Q3 2024 Recruit Holdings Co Ltd Earnings Call
Company Representative: 3, 2, 3, Financial Results, Q4 Outlooks, and Full Year Guidance Many of you may have already watched the video presentation of the financial results, but I would like to give you a brief summary. Although we have assumed a decrease in consolidated revenue and adjusted EBITDA for the full year due to the deteriorating business environment and uncertainty in the future during the fiscal year, today, we disclosed that consolidated revenue is expected to be approximately flat year-over-year at 3,400,000,000,000, and consolidated adjusted EBITDA is expected Profit attributable to owners of the parent is expected to be approximately 354 billion yen, a record high.
Q4 outlook and full year guidance.
Many of you may have already watched the video presentation of the financial results, but I would like to give you a brief summary.
Although we have assumed a decrease in consolidated revenue and adjusted EBITDA for the full year due to the deteriorating business environment and uncertainty.
Key in the future during the fiscal year.
Today, we disclosed that consolidated revenue is expected to be approximately flat year over year at three trillion 400 billion yen.
And consolidated adjusted EBITDA is expected to be 585 billion yen due to a significant increase in adjusted EBITDA margin in matching and solutions in a margin increase in HR technology, resulting from cost controls throughout the fiscal year.
Profit attributable to owners of the parent is expected to be approximately 354 billion yen.
A record high.
Company Representative: Basic EPS and Adjusted EPS are expected to increase approximately 34.1% and 16.9%, respectively. Consolidated revenue for Q3 decreased 1.5% due to continued lower revenue in HR technology despite revenue increases in matching and solutions and staffing. Consolidated adjusted EBITDA margin increased 2.5 percentage points to 18.3% as a result of cost controls for Q4. Now the results for each SBU. For HR Technology, U.S. dollar-based revenue decreased 17.2%, and adjusted EBITDA margin was 33.2%, which was above the outlook announced. For Q4, revenue is expected to be approximately flat quarter over quarter with a potential small increment benefit from Indeed Plus. Adjusted EBITDA margin for Q4 is expected to be approximately 27% as we expect operating expenses to increase quarter over quarter due primarily to seasonal increases in personnel costs and advertising expenses and incremental costs related to Indeed Plus. We expect U.S. dollar-based revenue for FY23 to decrease approximately 15.5% and an adjusted EBITDA margin of approximately 34%. Formatting and solutions revenue in HR solutions for Q3 decreased 0.8% to 73.1 billion yen, and revenue in marketing solutions increased 7.1%. The adjusted EBITDA margin was 23.3%.
Basic EPS and adjusted EPS are expected to increase approximately 34, 1% and 16, 9% respectively.
Consolidated revenue for Q3 decreased one 5% due to continued lower revenue in HR technology, despite revenue increases in matching and solutions and staffing.
Yeah.
Consolidated adjusted EBITDA margin increased two five percentage points to 18, 3% as a result of cost control.
For Q4.
Sure.
Now the results for each SBU.
For HR technology.
In.
Q3.
Yeah.
U S dollar based revenue decreased 17, 2% and adjusted EBITDA margin was 33, 2%, which was above the outlook announced for Q4 revenue is expected to be approximately flat quarter over quarter with a potential small increment benefit from indeed, plus adjusted EBITDA margin for Q4 is expected to be approximately 27% as we.
We expect operating expenses to increase quarter over quarter, due primarily to seasonal increases in personnel costs and advertising expenses and incremental costs related to indeed, plus we expect U S. Dollar based revenue for FY2023 to decrease approximately 15, 5% and adjusted EBITDA margin of approximately 34%.
Or matching and solutions revenue in HR solutions for Q3 decreased 8% to $73 1 billion in revenue in marketing solutions increased seven 1% adjusted EBITDA margin was 23, 3%.
Revenue in HR solutions is expected to decrease approximately four 5% due to the continued downward revenue trend in the job advertising service and impact from transition of revenue of <unk> HR technology due to indeed, plus revenue and marketing solutions is expected to increase approximately 7% adjusted EBITDA is expected to improve from the previous.
Company Representative: Revenue in HR Solutions is expected to decrease approximately 4.5% due to the continued downward revenue trend in the job advertising service and the impact of the transition of revenue from HR technology due to Indeed Plus. Revenue in Marketing Solutions is expected to increase approximately 7%. Adjusted EBITDA is expected to improve from the previous year to 12.5%, with advertising expenses in anticipation of the next fiscal year as in the past. For FY23, revenue in HR Solutions for FY23 is expected to increase approximately 2.5%, and revenue in Marketing Solutions for Q4 is expected to increase approximately 9% for FY23. Adjusted EBITDA margin in Matching and Solutions for FY23 is expected to be approximately 20%, in line with our initial estimate. For Staffing, based on results through Q3 and our outlook for Q4, we expect revenue in Japan for FY23 to increase approximately 10%. While revenue in Europe, the US, and Australia is expected to decrease approximately 2%.
Year to 12, 5% with advertising expenses in anticipation of mute next fiscal year as in the past for FY2023 revenue in HR solutions in FY2023 is expected to increase approximately two 5% and revenue and marketing solutions for Q4 is expected to increase approximately 9% for FY2023 adjusted EBITDA margin in Martin hatching and solutions for them.
Why 23 is expected to be approximately 20% in line with our initial estimate for staffing based on results through Q3 and outlook for Q4, we expect revenue in Japan for FY2023 to increase approximately 10% while revenue in Europe U S and Australia is expected to decrease approximately 2% adjusted EBITDA margin is expected to be approximately 6% in line with.
Our initial outlook.
