Full Year 2023 Recruit Holdings Co Ltd Earnings Call - Pre-Recorded

May 15, 2024

Hisayuki Idekoba: Announce our financial results for fiscal year 2023. In FY2023, the number of job openings in the US continued to decline significantly as we had anticipated. This was the first time since job openings have been tracked that there was a reduction of more than 3 million job openings despite not being in a recession. This is, of course, due to fluctuations in demand before and after COVID-19 pandemic. However, we believe that it is also associated with demographic changes in the US as well. In the US, the population is aging. As you can see in the chart, the working age population is not growing as strongly as it had been until around 2010. Partially because of this, although there was a large drop in the number of job openings, the unemployment rate did not rise as much as in the past.

Year 2023.

In FY 2023, the number of job openings in the U S continued to decline significantly as we had anticipated. This was the first time since job openings have been tracked that there was a reduction of more than three.

And job openings, despite not being in a recession.

This is of course due to fluctuations in demand before and after the COVID-19 pandemic. However, we believe that it is also associated with demographic changes in the U S as well in the U S. The population is aging.

Speaker Change: As you can see in the chart. The working age population is not growing as strongly as it had been until around 2010.

Partially because of this although there was a large drop in the number of job openings.

Speaker Change: And promo rate did not rise as much as in the past.

Hisayuki Idekoba: While revenue in the US declined in this environment, our global consolidated revenue for FY2023 was flat year on year. By prioritizing operational efficiency in anticipation of the worst economic downturn, adjusted EBITDA and net income reached record highs. As I mentioned last year, we have always been dedicated to improving efficiency in every downturn. 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 bottom. Of course, financial market stress is increasing under high interest rate conditions, and economic uncertainties remain high. As I mentioned earlier, against the background that the supply of workers to the job market in the US is not increasing significantly as in the past.

Speaker Change: While revenue in the U S declined in this environment.

Speaker Change: Global consolidated revenue for FY 2023 was flat year on year.

Speaker Change: By prioritizing operational efficiency in anticipation of the worst economic downturn adjusted EBITDA and net income reached record highs as I mentioned last year, we have always been dedicated to improving efficiency.

Speaker Change: <unk> in every downturn, we believe that we have been able to increase our revenue in the past by acting a bit Ari and the stages, where the economy seems to be bottoming out rather than starting to move after it has been confirmed that they can.

Economy has hit bottom.

Speaker Change: Of course financial market stress is increasing under high interest rate conditions and economic uncertainties remain high.

I mentioned earlier against the background that the supply of workers to the job market in the U S is not increasing significantly as in the past and even if a recession occurs we believe that it is unlikely that the number of job openings.

Hisayuki Idekoba: Even if a recession occurs, we believe that it is unlikely that the number of job openings will decline by another 3 million or so from the current level. We assume that the number of job openings in the US will hit the bottom after decreasing for another 18 or 24 months. In FY2024, we would like to operate in the year zero of the economic cycle, in the sense that the decline in job demand may bottom out and the trend may turn up in the future. Of course, it is extremely difficult to predict when the economy will improve, and it is also possible that the economy will deteriorate further in the future. However, we believe improving efficiency should not be done just as a recession countermeasure with the goal of improving profit margins only.

Speaker Change: We'll be crime by another $3 million or so from the current level, we assume that the number of job openings in the U S will hit the bottom after decreasing for another 18 or 24 month.

Speaker Change: In FY 2024, we would like to operate in the ear sito of the economic cycle in the sense that that decline in job demand may bottom out and the trend may turn up in the future.

Speaker Change: Of course, it is extremely difficult to predict when the economy will improve and it is also possible that the economy will deteriorate further in the future. However.

Speaker Change: We believe improving efficiencies should not be done just other recession counter measure with the goal of improving profit margins only.

Hisayuki Idekoba: Rather, we would like this year to be one in which we complete the transition to build a structure that will enable us to increase revenue with even greater speed when decline in job demand bottoms out and the economy moves into a period of expansion. As Recruit Group, while it is important to achieve high margins, we believe that our top priority is continuously create new solutions and as a result, increase the number of clients and users as well as the number of hires. This will enable us to remain a growth-oriented company. Now, let me talk a little more about how we can precisely improve the efficiency of our businesses.

