much. Thank you for the question. Let me answer your second question first.

Mizuho Shen: Goldman Sachs Securities, Munakata-san, please.

Minami Munakata: This is Munakata from Goldman Sachs. Thank you very much. I have two questions. Should I go one by one? You can say two questions first. First, they're both on HR Tech. First is on your firm's minimum budget. I don't really understand your intention, so I'm sorry to ask you the basics, but what is the advantage for the clients? My second question is also on HR Tech's Q3 outlook, Y-o-Y US dollar basis, 18% revenue decline and Q-on-Q also revenue decline. Operating expenses in yen amount is about the same as Q2 you said, in terms of amount. Q3 margin will decline against Q2, maybe because of seasonality or any planned investment. Thank you very much.

Kudos on fed.

How much job openings are are increasing or decreasing.

I have two questions. So should I go one by one? Oh, you can say two questions first. First, they're both on the HR techs.

What is the trend.

These are over or something where you.

Pay our attention to what is difficult is well.

What is the trigger for our clients to think about restarting hiring.

I don't really understand your intention, so I'm sorry to ask you the basics, but what is the advantage?

There may be a gap with the actual economic situations.

Maybe some people will <expletive> elite.

Or some people are more cautious so it's a very difficult.

And my second question is also on HRTech's third quarter outlook.

YOY, U.S. dollar basis, 18% revenue decline, and Q1Q also revenue decline.

Decision, but.

Are we referring to basically the same indicators that you would look at.

It's not something automatic for example, if it increases were how many months out if its good.

and operating expenses in yen amount is about the same as Q2 usage in terms of amount.

Understand.

So in terms of.

Q3 margin will decline against Q2, maybe because of seasonality or any planned investment? Thank you very much. Thank you for the question.

The number of paid dropped off I think it was 50% owned 50% for the second quarter, but how should we look at this in the fourth quarter.

Junichi Arai: Thank you for the question. Let me answer your second question first. -9% quarter-on-quarter and -18% year-on-year. As I mentioned, in October, year-over-year, -18%. These are the numbers we presented. The expenses, as I mentioned at the outset, we are controlling stringently, and so flat including natural turn, negative, slight negative on that basis. Margin forecast is 27%. Given the October status, we're seeing around 27%, but we think the 27% is a bit conservative for us. Some new measures or things we have not communicated with you or new investment, it's not that we are expecting any new investments or other costs that we have not communicated to you. Did I answer your second question?

Well I think it was a question for a minute about the phone that I responded to earlier.

Mizuho Shen: -9% quarter-on-quarter and -18% year-on-year. As I mentioned, in October, year-over-year, -18%. These are the numbers we presented. The expenses, as I mentioned at the outset, we are controlling stringently, and so flat including natural turn, negative, slight negative on that basis. Margin forecast is 27%. Given the October status, we're seeing around 27%, but we think the 27% is a bit conservative for us. Some new measures or things we have not communicated with you or new investment, it's not that we are expecting any new investments or other costs that we have not communicated to you. Did I answer your second question? Yes. Thank you. To your first question about the minimum budget.

When you have been carrying out those imagers.

quarter on quarter, and minus 18% year on year. And as I mentioned, in October , year over year.

The drop or change of the job as volume is no longer relevant to our revenue trends.

So in my script earlier.

We mentioned that we're no longer going to be disclosing that information so I recommend.

And the expenses, as I mentioned at the outset, we are controlling stringently and so flat, including natural churn, negative, slight negative on that basis. Margin for

We recommend that you shouldn't rely too much on that number.

And going back to the.

The original topic.

The number of job postings.

Is.

A data off we're often and what companies are starting to think according to you to go back I think is helpful for me.

F N B C nickel securities might assemblies.

But assemblies.

Yeah.

Hello, Thank you very much.

So my question is on HR Tech.

Like you said earlier.

It will take some time for it to normalize.

Yeah.

And lifting the feed towards normalization seems to be mild it is not plunging or declining rapidly.

So some new measures or things we have not communicated with you or new investment. It's not that we are expecting any new investments or other costs that we have not communicated to you. So did I answer your second question? Yes, thank you.

So it may take some time to towards normalization.

It may linger may take a long time, so next year.

Minami Munakata: Yes. Thank you.

If the top line does not bottomed out.

Junichi Arai: To your first question about the minimum budget. When the minimum or lower floor is set lower, the result will not be produced. It does not mean indeed it's not functioning properly. It means that the budget setting is not appropriate. Per job, by setting minimum budget per job, the expectation and the outcome will be more aligned and more desirable outcome will be produced. We know that that will be the case. That's why we are setting this minimum budget. The clients who pay the money are receiving this positively. I see. You will visualize the appropriateness of the budget setting.

How much cost control can you do next year.

You started reducing cost us from last year. So it may be more difficult for you to control. Your house further so if you have an image. So if your view on the time it requires more normalization in your cost control measures. Thank you.

Mizuho Shen: When the minimum or lower floor is set lower, the result will not be produced. It does not mean indeed it's not functioning properly. It means that the budget setting is not appropriate. Per job, by setting minimum budget per job, the expectation and the outcome will be more aligned and more desirable outcome will be produced. We know that that will be the case. That's why we are setting this minimum budget. The clients who pay the money are receiving this positively. I see. You will visualize the appropriateness of the budget setting. I understand. Thank you. Of course, $25 will be around that level, $20 to $25. Clients can choose not to pay this and just be a free client. Such clients will have the return from not paying.

So when the minimum or lower floor is set lower, the result will not be produced.

It does not mean, indeed, it's not functioning properly. It means that the budget setting is not appropriate.

So normalization, meaning the supply demand balance yes.

If I can add tightness.

From the extraordinarily tight supply demand. It is now relaxing so thank you very much.

So per job, by setting minimum budget per job, the expectation and the outcome will be more aligned and more desirable outcome will be produced. And we know that that will be the case. That's why we are setting this minimum budget. So the-

Next year.

Ah the economy will turn upward in the hiring will progress no that is not realistic that is not the view we have at this point in time.

Yeah.

So I think you know better than me.

I see. So you will visualize the appropriateness of the budget setting. I understand. Thank you. So, of course, 25.

Well, we see a hard landing or a deep dive oriented slow decline.

Minami Munakata: I understand. Thank you.

Junichi Arai: Of course, $25 will be around that level, $20 to $25. Clients can choose not to pay this and just be a free client. Such clients will have the return from not paying. If their return may be that much lower. The return on what you pay will become clearer, more visualized.

Or or shallow bottom about linger for a long time, we're thinking of all these scenarios as we consider our next steps and I think you are too and we are too.

$20 to $25, but clients can choose not to pay this and just be a free client. And such clients will have the return from not paying. So if their return may be that much lower.

But.

Like I mentioned earlier we.

We don't know when the timing will be.

But when the market recovers.

Mizuho Shen: If their return may be that much lower. The return on what you pay will become clearer, more visualized. I understand. Thank you. Now the other securities, Nagao-san, please. I'm sure Nagao-san will ask questions about the pie chart.

We need to become stronger and bigger so that is our only focus to become stronger when the market recovers next.

Minami Munakata: I understand. Thank you.

So no matter, how long or shallow or deep. It is all we are doing what we need to do.

Mizuho Shen: Now the other securities, Nagao-san, please. I'm sure Nagao-san will ask questions about the pie chart.

But as we mentioned in May this year.

We need to keep our discipline as a listed company.

[Equity Research Analyst] (BofA Securities): Up to how many questions may I ask? My name is Nagao of BofA Securities.

Yoshitaka Nagao: Up to how many questions may I ask? My name is Nagao of BofA Securities.

Up to how many questions may I ask? My name is Nago of EOA Securities. Up to two questions at a time. Understood. Then my first question is on matching resolutions. The third quarter outlook.

And demonstrate carryout and demonstrate what we are doing to the capital markets participants.

Mizuho Shen: Up to two questions at a time.

[Analyst]: Understood. My first question is on Matching Solutions. The Q3 outlook, I would like to know your view. When we look at Matching Solutions from a slightly different view, the Q3 is dining, beauty, travel, considering their seasonality, I can imagine that the revenue could be pretty sizable in this quarter. The margin is planned at 23%. As the revenue grows, margin could expand proportionately. What is the context of setting 23% as the margin outlook? That is my first question. Thank you.