Next I would like to briefly introduce indeed pass which is quite important to progress on business strategy before moving onto Q&A I appreciate sell side equity research analysts who have already published a research reports regarding indeed plus.
Company Representative: The Adjusted EBITDA margin is expected to be approximately 6% in line with our initial outlook. Next, I'd like to briefly introduce Indeed Plus, which is quite important to progress on business strategy before moving on to Q&A. I appreciate Southside Equity Research Analysts who have already published their research reports regarding Indeed Plus. Starting with Indeed+, we will quickly promote the conversion of HR solutions to match our solutions to HR technology and promote Simply Hiring in Japan. Sorry, Simplifying Hiring in Japan. IndyPlus has been developed and prepared for the Japanese market, which is the second largest HR matching market after the United States.
Starting with India, plus we will quickly promotes the conversion of HR solutions, a matching our solutions into HR technology and promote simply hiring in Japan.
Our simplify hiring in Japan.
In the past has been developed unprepared in the Japanese market, which is the second largest H our emerging markets. After the United States as a cross business project by HR solutions are matching our solutions and edge of technology.
Since 2021.
It's supposed the efficient hiring of the best match talent and simplifies the complicated hiring process.
Ended plus is a job distribution platform that automatically distribute jobs to the most appropriate job worse based on the job content by linking multiple jobbers.
For the 12 months through December 2023, HR solutions revenue in the job advertising business for full time and part time job seekers was approximately 115 billion yen and invade revenue in Japan was approximately 68 billion yen.
Company Representative: As a cross-business project by HR Solutions of Matching Solutions and HR Technology, since 2021, it supports the efficient hiring of the best math talent and simplifies the complicated hiring process. Indeed Plus is a job distribution platform that automatically distributes jobs to the most appropriate job boards based on the job content by linking multiple job boards.
Each of these are birth operated by AIDS our solutions in matching our solutions will gradually become HR board linked to Indian plus.
Revenue from job advertising services in HR solutions will gradually shifted to India, Japan.
In addition, indeed expects to further increase its revenue in Japan in the medium to long term.
<unk>, new employers, who use indeed, plus and by increasing the average revenue of existing employers.
Company Representative: For the 12 months through December 2023, HR Solutions' revenue in the job advertising business for full-time and part-time jobseekers was approximately 115 billion yen, and in-depth revenue in Japan was approximately 68 billion yen. Each of the job boards operated by HR Solutions in Matzinger will gradually become a job board linked to Indeed Plus, and revenue from job advertising services in HR Solutions was gradually shifted to India-Japan. In addition, Indeed expects to further increase its revenue in Japan in the medium to long term by acquiring new employers who use Indeed Plus and by increasing the average revenue of existing employers. Now, I would like to take your questions. If you have a question, please click on the Zoom raise hand button. Please unmute before asking your question.
Now I would like to take your questions.
If you have a question. Please click on the zoom raise had bottom please on mute before asking your question.
We will accept up to two questions at a time.
So first JP Morgan Morrison please.
Okay.
Thank you very much for this opportunity I have two questions first is indeed, plus that you just mentioned.
I could ask you to elaborate on that.
I am sorry, if I don't have a full understanding.
First of all your job at 115 billion revenue.
This will shift gradually to HR technology I understand.
So if it's just a simple shift.
TB by moving to PPC.
The revenue per customer may dip in the short term, but in the medium to long term.
I understand it has a big potential.
So what is the timeline you have in mind for our customers for the client the users to shift.
And how do you think the revenue will trend will it dipped ones and then recover and grow from there onward.
And woven L, which part of the phase will next year be.
It's only been 10 days since you started.
But the current advertisers a response or feedback or how do you feel the acquisition of the acquiring new.
Operator: We will accept up to two questions at a time. So first, J.P. Morgan. Mori-san, please.
Advertisers.
Thank you. Please go ahead with your second question.
HR Tech.
So you stopped PPA this time.
Mori-san: Thank you very much for this opportunity. I have two questions. First, the Indeed Plus that you just mentioned. I could ask you to elaborate on that. I'm sorry if I don't have a full understanding. First of all, your job at 115 billion revenue. This will shift gradually to HR technology, as I understand it. So if it's just a simple shift, by moving to PPC, the revenue per customer may dip in the short term, but in the medium to long term.
The revenue per job will.
The effort to increase.
Revenue per job will go back to zero ones or.
Are you taking various measures next measure will come very shortly.
Is this the trial.
So the revenue burn job after you stop using PPA, what will it look likes.
Could you elaborate on your initiatives to raise year of added value.
I'm sorry.
Or another question smart sourcing.
Will be launched in spring my understanding is correct.
And I'm, sorry, I don't have the full picture yet but.
Mori-san: I understand it has great potential. So, what is the timeline you have in mind for customers, for the client, and for users to shift? And how do you think the revenue will trend? Will it dip once and then recover and grow from there onward?
With such service.
You are trying to increase the revenue per job is that part of your effort. Thank you very much.
First starting with indeed plus.
Our job AD.
Business in Japan.
This is the revenue that our sales is creating and generating and these sales are through agency.
Mori-san: And which part of the phase will next year be? It's only been 10 days since you started, so how do you feel about the current advertiser's response or feedback, or how do you feel about the acquisition of new advertisers? Thank you.
And this has been the case historically.
This has been the model all along.
So our clients preference and the agency's actions and job seekers.
Mori-san: Please go ahead with your second question. HR Tech, so you stop PPA this time. The revenue per job will, the effort to increase. Revenue per job will go back to zero once or, Are you taking various measures? The next measure will come very shortly. Is this a trial?
Evaluation.
Yeah.
We'll all come into play.
Yeah.
So it's not that we set the timeline.
All these factors.
Will it needs to be watched.