Speaker Change: Rather we would like this year to be one in which we complete the transition to build a structure that will enable us to increase revenue with even greater speed when the crime and job demand bottoms out and the economy moves into a period of <unk>.

Speaker Change: Expansion.

Speaker Change: Recruit group, while it is important to achieve high margins, we believe that our top priority is consistent.

Speaker Change: Century create new solutions and as a result increased the number of clients and users as well as the number of hires this will enable us to remain a growth oriented company.

Speaker Change: Now, let me talk a little more about how we can precise III improve the efficiency of our businesses in HR technology by improving the efficiency of monetization, which has been our focus in recent years, we hope to return to a positive year.

Hisayuki Idekoba: In HR Technology, by improving the efficiency of monetization, which has been our focus in recent years, we hope to return to a positive year-on-year revenue trend in H2 of the fiscal year, even during a period of declining job openings. In the HR market in Japan, we believe it is essential to further strengthen the collaboration between HR Technology and HR Solutions in Matching & Solutions, and to operate them in a unified manner. First, through Indeed Plus, the job board business of HR Solutions in Matching & Solutions will be transferred to HR Technology, and both will be operated more efficiently. Adjusted EBITDA margin for HR Solutions in Matching & Solutions in FY2023 was approximately 20.5% before allocation of corporate overhead costs. As the collaboration progresses, we expect there to be some additional costs.

Speaker Change: On year revenue trend in the second half of the fiscal year, even during a player of declining job opex in the HR market in Japan. We believe it is essential to father strengthen the collaboration between HR technology and HR.

Speaker Change: <unk> in matching and institutions and to operate them in a unified manner.

Speaker Change: First through indeed press the job board business of HR solutions in matching and solution will be transferred to HR technology and board will be operated more efficiently as I said EBITDA margin for HR solutions in matching and solution in FY 'twenty.

Speaker Change: 23 was approximately 20.5% before allocation of corporate overhead costs as the collaboration progresses, we expect there to be some additional costs.

Hisayuki Idekoba: However, in the midterm, once the combined operation gets on track, we believe that we can improve the margin to a level that is not significantly different from the margin of HR Technology as a whole. For Marketing Solutions of Matching & Solutions, we aim to achieve an adjusted EBITDA margin before allocation of corporate overhead costs of around 35% to 40% in the midterm by improving productivity. In addition to improving operational efficiency, we also plan to further improve the efficiency of capital. We have continued to manage our capital conservatively, anticipating the worst economic conditions. However, over the next two years, we aim to reduce our net cash and cash equivalents level to approximately JPY 600 billion through strategic business acquisitions and continuing to return value to shareholders, mainly through share repurchases. Here is a summary of what I have just discussed.

Speaker Change: However in the mid term once the combined operation gets on track, we believe that we can improve the margin to a rebel that is not significantly different from the margin of HR technology as a whole for marketing solutions of matching in our solutions, we aim to achieve.

Speaker Change: And adjusted EBITDA margin before allocation of corporate overhead costs of around 35% to 40% in the mid term by improving productivity. In addition to improving operational efficiency. We also plan to further improve the.

Speaker Change: Efficiency of capital.

Speaker Change: We have continued to manage our capital conservatively.

Speaker Change: Anticipating the worst.

Speaker Change: The economy conditions. However over the next two years, we aim to reduce our net cash and cash <unk> rebel to approximately 600 billion yen through strategic business acquisitions, and continuing to return value to shareholders.

Speaker Change: Mainly through share repurchases.

Speaker Change: Here is a summary of what I have just discussed.

Hisayuki Idekoba: While it remains unclear whether FY2025 will be year one of the global economic recovery phase, we want to ensure we are prepared for it. We hope that FY2024 will be the year to prepare for the economic expansion period, while also being ready if there's a recession. Now, Junichi Arai will discuss the details of our consolidated and individual segment performance and outlook.

