Full Year 2023 Recruit Holdings Co Ltd Earnings Call - Q&A
Welcome to the Crown Holdings, if I 2023 earnings conference call.
Mizuho Shen: Welcome to the Recruit Holdings FY 2023 EARNEX conference call. This call is simultaneously translated from the original call in Japanese, and translation is provided for the convenience of investors only. I'm Mizuho Shen, Group Manager of Investor Relations and Public Relations, and joining me today are Hisayuki Rikoba, Representative Director, President, and CEO; Yoshihiro Kitamura, Managing Executive Officer, Matching and Solution Business, and Junichi Arai, Active Officer, Corporate Planning Division. Hello everyone.
Speaker Change: This call is simultaneously as Jonathan said.
Speaker Change: From the original calling Japanese on translation is provided for the convenience of the investors only I mean, it's all a sham group manager of Investor Relations and public relations and joining me today are so you get a coupon or was there some extra president and CEO.
Speaker Change: You touched on the rock managing executive officer matching our solution business.
Speaker Change: And you need to write it off.
Speaker Change: So Cooper planning Division Hello, everyone.
Speaker Change: The first 30 minutes of this call will be the first fire chat.
Mizuho Shen: The first 30 minutes of this call will be a four-side chat among the three participants, and the other half hour will be the Q&A session. Please note that today's session, including the Q&A, will be posted on our IR website after the event. Please refer to the full year presentation video and slides, earnings release, and FAQ available on our IR website. Now, I'll turn the poll over to Jin. Ijekobo-san, Kitamura-san, thank you.
Speaker Change: Longer three participants in the latter half hour will be the Q&A session.
Speaker Change: Please note that today's session, including Q&A will be posted on our IR website. After the event.
Speaker Change: Thank you Richard for your presentation video on <unk> earnings release and F. A cute.
Speaker Change: I have available on our IR website.
Now I'll turn the call over to Jim.
Speaker Change: Yeah Kawasaki the marathon.
Speaker Change: Yeah.
Speaker Change: I like to start by asking at Deca some questions.
Unknown Attendee: I'd like to start by asking DECO some questions today, when the full year financial guidance for FI24 will be disclosed. Now, looking back, last Fiscal Year, we only provided the next quarter's guidance due to lack of visibility. So.
Speaker Change: Today.
Speaker Change: You disclosed the full year financial guidance for FY 'twenty four.
Speaker Change: Yeah.
Speaker Change: Now looking back.
Speaker Change: Last fiscal year.
Speaker Change: We only provided the next quarter's guidance due to lack of visibility.
Speaker Change: So.
Speaker Change: This year in.
Hisayuki Idekobo: This year, In May, we disclosed the full year guidance, so please tell us the background that led to the decision to disclose full year guidance for the year. Due to the unprecedented circumstances caused by COVID-19, the unemployment rate in the U.S. temporarily rose to 15%, and during the recovery phase that followed. The job market experienced another unprecedented condition, with job openings exceeding more than 12 million at one point. These are all... something that we had never seen before.
Speaker Change: In May we just close the full year guidance. So please tell us the background that led to the decision to disclose full year guidance for the year.
Speaker Change: Yeah.
Speaker Change: Due to the.
Unprecedented circumstances caused by COVID-19.
Speaker Change: The unemployment rates in the U S temporarily rose to 15%.
Speaker Change: And during the recovery phase that followed.
Speaker Change: The job market experienced another unprecedented condition.
Speaker Change: Openings exceeding more than 12 million I'll point.
Speaker Change: These are all.
Speaker Change: Something that we had never seen before.
Speaker Change: I was at this time last year the number of job openings is expected to decline over the next two yes.
Hisayuki Idekobo: As of this time last year, the number of job openings was expected to decline over the next two years, but the extent of this decline remained uncertain. But despite the decrease in job openings, the unemployment rate did not increase much, thanks to a low labor supply compared to past recessions. So, as a result... Many individuals were able to remain employed, thus softening the impact on the consumer sector. Amidst weak performance in the corporate sector, even now, while the overall economic outlook is still uncertain, as the likelihood of a short-term increase in the U.S. labor supply is low.
Speaker Change: But the extent of this decline remained uncertain.
Speaker Change: Yeah.
Speaker Change: But despite the decrease in job openings.
Speaker Change: The unemployment rate did not increase much.
Speaker Change: Thanks to a lower labor supply.
Speaker Change: Patch at past recessions.
Speaker Change: So as a result.
Speaker Change: Many individuals were able to remain employed.
Speaker Change: Softening the impact on the consumer sector.
Speaker Change: Even amidst weak performance in the corporate sector.
Speaker Change: Even now while the overall economic outlook is still uncertain.
Speaker Change: The likelihood of a short term increase.
Speaker Change: In the U S labor supplies, though.
Speaker Change: We believe it is unlikely that the unemployment rate will rise to seven or 8%.
Hisayuki Idekobo: We believe it is unlikely that the unemployment rate will rise to 7 or 8 percent or that the number of job openings will decline by another 2 million or 3 million or more from this point forward.
Speaker Change: Or is that the number of job openings would decline by another 2 million or 3 million or more.
From this point for it.
Speaker Change: So based on this outlook.
Hisayuki Idekobo: So based on this outlet... We believe that the job market will shift to a relatively stable situation, allowing us to make a reasonable forecast for Hold a full year. See, I have another question in your presentation scheduled at 3 p.m. today. You mentioned that this fiscal year 2024 is year zero. Elaborate a bit more on what kind of a year you expect this to be by using this expression and also tell us a bit more about the background.
Speaker Change: We believe that the job market will shift to a relatively stable situation.
Speaker Change: Allowing us to make.
Reasonable forecast.
Speaker Change: For the full year.
Speaker Change: Yeah.
Let's see I have another question.
Speaker Change: In your presentation disclosed at three P M. Today.
You mentioned that for the fiscal year 'twenty to 'twenty four is ear zero.
Speaker Change: She didn't operate a bit more on what kind of a year you would expect us to be using this expression and also tell us a bit more about the background.
Speaker Change: Looking at recruit did more than 60 years of our business operations, we have experienced many economic downturns.
Hisayuki Idekobo: Looking at Recruit, in more than 60 years of business operations, we have experienced many economic downturns. And yet each time... We have managed our business with a firm focus on improving efficiency. We believe that we have been able to increase our revenue in the past by acting a bit early in the stages where the economy seems to be bottoming out rather than starting to move after it has been confirmed that the economy has hit rock bottom. Of course, it is very difficult to predict when the economy will pick up. But we believe that we are gradually entering the final phase of the economic cycle.
Speaker Change: And yet each time.
Speaker Change: We have managed our business with a firm focus on improving efficiency.
Speaker Change: We believe that.
Speaker Change: We have been able to increase our revenue in the past by acting a bit early in the stages, where the economy seems to be bottoming out rather than starting to move after it has been confirmed that the economy has hit the bottom.
Speaker Change: Of course, it is very difficult to predict when the economy will pick up.
Speaker Change: But we believe that we are gradually entering the final phase of the economic cycle.
Speaker Change: Having said that of course, there is still a possibility that the economy will take another turn for the worse in the future.
Hisayuki Idekobo: Having said that, of course, there is still a possibility that the economy will take another turn for the worse in the future, and that possibility may be high, but, in any case, I have used the term Year Zero in the sense that we are making firm preparations for efficient business operations and completing our preparations for the bottoming out of the economy. I see, so you're at zero in terms of preparation.
Speaker Change: And that possibility may be high but.
Speaker Change: But in any case.
I have used the term ear zero in the sense that we are making from preparations for efficient business operations and completing our preparations for the bottoming out of the economy.
Speaker Change: Yeah.
Speaker Change: I see so.
Unknown Attendee: I see. I have another question for Deco. Regarding the HR technology business, we disclosed adjusted EBTA to be 33% to 36% for FY24. If revenue turns to an upward year-on-year trend in the second half of FY 2024, which is the basis of our guidance, and productivity is appropriately maintained through appropriate cost control under efficient business operations. Then, will margins increase further in IFAI 2025? and beyond as the economic cycle recovers? Can we see a big improvement in margins going forward with the economic upturn? There may be people who have such a view.
Speaker Change: Year zero in terms of preparation I see I have another question for Deco.
Speaker Change: Regarding the HR technology business.
Speaker Change: We disclosed adjusted EBITDA.
Speaker Change: To be 33% to 36%.
Speaker Change: For FY 'twenty four.
Speaker Change: If revenue churn to an upward year on year trend in the second half of if I 2024.
Speaker Change: It is the basis of our guide us.
Speaker Change: And productivity is appropriately maintained through appropriate cost control under efficient business operations.
Speaker Change: Then.
Speaker Change: Will margins increase further.
Speaker Change: And if I 2025.
Speaker Change: And beyond as the economic cycle.
Speaker Change: It recovers.