And monitored.
And <unk>.
Shifting to smoothly and expeditiously.
Yeah.
Mori-san: So the RevenueBirds job, after you stop using PPA, what will it look like? Could you elaborate on your initiatives to raise your added value? I'm sorry.
So we want to.
I have business clients understand this as soon as possible and shift smoothly.
We have no intention of taking unnecessarily long time on this.
Company Representative: For another question, smart sourcing, will be launched in spring, if my understanding is correct. And I'm sorry, I don't have the full picture yet, but with such a service, you are trying to increase the revenue per job. Is that part of your effort? Thank you very much.
When we.
In May we will explain more on how we plan to progress.
Will we declined once dip once or not even if that happens.
At Moody's on deferred.
This will lead to a more efficient.
Simplified.
Hiring process in the medium to long term.
Company Representative: First, starting with Indeed Plus, our job ad business in Japan, this is the revenue that our sales are creating and generating and the sales through the agency, and this has been the case historically. This has been the model all along. So our clients' preference and the agency's actions and job seekers' evaluation will all come into play.
So there may be some ups and downs or.
<unk> decline as part of the transition, but this will be beneficial in the long run.
And revenue you mentioned, a 115 billion yen.
Okay.
Whether this shifts into indeed.
So the revenue recognition is different.
Indeed side, indeed side HR technology side.
Company Representative: So it's not that we set the timeline. All these factors will need to be watched, and monitored, and shifted smoothly and expeditiously. So we want to
Our four revenue via the agencies.
The invoice comes from the agency.
So revenue will be recognized on net.
Company Representative: I have business clients who need to understand this as soon as possible and shift smoothly. We have no intention of taking an unnecessarily long time on this. Holdings Holdings, In May, we will explain more about how we plan to progress. Will we decline once, dip once, or not? Even if that happens.
Now from recruit the business from a recruit.
Recruit issues the invoice and so the revenue is recognized on gross basis.
And the fee paid to the agency is included in the sales promotion expenses and so the number is different.
Company Representative: As Maurizio just said, this will lead to a more efficient and simplified hiring process in the medium to long term. So there may be some ups and downs or decline as part of the transition, but this will be beneficial in the long run. And revenue, you mentioned, 115 billion yen, whether this shifts it to Yes. The revenue recognition is different. The Indeed side, the Indeed side, the HR technology side, for revenue via the agency. The invoice comes from the agency.
It's not just the 104 100 shift.
To the other side.
So we hope to realize this shift.
As quickly as possible.
It depends on how our business clients manage their budget, but.
If it goes well, we should be able to avoid a big downside.
From the 30th we started this launch on Jack <unk>.
30 years, and so it's too early to make any judgment, but our business clients.
Company Representative: So revenue will be recognized on net; now, from Recruit, the business from Recruit, recruit issues the invoice, and so the revenue is recognized on a gross basis. And the fee paid to the agency is included in the sales promotion expenses. And so the number is different. It's not just 100 for 100 shifts on the other side.
Hey.
That they are enjoying a simpler process.
Okay.
So talk with recruit and then Megan and sand and is a sandbag. All these are back and forth communication can be avoided and they said that this is very convenient and easy to use. So the feedback is positive that's the feedback we get from our business department on the business side.
Company Representative: So we hope to realize this shift as quickly as possible. It depends on how our business clients manage their budgets, but if it goes well, we should be able to avoid a big downside. On the 30th, we started this launch on... 30th. And so it's too early to make any judgment.
On the Jobseeker side.
We're gonna be next the number of jobs are increasing job seekers are increasing is experiencing this positive change.
And so if this trend continues.
We can realize and complete the smooth transition.
And to your second question.
The abolition of PPA.
Company Representative: But our business clients say that they are enjoying a simpler process. So talk with Recruit, and then make, and then send, and send back. All this back and forth communication can be avoided. And they say that this is very convenient and easy to use.
In June.
<unk>.
Second question.
We.
Refers to the content expecting such question.
Pay for performance will continue being validated.
So it's not going to be a dramatic dramatic change like tpa, but it will be like P. T. S. A.
To adjust the billing of eye.
Company Representative: So the feedback is positive. That's the feedback we get from our business department on the business side and on the job seeker side. Rukminabi Next, the number of jobs is increasing, job seekers are increasing, and the country is experiencing this positive change. And so, if this trend continues..., we can realize and complete a smooth transition. And to your second question, the abolition of PPA, in FAQ. Second question. We, referring to the content, were expecting such questions.
Understanding the response by our clients.
And the launch of smart sourcing.
So.
The new product evolution using AI.
We are trying in many things we always do.
And the strong response from the clients came from the smart sourcing that Moody's unsaid.
And as you rightly said.
This is to improve the revenue up.
And unit price.
So how we can improve our performance will.
It will be pursued further.
We will take on various challenges too.
We will continue our pursuit for further.
Company Representative: Pay for performance will continue being validated. So it's not going to be a dramatic change like PPA, but it will be like PTSA to adjust the billing by... understanding the response by our clients and the launch of Smart 13. So, the new product evolution using AI.
Values.
Thank you follow up question on my second point.
So next year.
HR technology revenue.
Will be volume linked.
More volume linked.
Yeah.
I think it was somewhere in the FAA Q or in my script at hand.
Company Representative: We are trying many things, we always do, and the strong response from the clients came from this smart sourcing that Morisson said. And as you rightly said, This is to improve revenue and unit prices. So how we can improve our performance will be pursued further. We will take on various challenges too. We will continue our pursuit of further value. Thank you. Follow-up question on my second point. So next year. HR Technology, Revenue, will be volume linked. More volume links I think it was somewhere in the FAQ or in my script at hand.