Speaker Change: While it remains unclear whether F Y 2025 will be year, one of the global economy recovery phase.

Speaker Change: We want to ensure we are prepared for it.

Speaker Change: We hope that FY 2024 will be the year to prepare for the economy expansion period, while also being ready if there is a recession.

Speaker Change: Now June ally will discuss the details of our consolidated and individual segment performance and outlook.

Junichi Arai: Thank you, Hisayuki. I'm Junichi Arai. I'll start with a review of the fiscal year 2023 consolidated results and fiscal year 2024 annual guidance, followed by the result and outlook for each segment. The FY2023 consolidated revenue slightly exceeded the full year guidance announced in February. It decreased 0.4% to JPY 3.4 trillion, and by region, revenue was JPY 939 billion in the US, JPY 1.59 trillion in Japan, and JPY 886 billion in other regions, including Europe and Australia. Adjusted EBITDA increased 9.8% to JPY 598.3 billion, a record high, exceeding the outlook of JPY 585 billion announced in February, and adjusted EBITDA margin was 17.5%.

Thank you nickel generate.

Unknown Attendee: I'll start with a review of the fiscal year 2023 consolidated results in fiscal year 2020 for annual guidance.

Speaker Change: Full by the result and outlook for each segment.

Unknown Attendee: The FY 2023 consolidated revenues slightly exceeded the full year guidance announced in February.

A decrease 4% to three four trillion and by region revenue was 939 be union in the U S.

Unknown Attendee: 159 trillion in Japan.

And 886 billion yen in other regions, including Europe and Australia.

Unknown Attendee: Adjusted EBITDA increased nine 8% to $598 3 billion a record high.

Unknown Attendee: Exceeding the outlook of 585 billion announced in February and adjusted EBITDA margin was 17, 5%.

Junichi Arai: Operating income increased to JPY 402.5 billion, also a record high, despite one-time charges in each segment. Profit attributable to owners of the parent increased 31.1% to JPY 353.6 billion, another record high. Basic EPS increased 34.0% to JPY 225.99, and adjusted EPS increased 20.9% to JPY 241.11. The per share dividend amount is JPY 11.5 for H2 and JPY 23 for the full year. ROE was 19.5%. Total amount of dividend and share repurchases was JPY 254.6 billion for total payout ratio of 72.0%.

Unknown Attendee: Operating income increased to 402 fiber Union also a record high.

Unknown Attendee: Despite onetime charges in each segment.

Unknown Attendee: Profit attributable to owners of the parent increased three 1.1% to $353 6 billion.

Unknown Attendee: Another record high.

Unknown Attendee: Basic EPS increased 34 points their percent to $225 99 year.

Unknown Attendee: And adjusted EPS increased 29% to 240 111 year.

Unknown Attendee: The per share dividend amount is 11 five year for the second half and a 23 year for the full year.

Unknown Attendee: ROE was 19, 5%.

Unknown Attendee: Total amount of dividend share repurchases was $254 6 billion for a total payout ratio of 72.0%.

Junichi Arai: Regarding consolidated balance sheet as of 31 March 2024, net cash increased to JPY 1.13 trillion, and net assets were JPY 2.0 trillion after expending cash for share repurchases, but substantially impacted by exchange rate fluctuations. The number of issued shares as of 31 March 2024 was approximately 1.65 billion shares after retirement of 46 million shares on 29 March, which is equal to the number of shares repurchased during the fiscal year through 15 March through several share repurchase program executed in FY2023. The number of shares held as a treasury stock as of 31 March 2024 was 105 million shares.

Regarding cultivation balance sheet as of March 31st 2000, 2024, net cash increased to $1, one three trillion and that asset or two points, they're treating an offer expanding cash for share repurchases, but substantially impacted by exchange rate fluctuations.

The number of issued shares as of March 31, 2024 was approximately 165 billion shares after the retirement of 46 million shares on March 29th.

Which is equal to the number of shares repurchased during the fiscal year through March 15 through zero share repurchase program executed in FY2023.