Speaker Change: Can we see a big improvement in margins going forward with the economic upturn there may be people, who have such a view.
Speaker Change: What would be a response regarding FY 'twenty five and beyond.
Hisayuki Idekobo: What will be your response regarding FY25 and beyond? Well, the HR matching market as a whole is very large, and there is significant potential for long-term growth. So we believe it is still important to continue to increase our revenue. Therefore, we are not considering a management approach that merely focuses on increasing profit margins through downsizing or similar strategies.
Speaker Change: Well the HR marching market as a whole is very large.
Speaker Change: And there is significant potential for long term growth.
Speaker Change: So we believe it is still important to continue to increase our revenue.
Speaker Change: Therefore, we are not considering and management approach that merely Lucas is on increasing profit margins through a downsizing or similar strategies.
Only 350 million monthly unique visitors worldwide are currently using indeed.
Hisayuki Idekobo: Only 350 million monthly unique visitors worldwide are currently using Indeed, but we believe that we can continue to help many, many more people around the world find jobs in the future. As a recruitment group, while it is important to achieve high margins, we believe that our top priority is to consistently create new solutions and, as a result, increase the number of clients and users, as well as the number of actual hires.
Speaker Change: But we believe that we can continue to help many many more people around the world find jobs in the future.
Speaker Change: As recruit grip well it is important to achieve high margins.
Speaker Change: We believe that our top priority is to consistently create new solutions and as a result increased the number of clients and users as well as the number of extra hires.
Speaker Change: This will enable us to remain a growth oriented company with sustained revenue graph.
Hisayuki Idekobo: This will enable us to remain a growth-oriented company with a sustained revenue growth rate. Thank you. So with regard to the HR technology business, based on your comments just now, how do you intend to manage this business in the medium to long term? Also, based on what you just shared with us. What do you feel you would like the capital market participants to understand more deeply? What would you like them to remember?
Speaker Change: Yeah.
Speaker Change: So with regards to the HR technology business based on your comments just now how do you intend to manage this business in the medium to long term.
Speaker Change: And also based on what you just shared with us.
Speaker Change: What do you feel you would like the capital market participants to understand more deeply.
Speaker Change: What would you like them to remember.
Hisayuki Idekobo: What is your message? Well, it is going to be the same as what I've just mentioned, but the most important thing is that we are committed to improving HR matching, which means we are simplifying hiring or looking ahead. We are confident that the next five to 10 years will witness advancements in technology, especially the introduction of AI, that will transform the job search experience into something completely different from what it is today. If people are still struggling to find work 20 or even 50 years from now, then... It will be because we did not do enough.
Speaker Change: What is your message.
Speaker Change: Well it is going to be the same as what I've just mentioned, but the most important thing is too.
Speaker Change: Is that we are committed to improving H arent matching which means we are simplifying hiring.
Looking ahead.
Speaker Change: We are confident.
Speaker Change: The next five to 10 years will witness advancements in technology, especially with the introduction of AI that will transform the job search experience into something completely different from what it is today.
Speaker Change: If people are still struggling to find work 20, or even 50 years from now.
Speaker Change: Then.
Speaker Change: It will be because we did not do enough. It is a failure the company's failure, yes. It is our responsibility.
Hisayuki Idekobo: It is our failure, the company's failure. Yes, it is our responsibility. Of course, we cannot guarantee happiness for everyone in the world.
Speaker Change: Of course, we cannot guarantee happiness for everyone in the world.
Speaker Change: But I believe that if we can make it easier for people to find work for their passionate about.
Hisayuki Idekobo: But I believe that if we can make it easier for people to find work that they are passionate about, then we can make that easier, and they will be more satisfied with their daily lives. To achieve this, the entire Recruit Group intends to fully leverage data and technology, including generative AI, while operating our business with a strong sense of responsibility, believing that only we can improve and evolve the global HR matching market. Thank you very much. Next, let me turn to Kitamura-san.
Speaker Change: If we can make that easier than they will be more satisfied with their daily lives.
To achieve this the entire recruit group intends to fully leverage data and technology, including degenerative AI.
Speaker Change: Operating our business with a strong sense of responsibility, believing that only we can improve and evolve the global HR marching market.
Speaker Change: Thank you very much.
Speaker Change: Let me turn to Kitamura San.
Junko Yamamura: If I 2020 full guidance for revenue and matching and solutions.
Unknown Attendee: FI 2024 Guidance for Revenue in Matching and Solutions HR Solution Business is a decline of 10% to 23%. I think this is largely due to the shift of revenue to indeed Japan through Engiid Plus.
Junko Yamamura: HR solution business is a decline of 10% to 23%.
Speaker Change: I think this is largely due to the shift of revenue to indeed.
Speaker Change: Japan through indeed, plus.
Speaker Change: But how fast or how much of the volume.
Yoshihiro Kitamura: But how fast or how much of the volume will actually migrate this fiscal year? Also, can you share any recent progress on Indeed Plus since the event in March?
Speaker Change: Well actually migrate this fiscal year.
Speaker Change: Also can you share any recent progress on India plus.
Speaker Change: Since the event in March.
Speaker Change: First.
Speaker Change: Regarding the revenue forecast, we expect that.
Yoshihiro Kitamura: Regarding the revenue forecast, we expect that approximately... 70-80% of revenue from the full-time and part-time job advertising services in HR Solutions will be transferred to Indy Japan by the end of FY24. As for the progress of Indeed Plus, In March, we integrated four additional job sites into Indeed+, bringing the total number of connected job boards on this platform to seven. We have received many inquiries from job boards other than our own, and we are preparing to collaborate with them. I plan to expand that collaboration gradually. I am looking forward to it.
Speaker Change: Approximately.
Speaker Change: 70% to 80% of revenue.
Speaker Change: From the full time and part time job advertising services in HR solutions.
Speaker Change: Will be transferred to India, Japan by the end of FY 'twenty four.
Speaker Change: I saw the progress of indeed, plus.
Speaker Change: In March.
Speaker Change: We integrated four additional job sites into India plus bring.
Speaker Change: Bringing the total number of connected job boards on this platform to seven.
Speaker Change: We have received many inquiries from job worse other than our own.
Speaker Change: And we are preparing to collaborate with them.
Speaker Change: I'm trying to expand out gradually.
Speaker Change: Looking forward to it.
I believe that matching installations, HR solutions and HR technology will work, even more closely together in Japan from now on.
Yoshihiro Kitamura: I believe that matching HR solutions and HR technology will work even more closely together in Japan from now on. Earlier, Dekko mentioned in the presentation that it is essential to further strengthen the collaboration between the two businesses and operate them in a unified manner. What exactly will you focus on and how will you proceed with this collaboration? Collaboration is a key word that is gaining a lot of attention, but that is not the purpose. That is not the goal.
Speaker Change: Earlier, Doug mentioned in the presentation that it is essential to further strengthen the collaboration.
Speaker Change: Between the two businesses and operate them in a unified manner.
Speaker Change: What exactly will you focus on and how will you proceed with this collaboration.
Speaker Change: Well.
Speaker Change: The collaboration is a keyword that is gaining a lot of attention, but that is not the purpose that is not the goal. We believe the most important thing is to provide an environment in which the employees engaged in both businesses are highly motivated to realize the evolution of the businesses I see.
Yoshihiro Kitamura: We believe the most important thing is to provide an environment in which the employees engaged in both businesses are highly motivated to realize the evolution of the businesses. I see. At the same time...
Speaker Change: At the same time.
Yoshihiro Kitamura: It is also important for the group to further accelerate the evolution of the business to achieve greater efficiency. So, taking these factors into consideration, we believe that operating both businesses in a unified manner, we will be able to further evolve towards promoting Simplify Hiring in Japan, which is the second largest global HR matching market after the US. Regarding the future structure, it is currently under review. We believe that from FY 2025 onward, at least from a disclosure perspective, we will be able to report to the capital market participants on the progress of this evolution as a single business segment. Thank you.
Speaker Change: It is also important for the group to further accelerate the evolution of the business to achieve greater efficiency.
Speaker Change: So taking these factors into consideration, we believe that operating both businesses in a unified manner, we will be able to further evolve towards promoting simply simplify hiring in Japan, which is the second largest global HR matching market after the U S.
Speaker Change: Regarding the future structure.
Speaker Change: It is currently under review.
Speaker Change: But we believe that from FY 'twenty to 'twenty five onwards at least from a disclosure perspective, we will be able to report to the capital market participants on the progress of this evolution as a single business segment.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Now talking about the marketing solutions.
Unknown Attendee: Now, talking about marketing solutions. In the earlier presentation, DECO said that we would aim for an adjusted EBITDA margin for allocation of overhead costs of 35% to 40%, and Marketing Solutions in the medium term. Is this mainly due to an increase in revenue or improved operational efficiency, or perhaps both? How do you arrive at this 35% to 40% number in...