So even with the declining job.
Our revenue decline, maybe smaller or flat.
That means the revenue per job is increasing and so.
Of course, it is a business that is heavily impacted by volume, but compared to the past unit price is increasing.
So we will continue pursuing debts and try to increase it further.
So it's not that we are heavily dependent on volume.
We are trying to improve our performance.
And you improve the unit price per job.
And continue having our clients use our product and enjoy our value that we can offer.
Company Representative: So even with the declining jobs, revenue decline may be smaller or flat, which means the revenue per job is increasing. Of course, it is a business that is heavily impacted by volume, but compared to the past, unit price is increasing. So we will continue pursuing that and try to increase it further. So it's not that we are heavily dependent on volume. We are trying to improve our performance, and you improve the unit price per job and continue to have our clients use our products and enjoy the value that we can offer. Thank you very much. Next, Munakata Atan from Goldman Sachs. Can you hear me?
Thank you very much.
When I got out of town from Goldman Sachs. Please.
Can you hear me.
Yes.
Thank you I have two questions.
First question is regarding the sunset of PPA.
And your explanation.
<unk> talked about the E P.
Paying for the qualified job applicants.
And there was a discrepancy from the expectations.
To the actual usage by our clients.
But the concept of a paper application.
Some have been different but.
Having D a client or a corporate client to accept within 72 hours it.
Company Representative: Yes. Thank you. I have two questions.
Company Representative: The first question is regarding the sunset of PPA. In your explanation, you talked about paying for qualified job applicants, and there was a discrepancy from the expectations to the actual usage by the clients. But the concept of a paper application, itself, may have been different, but having the client, uh, corporate clients, accept it within 72 hours, was that where there was a discrepancy in terms of the process?
Was that where there was a discrepancy in terms of the process.
So.
Or was there are some a positive feedback.
Feedback from the paper acceptance model itself or the concept itself, which could help you continue to promote people of our bones model going forward.
And the second question, maybe difficult to respond immediately.
In terms of the next fiscal year.
N D E Q3 earnings report one year ago.
'twenty four 'twenty five.
Company Representative: So. Or was there some positive feedback from the paper acceptance model itself, or the concept itself, which could help you continue to promote the paper performance model going forward? And the second question may be difficult to respond immediately, in terms of the next fiscal year, in the Q3 earnings report one year ago, 2425. It is likely it should be declining in revenue, which was a commitment from the management one year ago, and So, one year has passed since then; are there any changes in the outlook for the next fiscal year? If there's a nice one that you can comment on now,
It is likely to be declining in our revenue that was coming from the minus mentioned one year ago and also one year has passed since then is there any changes in the outlook for the next fiscal year. If theres anything that you can comment now thank you very much.
Let me respond to your second question first.
We would like to talk about this in May.
We are currently having various discussions with deep business side.
<unk> at the various numbers that is where we are at.
So it is premature to make any comments clearly and today, so I would like to refrain from giving any clear answer but.
Company Representative: Thank you very much. Let me respond to your second question first. We would like to talk about this in May. We are currently having various discussions with the business side, looking at the various numbers. That is where we are at, so it is premature to make any comments clearly today, so I would like to refrain from giving any clear answer. It is the first time that we're able to provide the full year outlook at this structure. And so, for May. Are we going to do this or not?
It is.
The first time that we're able to provide the full your outlook at this juncture.
And so for May.
He going to do this or not that could be a one.
Ah folk in the road and that's of course dependent on the visibility of the market.
As I responded to the previous question, we will never stop evolving our business, how we can grow our revenue and expand our margin.
Company Representative: That could be one. Oh, folk on the road, and that's, of course, dependent on the visibility of the market. As I responded to the previous question, we will never stop evolving our business, looking for ways to grow our revenue and expand our margin. We will develop excellent services which will be accepted by clients and used by many job seekers. That is the way for us to grow our business, and this is not something that we can do in a single year. So what kind of year will the next fiscal year be?
We will or developed excellent service, which will be accepted by clients and used by many job seekers that is the way for us to grow our business and this is not something that we do in a single year.
So what kind of a year. The next fiscal year will be this is still a.
Binga formulated as a plan and.
So we are still working on that.
So from Q3 to Q4.
These are referred to the tranche.
In order to.
Consider our what will be the next fiscal year projections.
Company Representative: This is still being formulated as a plan, and so we are still working on that. So from Q3 to Q4, please refer to the trend, in order to consider what will be the next fiscal year's projections, as you wait for the main announcement. And going back to your first question, the Reject and replace within 72 hours from the application.
Would you wait for the main announcement.
And going back to your first question.
Yeah.
The.
Reject and replace within 72 hours from the application.
From the employer side looking for the applicants.
This actually initiated a large scale change in their hiring process.
Company Representative: From the employer side, looking for the applicants, this actually initiated a large-scale change in their hiring process. That was one discovery.
That was a one discovery.
So, especially for large.
Company Representative: So, especially for large clients, they had to work on the weekends. And even during long holidays, they had to respond. And it was quite cumbersome.
Clients they had to work on the weekends.
And even during a long holidays, they had to respond and it was a quite cumbersome that was all the feedback that we received.
Company Representative: That was the feedback that we received. But in order for the client to use this product, they had to comply with these requirements. And there was a hurdle for the client side. On the other hand, for the job seekers, it's an excellent scheme, but what is the change to resolve these challenges? We did try, but we were not able to resolve the challenges. Hence, it was difficult for us to further expand PPA. And something that happened happened.
But in order for their clients to use as a product they had to comply with these requirements and there was a.
A hurdle or for their clients side on the other hand for the job seekers, it's a excellent scheme.
But.