Unknown Attendee: The number of shares held as Treasury stock as of March 31, 2024 was 105 million shares after excluding 54 million shares held in our border incentive plan Trust an employee stock ownership plan Trust. The number of shares held as a trigger stock was 50 million shares or three.

Junichi Arai: After excluding 54 million shares held in a board incentive plan trust and employee stock ownership plan trust, the number of shares held as a treasury stock was 50 million shares or 3.1% of the issued share. Through the end of April, through the ongoing share repurchase program, we have repurchased approximately 23.7 million shares, equal to approximately 73% of the maximum total purchase price of JPY 200 billion. The total number of shares held by Japanese business shareholders who are pre-IPO shareholders has been reduced to below 9% of the issued shares, excluding treasury stock. Regarding guidance, although we provided quarterly outlook in FY2023 due to the uncertainty in the macroeconomic environment, for FY2024, we are providing full year guidance in ranges.

Unknown Attendee: 1% of the issue shares through the end of April through the ongoing share repurchase program, we have repurchased approximately $23 7 million shares equal to approximately 73% of the maximum total purchase price of 200 billion.

Unknown Attendee: The total number of shares sold our Japanese business shareholders, who are pre IPO shareholders has been reduced to below 9% of the issued shares excluding treasury stock.

Unknown Attendee: Regarding guidance, although we provided the outlook quarterly in FY2023 due to the uncertainty in the macroeconomic environment for FY 'twenty four we are providing full year guidance and ranges.

Junichi Arai: Our foreign exchange rate assumptions for FY2024 are 145 yen per US dollar, 158 yen per euro, and 98 yen per Australian dollar. Based upon the outlook of each segment, consolidated revenue is expected to be in a range of JPY 3.3 to 3.5 trillion, which is equal to a decrease of 3.4% to an increase of 2.4%. We expect adjusted EBITDA to be in a range of JPY 570 to 675 billion, equal to a decrease of 4.7% to an increase of 12.8%. Adjusted EBITDA margin to be in a range of 17.3% to 19.3%.

Unknown Attendee: Foreign exchange rate assumptions for FY, 'twenty, four or 145 yen per U S. Dollar 158 P M per euro and 98 yen per Australian dollar base.

Speaker Change: Based upon the outlook of each segment consolidated revenue is expected to be in a range of three three to three five trillion, which is equal to a decrease of three 4% to an increase of two 4%.

Speaker Change: We expect adjusted EBITDA to be in the range of 572 675 billion equal to a decrease of four 7% to an increase of 12, 8%.

Speaker Change: And adjusted EBITDA margin to be in a range of 17, 3% to 19, 3%.

Junichi Arai: Operating income is expected to be in a range of JPY 390 to 500 billion, equal to a decrease of 3.1% to an increase of 24.2%. Profit attributable to owners of parent is expected to be in a range of JPY 315 to 400 billion, equal to a decrease of 10.9% to an increase of 13.1%. Basic EPS is expected to be in a range of JPY 206 to 260, equal to a decrease of 8.8%, to an increase of 15.0%. We expect the per share dividend amount to be JPY 12 for H1 and H2, and JPY 24 for the full year. Next, I will explain the result and outlook of each segment.

Speaker Change: Operating income is expected to be in a range of 392 500 billion yen.

Speaker Change: <unk> two a decrease of three 1% to an increase of 24, 2%.

Speaker Change: Profit attributable to owners of the parent is expected to be in a range of 315 to 400 billion equal to a decrease of 10, 9% two and a decrease of 13, 1% basic EPS is expect to be in a range of 260 to 260 in <unk>.

Speaker Change: <unk>, two and a decrease of eight 8% to an increase of 15.0%.

Speaker Change: We expect the per share dividend amount to be 12 million for the first and second half and 24 yen for the full year.

Speaker Change: Next I will explain the results and outlook of each segment.

Junichi Arai: US dollar revenue for HR Technology for FY2023 was approximately $7.0 billion, a decrease of 15.0%, slightly above our February outlook of a decrease of approximately 15.5% on a constant currency basis. Revenue decreased 15.2%. By region, revenue in the US decreased 19.3% to $4.84 billion. Revenue outside the US decreased 3.5% to $2.16 billion, of which Japan accounted for $500 million. In the US, while total job postings, which include both free and paid ads, continued to decrease, at the same time, in light of the change in business environment, we significantly reduced operational costs, including promotion and advertising expenses, and strictly controlled hiring.