Speaker Change: In the earlier presentation Deco said that we will aim for an adjusted EBITDA margin.
Speaker Change: Before allocation of overhead call sub 35% to 40%.
Speaker Change: And marketing solutions in the medium term.
Speaker Change: Is this mainly due to an increase in revenue.
Speaker Change: Or improved operational efficiency.
Speaker Change: Or perhaps both.
Speaker Change: How do you arrive at this 35% to 40% number.
And.
Speaker Change: Adjusted EBITDA margin.
Speaker Change: Well to put it simply I believe that both revenue growth and productivity improvements will have a positive impact.
Unknown Attendee: Adjusted EBTA Margin, Well, to put it simply, I believe that both revenue growth and productivity improvements will have a positive impact. We expect that housing and real estate and Beauty Business will continue to be the largest contributors to revenue growth over the next several years. In addition, the dining business, which diversified its billing model options under the COVID-19 pandemic, is also expected to contribute to revenue growth along with these two businesses.
Speaker Change: We expect that the housing.
Speaker Change: And real estate.
Speaker Change: And beauty business will continue to be the largest contributors to revenue growth over the next several years.
Speaker Change: In addition.
Speaker Change: The dining business, which diversified it's sprinkled all options under COVID-19 pandemic is also expected to contribute to revenue growth along with these two businesses regarding sauce. We are currently in a phase focused on expanding the number of accounts and GBP primarily through are paid.
Unknown Attendee: Regarding SaaS, we are currently in a phase focused on expanding the number of accounts and GPB primarily through AirPay. The primary goal of the FinTech service is to reduce the complexity of financial transactions for business clients at the moment. In the next stage, we plan to proceed carefully in determining the take rate from GPV, etc. Meeting Legal Requirements
Speaker Change: The primary goal of the Fintech service is to reduce the complexity of financial transactions for business clients at the moment.
Speaker Change: In the next stage, we plan to proceed carefully and determining the take rates from G. P V et cetera.
Speaker Change: While meeting our legal requirements.
Speaker Change: Therefore, we see potential.
Unknown Attendee: Therefore, we see potential in these areas, but we expect their contribution to be mid-term in terms of revenue. So we are looking forward to the many changes to come. Then, what about initiatives to improve the operational efficiency of the business? With respect to improving the productivity of our operations, Over the next several years, starting in FY24, we will continue to make further efficiency improvements in terms of costs, for example, for SG&A expense. Outsourcing expenses will be revised to an appropriate size, as they were expanded in preparation for the recovery period from the COVID-19 pandemic.
Speaker Change: In these areas.
But we expect their contribution to be midterm in terms of revenue.
Speaker Change: So looking forward to the many changes to come.
Speaker Change: Then what about initiatives to improve operational efficiency of the business.
Speaker Change: Well with respect to improving the productivity of our operations.
Speaker Change: Over the next several years starting in FY 'twenty four we will continue to make further efficiency improvements in terms of costs for example for SG&A expense.
Outsourcing expenses will be revised to an appropriate size.
As they were expanded in preparation for the recovery period from COVID-19 pandemic.
Unknown Attendee: So there was an expansion, and investments, and this will be the right size. Also, for advertising expenses, they are divided more strictly into two categories, investment-oriented expense and cost-like expense for the matching platform, and these are to be managed more efficiently.
Speaker Change: So there was an expansion.
Speaker Change: Our investments and this will be right sized.
Speaker Change: So for advertising expense.
Speaker Change: They are divided more strictly into two categories investment oriented expense and cost like expense for the matching platform.
Speaker Change: And these are to be managed more efficiently.
Unknown Attendee: There are an endless number of these initiatives, but we believe reductions are possible from various perspectives. As a result of these efforts, we aim to manage performance targeting and margin before allocation of overhead costs of 35% to 40% in the midterm. So it's a multi-faceted approach. There is an overhead cost with regard to matching the solutions.
Speaker Change: There are endless number of these initiatives, but we believe reductions are possible from various perspectives.
Speaker Change: As a result of these efforts, we aim to manage performance targeting and margin before allocation of overhead costs of 35% to 40% in the midterm.
Speaker Change: So it's.
Speaker Change: Oh Gee for such an approach.
Okay.
Speaker Change: So oh, there is the overhead cost with regards to matching our solutions and how do we see the overhead costs going forward.
Unknown Attendee: And how do we see overhead costs going forward? Overhead costs and shared expenses include the costs related to the core technology infrastructure renewal mentioned earlier, as well as some outsourcing costs and costs related to subsidiaries not belonging to any business.
Speaker Change: Yeah.
Speaker Change: Overhead costs and shared expenses include the costs related to the core technology infrastructure renewal or mentioned earlier.
Speaker Change: Some outsourcing costs and costs related to subsidiaries not belonging to any business.
Speaker Change: We expect these to be around $31 5 billion yen and if our 24.
Unknown Attendee: We expect these to be around 31.5 billion yen in FY24. These expenses are associated with functions and services provided by both marketing solutions and HR solutions. So it's actually quite difficult to divvy them up.
Speaker Change: These expenses are associated with functions and services provided to both marketing solutions and HR solutions.
Speaker Change: So it's actually quite difficult to dig them up moving forward, we intend to appropriate allocate these costs and reduce them as we improve productivity along with you what additional changes in the future. Thank you.
Yoshihiro Kitamura: Moving forward, we intend to appropriately allocate these costs and reduce them as we improve productivity along with organizational changes in the future. Thank you. I'd also like to ask another question to you, Kitamura-san. You take a broad look at your operations in Japan, and we talked about HR solutions. Are there any new initiatives? You already talked about this at the events in March, but are there going to be any new initiatives in the HR solutions?
Speaker Change: I would like to also ask another questions to your time with us on.
Speaker Change: You take a broad look at your operations in Japan, and we talked about the HR solutions.
Speaker Change: Are there any new initiatives you already talked about this at the events in March but are there going to be any new initiatives in the HR solutions are what about progress.
Speaker Change: Okay.
Speaker Change: We are focused on increasing the number of job listings on recruit groups platforms through air work, a T S and indeed plus.
Yoshihiro Kitamura: What about progress? We are focused on increasing the number of job listings on recruit groups platforms through Airwork, ATS, and Indeed Plus. At the same time, our shift management service AirShift is making shift vacancies visible from data about detailed times and work units. By combining such data, we continue to develop matching services that can be used efficiently without increasing the workload on our business clients. For example, recently there has been an increase in demand from both job seekers and companies for spot work that utilizes spare time, and in order to meet this demand, we are entering the spot work field by leveraging our proprietary Indeed Plus technology.
Speaker Change: At the same time, our shift management service air shifts is making shift vacancies visible from data about detailed times and work of units.
Speaker Change: By combining such data.
Speaker Change: We continue to develop matching services that can be used efficiently without increasing the workload on our business clients.
Speaker Change: For example, recently there has been an increase in demand from both Jobseekers and companies for spot work that utilizes spare time and.
Speaker Change: And in order to meet this demand we are entering the spot work field by leveraging our proprietary indeed plus technology.
Speaker Change: We plan to launch such a feature on Tom work in the fall of 2024, and we will also launch a new dedicated shelf board at the same time.
Yoshihiro Kitamura: We plan to launch such a feature on TownWork in the fall of 2024 and will also launch a new dedicated job board at the same time. Thank you very much. Any updates on the SaaS business? Any news that you can tell us?
Speaker Change: Very much.
Speaker Change: Any updates on the hospice, that's any news that you can tell us.
Cynthia: Well Cynthia I, our events that we held.
Yoshihiro Kitamura: Well, since the IAR event that we held... a response to the start of digital wage payments in April of 2023, we launched our new payroll payment service, Airwalk Payroll, and recently, we have started offering this service to our group company, Recruit Staffing, allowing approximately 40,000 temporary staff members working there to receive their wages in advance. Also, currently, Recruit MUFG Business is applying to become a fund transfer agent that handles digital payment of wages.
Speaker Change: A response to the start of digital wage payments in April of 2023.
Speaker Change: We launched our new payroll payment service <unk> payroll and recently, we have started offering a service to our grip company recruits staffing allowed.
Speaker Change: Allowing approximately 40000 temporary staff members working there to receive their wages in a fast.
Also currently recruit M U S E T business.
Speaker Change: Is applying to become a funds transfer agent that handles digital payment of wages.
Yoshihiro Kitamura: Once this is approved, our business clients will be able to pay wages through the payments brand Coin Plus, and employees will have the option to receive their wages through COINPLUS on the payment application Air Wallets, in addition to their bank accounts.
Ross: Ross. This is approved our business clients will be able to pay wages to the payments brand quaint plus and employees will have the option to receive their wages through quaint plus on the payment application.
Ross: And while that's in addition to their bank accounts.