What is the E change a to resolve these are challenges we did try a but we were not able to resolve the challenges.
So.
It was difficult for us to further expand P. P. A.
And something that happened was.
That.
Company Representative: That Employers. In the service act, or replace it, they took advantage of this scheme, and so they would reject and then send an email to the applicant directly to hire that person.
And lawyers.
And as a result.
Or replace they.
They took advantage of this scheme.
And so say they would reject and then send an email to the applicant directly into higher that's a person and so this was something that ended up happening which was not expected.
Company Representative: And so this was something that ended up happening, which was not expected. So we saw a growth in the number of rejections, a surge in the number of rejections, through the end. So we decided not to continue to use PPA and improve the scheme but rather to sunset the scheme itself.
So we saw a growth in the number of rejections of surge in the number of rejections.
Towards the end.
So.
We decided not to continue to use P. P E and improve the scheme, but rather to sunset the scheme itself.
Thank you I have one follow up to that.
Company Representative: Thank you. I have one follow-up to that. Regarding PPA, thank you very much for the clear explanation. There may be some overlap with the previous question. Regarding the next fiscal year, in the U.S., I understand that the shift to PPSA is almost complete. So you will all establish PPSA, and rather than a drastic change, you'll be looking at a more minor change, adding value without a drastic change while improving the unit price. Is this the understanding?
Regarding PPA. Thank you very much for the clear explanation.
And there may be some overlap with a previous question.
Regarding the next fiscal year.
In the U S I understand that the shift to P. P. S. A is almost complete.
So you will all.
Established the P. B S a and a rather than a drastic change you will be looking at a more a minor change.
Adding value without a drastic change.
While improving the unit price is this E understanding.
For the next fiscal year I will explain in more detail in may.
Company Representative: For the next fiscal year, I will explain in more detail in May. As mentioned, but basically, we will go ahead with PPSA. But we will also conduct various trials. And for the successful trials, we will be able to share with you as soon as possible. But not every trial is going to be successful.
As mission, but basically we will forge ahead with P. B S. A.
But we will also conduct various all trials.
And Oh.
For the successful trials, we will be able to.
Share with you.
As soon as possible.
But there are not every trial is going to be successful so there'll be trial and error.
Company Representative: So there will be trial and error, and we will choose the initiatives that have a high probability of success. And so after launching, we will listen to customer feedback. If possible, we will make improvements and expand. And we will continue this cycle.
And we will choose the initiatives that have a high probability of success.
And so after launching we will listen to customer feedback if possible, we will make improvements on expand and we will be continuing this soft cycle.
So our challenge will continue.
Thank you very much that's very clear.
I look forward to your new trials. Thank you.
Towards the end of March.
Company Representative: So our challenge will continue. Thank you very much, that's very clear. I look forward to your new OO trials.
The leaders of businesses.
We will talk in more detail about their specific initiatives. So also or please look forward to the event in March.
Company Representative: Thank you. At the end of March, the leaders of businesses will talk in more detail about their specific initiatives. So also, please look forward to the event in March. Thank you. I look forward to it.
Thank you I look forward to it.
So next city Securities Yamana San please.
Thank you Yamaguchi out as my name. Thank you can you hear me.
I have two questions.
First is on indeed, plus medium term perspective.
Operator: So next city, Securities, Yamamura-san, please. Thank you. Yamamura is my name. Thank you. Can you hear me?
First <unk>.
Ah you will eliminate the redundancies and this will improve the efficiency in terms of your structure.
Yamamura: I have two questions. The first is on Indeed Plus, a medium-term perspective on fruits.
In the medium term.
Wallet share will increase how could I understand this.
So we are indeed plus.
Yamamura: You will eliminate redundancies, and this will improve the efficiency of your structure. In the medium term, Wallet share will increase. How do you understand this?
If the hiring can doesn't be done more efficiently.
There will be less job add required so of the demand will come to indeed, plus N share will increase.
Our business clients will use multiple media, maybe that will be the case to see how it goes so including the timeline how do you think of the progress in the medium term.
Company Representative: So with Indeed+, if the hiring can be done more efficiently, there will be less job ads required, so the demand will come to Indeed Plus, and the share of business clients will increase. Maybe that will be the case. We'll see how it goes.
Second question.
In Q3 matching.
Matching and solutions HR solutions revenue.
So in Q3, indeed, plus impact was probably nonexistent. So the slow revenue growth as no technical reasons is that correct in Q2, some business clients canceled and there was a temporary weakness.
Yamamura: So including the timeline, how do you think of the progress in the medium term? Second question: in Q3, Matching in Solutions, HR Solutions, and Revenue. So in Q3, the Indeed Plus impact was probably non-existent, so the slow revenue growth has no technical reasons. Is that correct? In Q2, some business clients canceled, and there was a temporary weakness. Maybe the impact is lingering.
Maybe the impact is lingering.
After indeed, plus started the situation may change, but advertisement promotion expenses was reduced and so maybe the revenue.
Is remaining weak.
Okay.
Matching and solutions H R solutions may be less competitive and that is why you are trying to boost.
Company Representative: After Indeed Plus started, the situation may change, but advertising, promotion, and expenses were reduced. And so, maybe the revenue is remaining weak. Matching in HR solutions may be less competitive, and that is why you are trying to boost it by taking these measures and introducing Indeed Plus. Thank you. So our medium-term view of Indeed Plus, in the end, business clients are aiming to hire people. So using... it's not about placing ads on multiple media. With the evolution of AI, matching will evolve. So the optimal display to the job seekers can be controlled in accordance with the budget, and so the return on investment will improve. Visa, Visa, and Budget to Use.
By taking these measures.
By introducing indeed plus.