Yoshitaka Nagao: Understood. My first question is on Matching Solutions. The Q3 outlook, I would like to know your view. When we look at Matching Solutions from a slightly different view, the Q3 is dining, beauty, travel, considering their seasonality, I can imagine that the revenue could be pretty sizable in this quarter. The margin is planned at 23%. As the revenue grows, margin could expand proportionately. What is the context of setting 23% as the margin outlook? That is my first question. Thank you.

So we must do what we need to do.

But there are things we can do in the short term and other things.

We have to hit the right balance.

So like we said last time.

Well, when we look at matching a solution from a slightly different view, the third quarter is dining, beauty, travel.

The assets and the talent that will contribute to our future growth, we will invest there without hesitation.

considering their seasonality, I can imagine that the revenue could be pretty sizable in this quarter.

So of course, we had the short term view.

And the margin is planned at 23%.

But.

The biggest focus is how to grow when the economy recovers.

margin could expand proportionately.

That is our sole focus and so whether the whether the time is long or short we will do what we need to we will not do what we should not do.

what is the context of setting 23% as the margin outlook? That is my first question. Thank you.

We will not push ourselves too much to control our costs.

Mizuho Shen: Thank you. We are also looking at the past numbers, but the margin is slightly high in Q3. However, there isn't a significant difference over the past two years. Of course, it could be much lower in the following quarters, but it doesn't necessarily mean that we have exceptionally high margin in Q3. For example, in 2019, pre-COVID, Q1 was 26.8%, Q3 is 27.4%. Last year, Q1 was 17.4%, and Q3 was 60.5%. Q2 is slightly lower, but there is no significant dip or jump. 23% doesn't imply anything, but it's just what we naturally reached.

Junichi Arai: Thank you. We are also looking at the past numbers, but the margin is slightly high in Q3. However, there isn't a significant difference over the past two years. Of course, it could be much lower in the following quarters, but it doesn't necessarily mean that we have exceptionally high margin in Q3. For example, in 2019, pre-COVID, Q1 was 26.8%, Q3 is 27.4%. Last year, Q1 was 17.4%, and Q3 was 60.5%. Q2 is slightly lower, but there is no significant dip or jump. 23% doesn't imply anything, but it's just what we naturally reached.

Thank you this maybe a similar question but.

We are also looking at the past numbers, but the margin is slightly behind the third quarter. However, there isn't.

Until that time comes.

You will control costs further.

significant difference over the past two years.

And if the environment deteriorates you will keep the discipline is Alyssa company you said that you will keep the margin at a certain level.

Of course, it could be much lower in the following quarters, but it doesn't necessarily mean that we have exceptionally high margin in the third quarter. For example, in 2019, pre-COVID,

Yeah.

Like I say every time.

We do not take certain steps to keep the margin at a certain level every quarter.

What 26.8% the third quarter is 27.4%.

But at the same time we.

Have a margin level that we have to keep as a listed company. So we have that perspective too.

Last year, the first quarter was 17.4%, third quarter was 60.5%.

But it's not that we will do everything.

The second quarter is slightly lower, but there is no significant dip or jump.

To keep that.

I understand thank you.

Thank you Julia Securities now found please go ahead.

23% doesn't imply anything, but it's just what we naturally reach.

So this is my second term.

So for the matching and solutions business I have a question about your view regarding the margin in this segment.

[Analyst]: Understood. Thank you. My second question is, on the pie chart, page nine.

Yoshitaka Nagao: Understood. Thank you. My second question is, on the pie chart, page nine.

Understood. Thank you. My second question is on the pie chart, page nine. Thank you. Thank you for that question.

Mizuho Shen: Thank you. Thank you for that question. It's on page nine.

Junichi Arai: Thank you. Thank you for that question. It's on page nine.

In the second quarter.

[Analyst]: Well, I would like to make some basic clarification. This dark blue, beauty, travel, dining, and SaaS solutions altogether. Can I assume that there are specific revenue figures and this is a sum?

Yoshitaka Nagao: Well, I would like to make some basic clarification. This dark blue, beauty, travel, dining, and SaaS solutions altogether. Can I assume that there are specific revenue figures and this is a sum?

Well, I would like to make some basic clarifications. This dark blues, beauty, travel, dining and sound solutions all together.

In.

Marketing solutions.

EBITDA margin.

It was approximately 30%.

And for HR solutions is approximately 23% above for the second quarter last year on a full year basis. It was 25% around 25% for marketing solutions.

Can I assume that there are specific revenue figures, and this is a sum? Yes.

Mizuho Shen: Yes.

Junichi Arai: Yes.

[Analyst]: Okay. Extracting SaaS solutions alone, it may not be your intention, but can I assume that it will be around JPY 10 billion in size? Well, at least that is a result of the subtraction. Can I assume that SaaS solutions business is now a meaningful size?

Yoshitaka Nagao: Okay. Extracting SaaS solutions alone, it may not be your intention, but can I assume that it will be around JPY 10 billion in size? Well, at least that is a result of the subtraction. Can I assume that SaaS solutions business is now a meaningful size?

The margin has significantly improved for our marketing solutions what is the driver here.

Extracting SAS solutions alone may not be your intention, but can I assume that it will be around 10 billion yen in size? Well, at least if that is the result of the...

And.

For HR solutions margin in the second quarter was 23% in last year on a full year basis. It was 12%. So this is again a significant improvement.

subtraction. And can I assume that South Solutions Business is now

I believe this is not only coming from cost reductions, but also due to revenue growth.

Mizuho Shen: In other areas, we are fortunate to have sizable businesses. What is sizable? That is a different question, but I can understand your impression as a result of the subtraction exercise you've done.

Junichi Arai: In other areas, we are fortunate to have sizable businesses. What is sizable? That is a different question, but I can understand your impression as a result of the subtraction exercise you've done.

Resulting in margin improvement for both of the businesses what is the mechanism for this margin improvement what is the most recent situations. Thank you.

In other areas, we are fortunate to have sizable.

businesses. So what is sizable?

Yeah.

The revenue mix has been changing for one thing.

That is a different question, but I can understand your impression as a result of the subtraction exercise you've done. I see the revenue of South Solutions is clearer now, so I really appreciate this disclosure. Thank you very much. I will ask another question later.

For each of the subdivisions for example in HR solutions, we have media.

[Analyst]: I see. The revenue of SaaS solutions is clearer now, so I really appreciate this disclosure. Thank you very much. I will ask another question later.

Yoshitaka Nagao: I see. The revenue of SaaS solutions is clearer now, so I really appreciate this disclosure. Thank you very much. I will ask another question later.

And placement services.

[Equity Research Analyst] (Citigroup Securities): Citigroup Securities, Yamamura-san, please. Hello. This is Citigroup Securities, Yamamura speaking. Thank you. I have two questions. First is HR Tech. North America and non-North America, status is my first question. Looking at your numbers, North American weakness is supported by the regions outside of North America's strength. Is this COVID or just PPSA penetration or the minimum budget setting? Does that have an impact? Could you elaborate? That's my first question. Second question is, in the past, Indeed and M&S resource was consolidated and the advertisement office was unified to utilize the system to have the advertisement in the right media more efficiently. In US Indeed office, do you have plans to integrate US Indeed office with Japan or not? And any upfront investment this fiscal year? Thank you very much. Thank you for the question. Let me answer your second question first.

Mizuho Shen: Citigroup Securities, Yamamura-san, please.

The revenue breakdown is not disclosed.

Junko Yamamura: Hello. This is Citigroup Securities, Yamamura speaking. Thank you. I have two questions. First is HR Tech. North America and non-North America, status is my first question. Looking at your numbers, North American weakness is supported by the regions outside of North America's strength. Is this COVID or just PPSA penetration or the minimum budget setting? Does that have an impact? Could you elaborate? That's my first question. Second question is, in the past, Indeed and M&S resource was consolidated and the advertisement office was unified to utilize the system to have the advertisement in the right media more efficiently. In US Indeed office, do you have plans to integrate US Indeed office with Japan or not? And any upfront investment this fiscal year? Thank you very much.

So I cannot explain what is the mechanism for margin growth there.

Hello, this is city group security speaking. Thank you. I have two questions. First is.

And I can say the same for marketing solution side of Fone.

But I hope you will remember that back in May.

Or even before that.

We just described.

status is my first question. Looking at your numbers, North American weakness is supported by the regions outside of North America's strengths.

Last year, we have strategic investment in matching solutions.

And Oh four without ear, we didn't really mention the specifics of this investment but in this may I think.

Is this COVID, or is this PPSA penetration, or the minimum budget settings?