Speaker Change: U S dollar revenue for HR technology for FY2023 was approximately $7.0 billion.

Speaker Change: A decrease of 15.0%.

Speaker Change: Slightly above our February outlook of a decrease of approximately 15, 5%.

Speaker Change: On a constant currency basis revenue decreased 15, 2%.

Speaker Change: By region revenue in the U S decreased 19, 3% to $4.84 billion.

Speaker Change: Revenue outside the U S decreased three 5% to $2, one $6 billion of which Japan O'connor for $500 million.

Speaker Change: In the U S. While total job postings, which include both free and paid ads.

Speaker Change: To decrease at the same time in light of the changing business environment. We.

Speaker Change: We significantly reduce operational costs, including promotion and advertising expenses and strictly controlled hiring.

Junichi Arai: In FY2023, the total amount of sales commission, promotion expenses, and advertising expenses were approximately 11% of revenue. Employee benefit expenses and service outsourcing expenses total approximately 52% of revenue. Adjusted EBITDA was JPY 344.3 billion, and adjusted EBITDA margin was 34.0%, in line with the outlook announced in February. As for the FY2024 outlook, revenue on a US dollar basis is expected to be in a range from flat to an increase of 9.5%. Revenue in the US is expected to be in a range from a decrease of 7% to an increase of 5%. Revenue in Japan is expected to increase around 70% as revenue partially transfers from HR Solutions in Matching & Solutions due to Indeed PLUS.

In FY2023 the total amount of sales commission promotion expenses.

Speaker Change: <unk> expenses were approximately 11% of revenue.

Speaker Change: <unk> benefit expenses service outsourcing expenses total approximately 52% of revenue.

Speaker Change: Adjusted EBITDA was $344 3 billion and adjusted EBITDA margin was 34% in line with the outlook announced in February.

Speaker Change: As for the FY 'twenty four outlook revenue on a U S. Dollar base is expect to be in a range from flat to an increase of nine 5% Rev.

Speaker Change: Revenue in the U S is expected to be in a range from a decrease of 7% to an increase of 5%.

Speaker Change: Revenue in Japan is expected to increase around 70% as revenue partially transfers from HR solutions.

Speaker Change: In merchant solutions due to indeed plus.

Junichi Arai: The revenue in rest of the world is expected to increase around 2%. On a Japanese yen basis, revenue is expected to increase 0.6% to 10.1%. Earlier this week, in HR Technology business, Indeed announced a reduction of approximately 1,000 employees or approximately 8% of its workforce. The primary purpose of this reduction is to simplify the organizational structure to make it easier and faster to make the decision and execute that simplified hiring strategy. The estimated cost saving to be realized through this action is expected to be approximately $255 million for approximately 10 months during FY2024. The total amount of share-based compensation in FY2024 is expected to be approximately $550 million. Adjusted EBITDA margin is expected to be in a range of 33% to 36%.

Speaker Change: And the revenue in rest of the world is expected to increase around 2%.

Speaker Change: On a Japanese yen basis revenue is expected to increase 6% to 10, 1%.

Speaker Change: Earlier this week in HR technology business, Indeed announced a reduction of approximately one thought on the employees or approximately 8% of its workforce.

The primary purpose of this reduction is to simplify the organizational structure to make it easier and faster to make the decision and execute that simplify hiring strategy.

Speaker Change: The estimated cost savings to be realized through dissection is expected to be approximately $255 million for approximately 10 months during FY 'twenty four.

Speaker Change: Total amount of share based compensation in FY 'twenty four is expected to be approximately $550 million.

Speaker Change: Adjusted EBITDA margin is expected to be in a range of 33% to 36%.