Thank you.
So our medium term view of indeed, plus.
In the end.
The business clients.
Are aiming for hiring people.
So.
Using.
It's not about placing ads on multiple media.
With the evolution of AI matching will evolve so that.
The optimal display to the job seekers can be controlled in accordance with the budget and so the return of will improve.
Vis vis the budget used.
So in the end.
Return on investment from business clients viewpoint, if that is the best.
Company Representative: So, in the end... return on investment from a business client's viewpoint, if that is the best we can win in this competition, so that is the biggest factor, as we see it. So that is the essence of Simplify Hiring. It's not just about shifting to Indeed+; beyond that... Improving Matching Accuracy.
We can win in this competition so that is the biggest factor.
As we see it.
So that is the simplify hiring the essence of simplify hirings.
It's not just about shifting to indeed plus beyond that.
Improving the matching accuracy.
We are focusing on that technology to improve the precision.
Company Representative: We are focusing on that technology to improve precision. It's not just about Indeed, it's not just about the Japan business. We are trying to make investments to improve our services, to become more competitive, as a company-wide effort. So it's not just about Indeed+. That alone is not a goal.
It's not just about indeed, it's not just about be it.
Get the Pam business.
We are trying to do investment to improve our services.
To become more competitive.
As a companywide effort. So it's not just about indeed, plus that alone is not goal.
And of course, if it's a good service.
Visit clients are willing to spend more budget that will be a highly welcome for us but that is not the goal.
Company Representative: And, of course, if it's a good service... If business clients are willing to spend more budget, that will be highly welcome for us. But that is not the goal. How to evolve the matching is our end goal. NQ3, Matching in Solutions, HR Solutions. So that was, the growth was negative 8%. I will not go into the details, the numbers, but, Placement.
How do you evolve the matching is our end goal.
In Q3 matching and solutions HR solutions.
Sure.
So that was the growth was negative 8%.
Okay.
I will not go into the details the numbers, but.
Placement business.
Company Representative: Business is going well. It remains strong on the media side, business clients' appetite, and the entire market is slightly weakening. So that is the background.
Business.
Is going well it remained strong.
But media side.
Business clients appetite.
And the entire market is slightly weakening.
So that is the background.
Of course, indeed, plus project was progressing and so development and sales, though were focused in that area.
Company Representative: Of course, the Indeed Plus project was progressing, and so development and sales were focused in that area. But the market slowed down a bit, and that was the big factor behind.
But the market.
Slowed down a bit.
And that was a big factor behind.
Company Representative: I said earlier, and I also mentioned in the script. This project started in 2021. So we've been preparing for quite some time. So, a breakthrough. It's not something we just came up with to address this short-term dip. It was not a quick fix.
I said earlier.
And I also mentioned in the script.
This project started in 2021.
So we've been preparing for quite some time.
So.
The breakthrough it's not something we just came up because it you addressed this a short term dip it was not a quick fix.
Yes.
Company Representative: So, the reduction in advertising is not leading to the revenue decline. Well, other players' peers are using a lot of advertising expenses, and of course, there's a comparison between us and our peers, the market projections or the views on the environment are different from one another. So that is not the only reason.
So the reduction in advertisement is not leading to the revenue decline.
Well other players peers are using a much advertisement expenses and of course, Theres, a comparison with us and our peers budge.
The market projection or the views on the environment are different from one another so that is not the only reason understood. Thank you very much.
Operator: Understood. Thank you very much. Thank you. Next, Nagal Pham from BofA.
Thank you.
Nextgen now golf from Bofa.
Nagao: Great. Thank you. I'm Nagao from BofA.
Securities.
Thank you.
I'm the Gulf from Bofa.
I have two questions.
Nagao: I have two questions. First, regarding the HR tech, EBITDA, Margin, and Actual Revenue were basically in line with the guidance. But, in terms of the EBITDA margin, for three consecutive quarters, you have overperformed the guidance. Looking at the EBITDA margin trend. Regarding profitability, is there a sense of optimism among the top management, or is there a continued conservative stance when it comes to the margin? I'd like to ask the management staff and, additionally, look at the U.S. economic indices. Improvement trends have continued for quite a long time.
First regarding the H R.
EBITA margin actuals.
Revenue.
It was basically in line with the guidance.
But.
In terms of the EBITDA margin.
For three consecutive terms you have over performed the guidance.
Looking at the EBITDA margin trend.
Regarding the E profitability.
Is there a sense of optimism among the top management or is there a continued conservative stance when it comes to the margin I.
I'd like to ask the management staff and additionally.
Looking at the U S economic indices.
Improvement trends have continued for quite a long time looking at the most recent H R Tech revenue it is still going down.
Nagao: Looking at the most recent HR tech revenue, it is still going down. But looking at the U.S. advertising market, in the second half of 2024, a large recovery is expected. So, little by little...
But looking at the U S advertising market.
In the second half of 'twenty for a large recovery is being expected so little by little.
Nagao: I believe that there are signs of optimism for HR tech revenue going forward. So I would like to ask the mindset of the board members regarding future trends. That was my first question.
I believe that there are signs of optimism for our H R Tech revenue going forward.
So I would like to ask.
The mindset of the board members regarding the future trends that was my first question.
Nagao: My second question... on the 13th of December, the share repurchase program was announced. Why was this announced at that time?
My second crops Jan on the 13th of December.
The share repurchase program was announced.
Why it was just announced at that timing.
And D.
Company Representative: and the, This purchase program will be up until July twenty-four. And then after that, are there any changes in terms of the shareholder return policy? Those are my two questions. Thank you. To the extent of my knowledge, Deco has never been optimistic.
This purchase program will be up until July of 'twenty four.