Okay.

You learned that more investments were made in HR solutions.

Does that have an impact? Could you elaborate? That's my first question.

But we're not going to be making the same level of investment. This year I think that what we explained back in may.

In the past, Indeed and MNS resource was consolidated and the advertisement office was unified to utilize the system to have the advertisement in the right media more efficiently.

In HR solutions, there is a difference in how we spend money.

And of course, a marketing solutions or we are all using less money for investments here.

Last year.

In this segment of our whole, 14.5%, whereas the EBITDA margin.

Do you have plans to integrate U.S. Indeed Office with Japan or not? And any upfront investment this fiscal year?

Yeah.

But this year.

It's 20% overall that is the target.

Junichi Arai: Thank you for the question. Let me answer your second question first. The full year business direction, the view at that point, upfront investment was not considered, like you said, Yamamura-san. Of course, we have many plans, but we do not have a full year plan that includes your point. There are many possibilities, so we cannot clearly say, this is not included, this is included, but we are thinking of the most possible, most promising measures for our business and, the biggest contributor to, better business efficiency. We're thinking of various measures, and trying to judge whether it works or not as we move forward. It's not that something will happen today or tomorrow, but as you rightly said, we will continue, pursuing a more product-productive, efficient, better job for our clients. That was your second question.

And no telephone mentioned.

As you mentioned in the first half.

Uh huh.

Marketing solutions will be around 30% and the HR solutions will be 23% for the first half that is the level of the margin.

Mizuho Shen: The full year business direction, the view at that point, upfront investment was not considered, like you said, Yamamura-san. Of course, we have many plans, but we do not have a full year plan that includes your point. There are many possibilities, so we cannot clearly say, this is not included, this is included, but we are thinking of the most possible, most promising measures for our business and, the biggest contributor to, better business efficiency. We're thinking of various measures, and trying to judge whether it works or not as we move forward. It's not that something will happen today or tomorrow, but as you rightly said, we will continue, pursuing a more product-productive, efficient, better job for our clients. That was your second question.

So the full year of business direction, the view.

And there is the our headquarters costs and when we deduct that.

upfront investment was not considered, like you said, Yamagata-san. Of course, we have many plans.

The overall margin will be around 22%.

But we do not have a full year plan that includes your point. Are there?

So when we take into account the headquarter cost.

There is a certain level of performance, we need to achieve in order to realize 22%. So we have to control our spending.

We cannot clearly say this is not included, this is included, but.

And.

We are thinking of the most possible, most promising measures for our business and the biggest contributor to better business efficiency.

On the business side, we scrutinize the need for hiring.

So that we can achieve a 20% margin on a full year basis.

Thank you.

So we're thinking of various measures and try to judge whether it works or not as we move forward. So it's not that something will happen today or tomorrow, but as you rightly said, we will continue.

One follow up.

In the past disclosures the EBITDA for marketing solutions was up around 27% at maximum.

But the first half Hospira finished and its already around 30%.

pursuing a more productive, efficient, better job for our clients.

So the cost is being controlled in the revenue mix is improving.

Mizuho Shen: To your first question, compared to our market share in the US, the other overseas businesses, there are some countries where our competitors are very strong. Europe environment is as difficult as the US. There's still big room for growth. There are some European countries, many countries in Europe, where we are acquiring market share. Now, on a dollar basis and local currency basis, the situation is different, and we look at both. In some case, overseas business on a local currency basis may seem stronger, the revenue may be growing more. It seems more flat. Understood. Does this answer your question? Thank you. We want to talk more about individual non-US countries. It will be clearer, but because dollar is strong, non-US business is like this, and we like it.

Junichi Arai: To your first question, compared to our market share in the US, the other overseas businesses, there are some countries where our competitors are very strong. Europe environment is as difficult as the US. There's still big room for growth. There are some European countries, many countries in Europe, where we are acquiring market share. Now, on a dollar basis and local currency basis, the situation is different, and we look at both. In some case, overseas business on a local currency basis may seem stronger, the revenue may be growing more. It seems more flat. Understood. Does this answer your question?

Yeah I've been working on are the pharma solutions business and.

our market compared to our market share in the U.S., the other overseas businesses. There are some countries where our competitors are very strong. Europe .

Can I assume that it's profitability improvement is also contributing here can you give us some more colors as much as possible. Thank you.

When we disclosed in the past.

On the cost allocation that has been changed quite a bit from what we disclosed.

Just before we stopped disclosing.

So there are some European countries, many countries in Europe , where we are acquiring market share now on a dollar basis and local currency basis.

You cannot compare the margin on at that timing Apple to Apple with the current margin.

Well, we had a headquarters cost allocate it out to only a small degree.

the situation is different and we look at both.

Yeah.

What was happening in the past headquarters costs are was smaller than what we have today. So one of the answers will be if not an apple to Apple comparison.

on a local currency basis may seem stronger. The revenue may be growing more.

But still we are all taking various measures so that we can come closer to that level.

Junko Yamamura: Thank you.

Well, we should be disclosing.

Junichi Arai: We want to talk more about individual non-US countries. It will be clearer, but because dollar is strong, non-US business is like this, and we like it. We like how things are. Thank you.

The margin on a consistent basis. So that you can make a fair comparison, but that is not the case.

So we want to talk more about individual non-US countries. It will be clearer, but because dollar is strong, non-US business is like.

So what we are.

Presenting.

Today.

<unk> would be lower based on the previous basis.

Mizuho Shen: We like how things are. Thank you.

Understand I'm, sorry, I cannot give you specific numbers, but I just wanted to tell you that it's not safe to make a simple comparison.

[Equity Research Analyst] (Mizuho Securities): Mizuho Securities, Kishimoto-san, please go ahead. This is Kishimoto speaking. Thank you for your explanation. I have one big question. Within our Matching & Solutions, I have a question about HR Solutions. According to the financial results, I saw the comments there, and in terms of attributes or industries, can you give us any colors on the hiring situation of the companies recently? In Q3, 2% growth is projected for HR Solutions. In Q2, some clients were hesitant to hire, and maybe such clients are expected to increase, or is it going to be a high hurdle to achieve year-over-year growth? What is the assumption for the momentum change from Q3 to Q4? That's my big question. Thank you for your question.

Mizuho Shen: Mizuho Securities, Kishimoto-san, please go ahead.

Akitomo Kishimoto: This is Kishimoto speaking. Thank you for your explanation. I have one big question. Within our Matching & Solutions, I have a question about HR Solutions. According to the financial results, I saw the comments there, and in terms of attributes or industries, can you give us any colors on the hiring situation of the companies recently? In Q3, 2% growth is projected for HR Solutions. In Q2, some clients were hesitant to hire, and maybe such clients are expected to increase, or is it going to be a high hurdle to achieve year-over-year growth? What is the assumption for the momentum change from Q3 to Q4? That's my big question.

This is Kishimoto speaking. Thank you for your explanation. I have one big question within matching and solutions. I have a question about HR solutions. According to the financial results, I saw the comments there.

So next question will be the last one Jpmorgan Securities Mori San please.

Thank you I thought you were absent today.

No. Thank you I was not ready at four sorry.

And in terms of attributes or industries, can you give us any colors on the hiring situation of the companies recently? And in the third quarter, 2% growth is projected for HR solutions.

I have two questions first is on a consolidated basis advertisement expenses.

First half was around 40 billion downs.

Usual years, you invest more in the fourth quarter, so second half tends to be bigger than the first half, but last year because of indeed.

and in the second quarter some clients were hesitant to hire and maybe such clients are expected to increase or is it going to be a high hurdle to achieve year-over-year growth?

I'm looking at first and second half second half with smaller.

This year.

We will be the usual year second half bigger than the first half in that case on a year on year basis. The advertisement expenses decline will not be the case will not decline that much.

So what is the assumption for the momentum change from the third to the fourth quarter? That's my big question. Thank you for your question.

Junichi Arai: Thank you for your question. As we explained, for the second quarter, we initially explained the revenue projection and the result is slightly lower than that. The third quarter is around 2% growth being projected. In terms of growth rate, it is more moderate. That's what the numbers tell you. Some clients are cautious, but other clients are active on the job board. Are they going to post ads or are they going to go to placement service? And what is the category the clients are looking for? That makes a lot of difference and the future is unclear. The type of programmer or engineers will continue to have high demand regardless of the industry or the type of clients.