Unknown Attendee: We hope to expand our service offerings to a wide range of companies in the future. Many things are happening, Dan. Are there any updates in marketing solutions? Yes, since the IRO event in March, recruit points can now be used at 1 per point on the Amazon website.
Ross: We hope to expand our service offerings to a wide range of companies in the future.
Speaker Change: Many things are happening then.
Speaker Change: Are there or anything.
Speaker Change: And he helped us in marketing solutions, yes, since the IR event since March recruit points I can now be used at one yen per point on the Amazon website.
Speaker Change: This has been well received by users as it expands the range of use of the recruit points. They have accumulated through the use of recruits are services.
Unknown Attendee: This has been well received by users as it expands the range of use of the recruit points they have accumulated through the use of the recruit services. And we believe this will contribute to an increase in the number of individual user actions, which is one of our key KPIs. We will continue to make efforts to provide more convenient services.
Speaker Change: And we believe this will contribute to an increase in the number of individual user actions, which is one of our key kpis.
Speaker Change: We will continue to make efforts to provide more convenient services looking forward to it.
Speaker Change: Yeah.
Speaker Change: I'm sure we will be taking questions from the analysts, but let me address one point before that.
Mizuho Shen: From here, we will be taking questions from the analysts, but let me address one point before that: in FY 2023, we implemented shareholder returns of approximately 250 billion yen through dividends and share repurchases. Including dividends, the total shareholder payout ratio was 72%, which was the highest in the last three fiscal years.
Speaker Change: And if I 2023.
Speaker Change: We implemented shareholder returns of approximately 250 billion yen through dividends and share repurchases.
Speaker Change: Including dividends the total shareholder payout ratio was 72 per cent trustee.
Trustee highest in the last three fiscal years.
Speaker Change: The business continues to generate strong cash flow.
Mizuho Shen: The business continues to generate strong cash flow in spite of the emerging environment, and interest-bearing debt is virtually zero. Hence, the net cash and cash equivalence level was approximately 1.1 trillion yen at the end of March. As we continue to improve operational efficiency and productivity, we believe that we also need to improve capital efficiency. As was mentioned in DECO's presentation, on a consolidated basis in light of the current situation, in accordance with our current capital allocation policy, taking into account the stable operation of the business, as well as contingency plans, while paying a stable dividend and executing strategic M&A if we have opportunities. We would like to proceed with shelter returns, using the Share Repurchase Program as the main method. As a listed company in Japan,
Speaker Change: In spite of the murky environment and interest bearing debt is virtually zero.
Speaker Change: So the net cash and cash equivalents level was approximately 1.1 trillion at the end of March.
As you continue to improve operational efficiency and productivity.
Speaker Change: We believe that they also need to improve capital efficiency.
Speaker Change: As was mentioned on Deco presentation.
Speaker Change: On a consolidated basis in light of the concentration.
Speaker Change: In accordance with our current capital allocation policy.
Speaker Change: Taking into account the stable operation of the business.
As far as contingency plans.
Speaker Change: While paying a stable dividend and executing strategic M&A, if we have opportunities.
Speaker Change: We would like to proceed with shoulder returns.
Speaker Change: Using the share repurchase program as the main method.
Speaker Change: As a listed company in Japan.
Mizuho Shen: We considered the time frame and the Feasible Scale of such programs and came to the conclusion that it would be achievable and not interfere with our business operations to set a target of reducing the net cash and cash equivalence level to approximately 300 billion yen over the next two years while promoting capital efficiency through shareholder returns. We hope to gain the long-term support of our shareholders. We are being recognized by the Capital Markets as a global growth company, and we look forward to your continued support. Thank you, everyone.
Speaker Change: Have you considered the timeframe.
Speaker Change: [noise] feasible scale of such programs.
Speaker Change: And came to the conclusion.
Speaker Change: But it would be achievable.
Speaker Change: And not interfere with our business operations to set a target of reducing the net cash and cash equivalents level to approximately 300 billion yen.
Speaker Change: Over the next two yes.
Speaker Change: While promoting capital efficiency to shareholder returns.
Speaker Change: We hope to gain the long term support of our shareholders.
Speaker Change: By being recognized.
Speaker Change: The capital markets.
Speaker Change: As a global growth company.
Speaker Change: And we look forward to your continued support.
Speaker Change: Thank you everyone.
Speaker Change: Now we would like to proceed to the Q&A session with the media and analysts. If you have a question. Please click on the raise hand button once they're called a pump. These on mute and say to your question in order to address as many questions as possible. Please limit the number of questions to one each time.
Mizuho Shen: Now we would like to proceed to the Q&A session with the media and analysts. If you have a question, please click on the raise hand button. Once called upon, please unmute and state your question. In order to address as many questions as possible, please limit the number of questions to one each time. Thank you. First, from Nikkei Shimbun, Nishioka-san, please. This is Takashi Nakagawa from
Speaker Change: Thank you.
Speaker Change: Trust from Nikkei Shimbun Nishioka some please.
Nishioka: So you have the four-year guidance announced, and we've heard about an increase in revenues. Sorry, regarding revenues and profits, I think there's a wide gap. So when do you expect revenues to increase, or when do you expect a decrease in profits? What are the different scenarios?
Michelle: This is Michelle come from Nikkei Shimbun. Thank you.
Unknown Attendee: I would appreciate more explanation on this. Thank you.
Speaker Change: Thank you.
Speaker Change: So you have the full year guidance are announced.
Speaker Change: And.
Speaker Change: You've heard about the increase in revenues.
Speaker Change: Sorry regarding revenues and profits are I think I think there is a wide gap.
Speaker Change: So when do you expect <unk> revenues to increase or when do you expect to decrease in profits are what are the different scenarios, sorry, but I appreciate more explanation on this thank you.
Speaker Change: Thank you.
Speaker Change: Regarding your question I briefly talked about this earlier.
Unknown Attendee: Regarding your question, I briefly talked about this earlier, but... The economic cycle in the U.S., to what extent it becomes worse, is key. We are seeing deceleration or slowing down as we speak, and many economists or even myself have also thought about this. We expected that the cycle would enter the recessionary stage earlier.
Speaker Change: But.
Speaker Change: The economic cycle in the U S to what extent it becomes worse is key we are seeing a deceleration.
Speaker Change: Slowing down as we speak and many economists or even myself I also thought about this.
Speaker Change: We expected that are deciding to go would enter the recessionary stage earlier. This was our thinking last year. However, the consumer side numbers remained strong and as a result of that from soft landing or too mild recession, if the current expectation at a 15% profitability.
Unknown Attendee: This was our thinking last year. However, the consumer side numbers remain strong. And as a result of that, from a soft landing or to mild recession is the current expectation at 15% probability; a hard landing is also a possibility. So again, the COVID-19 pandemic was an event that happens once every hundred years.
Speaker Change: The hard landing is also a possibility. So again the COVID-19 pandemic was an event that happens once every hundred years and after the occurrence. It is very difficult to predict where the economy will be.
Unknown Attendee: And after that occurrence, it is very difficult to predict where the economy will be. In my presentation, I talked about this. We continue to expect the consumer numbers to... to what extent will things deteriorate? Looking at, [inaudible] We expect things to get somewhat more stabilized, but as I mentioned before, especially for the financial sector, something like black swan events could occur, and if that happens, then we may see more of a recession.
Speaker Change: In my presentation I talked about this.
Speaker Change: We continue to expect the consumer numbers too.
Speaker Change: To deteriorate economic cycle to worsen or the number of job postings that to continue to decrease that is.
Speaker Change: What we can say with certainty, but to what extent if things slow deteriorate.
Speaker Change: Looking at <unk>.
Speaker Change: GDP decline or looking at other economic indicators in holiday decline. The most difficult one is in the financial sector. The high interest rates has puts high pressure or high stress. So the debt related issues that may occur that is another possibility.
Speaker Change: Given these economic indicators and also the the labor markets. The HR market are getting decoupled to some extent as I mentioned in my presentation. The job postings may decrease by 3 million or so still the economy remained out of recession.
Speaker Change: Therefore.
Speaker Change: We expect things to get somewhat more stabilized, but as I mentioned before especially for the financial sector.
Speaker Change: Something like Black Swan events could occur and if that happens then we may see them more of a recession. So there is a downside.
Unknown Attendee: So there is that downside, that is the expectation we take into account in our management. And that is why we have presented a rather wide gap. In any case, for management. With the premise that the economy may take a downturn, we need to focus on improving operational efficiency. That is our main goal for this year. So, towards next year, we will complete our efforts on improving operational efficiency. Things may get worse, but this management policy will remain unchanged.
Speaker Change: That is the expectation we take into account in our management and that is why we presented a rather wide gap.
In any case for management.
Speaker Change: With the premise that the economy may take a downturn, we need to focus on improving operational efficiency that is our main goal for this year. So two next year towards next year, we will complete our efforts on improving the operational efficiency. So things may get worse, but this management policy.
Speaker Change: They will remain unchanged.