And then after that is there any changes in terms of the shareholder return policy.
Those are my two questions. Thank you.
To the extent of my knowledge.
Deco has never been optimistic.
Company Representative: He always feels a sense of urgency, and assumes the worst in his management. That is my view. So, of course, there are good times and bad times in the market, and It's a balance, mindset, I believe, in growing the business. And that is the thinking of the rest of the board as well. Going back to your question, US IT companies.
He always feels a sense of urgency assumes the worst in his management that is my view.
So of course, there are good times and bad times, Indeed markets.
And.
It's a balanced mindset I believe and growing the business.
And that is the <unk>.
E thinking of the rest of the board as well.
Going back to your question.
U S I T companies.
I believe show a similar trend.
Company Representative: I believe they share a similar trend. So revenue, top-line growth. Rather than driving revenue top-line growth aggressively, it's more about Allocating Resources for Organizational Efficiency and operational efficiency.
So revenue top line growth.
Other than driving the revenue top line growth aggressively it's more about.
Allocating resources for organizational efficiency.
And operational efficiency.
Company Representative: As time goes by... We have seen an increase in productivity for our organization and our operation in the history of Recruit. When the HR market is tough, we have taken measures to improve the productivity of the organization, which makes us stronger as a result, and we have continued these efforts in the past, and we would like to continue going forward. That was the response to your first question.
As time goes by.
We have seen increase in productivity for our organization and our operation in the history of.
Recruits.
When the HR market is tough we have taken measures to improve the productivity of the organization, which makes us stronger or as a result, and we have a continued.
These efforts in the past and we will have to continue going forward that was the response to your first question.
Company Representative: Regarding the share repurchase announced in December, why at that timing? So this fiscal year, we have conducted a self-tender offer.
Regarding D E share repurchase announced in December why at that timing.
So this fiscal year, we have conducted a self tender offer.
Twice.
Company Representative: And now we have the share buyback program, the general Share Repurchase Program, that's the E, has the security E, thanks, in charge of. We did not want to conduct this simultaneously, so we have completed the self-tender offer, and so we are able to start the share repurchase program. That is one aspect.
And now we have the share.
Buyback program, the the general or.
The share repurchase program Ah that's B E.
The security E banks are.
And charge offs, we did not want to conduct this simultaneously. So we have completed the E self tender offer and so we are able to stop the share repurchase program.
That is one aspect and as we disclosed today.
Company Representative: And as we will disclose today, Longing improvement measures have been quite effective since about that time or a little before that time. And also, we had the one-time tax benefits from the organizational change, which boosted our bottom line above our initial expectations. Then, the dividend, as well as the self-tender offer that we conducted twice, the return to the shareholders, in terms of the ratio, would be inferior to the previous year based on the calculations. So, given that background,
Margin improvement measures have been quite effective from about that time are a little before that time.
And also we had the one time.
Tax benefits.
From the organizational change, which.
Sure.
Boost our bottom line.
Above our initial expectations.
Then.
The dividend.
As well as the self tender offer that we conducted twice.
The E.
Return to the shareholders.
In terms of the E ratio or would be inferior to the previous year based on the calculations.
So given that background.
Company Representative: Since we have confirmed that there are no immediate plans to invest in a large-scale M&A, we were ready to return to the shareholders, and that is why we announced at that timing that would be the background, and the program is running to the end of July. The reason being, what kind of return we can provide to the shareholders. We considered the amount, and we discussed with the security firms what to do, what timeframe would be necessary, and the reply was that from December to July would be the right amount of time. And so that is why we decided on the timeframe of the program.
Since we have confirmed that there are no immediate plans to invest in a large scale M&A, we were ready to.
Return to the shareholders and that is why we announced at that timing that would be the background.
And.
The program is running to the end of July.
The reason being.
What kind of return we can provide to the shareholders.
We considered the amount and we discussed with the security firms a lot.
Timeframe would be necessary E and the reply of us that from December to July would be the right amount of time and so that is why we E decided on the.
Time frame up the program.
Company Representative: So regarding the ongoing capital allocation policy, there is no change to that. It is RADA that we have done one by one, and the last item is the buyback, which we are conducting in an agile manner in order to secure the return to shareholders. Thank you.
So regarding the ongoing capital allocation policy there is no change to that.
It is rather a that we have done a one by one and the last item is the buyback, which we are conducting in an agile manner in order to secure the return to shareholders.
Thank you and then in that case this will not be something that youll be conducting on a regular basis going forward are constantly but rather you would look at the overall or texture and conduct such as share repurchases as Ali.
Nagao: Then, in that case, this will not be something that you'll be conducting on a regular basis going forward constantly, but rather, you will look at the overall picture and conduct such share repurchases agilely. You're right; there is no change to our stance, depending on the investor. Some would say that an agile share buyback is fine, but that the company should provide a more clear direction on this.
Youre right there is no change to our staff.
Depending on the invest there.
Some would say that the agile a share buyback is fine but.
That the company should provide a more clear direction.
Company Representative: So taking those feedback, Agile, of course, sounds good. But in what kind of situation will we conduct the share buyback may not be as clear. So, in May, we do hope to provide some more explanation regarding our capital allocation. Thank you very much.
On this so taking those feedback agile is of course the.
It sounds good but.
In what kind of.
Situation, we will conduct a share buyback may not be as clear so.
In May we do hope to provide some more explanation regarding our capital allocation. Thank you very much.
Operator: Macquarie Securities, Tanyuka-san, please. Thank you very much, Tania Oka from Macquarie Securities. I have two questions. The first is related to the earlier question.
Macquarie Securities and yoga assemblies.
Thank you very much and yoga from Macquarie Securities I have two questions.