Mizuho Shen: As we explained, for the second quarter, we initially explained the revenue projection and the result is slightly lower than that. The third quarter is around 2% growth being projected. In terms of growth rate, it is more moderate. That's what the numbers tell you. Some clients are cautious, but other clients are active on the job board. Are they going to post ads or are they going to go to placement service? And what is the category the clients are looking for? That makes a lot of difference and the future is unclear. The type of programmer or engineers will continue to have high demand regardless of the industry or the type of clients.

So if you could elaborate this year.

For the second quarter, we initially explained the revenue projection and the result is slightly lower than that. And the third quarter is around 2% growth is being projected. So in terms of growth rate, it is more moderate.

Okay.

Do you have any particular focus in Europe advertisement expenses last year direct directed recruiting service was a focus do.

Do you have any particular focus this year.

And your investment that's my first question.

In Japan. This year, we are not in.

Investing with.

Some clients are cautious, but other clients are active.

With a particular focus because we don't have any focus like I said answered. Another question margin is improving.

Are they going to post ads or are they going to go to placement?

So that is my short straightforward answer.

The second half.

As we mentioned.

surface and what is the category the clients are looking for. That is the that makes a lot of difference and the future is unclear. But the type of programming or engineers will continue to have high demand regardless of the industry or the type of client. And.

For Japan business.

What do you think it's most effective to invest into Japan business like we do every year. So it may not be like last year.

Like usual years, we will have a bigger investment in the fourth quarter.

Mizuho Shen: Of course, service business demand will continue to be high. On the other hand, manufacturing may be weaker. Depending on the industry, it's true that there are differences in colors, so to speak. Overall, there is a strong demand, so it's a mixture. Understood. Thank you. Towards Q4, do you think this trend is going to continue? I'm sorry, I'm asking about the future. Well, because of the given situation, our full year projection is less than what we originally disclosed. So I would like to make my decision by subtracting between Q4 and Q3. Macquarie Securities, Tanioka-san. Thank you. This is Tanioka from Macquarie. Thank you. I have one question. HR Tech.

Junichi Arai: Of course, service business demand will continue to be high. On the other hand, manufacturing may be weaker. Depending on the industry, it's true that there are differences in colors, so to speak. Overall, there is a strong demand, so it's a mixture.

I'm not looking at these numbers on a consolidated basis, but.

service, business demand will continue to be high. On the other hand, manufacturing may be weaker. So depending on the industry, it's true that there are differences in colors, so to speak. But job or...

I only look at it on a segment basis.

So it's.

It's just a simple addition, but I'm not so sure about the consolidated numbers.

In the first and second half mapping and solutions business in Japan has the biggest difference.

Akitomo Kishimoto: Understood. Thank you. Towards Q4, do you think this trend is going to continue? I'm sorry, I'm asking about the future.

Matching and solution, Japan will have bigger second half than first half. Thank.

So towards the fourth quarter, do you think this trend is going to continue? I'm sorry, I'm asking about the future. Well.

Thank you.

Thank you very much so nothing in solutions.

Junichi Arai: Well, because of the given situation, our full year projection is less than what we originally disclosed. So I would like to make my decision by subtracting between Q4 and Q3.

Looking at the current margin in third quarter or 23%.

They add this up.

of foliar projection is less than what we originally disclosed.

And.

Oh multiplied by the revenue percentage and Roger and 20% so.

So I would like to make my decision by subtracting between fourth and the third quarter. Mokori, security, Tanioka-san? Thank you, this is Tanioka from Mokori.

You can calculate the fourth quarter margin from the our full year forecast. So that is the amount that you plan to use yes. Indeed.

Mizuho Shen: Macquarie Securities, Tanioka-san.

Shinji Tanioka: Thank you. This is Tanioka from Macquarie. Thank you. I have one question. HR Tech. Sorry if you already explained this, but you've been doing good cost control in HR and talents and the advertisement. In the full year comment by Arai-san, even if the underlying basis changes, you can achieve a higher 20% margin. If the top line does not drop that much, you've frozen the hiring and took other measures, will you resume those measures? If you resume your hiring, what will be the trigger? Thank you.

The operating expenses are is stable, maybe some increase with FX, but so in advertisement expenses there are not that many food factors.

[Equity Research Analyst] (Macquarie Securities): Sorry if you already explained this, but you've been doing good cost control in HR and talents and the advertisement. In the full year comment by Arai-san, even if the underlying basis changes, you can achieve a higher 20% margin. If the top line does not drop that much, you've frozen the hiring and took other measures, will you resume those measures? If you resume your hiring, what will be the trigger? Thank you. In May results call or in February, Idekoba-san said if the difficult situation will continue for around 1 year, more than 1 year, and that is the case this year. What will happen next year? Calendar year 2024. I think that is what your question is coming from.

This year or not.

You've been doing good cost control in HR and talent and the advertisement.

Not much increase or decrease from quarter to quarter.

Alright, we have discipline.

We are investing in a disciplined manner.

even if the underlying basis changes, you can achieve the higher 20% margin.

So Mitch.

HR being controlled and this is also being controlled.

Because of this economy.

The return on the advertisement expenses may not be big and so we naturally reduce the advertisement expenses.

You've frozen the hiring and took other measures. Will you resume those measures?

And if you resume your hiring, what will be the trigger? Thank you.

Thank you My second question is a big theme.

Junichi Arai: In May results call or in February, Idekoba-san said if the difficult situation will continue for around 1 year, more than 1 year, and that is the case this year. What will happen next year? Calendar year 2024. I think that is what your question is coming from. It's not just the Q4 numbers, but beyond that, we are trying to cautiously ascertain the outlook to communicate to you. As of today, the economy does not seem to turn upward and lead to strong demand. Even if the Q4 revenue becomes stronger than we anticipate, it will not be a substantial uptick.

Indeed future works.

You could talk about AI a lot.

Okay.

So there are things you have done from the past and the new product that you launch in the spring.

Yeah.

It's the difficult situation that the difficult situation will continue for around one year, more than one year. And that is the case this year. So what will happen next.

HR Tech AI utilization when we think of this as a one big theme.

It is used to improve the service or.

The new product that will be launched next springs will this be.

Before the additional added value.

So I think that is what your question is coming from. So it's not just the fourth quarter numbers, but beyond that.

Mizuho Shen: It's not just the Q4 numbers, but beyond that, we are trying to cautiously ascertain the outlook to communicate to you. As of today, the economy does not seem to turn upward and lead to strong demand. Even if the Q4 revenue becomes stronger than we anticipate, it will not be a substantial uptick. For now, we will use our money to where we need to and prepare for the next upturn. Our behavior, our view, remains unchanged. We don't know what the revenue will look like in the Q4, but short-term margin, whether it hits 30% or 35%, we will keep that behavior in running our business. If that happens, we don't know when it will happen, but if we can clearly see the bottom, we may take such action.

SME clients to pay the youth usage fee for added value.

We are trying to cautiously ascertain the outlook to communicate to you. As of today, the economy does not look good.

Is it for how youre usability or.

By using AI can you increase pan.

He could share with us your rough view.

As you rightly said.

Yes.

even if the fourth quarter revenue becomes stronger than we anticipate, it will not be a substantial uptick. So for now, we will use our money to where we need to and prepare for the next upturn. Our behavior, our view remains unchanged. So we don't know what the revenue.

We by offering better service to the users and the business plans, we can enjoy how your profit in the long run.

Junichi Arai: For now, we will use our money to where we need to and prepare for the next upturn. Our behavior, our view, remains unchanged. We don't know what the revenue will look like in the Q4, but short-term margin, whether it hits 30% or 35%, we will keep that behavior in running our business. If that happens, we don't know when it will happen, but if we can clearly see the bottom, we may take such action. We don't know where the bottom will be. We're not thinking of such action yet. Thank you.

So that is what we are doing various trials and errors.

Oh, we have done many things and analyzed the numbers but.

Language.

short-term margin, whether it hits 30% or 35%, we will keep that behavior in running our business. So if that happens.

If we can understand the language, we will understand more how.

To evolve and improve the services.

But if we can clearly see the bottom, we may take such action. But we don't know where the bottom will be. So we're not thinking of such action.

So there's it's defeating in numbers and in analyzing it.

[Equity Research Analyst] (CLSA Securities): We don't know where the bottom will be. We're not thinking of such action yet. Thank you. Thank you. CLSA Securities, Kato-san, please go ahead. This is Kato speaking. Can you hear my voice? Yes. Hello. Hello. I also have a question on HR Technology. In this, the Q3, -18% is projected. In Q2 it's the same and also the same for October. In November and December, I think the projection is also the same. Last year's hurdle is going to be lower. Is that the assumption or PPSA contribution is expected to be more, resulting in 18%, -18%? What is the assumption here? As I responded earlier, pricing model change is neutral.