Speaker Change: Okay.
Speaker Change: Thank you very much.
Unknown Attendee: Thank you very much. So, if I could... Elaborate, so the base, guidance is an improvement, higher revenue. But if the environment worsens, then you will be in negative territory. Is this correct? Yes, basically, the top line: if there is a downturn, a big downturn, then the cost, in spite of efficiency efforts, may not be enough, and we could see lower profits. But if there's a delay in the recovery time.
Speaker Change: So if I could.
Speaker Change: Elaborate so the base.
Speaker Change: Guidance is and improvements higher revenue, but if the environment worsens then you'll be in the negative territory is this correct.
Speaker Change: Yes, basically E. The topline is there is a.
Speaker Change: A downturn a big downturn than the cost.
Speaker Change: In spite of efficiency efforts may not be enough and are we could see lower profit.
Speaker Change: But if there's a delay in the recovery timing.
Speaker Change: As Dirk mentioned.
Unknown Attendee: As Deco mentioned, we will still all prepare ourselves for Year Zero, and once we have more... visibility in the recovery, we will make new investments, and we will start to increase advertising spend ahead of the recovery. So even in the low range, we will need to make some investments in preparation, and that would mean some lower margins. And this may be a bit detailed, but as Kitamura-san said...
Speaker Change: We will still all prepare ourselves for ear zero and once we have more.
Speaker Change: Visibility in recovery, we will make new investments and we will all start to increase advertising spend ahead of the recovery so even in the low range.
Speaker Change: We will need to make some investments.
Speaker Change: Investments in preparation and that would mean some lower margins.
And just maybe a bit detailed but as I've stumped us on said.
Unknown Attendee: Indeed, plus, revenue will be shifting from MS to HR technology. So this shift or migration does have a numerical impact in terms of lower revenue, and if some negative scenario materializes, we still have to have the necessary expense, and so that would mean a lower profit. So, as DECO said, we would be prepared for the worst, and this is the range that we have presented. Thank you very much. Next, at J.P. Morgan Securities, Mori-san, please. Thank you for the explanation.
Speaker Change: Indeed plus Rev.
Speaker Change: Revenue.
We will be shifting from M S to HR technology.
Speaker Change: So this shift or a migration does have a numerical impact.
Speaker Change: In terms of a lower revenue.
Speaker Change: And and if some negatives as scenario materializes.
Speaker Change: Still we have to.
Speaker Change:
Speaker Change: Has the necessary expense and so that would mean a lower profit so as our Deco said we would.
Speaker Change: Be prepared for the worst and this is the range that we have presented.
Speaker Change: Understood. Thank you very much.
Speaker Change: Next the Jpmorgan Securities Mori San please.
Speaker Change: Thank you for the explanation.
Mori: We are limited to one question, so this was difficult, but I have a question about HR technology. I also wanted to ask some questions about M&S, but looking at specific periods, what are the important events in terms of HR technology? I just want to confirm with you.
We are limited to one question. So this was difficult, but I have a question around HR technology.
Speaker Change: I also wanted to ask some questions around the M N S. But looking at specific periods are the HR technology wise.
Speaker Change: Why is the what are important events I just want to confirm again with you.
Speaker Change: I think.
Unknown Attendee: I think I have a good understanding of the macro aspects, but looking at the business, what areas will be your focus specifically for this year? In the March investor updates, you mentioned a lot of things, and indeed apply, need to be increased recently. It has somewhat been stable at around 40-50%. And if you are going to increase this ratio, that means you need to add more added values. Are you going to focus on increasing this percentage? What will you do in order to reach a higher level?
Speaker Change: I think I have a good understanding on the macro aspects, but looking at the business what areas will be your focus specifically for this year in the March Investor updates you mentioned, a lot of things and indeed apply.
Speaker Change: Levo Whoa.
Speaker Change: Need to be increased Ah recently.
Speaker Change: Has somewhat been stable at around $40 50 per cent.
Speaker Change: And if you are going to increase this ratio that means that you need to add more added values are you going to focus on increase the percentage of what will you do in order to reach a higher level and also yesterday you mentioned you talked about some a reduction in workforce and improving operational.
Unknown Attendee: And also yesterday you mentioned that you talked about some reduction in the workforce and improving operational efficiency is important for the year, so will that be your focus? And you also mentioned making thorough preparations for year one. Does that mean further improving efficiency, or does it also entail something else? So for the HR technology business, what is your main focus? That is my question. Thank you. Thank you very much.
Speaker Change: <unk> is important for the year, so would that be your focus and you also mentioned, making a thorough preparations for a year one.
Does that mean, a further improving efficiency or does it also entails something else.
Speaker Change: For the HR technology business, what is your main focus but it's my question. Thank you. Thank.
Speaker Change: Thank you very much.
Speaker Change: So simply put.
Unknown Attendee: I'll simply put... We need to complete our efforts on improving efficiency. Our competitors are also presenting their numbers, and we see that the US was quite a challenge for staffing as well. The numbers quite fluctuated as if they were in a recessionary stage.
Speaker Change: We need to complete our efforts on improving efficiency.
Speaker Change: Our competitors are also presenting their numbers and we see that the U S. It was quite a challenge for stuffing as well the numbers are.
Speaker Change: Numbers quite fluctuate it as if they were in a recessionary stage.
So in this sense in improving efficiency and what we consider to be most important is of course cost are important area, but the monetization. This also needs to improve in terms of efficiency as ammonia son mentioned, we need to also increase indeed applied.
Unknown Attendee: So in this sense, in improving efficiency, what we consider to be most important is, of course, costs are an important area, but monetization, this also needs to improve in terms of efficiency. As Mori-san mentioned, we need to also increase Indeed Apply. What we offer to clients, our solutions need to be higher in value, and then we charge, we bill them accordingly. We need to increase the client's budget accordingly.
Speaker Change: What we offer to clients our solutions are need to be higher in values and then we charge we build them accordingly, we need to increase the client's budget. Accordingly, and this is something we are working on a daily basis by running various tech.
Unknown Attendee: And this is something we are working on on a daily basis by running various tests, and we are starting to see good results out of these tests. Numbers are increasing in the U.S., and we need to be ready by then for the trend to take a positive turn. Including the organizational change, we need to be prepared so that we may act swiftly. We need to bring these monetization efficiency tests to... completion.
Speaker Change: And we are starting to see a good results out of these tests.
Speaker Change: As Jos.
Speaker Change: Numbers increase in the U S and do we need to be ready by then or.
Speaker Change: For the trend to take a positive turn.
Speaker Change: Including the organizational change we need to be a be prepared so that we May act swiftly.
Speaker Change: So.
Speaker Change: We need to bring these our monetization efficiency tests too.
Unknown Attendee: And at this time, AI, particularly Gen-AI, is being incorporated into various aspects, and these are bringing significant changes. We need to be ready to adapt to these changes and apply those changes to ourselves. And that is why we are implementing these organizational changes when the trend changes. So we need to be ready, and we need to make preparations for that. And in that sense, introducing further efficiency is important. And I hope I have answered your question.
Speaker Change: Completion and at this timing.
Speaker Change #100: Hey, I, particularly Gen AI.
Speaker Change #100: Is being incorporated into various aspects and these are bringing a significant change.
Speaker Change #100: We need to be.
Speaker Change #100: Ready to adapt to these changes and apply those changes to ourselves and that is why we are implementing these organizational changes when the trend changes so we need to be ready and we need to make preparations for that and in that sense and introducing a further efficiency is important and I hope I am.
Speaker Change #101: Answer to your question, yes. Thank you I have a follow up regarding indeed apply.
Unknown Attendee: Yes. Thank you. I have a follow-up regarding Indeed Apply. Within this sphere, more than half or more would be operational, up and running, or are you intending to raise the ratio once the macro number is... recovered?
Speaker Change #101: Within this year more than half or.
Speaker Change #102: More would be operational up and running or are you intending to raise the ratio once the macro numbers are.
Speaker Change #101: Recovered.
Speaker Change #103: It should be higher.
Unknown Attendee: It should be higher. As part of our thinking as management, but this, Integration also happens at the client's cost. So when the economy worsens, things may not move as fast. As we heard, we haven't seen much increase in the past year or two. But as numbers improve, hopefully, this will also be reflected. Thank you. Thank you very much.
Speaker Change #104: As part of our thinking as management, but.
Speaker Change #103: Yes.
Integration.
Speaker Change #103: Also happens with the client's cost so when the economy worsens things may not move as fast.
As we heard a we haven't seen much increase in the past a year or two.
Speaker Change #103: But as numbers improve hopefully this will also be reflected.
Speaker Change #105: Thank you very much.
Speaker Change #105: Next.