First is related to the earlier question.
You talked about self tender offer.
Tania Oka: You talked about the self-tender offer. It's during the share reprieve period. Corporate shareholders still hold a large amount of your shares, so...
It's during these share repurchases period, corporate shareholders still hold or a big amount of your shares so.
Tania Oka: If you purchase, purchasing from shareholders, are you prepared to move positively towards purchasing from the existing shareholders, corporate shareholders? And the other question is, second question is, last year, about one year ago, indeed. HR, the headcount reduction was announced, and now you are a lean structure, a highly productive structure. Is there a trigger for rehiring?
If you purchase purchasing from the shareholders are you prepared to move positively towards purchasing from the existing shareholders corporate shareholders.
And the other question is second question is last year about one year ago.
Indeed.
Okay.
Which are the head count reduction was announced and now you are a lean structure of highly productive structure.
Is there a trigger of rehiring, what will trigger me.
Company Representative: What will the trigger be? So again, the same question from last time. Thank you. So, as I answered in your earlier question, we are currently in a period, and as I said, during this share repurchase period, large shareholders. If there is a request from large shareholders, and a self-tender offer is made, it will be a discounted transaction in that case. However, we will probably not run this in parallel. There is no consistency if we do these two things in parallel.
So again its a same question from last time.
Thank you.
So as I answered in your earlier question, we are greatly in the period.
And as I said.
During this share repurchase period.
Large shareholders.
If there is a request from large shareholders.
And self tender offer.
We'll be a discounted transaction in that case.
Yeah.
We will probably not run this in parallel.
There is no consistency if we do these two in parallel.
So if it if one ends and the other starts that may be something we can consider but.
Tania Oka: So if one ends and the other starts, that may be something we can consider, of timing, and other factors need to be aligned, so during the share repurchase period, the T.O.B. tender offer discounted tender offer will not be done for the specific shareholders, but if there are requests that come in, we will discuss afterwards. And no particular request at this point, though.
As timing.
And other factors need to be aligned so during the share repurchase period.
The key Ob tender offer discounted at a tender offer or will not be done for the specific shareholders, but.
If there are requests that come in.
We will discuss afterwards and no particular request at this point, though.
Company Representative: Thank you. To your second question, last year, at the end of March, we did a headcount reduction and hired. We are doing this in a very selective manner.
Thank you to your second question.
Last year.
At the end of March.
We did the head count reduction.
And for hiring.
We are doing this in a very selective manner.
It's not.
Company Representative: It's not just a big resumption of hiring. If there are talented, capable people, and if there's a focus area we want to increase our resources on, we do hire on a selective basis. So it's not that we will increase the headcount aggressively again unless we have a new product development or new initiative. These projects are ongoing, so we will shift people and also hire people in some cases, including our group companies. Our talent portfolio will be kept at an optimum level.
Just a a big resumption of hiring if there are talented capable personnel and if there is a focus area. We want to increase our resources on we do hire on a selective basis.
So it's not that we will increase the head count aggressively again.
So we have a new product development or new initiatives. These projects are ongoing.
So we will shift people and also hire people in some cases.
Including our group companies.
Our talent portfolio will be kept at the optimum level.
Company Representative: Thank you. Thank you very much. We have responded to all the questions raised. It's a bit early, but we'd like to close the session here. Finally, one more comment from Arai san.
Thank you.
Thank you.
Thank you very much.
We have responded to all the questions raised its a bit early but we'd like to close the session here.
C E. One more comment from my iPhone.
Okay.
Company Representative: So in the last week of March 2024, from the 27th of March morning to the 28th evening and the 29th evening, we will be hosting our inaugural INVESTA update FY2023, virtually spanning three days.
So in the last week of March.
2024.
From the 27th of March morning.
228 evening and the 29th evening.
We will be.
Hosting our inaugural Investor update.
If I 12023.
Virtually spanning three days this has already been announced.
Company Representative: This has already been announced, and As I mentioned earlier, in response to questions, this event will feature senior management from Recruit Holdings as well as our business and product leaders from the SBUs and members of the Sustainability Committee. Together, we will discuss updates to our business strategies and wages. Product Innovations. So, for institutional investors and the sell-side analysts. Our business side members will be presenting their activities in product development; we hope to share such information to further your understanding. So please note. Financial data related to results and guidance, including FY23 financial results and guidance for FY24, will not be discussed in the event in March.
And.
As I mentioned earlier and.
In response to your questions.
This event will feature senior management from recruit holdings as well as our business and product leaders from the S. B use and members of the sustainability Committee together, we will discuss.
Updates to our business strategies and latest.
Product innovations.
So.
Yeah.
For the institution investors and the sell side analysts.
Our business side members.
We will be presenting there are activities and D.
Product development, we hope to share such information to further your understanding.
So please note financial data related to results and guidance, including FY2023 financial results and guidance for FY 'twenty four.
Will not be discussed in the event.
In March.
Company Representative: These numbers will be discussed by IDECO or myself after our full-year results announcement in May. Details of the investor update FI 2023 can be found on our IR website. And this will be recorded as well, so that you can view it at a later date.
These numbers will be discussed.
By in Deco or.
Myself.
After our full year results announcement in May.
Details of the Investor update if I 2023 can be found on our IR website.
And this will be recorded as well.
So that's a you can view this.
At a later date.
But I hope that you will join us.
Company Representative: But I hope that you will join us for the event. Thank you very much. Thank you. This is the link for the investor update event. We updated the web page yesterday. Thank you very much for joining us today.
For the event.
You very much.
Thank you. This is D. A link for the Investor update events, we have updated the repairs yesterday. Thank you very much for joining us today.