Yesterday.

Shinji Tanioka: Thank you.

So that goes on and I talked about how much more we can do with AI.

Mizuho Shen: CLSA Securities, Kato-san, please go ahead.

Jun Kato: This is Kato speaking. Can you hear my voice? Yes. Hello. Hello. I also have a question on HR Technology. In this, the Q3, -18% is projected. In Q2 it's the same and also the same for October. In November and December, I think the projection is also the same. Last year's hurdle is going to be lower. Is that the assumption or PPSA contribution is expected to be more, resulting in 18%, -18%? What is the assumption here?

So I hope it goes on and you can have such discussion in the future. We can do more things more new things going forward.

This is Kato speaking. Can you hear my voice? Yes. Hello. Hello. So I also have a question on HR technology. In this third quarter, minus 18% is projected. In the second quarter, it's the same, and also the same for October . So in November and December , I think the projection is also the same. And last year's hurdle is going to be lower. And is that the assumption?

This HR hiring business.

The personnel cost ratio is high in the total cost.

Because the business was done by people are manually people matched the hirings and to increase sales.

PPSA contribution is expected to be more, resulting in 18%, minus 18%. What is the assumption here?

Junichi Arai: As I responded earlier, pricing model change is neutral. That is the basic assumption. Supply and demand imbalance is going to ease and the economic situation continues to be tough. These are the two main factors.

As I responded earlier, pricing model change is neutral. That is the basic assumption.

We needed more people.

Mizuho Shen: That is the basic assumption. Supply and demand imbalance is going to ease and the economic situation continues to be tough. These are the two main factors. Understand. The bottom, what is the KPI for you? Job openings maybe increase for three consecutive months. What is the KPI for you? Well, macro economic indicators are something we're focusing on, as well as Iida-kubun. We are looking at those indicators to paint a picture of the future, so there is no one magic indicator that we are focusing on. It is a combination of multiple factors that we take into account. Of course, we have internal data, and we also have public indicators like JOLTS. As Kato-san said, how much job openings are increasing or decreasing, what is the trend?

So it was a high personnel costs business, we needed more people for higher revenue, but.

supply and demand imbalance is going to ease and the economic situation continues to be tough, these are the two main factors.

How youre more convenience will be more productivity for us.

Jun Kato: Understand. The bottom, what is the KPI for you? Job openings maybe increase for three consecutive months. What is the KPI for you?

Okay.

So the lagging industries will have higher potential.

What is the KPI for you? So, opening.

maybe increase for three consecutive months. What is the KPI for you?

And maybe the advanced industries may not have much room for improvement.

Junichi Arai: Well, macro economic indicators are something we're focusing on, as well as Iida-kubun. We are looking at those indicators to paint a picture of the future, so there is no one magic indicator that we are focusing on. It is a combination of multiple factors that we take into account. Of course, we have internal data, and we also have public indicators like JOLTS. As Kato-san said, how much job openings are increasing or decreasing, what is the trend? These are also something we pay our attention to. What is difficult is what is the trigger for our clients to think about restarting hiring.

Well, macroeconomic indicators are something we're focusing on, as you can see, the Cobasan.

Okay.

So.

Because there are up.

It was it used to be slow or lagging behind we can do more.

We are looking at those indicators to paint a picture of the future, so there is no one magic indicator that we are focusing on.

And that's what we are talking.

It was on an eye.

It is a combination of multiple factors that we take into account.

It is a very promising discussion from business development people.

And like we announced yesterday.

And we also have public indicators like jolts.

We wanted to do many things, it's a very exciting so.

To answer your question the investment in this area is despite the good or bad economic times, we have to do we have to invest no matter what.

As Kato-san said, how much job openings are increasing or decreasing, what is the trend, these are also something we pay our attention to. What is difficult is

Mizuho Shen: These are also something we pay our attention to. What is difficult is what is the trigger for our clients to think about restarting hiring. There may be a gap with the actual economic situation. Maybe some people will make a leap, or some people are more cautious. It's a very difficult decision. We are referring to basically the same indicators that you would look at. It's not something automatic, for example, if it increases for how many months, it's good. Understand. In terms of the number of paid job ads, I think it was 50%, -50% for Q2. How should we look at this in Q4?

And.

We have the strong commitment because we think we are the only ones who can do this in the HR industry and for a brighter future.

what is the trigger for our clients to think about restarting hiring?

Junichi Arai: There may be a gap with the actual economic situation. Maybe some people will make a leap, or some people are more cautious. It's a very difficult decision. We are referring to basically the same indicators that you would look at. It's not something automatic, for example, if it increases for how many months, it's good.

I hope, we can share with you some more specifics in the future.

The there may be a gap with the actual economic situation. Maybe some people will make a leap or some people are more cautious. So it's a very difficult.

Thank you very much I look forward to it.

Thank you.

Last but not least in linear announce and upcoming IR event coming Friday December 15th I E. N J S. T vignettes, Kudo, Indeed, chief economist and at the head of the indeed hiring left well holds the webinar session to discuss global labor market trends Stephen will last approximately one hour with a presentation followed by a Q&A session details.

We are referring to basically the same indicators that you would look at.

It's not something automatic, for example, if it increases for how many months, it's good. Understand. So, in terms of...

Jun Kato: Understand. In terms of the number of paid job ads, I think it was 50%, -50% for Q2. How should we look at this in Q4?

This event will be posted on our IR site Tomorrow, we hope that you can attend this event and take advantage of this opportunity. Thank you.

The number of days dropped as I think it was 50% minus 50% for the second quarter, but how should we look at this in the fourth quarter?

Mizuho Shen: I think it was a question from Munakata-san that I responded to earlier. We have been carrying out those measures. The drop or change of paid job ads volume is no longer relevant to our revenue trends. In my script earlier, we mentioned that we're no longer going to be disclosing that information. I recommend that you shouldn't rely too much on that number. Going back to the original topic, the number of job postings is a data for us to know what companies are starting to think according to Iida-kubun. Thank you. That's all for me. SMBC Nikko Securities, Maeda-san, please. Maeda-san, please.

Junichi Arai: I think it was a question from Munakata-san that I responded to earlier. We have been carrying out those measures. The drop or change of paid job ads volume is no longer relevant to our revenue trends. In my script earlier, we mentioned that we're no longer going to be disclosing that information. I recommend that you shouldn't rely too much on that number. Going back to the original topic, the number of job postings is a data for us to know what companies are starting to think according to Iida-kubun.

I think it was a question from Minakata-san that I responded to earlier.

So the drop or change of paid job as volume is no longer relevant to our revenue trend. So in my script.

We mentioned that we're no longer going to be disclosing that information, so I recommend that you shouldn't rely too much on that number. And going back to the original topic.

a data for us to know what companies are starting to think according to it. Thank you. That's all for me. SMBC and equal securities might have some please. Might have some please.

Jun Kato: Thank you. That's all for me.

Junichi Arai: SMBC Nikko Securities, Maeda-san, please. Maeda-san, please.

[Equity Research Analyst] (SMBC Nikko Securities): Hello. Thank you very much. My question is on HR Tech. Like you said earlier, it will take some time for it to normalize. The speed towards normalization seems to be mild. It is not plunging or declining rapidly, so it may take some time towards normalization. It may linger, may take a long time. Next year, if the top line does not bottom out, how much cost control can you do next year? You started reducing cost from last year, so it may be more difficult for you to control your costs further. If you have an image, your view on the time it requires for normalization and your cost control measures. Thank you.

Eiji Maeda: Hello. Thank you very much. My question is on HR Tech. Like you said earlier, it will take some time for it to normalize. The speed towards normalization seems to be mild. It is not plunging or declining rapidly, so it may take some time towards normalization. It may linger, may take a long time. Next year, if the top line does not bottom out, how much cost control can you do next year? You started reducing cost from last year, so it may be more difficult for you to control your costs further. If you have an image, your view on the time it requires for normalization and your cost control measures. Thank you.

And the speed towards normalization seems to be mild. It is not plunging or declining rapidly.

So it may take some time towards normalization. It may linger. May take a long time. So next year, it's.

How much cost control can you do next year?