Junichi Arai: Approximately $85 million related to this workforce reduction will be charged as one-off restructuring costs in Q1. Revenue in HR Solutions in FY2023 increased 2.5% to JPY 305.0 billion, despite the continued decline in revenue in the job advertising service since Q2. Adjusted EBITDA margin for HR Solutions before allocation of corporate overhead costs was approximately 20.5%, significantly increasing from approximately 12% in FY2022, and adjusted EBITDA was approximately JPY 62.6 billion. Regarding the outlook for FY2024, based upon assumption that Japan's economic environment will be similar to FY2023 and will not deteriorate significantly, revenue in the placement service is expected to increase.

Speaker Change: And approximately $85 million related to this workforce reduction will be charged as one off restructuring cost in Q1.

Speaker Change: Revenue in HR solutions in FY2023 increased two 5% to 305.0 billion. Despite the continued decline in revenue and a Java typing service since Q2.

Speaker Change: Adjusted EBITDA margin for HR solution before allocation of corporate overhead cost was approximately 25% significantly increasing from approximately 12% in FY 'twenty two and adjusted EBITDA was approximately $62 6 billion.

Speaker Change: Regarding the outlook for FY 'twenty four based upon the assumption that Japan's economic environment will be similar to FY 'twenty, three and they will not deteriorate significantly.

Speaker Change: Revenue in the placement service is expected to increase revenue and EHR solution. In total however is expected to decrease in a range from 10% to 23% as.

Junichi Arai: Revenue in HR Solutions in total, however, is expected to decrease in a range from 10% to 23%, as revenue in the job advertising service continues to shift to Indeed in Japan related to the integration with Indeed Plus. Before allocation of corporate overhead costs, adjusted EBITDA margin for HR Solutions is expected to be approximately 16% to 19% due to the impact of Indeed Plus. We expect to unify the operations of HR Solutions of Matching & Solutions and HR Technology in order to efficiently accelerate the transformation of the HR matching businesses in Japan into HR Technology business. Starting from FY2025 onward, we are considering combining HR Solutions in Matching & Solutions with HR Technology in a single reporting segment, allowing us to more effectively show the progress and evolution of the business to capital market participants.

Speaker Change: As revenue in a Java advertising service continues to shift to indeed in Japan relative to the integration with India plus.

Speaker Change: Before allocation of corporate overhead costs adjusted EBITDA margin for HR solution is expected to be approximately 16% to 19% due to the impact of India plus.

We expected the unify the operations of HR solutions of matching solutions, and HR technology neuro to efficiently accelerate the transformation of the HR matching businesses in Japan into HR technology business.

Speaker Change: Starting from FY 'twenty five OLED, we're co selling combining HR solutions in matching solutions with HR technology in a single reporting segment, allowing us to more effectively show the progress and evolution of the business to kept our market participants.

Junichi Arai: In Marketing Solutions, as in H1 of the year, revenue in a total of Beauty, Travel, Dining, with value added by a SaaS solution is most likely to be reflected, combined with SaaS solutions, accounting for approximately 50% of revenue in Marketing Solutions, and increased approximately 15% to JPY 246.9 billion, primarily due to a revenue increase in Travel and Beauty. Housing and Real Estate is the largest vertical in Marketing Solutions, and revenue increased approximately 5% to JPY 143.6 billion, accounting for approximately 29% of Marketing Solutions. Others, including Automobiles, Education, Bridal, and others, accounted for approximately 21% of revenue in Marketing Solutions. Revenue in Marketing Solutions increased 9.0% to JPY 492.4 billion.

In marketing solutions as in the first half of the year revenue in a total of beauty travel dining where the value added by SaaS solution is most likely to be reflected combined with SaaS solutions accounted for appropriately 50% of revenue in marketing solutions and increased approximately 15 <unk>.

<unk> to approximately $246 9 billion.

Speaker Change: Primarily due to a revenue increase in trouble and beauty.

Speaker Change: Housing and real estate is our largest vertical in marketing solutions and revenue increased approximately 5% to approximately $143 6 billion accounting for approximately 29% of marketing solutions.

Speaker Change: Others, including car education, bridal and others are kind of for approximately 21% of revenue and marketing solutions as a result revenue and marketing solutions increased 9.0% to $492 4 billion year.