Minakata: Next, Minakata-san from Goldman Sachs, please. From Goldman Sachs. Thank you for taking my question. It's difficult to choose one question, but I'd like to ask about the Japanese market and checks in on the HR market. Indeed Plus, and TownWorks, and Sukima, Japan's unique initiatives seem to have accelerated, so the importance of the Japanese market seems highlighted from what we see. So, how do you assess the importance of the Japanese market, and... Over the past few years, have you changed the way you look at the Japanese market? Also, regarding the spot work service, there are already competitors. As a latecomer to this field, what do you think would be your uniqueness or your competitive edge in this area? Kitamura-san, over to you.
Speaker Change #106: And then I've got a sound from Goldman Sachs. Please.
Speaker Change #107: It's just simply that got us from Goldman Sachs. Thank you for taking my question.
It's difficult to choose one question, but I'd like to ask.
Speaker Change #107: About the Japanese market.
Speaker Change #108: Says the HR market.
Speaker Change #109: Indeed, plus and Tom works it came off a Japan unique and you should have seem to have accelerated so they report into the Japanese market seems highlight Ted from what we see.
Speaker Change #109: So how do you position the bones of the Japanese markets and.
Speaker Change #109: Over the past few years have you changed the way you look at the Japanese market also regarding the spot work serviced our already competitive tests.
Speaker Change #110: So as a that's come off in spots spot work, but do you think it would be our uniqueness or your competitive edge.
Speaker Change #110: Yeah.
Speaker Change #111: Some of the phone over to you. Thank.
Speaker Change #112: Thank you for the question.
Speaker Change #113: Well it recently.
Yoshihiro Kitamura: Thank you for the question. Well, recently, the Japanese market, H-R-R for Matching Solutions, and HR Tech. Across the organization, we have been promoting various initiatives with Indeed Plus at the center. And I think this has been very visible to the public.
Speaker Change #113: The Japanese market.
Speaker Change #114: H R.
Speaker Change #115: For our matching solutions on HR tech across the organization, we have been promoting various initiatives with indeed, plus up a center and I think this has been very visible or to the public.
Speaker Change #115: So in terms of this market, we do have a very high market share in Japan.
Yoshihiro Kitamura: So, in terms of this market, we do have a very high market share in Japan. And also, as mentioned at the beginning, Japan is the second largest market behind the U.S. And by promoting new initiatives, perhaps... Weekend, realize the creation of a new service in Japan that would be expanded globally to other markets. And this is how we have been promoting the collaboration. So something that has been tried for the first time or invented in Japan being adapted to the global market. We have not had such an example in the past, but recently, we have recognized this possibility, and that is why we are accelerating this.
And also as mentioned at the onset is Japan is the second largest market behind the U S.
Speaker Change #115: And by promoting new initiatives perhaps.
Speaker Change #115: We can.
Realize our the creation of a new service in Japan that would be expanded globally to other markets and this is how we have been promoting the collaboration.
Speaker Change #115: So something that has been tried for the first time or invent invented in Japan being adopted to the global markets. We have not had such an example in the past, but recently we have recognized this possibility and that is why we are accelerating this.
Speaker Change #115: So have we changed.
Yoshihiro Kitamura: So have we changed? Our view of the Japanese market, to be frank, yes, and we need to make an effort to change the Japanese market ourselves, so that what we are doing in Japan can be expanded globally. And this is not just HR tech, but our group as a whole. Also, regarding spot work. Initially, we had three materials or resources to make the spot work business successful. One is Airshift.
Speaker Change #115: Our view on the Japanese market to be Frank, Yes, and we need to make an effort to change the Japanese market ourselves.
Speaker Change #115: So that's what we are doing in Japan can be expanded globally and this is not just the HR tech, but our group as a whole.
Speaker Change #115: Also regarding spot work.
Speaker Change #115: Yeah.
Speaker Change #115: Initially we had three.
Speaker Change #115: Materials.
Speaker Change #115: Or our resources to make these spot work business successful.
Speaker Change #115: One is air shifts.
Speaker Change #115: So rich shift is lacking that kind of a corporate client information is available to us and linked to that there is a shift mode for people, who are part time walk us rehab.
Yoshihiro Kitamura: So which shift is lacking? That kind of corporate client information is available to us. And linked to that, there is a shift mode for people who are part-time workers. We have the application to manage the schedule of these part-time workers, and this is linked to AirShift. So on the shift board... We also know the information of people who are available but are not working at the moment. Also, spot work is something that you receive immediate payment for after work. And in order to provide that service, you need to cash out first.
Speaker Change #115: We have the application to Manistee is schedule of these are part time workers and this is linked.
Speaker Change #115: To add shifts.
Speaker Change #115: So on the shift board.
Speaker Change #115: We also know the information of people who are available but are not working at the moment.
Also spot work is something that Ah Ah you receive immediate payment after work.
Speaker Change #115: And in order to provide that service.
Speaker Change #115: You need to cash out first.
Yoshihiro Kitamura: And then you send the invoice to the client. And so there is this cash conversion cycle. And so we have the AirPay service, and we have liquid cash that is available for such an advance payment. So we have other strengths, but these are the three competitive strengths that we have identified, and also we have Indeed Plus' unique matching system, so that even if we are a latecomer, we believe that we can provide a valuable service. I hope that this has answered your question. That's very clear. Thank you very much.
Speaker Change #115: And then you make the E.
You send the invoice to the clients and so there's there is this a cash conversion cycle and so we have the a a pay service.
Speaker Change #115: And we have a liquid cash that is available for such an advanced payments.
Speaker Change #115: So we have other strength, but these are the three eat competitive strengths that we have identified and also we have indeed pluses the unique matching system.
Speaker Change #115: So that even if we are late comer, we believe that we can provide a valuable service I hope.
Speaker Change #116: But it sounds like your question.
Speaker Change #117: That's very clear. Thank you very much it's very exciting to have those initiatives I'm looking forward to this and future updates. Thank you.
Yoshihiro Kitamura: It's very exciting to hear those initiatives. I'm looking forward to this and future updates. Thank you. Next is from Citigroup Securities, Yamamoto-san, please. Thank you for the explanation. I'm Yamamura from a city group. Can you hear me?
Speaker Change #118: Next is from Citigroup securities they are not not the phone please.
Speaker Change #118: But thank you for the explanation I'm Yamaguchi from Citigroup can you.
Speaker Change #119: You hear me yes.
Yamaguchi: I have a question about cash allocation cash over one trillion down to 600 billion yen that is the production that you're aiming that is a significant amount.
Yamamoto: Yes. I have a question about cash allocation. Cash over 1 trillion down to 600 billion yen, that is the reduction that you're aiming for. That is a significant amount, and basically, shareholder returns will account for the majority of this based on the disclosed materials. M&A, which you have suspended for the past few years, will also be an option. So what is your priority? What balance should we consider this?
Speaker Change #121: And the basically shareholder returns are will amount accounts for the majority of this based on the disclosed materials.
Speaker Change #121: M&A, which you are suspended for the past few years for also a b.
Speaker Change #122: An option. So what is your priority what balance should we consider this and as for M&A.
Unknown Attendee: And as for M&A... If you already have certain plans, any considerations, which areas in particular are you looking at, and what is the background to what you consider to be issues or challenges that need to be addressed through such MNAs? Thank you. Junko Nagao, Junko Yamamura, Ayano Senaha, Shinji Tanioka, Mizuho Shen, Minami Munakata, Haruka Mori, Mizuho Shen, Minami Munakata, Katsumi Arai, Shinji Tanioka, Recruit Holdings... Well, as you know...
If you already have a certain plans any considerations of which areas. In particular are you looking at and what is the background to what you consider to the issues or challenges that need to be addressed through such M&A. Thank.
Speaker Change #123: Thank you.
Speaker Change #124: Oh, they go first on M&A.
Speaker Change #125: Do you anticipate anything interesting to happen in this area.
Speaker Change #126: Well as you know.
Speaker Change #127: The U S has seen a rapid change in the interest rate from zero to five based on this change.
Unknown Attendee: The U.S. has seen a rapid change in the interest rate from zero to five. Based on this change, IPOs and M&As, well, for M&As in the private sector, we are not seeing the numbers increasing, as you are aware. On the other hand...
Speaker Change #127: IPO and M&A as well for emanates in the private sector.
Speaker Change #128: We're not seeing the numbers are increasing as you are aware of.
Speaker Change #128: On the other hand.
Speaker Change #128: Looking at startups.
Unknown Attendee: Looking at startups, how they are financing through rounds based on our data in HR tech. Nishitaka Nagao, Junko Yamamura, Junichi Arai, Ayano Senaha, Shinji Tanioka, Recruit Holdings, or conversations or dialogue with startups, and partnerships are increasing in number. But since we are talking about MNAs, we want to be careful. If we rush into this, then the possibility of failure is also going to be higher. We need to make sure that a company has solid technology and also shares the vision with us. With such companies, we are having conversations, but, of course, with MNAs. Also...
Speaker Change #128: How they are financing through rounds based on our data in HR Tech.