I started reducing costs from last year, so it may be more difficult for you to control your costs further. So if you have an image, so if your view on the time it requires for normalization and your cost control measures, thank you. So normalization, meaning the supply-demand balance? Yes, supply-demand tightness.

[Equity Research Analyst] (SMBC Nikko Securities): Normalization meaning the supply-demand balance?

Junichi Arai: Normalization meaning the supply-demand balance?

Eiji Maeda: Yes. Supply-demand tightness. From the extraordinarily tight supply demand, it is now relaxing. Thank you very much.

Mizuho Shen: Yes. Supply-demand tightness. From the extraordinarily tight supply demand, it is now relaxing. Thank you very much.

From the extraordinarily tight supply demand, it is now relaxing, so thank you very much.

Mizuho Shen: Next year, the economy will turn upward and the hiring will progress. No, that is not realistic. That is not the view we have at this point in time. I think you know better than me, will we see a hard landing or a deep dive, or a slow decline, or a shallow bottom, but linger for a long time? We're thinking of all these scenarios as we consider our next steps, and I think you are too, and we are too. Like I mentioned earlier, we don't know when the timing will be. When the market recovers, we need to become stronger and bigger. That is our only focus, to become stronger when the market recovers next. No matter how long or shallow or deep it is, we are doing what we need to do.

Junichi Arai: Next year, the economy will turn upward and the hiring will progress. No, that is not realistic. That is not the view we have at this point in time. I think you know better than me, will we see a hard landing or a deep dive, or a slow decline, or a shallow bottom, but linger for a long time? We're thinking of all these scenarios as we consider our next steps, and I think you are too, and we are too. Like I mentioned earlier, we don't know when the timing will be. When the market recovers, we need to become stronger and bigger. That is our only focus, to become stronger when the market recovers next. No matter how long or shallow or deep it is, we are doing what we need to do.

the economy will turn upward and the hiring will progress. No, that is not realistic. That is not the view we have at this point in time.

Will we see a hard landing or a deep dive or a slow decline?

or shallow bottom, but linger for a long time. We're thinking of all these scenarios as we consider our next steps. And I think you are too, and we are too. But like I mentioned earlier,

We need to become stronger and bigger. So that is our only focus, to become stronger when the market recovers next.

So no matter how long or shallow or deep it is, we are doing what we need to do.

Mizuho Shen: As we mentioned in May this year, we need to keep our discipline as a listed company and carry out and demonstrate what we are doing to the capital market participants. We must do what we need to do. There are things we can do in the short term and other things. We have to hit the right balance. Like we said last time, the assets and the talents that will contribute to our future growth, we will invest there without hesitation. Of course we have the short term view, but the biggest focus is how to grow when the economy recovers. That is the sole focus. Whether the time is long or short, we will do what we need to do.

Junichi Arai: As we mentioned in May this year, we need to keep our discipline as a listed company and carry out and demonstrate what we are doing to the capital market participants. We must do what we need to do. There are things we can do in the short term and other things. We have to hit the right balance. Like we said last time, the assets and the talents that will contribute to our future growth, we will invest there without hesitation. Of course we have the short term view, but the biggest focus is how to grow when the economy recovers. That is the sole focus. Whether the time is long or short, we will do what we need to do. We will not do what we should not do. We will not push ourselves too much to control our costs.

and demonstrate, carry out and demonstrate what we are doing to the capital markets participants. So we must do.

But there are things we can do in the short term, and other things. We have to hit the right balance.

the assets and the talents that will contribute to our future growth, we will invest there without hesitation.

The biggest focus is how to grow when the economy recovers.

That is the sole focus. And so whether the time is long or short, we will do what we need to do. We will not do what we should not do. We will not push ourselves too much to control our costs. Thank you. This may be a similar question.

[Equity Research Analyst] (BofA Securities): We will not do what we should not do. We will not push ourselves too much to control our costs. Thank you. This may be a similar question, but until that time comes, you will control costs further. If the environment deteriorates, you will keep the discipline as a listed company, you said. You will keep the margin at a certain level? Like I say, every time, we do not take certain steps to keep the margin at a certain level every quarter. But at the same time, we have a margin level that we have to keep as a listed company. We have that perspective too. But it's not that we will do everything to keep that. I understand. Thank you. Thank you. BofA Securities, Nagao-san, please go ahead. So, this is my second turn.

Eiji Maeda: Thank you. This may be a similar question, but until that time comes, you will control costs further. If the environment deteriorates, you will keep the discipline as a listed company, you said. You will keep the margin at a certain level?

And if the environment deteriorates, you will keep the discipline as a listed company, you said. So you will keep the margin at a certain level.

Junichi Arai: Like I say, every time, we do not take certain steps to keep the margin at a certain level every quarter. But at the same time, we have a margin level that we have to keep as a listed company. We have that perspective too. But it's not that we will do everything to keep that.

We do not take certain steps to keep the margin at a certain level every quarter.

But on the same time, we have a margin level that we have to keep as a listed company. So, we have that perspective too. But it's not that we will do everything to keep that. I understand. Thank you.

Eiji Maeda: I understand. Thank you.

Mizuho Shen: Thank you. BofA Securities, Nagao-san, please go ahead.

Yoshitaka Nagao: So, this is my second turn. For the Matching & Solutions business, I have a question about your view regarding the margin in this segment. In Q2 in Marketing Solutions, EBITDA margin is approximately 30%, and for HR Solutions it's approximately 23%, both for Q2. Last year on a full year basis, it was around 25% for Marketing Solutions. The margin has significantly improved for Marketing Solutions. What is the driver here? For HR Solutions, the margin in Q2 was 23%, and last year on a full year basis it was 12%. This is again a significant improvement. I believe this is not only coming from cost reduction, but also due to revenue growth resulting in margin improvement. For both of the businesses, what is the mechanism for this margin improvement? What is the most recent situation? Thank you.

So this is my second turn. So for the matching and solutions business, I have a question about your view regarding the margin in this segment.

[Equity Research Analyst] (BofA Securities): For the Matching & Solutions business, I have a question about your view regarding the margin in this segment. In Q2 in Marketing Solutions, EBITDA margin is approximately 30%, and for HR Solutions it's approximately 23%, both for Q2. Last year on a full year basis, it was around 25% for Marketing Solutions. The margin has significantly improved for Marketing Solutions. What is the driver here? For HR Solutions, the margin in Q2 was 23%, and last year on a full year basis it was 12%. This is again a significant improvement. I believe this is not only coming from cost reduction, but also due to revenue growth resulting in margin improvement. For both of the businesses, what is the mechanism for this margin improvement?

in the second quarter in marketing solutions, it is the margin.

is approximately 30 percent, and for HR solutions, it's approximately 23 percent, both for the second quarter. Last year, on a full-year basis, it was 25 percent, around 25 percent for marketing solutions. So the margin has significantly improved for marketing solutions. What is the driver here?

For HR solutions, the margin in the second quarter was 23%. And last year on a full year basis, it was 12%. So this is, again, a significant improvement.

I believe this is not only coming from cost reduction, but also due to revenue growth, resulting in margin improvement. For both of the businesses, what is the mechanism for this margin improvement? What is the most recent situation? Thank you.

Mizuho Shen: What is the most recent situation? Thank you. The revenue mix has been changing, for one thing, for each of the subdivisions. For example, in HR Solutions, we have media, and the placement service. The revenue breakdown is not disclosed, so I cannot explain what is the mechanism of the margin growth there, and I can say the same for Marketing Solutions side as well. I hope you will remember that back in May or even before that, we described last year we have strategic investment in Matching & Solutions. For that year, we didn't really mention the specifics of this investment. In this May, I think you learned that more investments were made in HR Solutions. We are not going to be making the same level of investment this year.

Junichi Arai: The revenue mix has been changing, for one thing, for each of the subdivisions. For example, in HR Solutions, we have media, and the placement service. The revenue breakdown is not disclosed, so I cannot explain what is the mechanism of the margin growth there, and I can say the same for Marketing Solutions side as well. I hope you will remember that back in May or even before that, we described last year we have strategic investment in Matching & Solutions. For that year, we didn't really mention the specifics of this investment. In this May, I think you learned that more investments were made in HR Solutions. We are not going to be making the same level of investment this year.

The revenue mix has been changing, for one thing.

for each of the subdivisions. For example, in HR solutions, we have media.

So I cannot explain what is the mechanism of the margin growth there. And I can say the same for marketing solution side as well.

But I hope you will remember that back in May or even before that.

Last year, we have strategic investment in matching solutions.