Junichi Arai: Regarding the three KPIs most important to our Help Businesses Work Smarter strategy, the number of actions was approximately 480 million. Cumulative number of registered SaaS accounts increased to approximately 3.7 million due to growth of new business clients as of 31 March 2024. Gross payment volume in FY2023 increased to approximately JPY 1.8 trillion. As all KPIs increased, we believe that we are making progress toward our goal of creating an ecosystem in Japan. Adjusted EBITDA margin for Marketing Solutions before allocating corporate overhead cost was approximately 28%, an increase from approximately 25% in FY2022. Adjusted EBITDA was approximately JPY 138 billion as we executed cost control measures.

Speaker Change: Regarding the three Kpis most important to our health businesses work smarter strategy. The number of action was approximately 480 million.

Speaker Change: Our cumulative number of registered SaaS accounts increased to approximately $3 7 million due to growth of new business clients as of March 31, 2024, and gross payment volume FY2023 increased by approximately 1.8 trillion.

Speaker Change: As all Kpis increased we believe that we are making progress toward our goal of creating an ecosystem in Japan.

Adjusted EBITDA margin for marketing solutions before allocating corporate overhead cost was approximately 28% an increase from approximately 25% in FY 'twenty two.

Speaker Change: And adjusted EBITDA was approximately 138 billion as we executed cost control measures.

Junichi Arai: In FY2024, revenue in Marketing Solutions is expected to increase in the range from 1.5% to 9.0%, driven by solid recovery and growth of the market post-pandemic, especially in Beauty, Dining, and Housing and Real Estate. Adjusted EBITDA margin for Marketing Solutions before allocating corporate overhead cost is expected to be in a range from approximately 29% to 31% as we focus on improving efficiencies while continuing to invest in SaaS solutions. For the Matching & Solutions segment, revenue in FY2023 increased 6.2% to JPY 807.8 billion. The total amount of sales commission, promotion expenses, and advertising expenses were approximately 23% of revenue. Employee benefit expenses and service outsourcing expenses totaled approximately 40% of revenue. Adjusted EBITDA for others and eliminations was approximately -JPY 37 billion.

Speaker Change: In FY 'twenty for revenue in marketing solution is expected to increase in a range from one 5% to 9.0% driven.

Speaker Change: Driven by a solid recovery in growth or the market pulse pandemic, especially in beauty dining and housing on real estate.

Speaker Change: That EBITDA margin for marketing solutions before allocating corporate overhead cost is expected to be in a range from approximately 29% to 31% as we focus on improving efficiencies, while continuing to invest in SAS solutions for matching our solutions segment revenue in.

Speaker Change: <unk> 23 increased six 2% to 807 8 billion year.

Speaker Change: The total amount of sales commission promotional expenses and advertising expenses or approximately 23% of revenue.

Speaker Change: Employee benefit expenses and service outsourcing expenses totaled approximately 40% of revenue.

Speaker Change: Adjusted EBITDA for others and eliminations was approximately negative three 7 billion year adjust.

Junichi Arai: Adjusted EBITDA margin for the segment improved significantly from 14.4% in FY2022 to 20.3% in FY2023, and adjusted EBITDA increased to JPY 163.6 billion. This improvement was a result of cost control and agile investment approach based upon the financial situation, allowing for quick responses to an uncertain business environment. For FY2024, Matching & Solutions revenue is expected to be in a range from a decrease of 7.7% to an increase of 1.8%. Adjusted EBITDA margin, including others and eliminations, is expected to be 20% to 23%. In event of any sudden changes in our environment, we are prepared to respond flexibly. Revenue in Staffing for FY2023 was JPY 1.63 trillion, an increase of 3.1%.

Speaker Change: Adjusted EBITDA margin for the segment improved significantly from 14, 4% in FY 'twenty, 2% to 23%, if our 23 and adjusted EBITDA increased to $163 6 billion yen.

Speaker Change: This improvement was a result of cost control in Australia investment approach based upon the financial situation, allowing for quick responses to an uncertain business environment.