Speaker Change #128: Start ups over the past two years or more.
Speaker Change #128: They have and implemented a new rounds of financing are the number of months to close to 200 startups are maybe more than 200, and some cases so in terms of activity.
Speaker Change #128: Or conversations that dialogue with startups and partnerships are increasing in number.
Speaker Change #128: But since we're talking about M&A.
Speaker Change #128: We want to be careful.
Speaker Change #128: If we rush into this that and the possibility of failures, though is also going to be higher so.
Speaker Change #128: We need to make sure that our company has a solid technology.
Speaker Change #128: Also shares the vision with us with such companies, we are having conversations but of course.
Speaker Change #128: M&a's.
Speaker Change #128: Oh so.
Unknown Attendee: Consider the counterparts. Of course, we want to have some good results. So we are working on this. So while working on this, at the same time, we will be promoting shareholder returns. So I will be focused on both. So allocating how much to which is not something we have or we share with you. But as I said before, we have the capital allocation policy of the company, and that states that we use funds first and foremost for the businesses, and that generates stable dividends, and then invest in promising M&As. If we still have cash left and considering our valuation, of course, we will then implement share repurchases. That is the plan, and that plan remains unchanged.
Speaker Change #128: Consider the counterparts of course, if we want to.
Unknown Attendee: So MNAs and shareholder returns will both be sought. And then we aim to bring the net cash level down to our target level. Thank you very much. That was clear.
So some good results. So we are working on this so while working on this at the same time, we will be promoting shareholder returns so that will be focused on both so.
Speaker Change #129: <unk>, how much too which is not something the.
Speaker Change #129: We have or we share with you, but as I said before.
Speaker Change #129: We have the capital allocation policy of the company and that states that we used funds to first and foremost for the businesses and that makes stable dividends and then invest in promising m&a's and.
Speaker Change #129: If we still have cash left and considering our evaluation.
Speaker Change #129: We will then implement share repurchases that is the order and that order remains unchanged, so M&A and shareholder returns.
Speaker Change #130: Oh, it will be both thought.
Speaker Change #131: And then we aim to bring the net cash level down to our target level. Thank you very much that was clear.
Speaker Change #132: Thank you very much next question John Nagao San please.
Nagao: Thank you very much. Next question, Nagao-san, please. I'm Nagao from BofA.
Speaker Change #133: I'm the guy from Bofa.
Speaker Change #134: I have so many questions and it's very difficult to narrow down.
Yoshihiro Kitamura: I have so many questions, and it's very difficult to narrow down the questions, but since Kitamura san is participating, I'd like to ask about marketing solutions and HR solutions regarding Indeed+ and so having a unified solution for putting that together with HR tech. The job board type... That kind of agency reorganization may be necessary in terms of the remuneration for the former recruits. The ex-recruit people, or those who love recruiting, I think have been responsible for them, but there seems to be some dissatisfaction on their side as well. But are you able to control that?
Speaker Change #135: The question about since I Kitamura, San is participating I'd like to ask about marketing solutions and HR solutions are regarding indeed, plus.
So all having a unified.
Speaker Change #135: Solution and are putting that together with our HR tech.
Yeah.
Speaker Change #136: The job Board type.
That kind of an agency a reorganization maybe necessary E in terms of the remuneration or the former recruits.
Speaker Change #136: The X recruit people, who love recruits I think happened are responsible for them.
Speaker Change #136: There seems to be some dissatisfaction on their side as well, but are you able to control that and then from indeed, Wendy E jobs of advertisement job posts, our sense I mean, you need to make sure that there is no issue in terms of compliance and that kind of an audit function needs.
Yoshihiro Kitamura: And then from Indeed, when the job advertisements and job posts are sent, you need to make sure that there is no issue in terms of compliance. And that kind of an audit function needs to be added to Indeed in terms of the contents of the job postings. So is that really available?
Speaker Change #136: To be added to indeed in terms of the contents of the job postings, so or is that really available in order to transition the business smoothly I think we need some time to prepare and so I would like to ask about the current status regarding D. A transition since this is a major turning point that I'm wondering is this will be us.
Yoshihiro Kitamura: In order to transition the business smoothly, I think we need some time to prepare. And so I would like to ask about the current status regarding the transition. Since this is a major turning point, I'm wondering if this will be a successful effort. Well, you are very knowledgeable about this service. You have studied it very well.
Speaker Change #136: Successful effort.
Speaker Change #137: Well you are very knowledgeable about this service.
Speaker Change #138: You have studied very well.
Speaker Change #139: Well. Thank you very much for your question.
Speaker Change #139: In the transition to indeed, plus.
Yoshihiro Kitamura: Well, thank you very much for your question about the transition to Indeed Plus. We have agencies who have been partners and also ourselves. We need to change the way we work. This has been the decision that has been reached, that we need to transform. And also in terms of the audit or screening of the job postings.
Speaker Change #140: We have agencies, who have been our partners and also ourselves we need to change the way. We work. This has been the decision that has been reached.
Speaker Change #140: That we need to transform and also in terms of the audits or screening of the job postings.
Yoshihiro Kitamura: I will be providing some people, and we will be providing support in establishing this kind of an organization. And this ties in with what we talked about earlier regarding the financial numbers. So at this time, we're not really pursuing a higher profit. More than any other.
Speaker Change #140: We will be providing some people and we will be providing a support in establishing it as kind of an organization and this ties in with what we talked about earlier regarding D. A financial or numbers. So at this time, we're not really pursuing a higher profit.
Speaker Change #140: Yeah.
Speaker Change #140: More than any other.
Yoshihiro Kitamura: Indices because we need to make sure that we are compliant with the law and we need to provide sufficient audit functions. So this year we will be focusing on these efforts more, and that is why the improvement in terms of profit is limited.
Speaker Change #140: Indeed indices, because we need to make sure that we are compliant with the law and we need to provide a sufficient audience functions. So this year, we will be focusing on these efforts more oh and that is why the improvement in terms of profits is now live.
Speaker Change #140: Ted.
Speaker Change #141: Of course.
Speaker Change #141: We are used to.
Yoshihiro Kitamura: We are used to... what we have been doing in the past and continuing what we have been doing is one thing. But there are some changes that we can make to further improve the situation. So we have to look at the balance. And this is not just from the agencies but also from our internal employees. There are different views.
Speaker Change #141: But we had been doing in the past and continuing.
Speaker Change #141: But we have been doing.
Speaker Change #141: Is one thing, but there are some changes that we can make to further improve that situation. So we have to look at the balance and this is not just from the.
Speaker Change #141: Agencies, but also from a our internal employees there are different views.
Speaker Change #141: Recruiting is a very diverse organization. So there are people with different views, but.
Yoshihiro Kitamura: Recruit is a very diverse organization, so there are people with different views. We believe that simplifying hiring and supporting the job seekers so that they can find work with caution.
Speaker Change #141: We believe that our simplify hiring.
Speaker Change #141: And supporting the Jobseekers.
Speaker Change #141: Find work.
Speaker Change #141: That stake and work with passion.
Speaker Change #141: Yeah.
Speaker Change #141: We want to support such Jobseekers more than anything and this is what we are committed to in the medium to long term.
Yoshihiro Kitamura: We want to support such job seekers more than anything, and this is what we are committed to in the medium to long term. So we don't want to deviate from this goal. We want to work with everyone to make this service better. And as a result of that... We believe that we can generate profit that is higher than what we have enjoyed in the past, and the creation of New Value is essential in creating the future.
Speaker Change #141: So we don't want to deviate from the school, we want to work with everyone.
Speaker Change #141: To make the service better.
Speaker Change #141: And as a result of that.
Speaker Change #141: We believe that we can generate.
Speaker Change #141: Profit that is higher than what we have enjoyed in the past.
And creation of new value.
Speaker Change #141: Is essential or in creating the future, we don't see a future of delivering profitable growth without delivering you values. So this has been our focus.
Yoshihiro Kitamura: We don't see a future of delivering profit or growth without delivering new values, so this has been our focus. Kitamura san, what has been the feedback from the clients? Well, we have received excellent feedback from the clients in terms of job application numbers and also regarding speed. In the past, it took like two, three weeks to, uh..., open up job postings, but now, when companies require hiring, they are able to shorten the period and receive more applications from jobseekers than in the past.
Speaker Change #141: So demand has been the feedback from the clients well we have received excellent feedback from the clients in terms of job application numbers and also regarding speed.
Speaker Change #141: In the past they took like two or three weeks too.
Speaker Change #141: Open up the job postings, but now Oh when companies require hiring they are able to shorten that period and receive more application.
Speaker Change #141: From Jobseekers stand in the past.
Yoshihiro Kitamura: So this is still early days, but over the past few months, we have received very strong feedback. May I add to that? Well, Recruit is a company that continuously challenges change and transforms itself. So, in the short term, perhaps doing what we have done before may be best, but now that Japan is facing a severe labor shortage, and we know that this will become more aggravated as time goes by, we have had various internal discussions.