And for that year, we didn't really mention the specifics of this investment. But in this May, I think.

you learned that more investments were made in HR solutions.

But we are not going to be making the same level of investment this year. I think that's what we explained back in May in HR solutions. There is a difference in how we spend money.

Mizuho Shen: I think that's what we explained back in May. In HR Solutions, there is a difference in how we spend money, and of course, in Marketing Solutions, we are using less money for investments here. Last year in this segment as a whole, 14.5% was the EBITDA margin. This year it's 20%, overall, that is the target. Nagao-san mentioned, as you mentioned, in H1, Marketing Solutions will be around 30% and, HR Solutions will be 23%, for H1. That is the level of the margin. There is the headquarters cost. When we deduct that, the overall margin will be around 22%.

Junichi Arai: I think that's what we explained back in May. In HR Solutions, there is a difference in how we spend money, and of course, in Marketing Solutions, we are using less money for investments here. Last year in this segment as a whole, 14.5% was the EBITDA margin. This year it's 20%, overall, that is the target. Nagao-san mentioned, as you mentioned, in H1, Marketing Solutions will be around 30% and, HR Solutions will be 23%, for H1. That is the level of the margin. There is the headquarters cost. When we deduct that, the overall margin will be around 22%.

And of course, in marketing solutions, we are using less money for investments here.

in the segment as a whole, 14.5% was the ibiza margin.

It's 20% overall, that is the target. And that also mentioned, as you mentioned,

Marketing solutions will be around 30% and HR solutions will be 23% for the first half. That is the level of the margin.

and there is the headquarters cost. And when we deduct that, the overall margin will be around 22%.

Mizuho Shen: When we take into account the headquarters cost, there is a certain level of performance we need to achieve in order to realize 22%. We have to control our spending. On the business side, we scrutinize the need for hiring so that we can achieve a 20% margin on a full year basis. Thank you. One follow-up. In the past disclosures, the EBITDA for Marketing Solutions was around 27% at maximum. The H1 has finished and it's already around 30%. The cost is being controlled and revenue mix is improving. You have been working on the SaaS solutions business, and can I assume that its profitability improvement is also contributing here? Can you give us some more color, as much as possible? Thank you.

Junichi Arai: When we take into account the headquarters cost, there is a certain level of performance we need to achieve in order to realize 22%. We have to control our spending. On the business side, we scrutinize the need for hiring so that we can achieve a 20% margin on a full year basis.

There is a certain level of performance we need to achieve in order to realize 22% so we have to control our spending.

On the business side, we scrutinize the need for hiring so that we can achieve a 20% margin on a full year basis.

Yoshitaka Nagao: Thank you. One follow-up. In the past disclosures, the EBITDA for Marketing Solutions was around 27% at maximum. The H1 has finished and it's already around 30%. The cost is being controlled and revenue mix is improving. You have been working on the SaaS solutions business, and can I assume that its profitability improvement is also contributing here? Can you give us some more color, as much as possible? Thank you.

In the past disclosures, the EBITDA for marketing solutions was around 27% at maximum.

But the first half has finished and it's already around 30%.

So the cost is being controlled and revenue mix is improving.

You have been working on the fast solution business, and

Can I assume that its profitability in person is also contributing here? Can you give us some more colors as much as possible? Thank you.

[Equity Research Analyst] (BofA Securities): When we disclosed in the past, the cost allocation has been changed, quite a bit from what we disclosed just before we stopped disclosing. You cannot compare the margin, at that time in apples to apples, with the current margin. Well, we had our headquarters cost, allocated, but to, only a small degree. That's what was happening in the past. The headquarters cost, was smaller than what we have today. One of the answers will be, it's not an apples to apples comparison. Still, we are, taking various measures so that we can come closer to that level. Well, we should be disclosing, the margin on a consistent, basis so that you can make a fair comparison, but that is not the case.

Junichi Arai: When we disclosed in the past, the cost allocation has been changed, quite a bit from what we disclosed just before we stopped disclosing. You cannot compare the margin, at that time in apples to apples, with the current margin. Well, we had our headquarters cost, allocated, but to, only a small degree. That's what was happening in the past. The headquarters cost, was smaller than what we have today. One of the answers will be, it's not an apples to apples comparison. Still, we are, taking various measures so that we can come closer to that level. Well, we should be disclosing, the margin on a consistent, basis so that you can make a fair comparison, but that is not the case. What we are presenting today would be lower based on the previous basis.

The cost allocation has been changed quite a bit from what we disclosed just before we started.

But you cannot compare the margin at that timing, apple to apple, with the current margin.

Well, we had our headquarters cost allocated, but to only a small degree.

what was happening in the past, the headquarters cost was smaller than what we have today. So one of the answers will be it's not an apple to apple comparison.

But still, we are taking various measures so that we can come closer to that level.

Well, we should be disclosing the margin on a consistent basis so that you can make a fair comparison, but that is not the case.

[Equity Research Analyst] (JPMorgan Securities): What we are presenting today would be lower based on the previous basis. I understand. I'm sorry, I cannot give you specific numbers, but I just wanted to tell you that it's not safe to make a simple comparison. Next question will be the last one. JPMorgan Securities, Mori-san, please. Mori-san? Thank you. I thought you were absent today. No. Thank you. I was not ready yet. Sorry. I have two questions. First is on a consolidated basis, the advertisement expenses. H1 was around JPY 40 billion down. In usual years, you invest more in the Q4, so H2 tends to be bigger than the H1. Last year, because of Indeed, we're looking at H1 and H2 was smaller.

would be lower based on the previous basis.

Yoshitaka Nagao: I understand.

Junichi Arai: I'm sorry, I cannot give you specific numbers, but I just wanted to tell you that it's not safe to make a simple comparison.

I understand. I'm sorry, I cannot give you specific numbers, but I just wanted to tell you that it's not safe to make a simple comparison.

Mizuho Shen: Next question will be the last one. JPMorgan Securities, Mori-san, please. Mori-san? Thank you. I thought you were absent today.

So next question will be the last one. JP Morgan Securities. Mori-san, please. Mori-san, thank you. I thought you were absent today. No, thank you. I was not ready yet for, sorry.

Haruka Mori: No. Thank you. I was not ready yet. Sorry. I have two questions. First is on a consolidated basis, the advertisement expenses. H1 was around JPY 40 billion down. In usual years, you invest more in the Q4, so H2 tends to be bigger than the H1. Last year, because of Indeed, we're looking at H1 and H2 was smaller. This year will be the usual year, H2 bigger than H1. In that case, on a year-on-year basis, the advertisement expenses decline will not be the case, will not decline that much. If you could elaborate. This year, do you have any particular focus in your advertisement expenses? Last year, direct recruiting service was the focus. Do you have any particular focus this year in your investment? That's my first question.

I have two questions. First is, on a consolidated basis, the advertisement expenses. First half was around $40,000.

In usual years, you invest more in the fourth quarter, so second half tends to be bigger than the first half. But last year, because of Indeed,

And looking at first and second half, second half was smaller. This year...

Mizuho Shen: This year will be the usual year, H2 bigger than H1. In that case, on a year-on-year basis, the advertisement expenses decline will not be the case, will not decline that much. If you could elaborate. This year, do you have any particular focus in your advertisement expenses? Last year, direct recruiting service was the focus. Do you have any particular focus this year in your investment? That's my first question. For Japan, this year we are not investing with a particular focus. Because we don't have any focus, like I said, answered Nagao-san question, margin is improving. That is my short, straightforward answer. H2, as we mentioned, for Japan business, we think it's most effective to invest in the Japan business like we do every year. It may not be like last year.

will be the usual year, second half bigger than the first half. In that case, on a year-on-year basis, the advertisement expenses decline will not be the case, will not decline that much. So if you could.

Do you have any particular focus in your advertisement expenses? Last year, direct recruiting service was a focus. Do you have any particular focus this year in your investment? That's my first question.

Junichi Arai: For Japan, this year we are not investing with a particular focus. Because we don't have any focus, like I said, answered Nagao-san question, margin is improving. That is my short, straightforward answer. H2, as we mentioned, for Japan business, we think it's most effective to invest in the Japan business like we do every year. It may not be like last year.

for Japan, this year we are not investing with a particular focus. Because we don't have any focus, like I said, answered Nagao-san's question, margin is improving. So that is my short, straightforward answer.

We think it's most effective to invest in the Japan business like we do every year. So it may not be like last year.