Speaker Change: For FY 'twenty for matching our solutions revenue is expected to be in a range from a decrease of seven 7% to an increase of one 8% and adjusted EBITDA margin, including others and eliminations is expect to be 22 or 23%.

Speaker Change: In the event of any sudden changes in the environment, we are prepared to respond flexibly.

Speaker Change: Revenue in stuffing for FY 'twenty, three was $1 six three trillion and.

Speaker Change: An increase of three 1% for Japan revenue increased nine 9% to $751 6 billion driven by the increase in a number of temporary staff on assignment due to increased demand.

Junichi Arai: For Japan, revenue increased 9.9% to JPY 751.6 billion, driven by the increase in the number of temporary staff on assignment due to increased demand. Revenue in Europe, US, and Australia were JPY 442.5 billion, JPY 244.0 billion, and JPY 196.0 billion respectively. A decrease of 2.1% in total or 9.2% on a constant currency basis as demand for Staffing services continued to slow down against a backdrop of an uncertain economic outlook. Adjusted EBITDA margin was 6.0%, and adjusted EBITDA decreased 4.2% to JPY 97.9 billion. Revenue in FY2024 for Staffing is expected to increase in the range from 0.1% to 0.9%.

Speaker Change: And in Europe U S and Australia were $442 5 billion.

Speaker Change: 244.0 billion.

Speaker Change: And 196.0 billion yen respectively.

Speaker Change: A decrease of two 1% in total or nine 2% on a constant currency basis.

Speaker Change: Demand for staffing services continued to slow down against a backdrop of an uncertain economic outlook.

Speaker Change: Adjusted EBITDA margin was 6.0% and adjusted EBITDA decreased four 2% to 97 9 billion yen.

Speaker Change: Revenue in FY 'twenty four for stuffing is expected to increase in a range from 0.1% to 0.9% revenue in Japan is expected to increase approximately 5% based upon the assumption that there'll be no rapid change in economic environment.

Junichi Arai: Revenue in Japan is expected to increase approximately 5% based upon the assumption that there will be no rapid change in the economic environment. For Europe, US, and Australia, we expect revenue to decrease in a range from 2.5% to 4% as the outlook of the labor market environment in Europe, and the US and its impact to the staffing business is still uncertain. We aim to maintain a 5.5% to 6% adjusted EBITDA margin as we continue to operate efficiently. Finally, let's discuss capital allocation.

Speaker Change: For Europe U S and Australia, we expect revenue to decrease in a range from two 5% to 4%.

The outlook of the labor market environment in Europe, and the U S.

Speaker Change: And its impact to the southern business is still a sudden.

Speaker Change: We aim to maintain a five 5% to 6% adjusted EBITDA margin as we continue to operate efficiently.

Speaker Change: Finally, let's discuss capital allocation.

Junichi Arai: As Hisayuki Idekoba mentioned earlier, while continuing to further our business growth strategy, continuing to pay stable dividends in accordance with our capital allocation policy and with our focus on strategic M&As and further shareholder returns, we aim to reduce net cash or cash and cash equivalents less debt to approximately JPY 600 billion by the end of March 2026. This is expected to result in maintaining or increasing ROE and total payout ratio. As we step forward with our growth strategy as a global tech company, we are grateful for the understanding and support of our shareholders, capital market participants, and all of our stakeholders. This concludes my presentation. Thank you very much.

Speaker Change: As <expletive> mentioned earlier.

Speaker Change: We'll continue to further our business growth strategy continuing to pay dividends in accordance with our capital allocation policy and with a focus on our strategic M&A and for the shareholder returns, we aim to reduce net cash or cash and cash equivalents less debt to approximately 600 billion yen.

Speaker Change: By the end of March 26. This is expected to result in maintaining or increasing ROE and total payout ratio.

As we step forward with our growth strategy as a global Tech company.

Speaker Change: We are grateful for their understanding and support of our shareholders kept our market participants in all of our stakeholders. This concludes my presentation. Thank you very much.

Full Year 2023 Recruit Holdings Co Ltd Earnings Call - Pre-Recorded

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