Speaker Change #141: So this is still early days, but over the past.
Speaker Change #141: A few months, we have received very strong feedback.
Speaker Change #142: May I add to that.
Speaker Change #143: Well recruit is a company that continuously challenges.
Speaker Change #142: Change.
Speaker Change #142: Yeah.
And transformed itself.
Speaker Change #142: So in the short term, perhaps doing what we have done before maybe best but.
Speaker Change #142: Now that Japan is facing a severe a labor shortage and we know that this will become more aggregate aggravated as time goes by.
Speaker Change #142: We have had there is internal discussions and even though this is a.
Yoshihiro Kitamura: And even though this is a big challenge, quite difficult, we wanted to create a solution to resolve this societal challenge, and this is a decision that we have made as a group. So this is not just the Open to Recruits job board but also other companies' job boards or other regions' job boards. We want to work together with various partners in AI-based matching.
Speaker Change #142: Big Challenge quite difficult, we wanted to create a solution to resolve this societal challenge and this is a decision that we have made as a grip.
Speaker Change #142: So this is not just the open to recruit such a board, but also other companies job boards or other regions job force.
Speaker Change #142: We want to work together with various partners in AI based matching so in this sense. This is our challenge towards the future.
Yoshihiro Kitamura: So in this sense, this is our challenge for the future. And so it may be quite tough, but we would like to work hard to make this successful. Thank you very much. Thank you very much. Moving on to the next question from CLSA Securities. Kato-san, please. Good afternoon. I am Kato from CLSA. Can you hear me?
Speaker Change #142: And so it may be quite tough, but we would like to work hard to make this successful.
Speaker Change #144: Thank you very much.
Speaker Change #145: Thank you very much moving onto the next question from CLSA Securities cut or some piece.
cutoff: Good afternoon, I am cutoff from CLSA can you hear me, yes, we can hear you.
Kato: Yes, we can hear you. Yes, I have one question. In March, during Investors' Day, you mentioned that we will have job offers for 100 million people by 2030, and 23 hires per minute by 2030 is the target you mentioned. So. What will be the number of hires per minute? [inaudible] and what are some of the factors that need to improve in order to reach that goal? You're asking for numbers. Do we have any?
Speaker Change #147: Yes, I have one question at March during the investors day, you had mentioned that we will have a job offers to 100 million people by 2030.
cutoff: And.
Speaker Change #148: 23 hires per minute by 2030 is the target you had mentioned.
cutoff: So.
cutoff: What will be the number of hires per minutes.
cutoff: Then.
cutoff: And what are some of the factors that need to improve in order to reach that goal.
Speaker Change #149: You're asking for numbers or do we have numbers.
cutoff: Yeah.
Well.
Unknown Attendee: Well, it's not that we have specific numbers. So rather than looking at numbers, we are focused on how we can make contributions to society. And that is a benchmark that we are measuring against. We've done this last year and the year before that, and again, at the end of June or in the beginning of July, we will have the SI chat with myself. Now, coming back to what Deko said at the beginning.
Speaker Change #150: It's not that we have specific numbers.
Speaker Change #150: So rather than looking.
Speaker Change #150: Looking at numbers, we all focused on how we can make a contribution to society and and that is a benchmark that we are measuring against.
Speaker Change #150: We've done this last year and the year before that and again at the end of June or in the beginning of July.
Speaker Change #150: We will have the ESI chat with myself.
Speaker Change #150: And.
Speaker Change #150: Hopefully rather than presenting the best case scenario in the worst case scenario, we would like to talk about what we will be working on towards that goal.
Speaker Change #150: And.
Coming back to what they said in the beginning.
Speaker Change #150: Making everyone happy in the World I think that that's where we want to go.
Unknown Attendee: Making everyone happy in the world, I think that that's where we want to go, what needs to happen in order to reach that state. That's something we have yet to see. That is a difficult question. I believe in 2011 or 2010, indeed.
Speaker Change #150: What needs to happen in order to reach that state that's something we have yet to yet to see.
Speaker Change #150: That is a difficult question.
Speaker Change #150: I believe in 2011 O 2010, indeed.
Unknown Attendee: When I was, in the future goal for recruit, I remember writing down 500 million users. And many people laughed at that. Everyone asked how I would achieve that, what was the formula you're using to calculate that number, and many other questions.
Speaker Change #150: When I was.
Speaker Change #150: And writing the future goal for recruits I.
Speaker Change #150: Remember, writing down our 500 million users and many people laughed at that everyone asked how I would achieve that in what is a formula you are using to calculate that number and in many other questions. But today, we have 350 million users, we're still not there yet.
Unknown Attendee: But today we have 350 million users. We're still not there yet. But we are a company of non-continuous growth, and we set ourselves a very ambitious target. We continue to run tests, and we bring ourselves closer to achieving those goals. I'm aware that this is not a satisfactory answer to your question, but I'm often engaged in similar conversations. But I would like to say that this is something that is not easy to calculate, but we are trying to reach. Thank you very much. This is Umuro from Umbrella Securities.
Speaker Change #150: But we are a company of our non contiguous.
Growth and.
Speaker Change #150: We set ourselves very ambitious targets and have continued to run tests.
Speaker Change #150: And so we bring ourselves closer to achieving those goals. So.
Speaker Change #150: I'm aware that this is not a satisfactory answer to your question, but I'm often engaged in a similar conversations but I would like to say that this is something that is not easy to calculate but we are trying to reach.
Speaker Change #151: Thank you very much different from Nomura Securities.
Umuro: I'd like to ask about the take rates for Indeed US. This year, what are the initiatives that we should focus on? For example, is it connection to OTS, or smart solution, SaaS service, Indeed Flag?
Speaker Change #151: It's about the take rates of indeed U S.
Speaker Change #152: This year what are the initiatives that we should focus on for example is that a connection to it yes or smart solution for service ended flux.
Speaker Change #153: So what would be the priority in terms of the contribution of the different initiatives in India. The U S.
Unknown Attendee: So what would be the priority in terms of the contribution of the different initiatives in Indeed US? Well, we're testing different initiatives. And if I could highlight two of them,
Speaker Change #153: Yeah.
Speaker Change #153: Yeah.
Speaker Change #154: Well, we're testing different.
Speaker Change #154: Initiatives and if I could highlight two of them.
Speaker Change #154: Yeah.
Speaker Change #154: Yeah.
Speaker Change #154: So there are many jobs that are being posted free of charge.
Unknown Attendee: So there are many jobs that are being posted free of charge, without a budget. But there are job postings that have been posted for two, three years without any budget being allocated. And so we are testing, asking past clients to pay for that job post at some point after some time has passed. That is one.
Without a budget, but are there are job postings that vento said, two or three years without any budget being allocated.
Speaker Change #154: And so we are testing it asking clients to pay for that job post at sometime after some time had passed.
That is one and then second is to provide the budget recommendation.
Unknown Attendee: And then second, to provide the budget recommendation, to attach an explanation of why that budget should be eliminated. We are considering providing that in more detail, for example, for this job, this kind of experience or this kind of a license is necessary, and our matching engine is very sophisticated. So the reason for the budget, we are able to provide a very fine mesh, Analysis, so this kind of a budget recommendation is going to be quite interesting. That kind of estimation requires perhaps more evolution in gen-AI, and more technology will be necessary, but we will be working on different initiatives to improve the take rate.
Speaker Change #154: And should I pass an explanation of why that buzzard should be erased.
Speaker Change #154: We are considering providing that in more detail for example, all for this job.
Speaker Change #154: It's kind of an experience or this kind of a.
Speaker Change #154: License is necessary.
Speaker Change #154: And our matching.
Engine is a very sophisticated so the reason.
Speaker Change #154: <unk> of the budget, we are able to provide a very fine mist.
Analysis. So this kind of a budget recommendation is going to be quite interesting.
Speaker Change #154: So.
Speaker Change #154: That kind of explanation.
Speaker Change #154: Requires a perhaps more evolution and G&A I and more technology will be necessary, but we will be working on different initiatives to improve the take rates.
Speaker Change #154: And this is something that we need to have the customer onboard we need to have then field persuaded so that we can increase the take rates and the repeat rate as well so for US our revenue is important but we also want to make sure that the client satisfaction remains high.
Unknown Attendee: And this is something that we need to have the customer on board. We need to have them feel persuaded so that we can increase the take rate and the repeat rate as well. So, of course, revenue is important, but we also want to make sure that client satisfaction remains high.
Speaker Change #155: Thank you very much.
Unknown Attendee: Thank you very much. So, it is time to close. We would like to conclude the results call at this time. Thank you very much, everyone, for joining us.
Speaker Change #155: You very much.
Speaker Change #156: So it is time to close they will like to conclude the results call. At this time. Thank you very much everyone for joining.