Recruit Holdings Co Adr

Welcome to the Recruit Holdings FY2023 Earnings 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 Irekoba, Representing Director, President, and CEO, Yoshihiro Kitamura, Managing Executive Officer, Matching and Solution Business, and Junichi Arai, Executive Officer, Corporate Planning Division. Hello, everyone. The first 30 minutes of this call will be the far-side chat among the three participants, and the latter half hour will be the Q&A session. Please note that today's session, including Q&A, will be posted on our IR website after the event. Please refer to the full year presentation video on slides, earnings release, and FAQ available on our IR website. Now, I'll turn the call over to Jun. Thank you. I'd like to start by asking Deco some questions. Today, we disclosed the full year financial guidance for FY24. Now, looking back, last fiscal year, we only provided the next quarter's guidance due to lack of visibility. So 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 circumstance 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. 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, softening the impact on the consumer sector even 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, we believe it is unlikely that the unemployment rate will rise to 7 or 8%. or that the number of job openings will decline by another 2 million or 3 million or more from this point forward. So based on this outlook, we believe that the job market will shift to a relatively stable situation, allowing us to make reasonable forecasts for the full year.

I see. I have another question. In your presentation disclosed at 3 p.m. today, you mentioned that this fiscal year 2024 is year zero. Could you 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? Looking at RECRUIT, In more than 60 years of our 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 the 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. 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 year zero in terms of preparation. I see. I have another question for Decoe. regarding the HR technology business. We disclosed adjusted EBITDA to be 33% to 36% for FY24. If revenue turns to an upward year-on-year trend in the second half of FY2024, 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 FY 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. 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. 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 Recruit 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. This will enable us to remain a growth-oriented company with sustained revenue growth. Thank you.