Recruit Holdings Co Adr

Welcome to the Recruit Holdings Q2 FY 2023 Earnings Conference Call. This call is a simultaneous translation of the original call in Japanese and translation is provided for the convenience of investors only. I am Mizuho Shin, Group Manager of Inter-investor Relations and Public Relations. And joining me today is Junichi Arai, Executive Officer of the Corporate Planning Division. The first quarter financial results presentation video and its transcript We're uploaded to the IR website at 3 p.m. today, so all 50 minutes of today's session will be used as a Q&A session. This time, we've decided to start the call at 4 p.m., which is one hour earlier than in the past. This change is intended to speed up the process of uploading the Japanese and English transcripts of the call for the benefit of global investors. Thank you very much, and I appreciate your attendance today. We uploaded the IR website, the transcript at 3 p.m. today. And so I think you have seen it already. Let me briefly summarize. So for the consolidated full year outlook, the numbers will still be not disclosed. because market environment is still unforeseeable. Many things could happen, so we will not disclose the outlook. On the other hand, in the financial results briefing in May, we said we expect both revenues and profit to decline. revenue decline will remain unchanged, but the adjusted EBITDA will be a slight decline or flat. And the net profit, unless some runoff and extraordinary losses are incurred in the fourth quarter, we will keep the net profit unchanged. And the segment views were also expressed, but HR technology, full year outlook will not be disclosed because it's still unforeseeable. But when I and talked in May. If the US dollar basis fall 20%, what will the margin be? We said probably mid 20s. Margin can be possible, we said. But we have tight cost control. And the result is shown in the first half results. So given the second half outlook, the mid will be more like upper 20s than mid 20s. So we are changing our forecast to that. But to repeat myself, we're not saying that the revenue forecast is minus 20%. Even if something happens and the fourth quarter results plunge, we can generate that level of profit. So let me repeat that message. And in the short term, second quarter results, we just announced and each segment outlook and the consolidated outlook were shared with you for the third quarter. Now, as we continue our dialogue, matching and solutions and marketing solutions, revenue. The disclosure was not done for a long time, but on a biannual basis, we will now give the revenue breakdown in line with our business strategy. So that is one special item this time. So we shared that information with you one hour ago. Including each topic, we will be happy to answer your questions. Shin-san?

First of all, UBS Securities, Fukuyama-san, please go ahead. I believe I'm unmuted now. Can you hear my voice? Yes, we can. Thank you. Thank you, as always. And we really appreciate reconsidering the disclosures. So one question from me is related to the change in the pricing model of Indeed after six months, especially in the US. How much has it penetrated? And regarding your customers who have switched to a new pricing model, has there been any changes to how they consume their budget? Thank you. Thank you for your question. Penetration wise, as we mentioned previously, we believe it has been progressing steadily, especially for existing customers. And in terms of the pace of consuming budget, well, we have been making multiple changes, so we cannot give you any uniform answer. But if you look at our revenue situation, of course, there are economic drivers. But as we described, there are multiple factors for paid job numbers to increase excuse me to change but as we mentioned previously short-term revenue is not something we're going after by increasing the unit price significantly the same budget with the same impact or larger impact is something we are trying to offer to our customers with this strategy. We are offering incremental value. And once it is promoted and understood, revenue would be somewhat neutral, it will not decline. And I would describe it as a very smooth transition. Thank you. Regarding the unit price for a job, it has not decreased. Is that the correct understanding? I believe it was in the FAQ or in my script. But we have revisited our minimum budget. And as Fukuyama-san said, there is overall a positive impact. This is not only coming from the impact of PPSA, but it has been progressing smoothly. Thank you. That was encouraging. Thank you.

Goldman Sachs Securities, Munakata-san, please. This is Munakata from Goldman Sachs. Thank you very much. I have two questions. So should I go one by one? Oh, you can say two questions first. First, they're both on HR tech. First is on your first minimum budget. I don't really understand your intention. So I'm sorry to ask you the basics. But what is the advantage for the clients And my second question is also on HR Tech. Third quarter outlook, YOY, U.S. dollar basis, 18% revenue decline. And QonQ, also revenue decline. And operating expenses in yen amount is about the same as Q2, you said, in terms of amount. Q3 margin will decline against Q2, maybe because of seasonality or any planned investment. Thank you very much. Thank you for the question. So let me answer your second question first. minus 9% quarter on quarter and minus 18% year on year. And as I mentioned, in October, year over year, minus 18%. So these are the numbers we presented And the expenses, as I mentioned at the outset, we are controlling stringently and so flat, including natural churn, negative, slight negative on that basis. Margin forecast is 27%. but given the October status, we're seeing around 27%, but we think the 27% is a bit conservative for us. So some new measures or things we have not communicated with you or new investment. It's not that we are expecting any new investments or other costs that we have not communicated to you. So did I answer your second question? Yes, thank you. So to your first question about the minimum budget. So when the minimum or lower floor is set lower, the result will not be produced. It does not mean Indeed is not functioning properly. It means that the budget setting is not appropriate. So per job, the We by setting minimum budget per job, the expectation and the outcome will be more aligned and more desirable outcome will be produced. And we know that that will be the case. That's why we are setting this minimum budget. So the clients who pay the money are receiving this positively. I see. So you will visualize the appropriateness of the budget setting. I understand. Thank you. So of course, $25 will will be around that level. $20 to $25. But clients can choose not to pay this and just be a free client. And such clients will have the return from not paying. So if their return may be that much lower. So the return on what you pay will become clearer, more visualized. I understand. Thank you.