Mizuho Shen: Like usual years, we will have bigger investment in the Q4. I'm not looking at these numbers on a consolidated basis, but I only look at it on a segment basis, so it's just a simple addition, but I'm not so sure about the consolidated numbers. In H1 and H2, Matching & Solutions business in Japan has the biggest difference. Matching & Solutions Japan will have bigger H2 than H1. Thank you. Thank you very much. Matching & Solutions, you're looking at the current margin in Q3, 23%. You add this up and multiply by the revenue percentage and margin 20%. You can calculate the Q4 margin from the full year forecast. That is the amount that we plan to use. Yes.

Junichi Arai: Like usual years, we will have bigger investment in the Q4. I'm not looking at these numbers on a consolidated basis, but I only look at it on a segment basis, so it's just a simple addition, but I'm not so sure about the consolidated numbers. In H1 and H2, Matching & Solutions business in Japan has the biggest difference. Matching & Solutions Japan will have bigger H2 than H1. Thank you.

like usual years, we will have bigger investment in the fourth quarter.

I'm not looking at these numbers on a consolidated basis, but I only look at it.

So it's just a simple addition, but I'm not so sure about the consolidated numbers.

in first and second half, matching in solutions business in Japan has the biggest difference.

Matching and Solution Japan will have bigger second half than first half. Thank you.

Haruka Mori: Thank you very much.

Junichi Arai: Matching & Solutions, you're looking at the current margin in Q3, 23%. You add this up and multiply by the revenue percentage and margin 20%. You can calculate the Q4 margin from the full year forecast. That is the amount that we plan to use. Yes. Indeed, the operating expenses is stable, maybe some increase with FX. In advertisement expenses, there are not that many swing factors. This year, not much increase or decrease from quarter to quarter. Right. We have discipline. We are investing in a disciplined manner. The HR is being controlled and this is also being controlled. Because of this economy, the return on the advertisement expenses may not be big, and so we naturally reduce the advertisement expenses.

Thank you very much. So, matching and solutions. You're looking at the current margin and 3rd quarter 23%.

multiplied by the revenue percentage and we're 120% so

you can calculate the fourth quarter margin from the full year forecast. So that is the amount that we plan to use. Yes, indeed.

Mizuho Shen: Indeed, the operating expenses is stable, maybe some increase with FX. In advertisement expenses, there are not that many swing factors. This year, not much increase or decrease from quarter to quarter. Right. We have discipline. We are investing in a disciplined manner. The HR is being controlled and this is also being controlled. Because of this economy, the return on the advertisement expenses may not be big, and so we naturally reduce the advertisement expenses. Thank you. My second question is a big theme. Indeed FutureWorks, you talk about AI a lot. There are things you've done from the past and the new product that you launch in spring.

the operating expenses is stable, maybe some increase with FX, but so in advertisement expenses, there are not that many swing factors.

This year, not much increase or decrease from quarter to quarter. Right. We have discipline.

So the HR being controlled and this is also being controlled.

the return on the advertisement expenses may not be big. And so we naturally reduce the advertisement expenses.

Haruka Mori: Thank you. My second question is a big theme. Indeed FutureWorks, you talk about AI a lot. There are things you've done from the past and the new product that you launch in spring. HR Tech, AI utilization, when we think of this as one big theme, it is used to improve the service or the new product that will be launched next spring. Will this be for the additional added value, ask the clients to pay the usage fee for added value? Is it for higher usability or by using AI, can you increase TAM? If you could share with us your rough view.

Thank you. My second question is a big theme.

So there are things you've done from the past and a new product that you launch in spring.

Mizuho Shen: HR Tech, AI utilization, when we think of this as one big theme, it is used to improve the service or the new product that will be launched next spring. Will this be for the additional added value, ask the clients to pay the usage fee for added value? Is it for higher usability or by using AI, can you increase TAM? If you could share with us your rough view. As you rightly said, by offering better service to the users and the business clients, we can enjoy higher profit in the long run. That is what we are doing through various trials and errors. We have done many things, and analyzed the numbers, but language. If we can understand the language, we will understand more how to evolve and improve the services.

HR tech, AI utilization, when we think of this as a one big theme.

it is used to improve the service or the new product that will be launched next spring.

For the additional added value, ask the clients to pay the usage fee for added value. Is it for higher usability or?

Junichi Arai: As you rightly said, by offering better service to the users and the business clients, we can enjoy higher profit in the long run. That is what we are doing through various trials and errors. We have done many things, and analyzed the numbers, but language. If we can understand the language, we will understand more how to evolve and improve the services.

We, by offering better service to the users and the business clients, we can enjoy higher profit in the long run. So that is.

We have done many things and analyzed the numbers, but...

If we can understand the language, we will understand more how to evolve and improve the services.

Mizuho Shen: If it's just feeding in numbers and analyzing it. Yesterday, Idekoba-san and I talked about how much more we can do with AI. I hope Idekoba-san and you can have such discussion in the future. We can do more things, more new things going forward. This HR hiring business, the personnel cost ratio is high in the total cost, because the business was done by people manually. People matched the hiring. To increase sales we needed more people. It was a high personnel cost business. We needed more people for higher revenue, but higher, more convenience will be more productivity for us. The lagging industries will have higher potential. Maybe the advanced industries may not have much room for improvement.

Junichi Arai: If it's just feeding in numbers and analyzing it. Yesterday, Idekoba-san and I talked about how much more we can do with AI. I hope Idekoba-san and you can have such discussion in the future. We can do more things, more new things going forward. This HR hiring business, the personnel cost ratio is high in the total cost, because the business was done by people manually. People matched the hiring. To increase sales we needed more people. It was a high personnel cost business. We needed more people for higher revenue, but higher, more convenience will be more productivity for us. The lagging industries will have higher potential. Maybe the advanced industries may not have much room for improvement.

So if it's just feeding in numbers and analyzing it.

Idekoba-san and I talked about how much more we can do with AI.

So I hope you can have such a discussion in the future. We can do more things, more new things going forward.

the personnel cost ratio is high in the total cost.

because the business was done by people, manually. People matched the hiring and to increase sales.

So it was a high personnel cost business. We needed more people for higher revenue, but.

higher, more convenience will be more productivity for us.

So the lagging industries will have higher potential.

And maybe the advanced industries may not have much room for improvement.

Mizuho Shen: Because it used to be slow or lagging behind, we can do more. That's what we are talking, Idekoba-san and I. It is a very promising discussion from business development people. Like we announced yesterday, we want to do many things. It's very exciting. To answer your question, the investment in this area is, despite the good or bad economic times, we have to do, we have to invest no matter what. We have the strong commitment because we think we are the only one who can do this in the HR industry and for a brighter future. I hope we can share with you some more specifics in the future. Thank you very much. I look forward to it. Thank you.

Junichi Arai: Because it used to be slow or lagging behind, we can do more. That's what we are talking, Idekoba-san and I. It is a very promising discussion from business development people. Like we announced yesterday, we want to do many things. It's very exciting. To answer your question, the investment in this area is, despite the good or bad economic times, we have to do, we have to invest no matter what. We have the strong commitment because we think we are the only one who can do this in the HR industry and for a brighter future. I hope we can share with you some more specifics in the future. Thank you very much.

It used to be slow or lagging behind. We can do more. And that's what we are talking.

It is a very promising discussion from business development people.

We want to do many things. It's very exciting.

to answer your question. The investment in this area is, despite the good or bad economic times, we have to do, we have to invest no matter what.

We have the strong commitment because we think we are the only one who can do this in the HR industry and for a brighter future. I hope we can share with you some more specifics in the future.

Haruka Mori: I look forward to it. Thank you.

Mizuho Shen: Last but not least, let me announce an upcoming IR event. Coming Friday, 15 December 2024 at 8:00AM JST, Svenja Gudell, Indeed Chief Economist, and the head of the Indeed Hiring Lab will host a webinar session to discuss global labor market trends. The event will last approximately one hour with a presentation, followed by a Q&A session. Details about this event will be posted on our IR site tomorrow. We hope that you can attend this event and take advantage of this opportunity. Thank you.

Last but not least, let me announce an upcoming IR event. Coming Friday, December 15th at 8 a.m. JST, Svendja Gudel, Indeed Chief Economist and the head of the Indeed Hiring Lab, will host a webinar session to discuss global labor market trends. The event will last approximately one hour with a presentation followed by a Q&A session. Details about this event will be posted on our IR site tomorrow. We hope that you can attend this event and take advantage of this opportunity.

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